Sunday, July 02, 2000

Familiar brands face unfamiliar challenges

P&G toothpaste decline illustrates marketing pitfalls

By Randy Tucker
The Cincinnati Enquirer

       Crest vs. Colgate.

        Cadillac vs. Lincoln.

        McDonald's vs. Burger King.

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        The battle for supremacy in the consumer-goods marketplace has never been more intense.

        Commercials urging consumers to choose one manufacturer's brand over a competitor's flood television and radio airwaves 24 hours a day, seven days a week.

        At stake are the millions, sometimes billions of dollars in sales that go to the marketer that captures the largest percentage of the consumer population in a particular product category.

        And while most experts agree that advertising is the key to the success of branded products in any consumer segment, they say successful marketing campaigns must involve more than just TV commercials.

        Dennis Christopher, an independent consultant in New York who specializes in branding strategy and new product development, said it's critical for advertisers to deploy every weapon in their marketing arsenals to reach consumers, no matter how well-established the brand might be.

        Failure to do so could mean the difference between ranking No. 1 or No. 2 in a category, as was the case with Procter & Gamble's former market-leading Crest brand toothpaste, Mr. Christopher said.

        Colgate-Palmolive's Colgate replaced Crest as the No. 1 U.S. toothpaste in late 1997 with the introduction of Colgate Total.

        Crest, one of P&G's oldest and most venerable brands, had dominated the category for nearly 30 years, and its fall from the top devastated morale among the Cincinnati-based packaged-goods giant's rank-and-file.

        But Mr. Christopher said that at least part of the blame rests with P&G itself, which, in his opinion, did little to counter Colgate's aggressive promotions.

        “When Colgate came out with Colgate Total, they not only launched a broad TV, radio and print campaign, they used coupons, in-pack giveaways, in-store displays and a number of other promotional vehicles to lure customers,” he said. “They (Colgate) followed that up with a variety of new products for whiter teeth, fresher breath, etc. Crest, meanwhile, continued to run basically the same ad campaign it had been running for the past several years.”

        It didn't take long for P&G to shift its nearly $3 billion marketing machine into high gear, revving up promotions for Crest and introducing a number of new Crest products, including the recently announced Crest Whitestrips.

        The clear plastic strips, guaranteed to remove stains from teeth within 14 days, are expected to snare significant market share in the half-billion-dollar whitening toothpaste segment, P&G said.

        But for all its efforts, Crest still trails Colgate in dollar sales, although Crest did post its first unit sales win over Colgate last month.

        In May, Crest overtook Colgate with a 30.4 percent share of U.S. volume sales, compared with a 28.4 percent share for Colgate, according to market data-tracker Information Resources Inc. of Chicago.

        To maintain Crest's momentum, though, P&G will have to continue to focus on what marketers call “brand image.”

        Brand image is difficult to translate into words, Tom Vierhile, general manager of the consultancy group Marketing Intelligence Service in Naples, N.Y., said.

        But it involves much more than the products' physical attributes, performance or packaging, he said.

        “Brand image could be compared to romance,” Mr. Vierhile said. “Manufacturers romance a product by creating an intangible appeal that makes their product more desirable than what their competitors offer, even though the products may not differ much in their composition.”

        He used Starbucks brand gourmet coffee as an example.

        “Starbucks has created a brand image that goes far beyond coffee ingredients,” Mr. Vierhile said. “They've created a story behind the product, giving consumers an emotional reason to purchase the product.”

        The same principles apply in the toothpaste category, he said, although performance probably plays a more significant role there.

        “Colgate Total offered consumers a remarkable new technology that does make your teeth feel cleaner,” said Mr. Vierhile, whose organization evaluates new products and their performance. “But P&G had plenty of time to introduce its own version of Crest featuring the new technology because Colgate Total was in development for quite some time.”

        In an increasingly competitive marketplace, even a better performing product can only take a manufacturer so far.

        Consumers are faced with an explosion of choices in many different product categories. So many, in fact, that the decision to buy often boils down to price.

        That's were competition from private-label brands — or generic versions of branded products — becomes a factor.

        Some industry estimates put private-label sales at about 15 percent of what Americans spend on groceries each year.

        Also, the growth of private-label brands has been an accompanied by a proliferation of house brands — or products specifically for the retailer that carries them.

        All these factors combined means manufacturers will continue to face eroding brand loyalty and will have to devote even more time and resources to promoting their brands.

        But, analysts warn, there are not quick fixes to a problem that has been growing for years.


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