The Editor’s Choice
After yet another weekend of spotty internet performance, my eyes were drawn to an article with a wonderfully direct headline: “How can I make my home Wi-Fi faster?” The site being Recode.net, I braced for techno-speak about mesh routers, GHz bands and CAT 6 cabling. What I got instead was internet security advice that P&G’s Neil McElroy would’ve understood way back in 1931: “Buy products from reputable brands. Don’t buy the $30 camera that you found a random Amazon listing for. Buy from a brand you trust. That costs more money, but it’s absolutely worth it.”
We now live in a world where hearing a Marketing 101 concept – brands matter – seems out of the ordinary. That may help explain why, as Businessweek has reported, the top 10 packaged foods companies saw $16 billion in revenue evaporate over the past three years.
The leadership at 3G Capital seems to have gotten the memo. In May, the private equity firm pressed the pause button on its intensive cost-cutting schedule long enough to let its Kraft Heinz execs rethink, reformulate and reinvigorate the brand promise behind Oscar Mayer hot dogs. Basically addition by subtraction: No added nitrates or nitrites. No artificial preservatives. No by-products. Not the Wienermobile’s most hummable jingle, I suppose, but then Millennial mom will take transparency over tonality every time.
Unfortunately, that seems to have been the highlight of the past few months, a period that I heard one CPG executive refer to as marketing’s very own “summer of hell.”
He was not being hyperbolic. Brand marketers witnessed German hard-discounter Lidl’s invasion on top of German hard-discounter Aldi’s expansion plans (both chains stock American national brands sparingly and merchandise them accordingly); Amazon’s acquisition of Whole Foods and its escalating price war with Walmart; and the launch of ever-more-brazen challenger sites like Brandless.com, which aspires* to nothing less than eliminating the “hidden costs you pay for a national brand.”
The media and bloggerverse more often than not describe these developments as if they were bolts out of the blue, using words like “alarming,” “startling” and, most commonly, “game changing.” But with the exception of Amazon’s moves (it does tend to strike like a dragon on “Game of Thrones”) none of this should come as a surprise. Twelve years ago, the late Jim Lucas, a shopper marketing visionary (DraftFCB, Schawk, Frankel, etc.) posted a warning on our site, P2PI.org, about the rise of “choice editing” – the paring down of shelf assortments based on shared interests or tastes.
Whole Foods, Lucas said, choice edits based on nutrition; Trader Joe’s curates around its “affordable gourmet” shopper profile; and “Aldi and Lidl focus on choice editing on the basis of price/value. They incorporate the dual strategy of a limited number of low-priced national brands in conjunction with a good deal of store-brand products. By focusing on a limited number of branded products, these hard discounters can move a great deal of merchandise and secure volume discounts from manufacturers.”
You should walk any U.S. Lidl or Aldi store and apply the “Four C’s” of display effectiveness to see how the “limited number of branded products” are being deployed. The lone national brand is there to “Command” shoppers’ attention and “Connect” with them; however, the plethora of lower-priced store brands crowded all around it “Conveys” a different message and thus, “Closes” the sale.
Whether national brands will continue to matter or not will depend on whether other CPG companies choose to follow Kraft Heinz’s lead. The good news is that I detect a greater sense of urgency from industry suppliers in addressing the complexity of this issue. For example, from Menasha's 2017 “Editors’ Choice” blurb: The company’s focus this year is on “collaborative discussions” aimed at getting in-store considerations a better “seat at the planning table.”
Likewise, Jon Kramer, WestRock’s VP-Marketing, sent out a note the other day sounding a similar theme. CPGs, he warned, need to “go much farther back through the supply chain to areas such as product development, portfolio planning, packaging strategy and fulfillment and move the conversation away from price and back toward brand-building engagement. Transforming the supply chain is a complex undertaking. It requires far greater internal alignment than has traditionally been exercised at most CPGs, with all organizational functions working in tandem toward common goals. It demands more strategic collaboration with key retailers (who themselves might have to be re-evaluated). And it will require assistance from third-party suppliers that have both the capabilities and the desire to be full business partners rather than just commodity service providers.”
If you’ve never bothered to walk a “trade show” before, I’d suggest now is the time – and P2PX is the venue – to start realigning priorities. And lest you think this show is nothing but corrugate floorstands, here’s a small sampling of concepts you’ll find on the P2PX show floor: Artificial Intelligence (AI) Retargeting Modules; Lapsed Shopper Programs; “Intelligent Offers” digital solutions; software platforms for optimizing social media campaigns; Retail Attachment Scorecards; and “Instore Vision” apps.
One last thing about the exhibitors at our shows: You’re working with brands you can trust.
* According to Brandless.com, “BrandTax is the hidden costs you pay for a national brand. We’ve been trained to believe these costs increase quality, but they rarely do. We estimate the average person pays at least 40% more for products of comparable quality as ours. And sometimes up to 370% more for beauty products like face cream. We’re here to eliminate BrandTax once and for all.”