As a brand manager, what steps would you take if you need to expand a currently established brand to a new adjacent category?
To expand the currently established brand to a new adjacent category, the one-word answer can be Innovation which is followed by bringing Innovation to life. As per one of the research by Professor Richard at Yale University, The average life span of a company is reduced from 67 years in 1920 to 15 years now.
So, Innovate or Perish is the choice with the marketing manager at hand.
Let us say the brand is well established in the market and is entering a new category altogether.
Step 1: Growth Framework
We can simply see the growth equation below to devise our future strategy and target the right area
Market * Penetration % * Frequency of consumption *Average weight of consumption * Price = Size of the brand / category
Since the brand is entering the category, Penetration should be our prime focus entering the segment which means getting customers to use our brands from the available alternatives in the market and creating brand awareness.
a. Identifying the unmet needs in the category or poorly tapped needs and explore the possibility if the brand could solve better
b. If the price is the major concern for the customers in this segment, we can come up with similar offerings at a competitive price or affordable price
c. The product provides solutions in a better way that may trigger the sales/ purchase
The frequency of consumption & Average wt. of consumption would be later part of the strategy once the brand is positioned in the market and is well known among the consumers. The first can be increased by informing the consumers about the newer occasions when the product can be consumed & Later can be increased by offering bundled packs of the product etc.
Step 2: Knowing the insight & Product Ideas
Identifying the customer pain point through primary & secondary research is always the starting point of a big idea that will lead to innovative & differentiated offerings in the form of products and/or services.
The primary research involves consumer immersions in the form of In-depth interviews, whereas secondary research may involve diving deeper into the research articles/content available from various online databases/ reports.
The interviews may start with broad questions focusing on their life, routines, and other habits and then gradually moving towards the category and the brands used today. The questions could involve knowing the problems faced by the current brand etc.
Some of the tools that may come handy to know the consumer sentiments may be keyword planner, Google trends, social listening and to tap the spaces in the category.
List down several insights, data points obtained from the above steps. This is followed by narrowing down those insights by identifying large spaces that align with the brand's overall strategy and image.
Two alternatives may be considered while narrowing down to obtain meaningful and workable insight
a. Keeping the brand in mind and narrowing down on space
b. Pick up space first without considering the brand
There are pros & cons for each of the alternatives. The first one is generally followed in case of stringent deadlines and is less hectic or chaotic, the later one takes more of time and effort but may boil down to a gold insight.
Each insight obtained may lead to different products/ideas. This is again getting into divergent mode by brainstorming each of the insights, product ideas, and the associated benefits
Step 3: One Big Idea
This step is more of eliminating the product ideas mapped with various insights in the above steps.
This can be facilitated through a framework which is mapping the insight on a X-Y matrix,
where X is the market attractiveness of your product idea ( How many consumers will be willing to buy your product in the future ) and how much profitable is the idea.
The Y-axis denotes probability to win which can be judged by
a. Internal Factors: Brand purpose alignment, R & D capability, technical expertise, capital investment, distribution capabilities, etc.
b. External Factors: Government policies, Legal structure, Competitive environment, etc.
The product idea which wins both on Market attractiveness and the probability to win is the BIG IDEA for the brand to enter in the new category.
Step 4: Product Attributes:
The job of brand manager here is to list the product attributes based on the research and consumer understanding / also to brief the R & D team about the problem that you are trying to solve with your upcoming launch in new category.
The R & D team may come up with the best possible product attributes based on your inputs and its expertise.
Step 5: Working on the Financials & Pricing
This involves working on investments and returns to get the buy-in from various stakeholders for a time frame of 3-5 years on average.
Pricing may not be just a number, It is more than that as it is aligned with your core strategy. It can signal a mass offering or a premium one depending upon the price point set for the product.
The pricing may lead to adjustments in packaging, Supply chain, manufacturing, distribution & it is not possible to meet the price points at all times without any compromise.
The financials will include variable cost, Fixed cost, Marginal contribution, Estimated Revenues, EBIT, Net operating profit
Step 6: Communicating the Idea /Product
The challenge here is to bring the change. The change could be a desired mindset from the existing one or a desired behaviour from existing behaviour inline with the communication objective.
The next step is to identify the communication idea / Insight which is a confluence of brand truth, cultural truth, and category truth. This benefits that one want to communicate around the central Idea is facilitated by benefit ladder comprising of
a. Emotional Benefit
b. Functional Benefit
c. Product Attributes
Step 7: Packaging Design
Although much has been done till know to ensure the product being successful in the market, But the packaging is of prime importance and one might lose a plot here and all the efforts might go for a toss.
Packaging should serve basically three purpose
a. Get the product noticed and bought by the customer/shopper in the cluttered space
b. It should be attractive enough for the retailer to add it to the shelf
c. It should delight the customer when the product is consumed
In addition to the above, the following points in regard to packaging design should be considered
a. Elements; Colour / Image / Text / Shapes / Words etc
b. Branding: Importance to parent brand / New sub-brand creation
c. Personality: Brand communication / Intended message being communicated or not to the target consumer etc.
Step 8: Creating Buzz through media & partnerships ( Influencers / Sponsorships etc.)
This involves making sure that your message reaches the audience and buzz is created before the actual launch of the product.
This involves distributing the marketing budget across various channels by knowing your customer journey and using the attribution models to spend your budget wisely.
The consumer should be exposed to the messages ( communication) for a sufficient number of times across different channels so that the message retains in the mind given the clutter in each space.
Collaborating with the various social media influencers, celebrity endorsers, events to give the credibility to the product
The media plan should have a perfect mix of geographies, media vehicles, Budget, Organic strategy.
Step 9: Distribution
The last step in distribution, you have done all the marketing efforts to create awareness among the consumers and bring the consumers to platforms where the products can be bought for consumption. If the product is not available all those efforts goes in vain. This is the importance of distribution n the whole process.
The basic principles to be followed here are
a. Availability at the places where the shopper is likely to buy the product
b. Visibility on shelves where the consumer might see the product
c. Accessibility for experiencing the products
Again, as discussed during narrowing down the insights the same framework of attractiveness Vs Probability to win may be followed in regards to channels of distribution.
Key things to keep in mind for distribution as may of the innovation fails when a faulty distribution model is adopted
a. Geographies
b. Type of stores for launch
c. Retailer Margins
d. The extra mile that you take for Online channels
e. Sales promotions
f. Visibility guidelines and adherence
g. Sell in quantities for each store
Each of the above has cost implications, so it should be done very wisely keeping ROI, customer satisfaction, the Brand image in mind.