Brexit: What Brands Need To Do

Are your Brands strong enough to survive and thrive in the post Brexit world?

So, last week it kicked off. Well, for 24 hours at least.

It is still not exactly clear who did what, in what order. But for around 24 hours Unilever products were unavailable on Tesco.com. It was the lead story on Wednesday’s TV News and in Thursday’s newspapers. Why such a big deal?

It was probably best summed up in the Times Red Box daily news bulletin which, last Thursday, said ‘forget talk of single markets, customs unions and sterling devaluation. This Brexit s*** just got real. Never mind the promise of £350m a week, I definitely don’t remember being told Ben & Jerry’s ice cream would be off the menu after Brexit’.

This told you 2 things.

Firstly, the power of specific examples. It is why Marmite became the poster child for the dispute. Unilever and Tesco having a stand off. Who cares? What, you mean, I won’t be able to buy Marmite…? It’s a disgrace.

Secondly, it was a reminder of the role that brands play. Can’t get Tesco own label mayonnaise, detergent or ice cream? No, worries, I’ll buy something else. What, I can’t get Hellmann’s, Persil and Ben & Jerry’s…? I’ll go to another store.

That is why there was always going to be a quick resolution to the stand off. But it is also why Discounters are listing an increasing number of brands. And why M&S introduced a range of brands a few years ago.

Unless you are a young, bearded Hoxton hipster, living on a diet of raw organic vegetables and green tea, you are going to buy and use brands.

Brands play an important role. But with that role comes responsibility. The responsibility to do the things that brands need to do. For themselves and for retailers.

So, what are some of these responsibilities?

Be Good or Be Cheap. It is clear that price rises are coming. And in a world that has seen a lot of price deflation in recent years, that is no bad thing.   The key to success will be to put through price increases without volume sales taking a hit. To do this the brand (proposition, equity) and product (quality, performance) need to be strong. Better matters in driving shopper choice. Better matters in supporting your price position.

Price increases (within reason) on strong brands are likely to be acceptable to most shoppers and retailers. Whereas price increases on weak brands… It sounds obvious, but branded manufacturer’s businesses are underpinned by strong brands. If you don’t have them, prepare for some pretty tough conversations.

Be Transparent. There is a lot of sleight of hand when it comes to pricing and value in our industry. We call it ‘value engineering’. Shoppers call it a smaller product at the same price. A Snickers Duo is about the same size as the old Snickers bar used to be, isn’t it? Friends are always asking me (apparently I know about this stuff) what happened to 2 litre bottles of Coke? Err… I think they became 1.75 litres didn’t they?

Most importantly, we need to be honest with ourselves about pricing. How many new products are launched with an RRP that nobody inside the organisation believes in? It is more of a price anchor from which to promote. If a product is not good enough for shoppers to buy at base price, then the base price is too high.   Don’t set the price at £2.00 if you really intend to sell it at £1.50.

We wonder if there is brand prepared to say to shoppers ‘We’ve had to increase our price slightly. We are doing this so you can continue to enjoy the brand in the same way that you always have. We hope that you continue to do so’. Risky? Perhaps. Different? Definitely.

Be Innovative. ‘Innovation’ is an over used word. It has become a catch all term for NPD. Innovation isn’t a new flavour. It’s not a new pack size. It’s not a new pack design. It is something more than that. New product or pack formats. New benefits. New solutions. Brands have always played this role. And they need to keep doing it. To drive interest and excitement, to help drive up average price in a category.

Don’t spend your time playing around the edges, bringing in a new variant to protect shelf space. Reinvest that time and energy into delivering genuine innovation. And if you can’t do that, invest in the core – make it is as strong as it can possibly be.

Last week demonstrated the key role that brands can play – for manufacturers, for retailers and for shoppers.

But, they can only play that role if they are strong. Strong brands can support their price position in the market and ensure higher prices are justifiable not arbitrary.

“This Brexit s*** just got real”. Can your brands handle it?

Feel free to forward.  Have a great weekend and speak to you next week.

© 2020 by Insight Traction