Retail Branding: December 2007 Archives
In a world increasingly filled with advertising clutter, marketers are trying to find new ways to cut through the noise and send their message straight to the consumer. Although the phenomenon of celebrity endorsements is not new, there has been a resurgence of this trend in recent times.
Brands are using celebrities as sources of product differentiation through co-branding, a step beyond endorsement. For example, beginning last June, bargain clothes retailer Steve and Barry’s signed an exclusive agreement Sarah Jessica Parker to sell a line called “Bitten” in its stores. Parker, a celebrity famous for her Sex and the City character’s impeccable (and often expensive) style, will promote the brand of clothing consisting of 500 items ranging between $7.98 and $19.98. Along the same lines, Kate Moss designed a line for English retailer Topshop that became a hit with fashionable yet price conscious consumers. In fact, the line was so popular that it restricted shoppers to buying 5 items each. The success of the line continued in the United States when it was sold at discount retailer H&M, later expanding to upscale Barney’s New York.
While celebrity endorsements are a popular way for brands to gain publicity, there is a difference between celebrity endorsements and celebrity branded items. While endorsements claim “I like it” branded approaches say “I made it.” Both approaches are evident in many cosmetic campaigns. For example, Tyra Banks endorses certain Cover Girl products, claiming to use the products with great satisfaction. On the other hand, Queen Latifah has represented Cover Girl in the branded approach where she promotes the Queen Collection as a product line in which she had great influence and involvement in creating.
This trend of celebrity endorsement extends beyond clothing lines. Celebrities are endorsing products that range from cars to liquor. Harbrew Imports has begun a campaign that uses different celebrities to endorse different drinks; it has even signed Danny DeVito on to promote the launch of Lemoncello.
Such a strategy of product differentiation and branding has both upsides and downsides. On one hand, celebrities may add a credibility and likeability to a product. This may induce fans and new consumers to sample and eventually adopt the product. This trend may be an effective way to cut through the clutter that has come to characterize a market inundated with new products and increasingly skeptical consumers. For example, Proactiv, a brand of skin products, has used a series of celebrity endorsements such as Jennifer Love Hewitt and Jessica Simpson to promote the product. Although the ads are infomercials, the celebrity testimonies add credibility to the ads that have resulted in good publicity and increased brand awareness.
However, such source attractiveness may backfire. Using a celebrity endorser is both an art and a science; in order to be effective, an advertiser must use a celebrity that will enhance the marketer’s message without overshadowing it. In addition, an overexposed celebrity will not have the same effect on consumers as a celebrity that only endorses brands and products selectively. While such dangers may be guarded against by exclusivity contracts, marketers must weigh a celebrity’s past and present endorsement deals in evaluating a good spokesperson for their brand. Also, a celebrity endorser may become a liability to the brand because actions taken in their personal lives may affect their public image, and in turn, brand identity. For example, Nike and Reebok quickly cancelled their endorsement deals with Michael Vick, an Atlanta Falcon’s football player who pleaded guilty to federal dog fighting charges. In an attempt to disassociate their brands with a liability, Nike and Reebok sought decisive action in hopes of minimizing negative impacts of Vick’s personal life upon their brands. Pepsi is another example; in various attempts to match the brand equity of Coca-Cola, Pepsi Co. has used celebrity endorsers such as the Spice Girls, Michael Jackson, and Britney Spears to draw attention to their product and brand it as a trendy choice of soda. However, the volatile careers and personal lives of such celebrities have called both positive and negative attention to the brand. Even though Pepsi Co. has spent large sums in advertising expenditures, it still has a long way to go before it can match the timeless marketing campaigns of Coca-Cola, including Santa Clause and the Polar Bear.
Also, there is an argument that the pairing of a popular celebrity with a favorably perceived product ultimately detracts from the product’s brand image. If the product already has a solid brand image, an endorsement by a celebrity may have a negative impact because it does not allow the product to stand on its own.
Have retailers and advertisers found an effective way to publicize their products? The jury is still out. While celebrities may induce immediate sales and short-term growth, questions remain about the possible long-term impacts of celebrity endorsements. The personal lives and public images of celebrities may not be worth the short-term effects; their association with the brand may endure longer than the temporary boost in sales.
Sources:
Belch, George E., and Michael A. Belch. Advertising and Promotion. 7th Ed. New York: McGraw-Hill Irwin, 2007.
Janoff, Barry. "Sarah Jessica Parker to Star for Steve & Barry's." BrandWeek. 1 Oct. 2007 .
Americans today are obsessed with eating healthier. This trend, along with the hectic lifestyles of consumers, has heralded the arrival of functional food and beverages on the market. The idea here is that consumers are looking for a combination of convenience and health properties.
This is where functional foods come into play. Functional foods can be defined as "foods that are enhanced with added ingredients to provide specific health/disease benefits beyond general nutrition". The popularity of these foods across age segments is both an opportunity and a challenge for traditional food and beverage companies. As of 2007, the functional beverage market alone is valued at $9.8 billion, with the highest use among consumer aged 18 to 34. Energy drinks come to mind, with a different energy drink for every target market.
Candy makers are among the latest to take advantage of this opportunity, with a slew of new chocolates that promote the potential benefits of antioxidants. Keep in mind that antioxidants have not been proven to improve one's health (in fact, very high doses can have a negative effect!). Nevertheless, functional foods are appearing everywhere. The bulk of the growth is actually taking place in the beverage market. One success story is that of Glaceau's Vitamin Water, which grew at a staggering rate of 433% from 2004 to 2006. Vitamin Water is an enhanced water drink with added vitamins and nutrients. Unsurprisingly, Glaceau's parent company, Energy Brands, was acquired by the Coca-Cola Company in June 2007. Many other drinks focus on "healthy" fruit combinations such as acai and blueberry (apparently some fruits sound "healthier" than others). And some drinks incorporate up to 200% of the daily recommended amount for certain vitamins, without scaring anyone off apparently.
Other attempts have been more controversial. Enviga, a sparkling green tea, was launched by Coca-Cola in 2007. The company claimed that Enviga would burn up to 100 calories if the consumer drank three cans a day. In February of 2007, the Center for Science in the Public Interest filed a lawsuit against Coca-Cola, asserting that Enviga's calorie-burning "properties" amount to fraudulent claims (losing calories by drinking ice tea was too good to be true apparently). This type of backlash exemplifies the sensitive nature of functional foods in general. Consumers are looking for actual benefits, and even the suspicion that these claims are just part of a marketing ploy can potentially affect the market in a negative manner.
Just as interesting is the way in which beverage companies such as PepsiCo and Coca-Cola have approached the branding process for functional beverages. In most cases, the solution has been to acquire independent companies and essentially leave the brand unchanged. Odwalla and Vitamin Water products, for example, bear no mention of the Coca-Cola company name. From this we can infer that the strategy is to position these drinks as independent and possibly more authentic. More traditional drinks such as soda tend to be viewed as unhealthy. Nonetheless, Pepsi and Coke have been adding functional benefits to their flagship drinks, with Diet Pepsi Max and Diet Coke Plus appearing on shelves recently.
What does all this mean? For the manufacturer, it means continually innovating with new drinks and new functionalities while making sure that the consumer still has a clear understanding of what the product does. Manufacturers will also need to deal with the problem of economies of scale: how to produce so many different foods and beverages in a cost-efficient manner? For the retailer, it means a growing diversity in the products that appear on the shelf. For the consumer, it means even more choice (and probably more confusion) and a food for every ailment.
In the future, we might see manufacturers merge the benefits of several drinks into one as the number of variations becomes hard to cope with. In any event, the consumer must be able to trust the manufacturer and understand the benefits of the drink.
Welcome to the age of functional foods...
Logically, strategy must precede metrics.
However, in many companies, metrics develop a life of their own and begin to dictate strategy.
Because of reward and incentive systems based on key performance metrics, managers all too often manage metrics such as ROMI rather than managing the business. For example, when profits or returns are limited under adverse economic conditions, companies often cut back on marketing investments in order to produce acceptable performance (ROMI’s). Ironically, for strong companies, this may be the best time to go on an offensive because less robust competitors may be weaker still.
Using the same metrics to both measure past performance and to resource the future can have disastrous results:
- The best way to kill new product innovations that have long-run payoffs is to use short-term, backward-looking metrics such as margins, turnover and return on assets that favor incumbent products thus starving innovations of badly need growth funds.
- Blurred insights can lead to questionable decisions. For example, higher short-run sales response elasticity for price-promotions has led to a systematic decrease in the share of marketing mix budgets allocated to advertising in the long run.
- Because marketing activities are listed as expenses rather than investments, they must typically “pay” for themselves within a year. Ironically, market-based assets such as customers and brands are the only assets that appreciate, and not depreciate.
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