online marketing psychology

March 9, 2010

How brand focus can make you profits.

The cost to launch new brands, especially on a global level is huge. So what if you are a CPG producer and launching new products is an important aspect of your business?

You start focusing on improving existing brands.

One fact that really surprised me was that Reckitt Benckiser (CPG manufacturer with a market value of £21billion) only launched one new brand in the last ten years.

One brand!

So instead of looking for new brands. They focus on two things:
  • Existing brands (in 2000, their top 17 brands were responsible for 40% of the revenues. Today they account for 71%)
  • Markets were they can have the top position or where there is a lot of growth potential
While they only launched one brand in these last ten years. A lot of new products got introduced as extensions. Probably some of these have failed. Luckily the investments in an extension are a lot lower then the cost of launching a completely new brand.

On the other hand, this strategy might have cost them another successful product. That, if they had launched it as a separate brand, might have been a hit!

Rolling out new brands globally is a very expensive exercise. It’s much more likely that you will see the bulk of new innovations in our existing brands.
CEO Bart Brecht
However it is more a safe strategy trusting the reputation you have build up on certain brands.

This focus on existing brands is remarkable in the CPG industry. And it has paid off. Their stock grew an impressive 400%, well above sector average.

Let's hope this brand focus inspires some other companies.

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