The folly of a brand monopoly

About 10 years ago, I started watching a major local consumer brand. What got me watching was the regularity with which the company launched new brands or altered its brand portfolios. The net result of all the activity was one brand that has stuck with some noticeable success, two which have vanished and about five which appear to be tenuous, subject to probable rationalization.

The point of a brand is to retain the consumer and make money. Launching a brand or altering a portfolio is an exercise in expenses and intense effort. If the exercise is to yield results, particularly market and / or product development, it must be considered and often subject to brute-force in terms of branding, marketing and sales. If that can’t be projected and programmed, why take the risk?

The alternative reason is to dominate and preserve the market with denial tactics. These tactics attempt to deny the competitor resources such as loyalty, revenue, means of production and assets, effectively reducing the competitor’s return on investment. Call it poisoning the well.

During the time of the frenetic launch activities, there were a number of noticeably successful new market entrants in adjacent categories that took significant market share from the local consumer brand. This leads me to the idea of denial tactics. Although I don’t have the numbers the correlation between the new products and the entrants makes it apparent.

What struck me however was that by attempting to reduce the penetration of the entrants, the local company effectively degraded its own revenue, cannibalized its own products and degraded the focuses of its own brands. The net result is that the market is now even more fragmented.

What might have been the alternative strategy? To focus on the extrinsic aspects of the brands, reinforcing identity with personal transformation and tribal facets. Some intrinsic aspects – reformulation – might have had an impact but that wouldn’t have been as strong as development of the extrinsic details.

A healthy market relies on choice. Imagine being expected to eat your favourite meal three times a day for a year. That meal would not be your favourite for long. The market reflects this. A healthy market will consist of a most-popular brand, a couple of slightly smaller brands and a host of small niche brands. The larger brand will be challenged to maintain its top position. Consumers will switch between the large brand and the smaller brands continuously. If there is only one brand at the outset, it will be challenged by imitators who sense and try to emulate its success.

Consumers will not only experiment with switches in the consideration set, the range of brands which have similar properties, for instance a range of wines, but are also likely to experiment with adjacent categories, for instance ciders which are adjacent to wine.

There is no sustainable single choice and attempts to impose the single choice are likely to fail.

Faced with competition, the best tactic is to focus on strengthening the existing brand, probably by manipulating intrinsic and extrinsic facets of identity. Compete with yourself and yesterday. Obviously this implies copious and rigorous research. If a new product is indicated, double down on research with the design thinking approach and a limited trial.

New products are expensive and risky. Don’t be knee-jerk about competitor threats.