Monday, October 12, 2009

Brands Gone Wrong

Wisdom this morning from Al Ries:

Upgraded Extensions May Make 'Basic' Version Look Worse

Consumers Don't Like Choosing Between Quality and Price

By Al Ries

Published: October 12, 2009

A recent trend in marketing is the downgrading of established brands by upgraded line extensions.

Take Budweiser Select. According to Anheuser-Busch, "When it comes to brewing beer, the prevailing assumption is that you can't have it both ways. You can either aim for the best possible flavor, forgetting about calories and carbs; OR you can keep the calorie count in check, and sacrifice taste along the way. Budweiser Select is the exception to these brewing rules."

So what does that make Anheuser-Busch's other low-calorie beer? "Bud Light Mediocre?"

Kroger, the country's largest supermarket chain, has opened new superstores in Dayton, Cincinnati and Atlanta, called "Kroger Fresh Fare."

So what does that make regular Kroger stores? "Kroger Stale Fare?"

Well, you might be thinking, nobody pays attention to words like "fresh fare" or "select" anymore. They are just part of our daily routine of pleasant promotional puffery.

It's true. The language of marketing has had the belief squeezed out of it. Years of hyperbole have wiped out the meaning of many of the words used in brand names and advertising.

There are, however, a number of examples of line extensions that could seriously damage the core brands.

Take Vitaminwater10, Glacéau's latest extension of its Vitaminwater brand. What do you suppose most consumers think when they see Vitaminwater10, a name that implies the brand has only 10 calories?

"What? Regular Vitaminwater has calories?"

It's water, for goodness sake, and everyone knows that water has no calories. But sure enough, when a consumer looks at the label of a bottle of regular Vitaminwater, he or she finds it has 50 calories per serving. The fitness crowd isn't going to be happy about that, especially when they find out that all the calories come from sugar.

It gets worse. Glacéau also plays the "per serving" game, which can make any product look like a diet product. As it happens, the 10 calories in Vitaminwater10 is per-8-oz. serving, which means that a 20-oz. bottle contains 25 calories.

And a 20-oz. bottle of regular Vitaminwater contains 125 calories. That's going to really upset that fitness crowd.

What's next? Coke12 with only 12 calories per serving? Serving size: one ounce.

It's odd. Consumers seldom read the fine print on product labels unless companies give them a reason to. For years, Miller High Life ran a "Miller Time" campaign to attract the blue-collar crowd who apparently never bothered to read the "The Champagne of Beers" slogan on the High Life label.

Take Clearly Canadian, the first of the New Age non-carbonated beverage craze. Introduced in 1988, sales took off like those of the iPod.

1989: $5.0 million.
1990: $17.0 million.
1991: $61.2 million.
1992: $155.2 million.

With net profits of $14 million in 1992, Clearly Canadian looked like a clear-cut winner.

It never happened. The next year (1993), sales dropped to $90.9 million and the company's profits disappeared. Sales continued to fall every year until they reached rock bottom in 2006 at $7.5 million.

Where is Clearly Canadian today? In deep trouble. In the past eight years on sales of $124.7 million, Clearly Canadian managed to lose $54.7 million.

What happened to Clearly Canadian? Back in 1992, Tom Pirko, president of Bevmark consulting firm, accurately predicted the reason for the product's rise and fall: "Clearly is the first product that works on the basis of mimicry. People buy it as a mineral water and it's a soft drink. Will the consumer continue to believe in the mimicry?"

Not after the consumer read the label. An 11-oz. bottle of Clearly Canadian contained 100 calories. And the word got around. A hundred calories for a clear, non-carbonated beverage?

Whoops. Back to Diet Coke.

Speaking of which, perhaps you have noticed the slow erosion in the per-capita consumption of cola in the U.S.

2004: Down 0.2%
2005: Down 1.5%
2006: Down 2.1%
2007: Down 3.6%
2008: Down 4.1%

Why didn't the launch of Diet Coke stem the decline of the Coca-Cola brand? (If you like cola taste, but not the calories, you had an alternative.)

Two reasons: (1) Regular Coke is perceived as a brand with "too many calories." (2) Diet Coke is perceived as a brand that "doesn't taste as good" as regular Coke.

The introduction of the mid-calorie colas, C2 and Pepsi Edge, only added to the confusion. Consumers don't like sacrifice (calories or taste), nor do they like compromise.

And so consumers looked for alternatives. Hence the rise of Clearly Canadian, until it too fell into the calorie trap.

Nor did the 1994 launch of Clearly 2, a version of Clearly Canadian with only two calories, stem the decline of the brand. In my opinion, Clearly 2 probably accelerated the decline because it reinforced the idea that the base brand, Clearly Canadian, has too many calories.

Someday I expect cola to make a comeback, perhaps with stevia as a natural non-calorie sweetener. (Coca-Cola with Truvia and PepsiCo with PureVia are obviously exploring this possibility.)

Another interesting upgrade is Scope Outlast, Procter & Gamble's latest extension of its mouthwash brand. "Breath feels fresh up to 5X longer," says the label.

Great, but at Rite-Aid, Scope Outlast costs 45% more per ounce than regular Scope. So the consumer is stuck with an unpleasant choice: Buy the obsolete product and save money, or buy Scope Outlast and get ripped off. (Reminds me of the pain of flying. Sit in coach and suffer physically or sit in first class and suffer financially.)

Then, too, I wonder how many consumers are going to read the fine print under the slogan, "Breath feels fresh up to 5X longer?" ... "Vs. brushing alone."

What? Any normal consumer would assume "5X longer" means that Scope Outlast outlasts regular Scope up to five times longer.

So, Procter & Gamble, how much longer does my breath feel fresh after using regular Scope vs. brushing alone? 1X? 5X? 10X?

It's almost an article of faith among marketing people that the more varieties the better. That's why there are five varieties of Charmin. Ten varieties of Cheerios. Sixteen varieties of Wheat Thins. Thirty-one varieties of Tide.

Then there's Gatorade Tiger, with three flavors. Gatorade A.M. with two flavors. Gatorade Endurance Formula with three flavors. Gatorade Energy Bar with two flavors. Gatorade Nutrition Shake with three flavors. Gatorade Thirst Quencher with seven flavors. And Gatorade G2 with three flavors. Total: 23 flavors or varieties of Gatorade.

And why would Starbucks introduce its own brand of instant coffee? Even worse, promote a "taste challenge" inside Starbucks stores to see if consumers can tell a cup of brewed coffee from a cup of instant?

"We're convinced a majority of people won't be able to tell the difference," said CEO Howard Schultz. So how does it help Starbucks to switch consumers from Fourbucks to Onebuck?

Years ago, I was an agency account executive working on the launch of the first Peugeot automobile in the U.S. market, the Peugeot 403.

It's the same car Peter Falk drove in the Columbo television series. A dowdy-looking vehicle to be sure, but Road & Track magazine named the Peugeot 403 as one of the "seven best-made cars in the world."

The first year, the car sold quite well and the client was pleased. The next year, we got the word that Peugeot was going to introduce the 404, a better-looking car with a slightly larger engine. Great, I thought, replacing the 403 with the 404 could substantially increase sales.

But we're not going to that, replied the client. We're going to sell both models side-by-side in the showrooms.

I was appalled. And for months I argued with Peugeot's U.S. general manager. The old model, the 403, is going to look outdated next to the 404. And the 404 (which was 15% more expensive) is going to look too expensive next to the 403. I tried to offer options. You can either bring in the 404 and discontinue the 403 or stick with the 403 and don't bring in the 404.

Finally out of sheer frustration, the general manager said to me, "Please, Al, stop it. These decisions are made in Paris."

When the second model hit the showrooms, instead of doubling sales as the client expected, total sales actually declined.

Saturn is a repeat of Peugeot. Initially, the Saturn was available in one model only, the S-series. (You could have it in a two-door, a four-door or a hatchback version.) Four years after its introduction, Saturn hit its high-water mark, selling 286,003 vehicles in 1994.

By 1998, Saturn had a problem. Sales had declined to 231,786, a result that could have been expected since the S-series was getting a little long in the tooth.

Solution: The introduction of a larger, more expensive Saturn, the L-series. Headline of an April 5, 1999 article in Automotive News: "Saturn expects new model to double sales."

The article featured Cynthia Trudell, president of Saturn Corp: "With a new mid-size sedan and wagon, Trudell is betting that she can double Saturn's sales to about 500,000 units within a couple of years."

It never happened. Sales never again topped the 286,003 vehicles Saturn sold in the year 1994. And last year, with five models to sell (Astra, Aura, Sky, Outlook and Vue), Saturn sold just 188,004 vehicles.

Saturn's S-series and L-series were like the Peugeot 403 and 404. The older S-series cars looked "outdated" and the newer and larger L-series cars looked "too expensive."

Marketers should study history. The world's largest-selling vehicles were often a single model with only minor updates on an annual basis -- Ford's Model T, for example, with more than 15 million sold.

Then there's the Volkswagen Beetle, with over 21 million sold. There was no Basic Beetle, Super Beetle, Family Beetle, Turbocharged Beetle, Economy Beetle. There was just one model.

I bought a Beetle in 1965 for $1,645. One price, no options.

No automatic transmission. No power steering. No air conditioning. No radio. No undercoating. No cash back. No financing. No discounts. No driving instructions.

No sales pitch either. I gave the salesman a check and he gave me the key.

In architecture, less is more. In marketing, more is often less.