Wooing a Skeptical Consumer

Mritunjay "Manja" Bansal works in brand management at Kraft Foods and can be reached at mbansat@kraft.com. The views expressed herein ore his own and not those of his employer.

Even though the economy continues to do well, consumers are getting increasingly savvy in their shopping habits and are no longer taking brands at face value. Manufacturers have been forced to re-establish the price-value relationships of their brands and have had to contend with unprecedented growth in both alternate channels and private label products. According to an FMI study, the average price per item in real dollar terms dropped 9.6% in the past four years and new item introductions in food dropped over 21% in the last three years. The question for brand marketers is how to woo this increasingly skeptical consumer and still maintain the equity of their brand?

Clear Definition of Value. Realizing that the price-value relationship is out of whack is the first crucial step in reviving the fortunes of a struggling brand. Cold cereal sales have fallen 15% (almost $1 billion) between 199497 but Malt-O-Meal, a private label manufacturer based in Minnesota, has seen its market share double to over 4% in the past five years. Likewise, Quaker Oats is seeing its growth come not from the boxed cereals but from the cheaper bagged products. Market leader Kellogg has in the same timeframe seen its share drop from 38% to 32% and is now looking to cut $100 million in annual costs by restructuring the business. Price-based competition has changed the face of this business, with new product introductions down 35% in the past three years.

By comparison, Sprint established its position in the long-distance market by virtue of a clear value proposition, the dime call, and it continues to build on that. Sprint recently unveiled a new program under which all calls under 30 seconds are free. In both cases, Sprint offered a clear value proposition that appealed to the long-distance consumer.

Keep it Simple. Simplicity is important not only in promotional settings but also in the everyday product offering. All-American marketing icon Ed McMahon and his Publishers Clearinghouse Sweepstakes were recently sued in 32 states for having a promotion so complex that it took a law degree and bifocals to figure it out. They ultimately settled out of court and agreed to change the wording in their mass-mailings.

Similarly, cellular phone service was a consumer nightmare with different rates for different times of the day, until AT&T introduced the one-rate nationwide plan. Blending long-distance with cellular calling, it redefined the entire category based on simplicity and affordability, one rate for the entire country, no matter when you call. Today roaming is no longer the bad word it used to be and for an increasing number of households, the cell phone is getting to be their only phone.

Break the New Product Mold. The marketer can improve the playing field by introducing radical new items that change the way consumers have historically done things. Margins can be sustained only when brands can be sufficiently differentiated and introducing path-breaking new items is definitely one way to do it.

Despite all the offerings in the household supplies category, Clean Shower has revolutionized the way showers around the country are cleaned. By eliminating the need for scrubs and swabs, Clean Shower has come as a godsend for today's busy consumer. Interestingly enough, Clean Shower was first developed by Florida chemist and entrepreneur Bob Black and not by the giants that lead the household chemicals category.

In the world of technology, the honors for breaking the new product mold go to Palm Pilot. Even though its maker 3Com did not invent the Personal Digital Assistant category (Apple's ill-fated Newton gets that credit), 3Com created a product that was both easy to use and demonstrated real functionality. In just two years since its launch, the Palm Pilot has over two million consumers, 7,500 developers creating independent software applications for it and Amazon.com carrying four books on learning how to use it.

Avoid Reckless Expansion of Thademarks. As marketers we believe that expanding trademark usage beyond the original product category is a good way of ensuring long-term growth. Sometimes that can work well but it also has the potential for confusion and a diluted brand equity from a consumer's standpoint. Nikon thrives with its line of cameras and high-end optics but has struggled in the sunglasses category where arguably it doesn't belong. Betty Crocker's unsuccessful foray into cereals was another example of a manufacturer-driven trademark expansion. Gatorade is one brand that has judiciously stuck to its knitting and maintained the power of its singular trademark, while the jury is still out on how the new Celestial Seasonings herbal cough-drops will fare.

Use technology well. The age of the Internet affords manufacturers opportunities to connect with their consumers at minimal cost. Airlines have done a particularly good job in this regard. Several of them have started managing their seat inventory by making last-minute NetSaaver or E-Saver fares available for cheap weekend travel. American Airlines has gone one step ahead in linking these fares to their frequent flyer mileage program; now if you use up some accumulated mileage along with the low NetSaaver fare, you can get an even cheaper deal. Its a win-win for all involved: consumers fly for less and can use up low banked miles and the airline gets to reduce outstanding liabilities on its books.

COPYRIGHT 1998 BPI Communications, Inc.
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