Branding. Here We Go Again. Part I
Say the word “branding” to any group ofhorticultural executives, and you are likely to get some sighs, rolled eyes andunder-the-breath utterances of “Here we go again.” In addition tobeing oft maligned, it is also the most widely misunderstood concept in theindustry. Various consultants (myself included), tag and label vendors,promotional companies and advertising agencies are all guilty of jumping on thebranding bandwagon. Do success stories exist? Absolutely. Are there a number offailures? You bet. Is this still a viable strategy for the industry? Yes. And,that’s the main reason for this article.
The problem with branding is that we use the word todescribe point-of-purchase (POP) materials, promotions and a host of othermarketing efforts. What is currently done in the industry is not reallybranding but in-store promotion. One of our goals in this article is to explainthe difference between brands and promotions. We will also discuss someobservations and research-supported facts about what will and will not work.Lastly, we will lay the groundwork for a successful branding formula that wasresearched in spring 2003.
Consumer Branding 101
There are many definitions of branding, but the common themeamong versions is that branding is a long-term organizational commitment. Atrue brand must have focus, alignment and linkage.
Focus is the process used to define the product or service’spersonality. What is its unique selling proposition? What is its core essenceor personality? What promise is the product making to the purchaser? Withrespect to the “core essence,” brands are differentiating, compellingand enduring.
Alignment is the process that makes branding anorganizational commitment. Here, the brand’s core essence is translated intostrategies that will determine how the brand will behave in the marketplace.The job of the marketing manager is to make very calculated decisions on the marketing:brand name, brand promise, packaging, price, communication with the consumer,channels of distribution, product mix, selling volumes, financial contributionto the company and selling season. In most instances, all of these issues areplanned before the brand is even launched.
In large corporations, a brand manager oversees theseactivities and employs the services of advertising agencies, graphic designfirms, research companies, merchandising companies, media, etc. Over the longterm, the job of the brand manager is to maximize market share andprofitability by constantly altering the marketing mix variables in response tochanges in consumer tastes, channels of distribution and competition.
Undoubtedly, this is an expensive process, which is why brandingmust be a long-term organizational commitment. It takes significant time andresources to break the clutter, create brand awareness, drive demand and yieldan acceptable return.
Promotions are very different. Mostly what is done in thehorticultural industry is in-store promotion. Typically, promotions are acombination of merchandising, POP materials, in-store events andadvertising/direct mail.
The main differences between brands and promotions is that brandsalways have a real or perceived difference from other products, endurance inthe marketplace and a strategic intent.
Because of their endurance in the marketplace, demand andprice sensitivity for brands can usually be measured (through research). Dependingon the product class, brands may or may not yield a higher margin to theretailer. (In supermarkets, for instance, private label goods can be moreprofitable. Branded items are stocked because they create traffic, and theretailer earns rebates, co-op advertising and other perks.
Can a product launched as a promotion become a brand?Absolutely. A good example in the horticultural industry is Wave petunias. Thisproduct has built a loyal following. Among consumers, the Wave petunia has areal or perceived difference in garden performance, the company is willing todedicate resources to support this product for the long haul (endurance) andthe brand’s personality is fairly compelling. After some time in the market,customer demand and awareness could be measured scientifically via research.
In this industry where marketing resources are scarce, ourrecommendation is to launch any new product using a promotional strategy. Ifthe product is truly different and compelling, retailers and customers (overtime) will build the brand for you.
10 Brutal Facts of Branding
Over the past five years, we have conducted numerousresearch studies on the topic and have collected some anecdotal evidence aboutwhat will and will not work in branding plants. Below, are these 10 brutalfacts of branding.
1. Branding (as we are defining it in this article) makessense if it is intended to be a galvanizing organizational initiative.
2. If branding cannot generate sustained demand, improvedmargins or increased market share, what’s the point?
3. Today, retailers (especially the independents) hold allof the brand equity.
4. It is important to know which kind of brand you want tobuild. This article only discusses consumer branding. Trade branding is anentirely different subject. It is possible for a consumer brand to influencethe trade; it virtually never happens in reverse.
5. As it relates to branding plants, NQuery’s researchsuggests that consumers care about quality, garden performance, unique colorsor varieties, reducing the fear of failure and new uses of the product.
6. Branding is more difficult on plant material where thereis no perceptible difference from existing options, which is why gardenperformance is typically the most powerful point of differentiation.
7. For plant material where there is virtually no productperformance differences between two or more options, branding will only work ifa supplier can garner enough shelf space in a retail setting to create animpact via tagging, labeling, merchandising and pricing.
8. Suppose you have a similar plant from two suppliers, bothpriced the same at retail. One product version is supported by effectivetagging and labeling, and the other carries a standard plant tag. If these twoitems are merchandised together, consumers will cherry pick and look for thebest looking plant. Here, the merchandising is not working in conjunction withthe POP materials to create a meaningful vignette for the branded product.
9. As a retailer, it is often necessary to buy similar plantsfrom multiple suppliers. Suppose two annuals are merchandised together butpriced differently. One version is supported by crafty tags and labels; theother is not. If there are no perceptible differences in the plant itself andthe only difference is tagging, labeling and price, the consumer will alwaysdefault to the less expensive option. Á
10. In some instances, clever labeling, packaginginnovations and new uses of the product (regardless of merchandising) caninduce the customer to trade up. Will this continue to work in the long run?Yes, if the product itself is unique.
The bottom line to these “Brutal Facts” is thatultimately it is the product and its performance that sells. For more commonplant material, ad-hoc promotions can work to increase turns and margins, butit is not the POP materials alone that make it work. To effectively do in-storepromotions, suppliers and retailers must work together and adhere to the”Three P’s” Formula.
The Three P’s Formula
The Three P’s are POP, pricing and placement. Put simply, aPOP program combined with higher pricing and better store placement can resultin higher profits. Yes, higher profits. We’ve done the research and have thedata to support it.
Why invest in POP? First, customers need to be more self-servicing.I’m not saying abdicate the personal touch and install self-checkout lanes, butduring peak demand, POP can help sell the product. Secondly, our research hasshown that tags and labels are the most widely consumed source of gardeninginformation, including magazines, television and the Internet. Last, POP is oneof the most cost effective ways to communicate with consumers at the point ofsale, adding value to the purchase occasion and reducing fears of failure.
Why higher pricing? We are leaving money on the table. (Thebig box stores (more than anyone) need to re-read the preceding sentence.) Hereare some observations to support my position.
According to research conducted by DIY Retailing, homecenter lawn and garden departments are one of the least productive whencompared to hardware, plumbing and electrical. As the growth in box storesslows and the market becomes saturated, the emphasis will be on improvingdepartmental productivity and overall profits.
Our research shows that consumers place a”subconscious” limit on the amount of plant material they purchase inone visit to the garden center. They realize the product is perishable and willonly purchase an amount that can be consumed in the allotted time forgardening. (Remember, the average gardener is only giving us 4-5 hours perweek.) According to research by Harris, the percentage of U.S. adults who saygardening is their favorite pastime is going down.
Growth in the overall gardening market is slowing.
Gardening sales can only be increased by raising the averagetransaction and/or increasing the frequency of purchase. Increasing thefrequency of purchase requires changing consumer behavior, and it costs a lotof money to change consumer behavior. There are numerous ways to raise theaverage transaction, and pricing is one of them.
Achieving greater profits. In spring 2003, HorticulturalPrinters, Inc, Swanson Russell Associates and NQuery Research wanted to testthe debate regarding brand promotions — specifically POP programs — in theretail garden center.
Our goal was two-fold: to measure whether consumersconsidered plants branded with POP material as having a greater perceived valueand to find out whether consumers would pay a higher price for plants that usedbranded promotions.
This test was conducted in six retail garden center storesin Dallas, Texas during April 2003. Impatiens supported by POP materials weredisplayed in close proximity to impatiens receiving no brand support. For test purposes,the impatiens with POP support were given the previously unused brand name”Southern Shades,” priced an average of 30 percent above theunbranded plants and placed on an end cap in the retail setting. (Thisadditional price margin was enough to cover the cost of the POP materials, plusan additional amount to allow for a greater profit for the plant supplier andretailer.)
The findings of this research yielded powerful results thatsupport the notion of The Three P’s Formula. Greater profits are possiblethrough effective POP and improved placement in the retail setting. Next month,we will provide significant detail regarding the results of this research test.