Direct-to-consumer brands challenge established brands

A growing number of upstart direct-to-consumer brands are challenging established manufacturers. What are they doing? How are they doing? For an overview, take a look at this post by Reckitt Benckiser's head of global marketing and innovation.

Reckitt Benckiser adjusts its product portfolio

Reckitt Benckiser's product portfolio includes brands for the home (Vanish, Calgon, Woolite), for personal health (Scholl, Nurofen, Strepsils) and for hygiene (Dettol, Harpic, Lysol). Until recently, RB also had some food brands in its product pantry.

Now it has sold those food brands to McCormick, a major spice company based in the US. This is a strategic move, not just to raise money for debt reduction following the acquisition of Mead Johnson Nutrition. Strategically, food brands like French's condiments and Frank's RedHot sauce are not core to RB's product portfolio, given the move toward health and hygiene. Also, these food brands contribute less than 5% of RB's revenues.

Interestingly, RB had several bidders trying to buy its food brands, partly because brands like French's are strong in specific areas (US and Canada) but also to keep these brands out of the hands of competitors. French's has a devoted customer following in Canada because it makes its ketchup there, giving the brand a strong local connection.

This post updates coverage of product-mix and product-line decisions in Chapter 6 of Essential Guide to Marketing Planning.

Reckitt Benckiser Reassesses Strategy

Updating Chapter 1 of my new Essential Guide to Marketing Planning, take a look at Table 1.3, which illustrates levels of strategy for Reckitt Benckiser.

Corporate strategy covers decisions about long-term direction, value creation and priorities, as well as purpose and focus.

Business strategy covers decisions about each unit's scope, competitive approaches, markets, and resource allocation.

Marketing strategy covers decisions about products/brands, communications, channels/logistics, pricing, and marketing support.

Now Reckitt Benckiser is reassessing its corporate and business strategies, considering whether to sell off its food unit, which includes French's mustards and sauces. Although this unit contributed £400m to RB's revenues in 2016, the company doesn't consider food to be a 'core business' according to this statement:

'Food is a truly fantastic business with great brands, people and a history of outperformance. It is nevertheless non core to RB. We have therefore decided to initiate a strategic review of Food where we will explore all options for this great business'.

Reckitt Benckiser recently reached agreement for acquiring Mead Johnson Nutrition, an expensive deal that would require funding and focus. Thus, RB's decision to consider leaving the food business, which would allow the company to reallocate resources and focus on the remaining business units plus the new infant nutrition unit. 

On the level of marketing strategy, RB is looking at ways of using Big Data across multiple media (traditional and digital/social/mobile) to reach consumers in a more personal way via communications. 'As a brand, data ownership is your most valuable asset. It drives insights, it drives sales, and helps to know your consumer', says the Global Media Director.

Who's marketing in China?

The Chinese market is large and its economic growth is outpacing that of many major markets worldwide. No wonder so many companies see China as a key market for goods and services. Four examples:

• Reckitt Benckiser recently acquired the baby formula firm Mead Johnson with an eye towards selling more in China, now that the one-child policy has been changed and the birth rate is increasing. RB has marketed other brands in China, recognising the power of global brands that are already established.
  
  
• Mattel, which owns Barbie and other toy brands, is working with Chinese e-commerce giant Alibaba to research the local market and develop appropriate products. 'By combining Mattel's unmatched expertise in childhood learning and development with Alibaba's immense reach and unique consumer insights, our goal is to help parents in China raise children to be their personal best', says Mattel's CEO.
• Shanghai Disney, opened in June 2016, expects to welcome 10 million visitors by the time it celebrates its first anniversary. Just as important, the strong attendance is helping the theme park race towards its break-even point and become profitable soon, banking on the high brand awareness of Disney characters and the entertainment experience of family fun.
• The luxury watch brand Cartier markets in China by leveraging its connection with singer/actor Lu Han and through social media marketing. Celebrity spokespeople are credible and influential here, and world-class status-symbol brands are also coveted.

Update: Marketing at Reckitt Benckiser

Reckitt Benckiser markets some very well-known brand names in health, hygiene and household products, including Finish, Strepsils, Vanish, Scholls, Mucinex and Airwick. This post updates the RB opening case on pages 1-2 of Essential Guide to Marketing Planning 3e.

Here's how RB's main product categories contributed to turnover in 2014:

• Hygiene products generated 41% of RB's revenue
• Health products generated 31% of RB's revenue
• Home products generated 20% of RB's revenue
• Portfolio brands and foods generated 8% of RB's revenue

Each RB brand has its own digital marketing strategy, including a distinct social media personality and presence. Shailesh Shukla, VP of marketing for RB, notes that consumer behaviour is what drives marketing strategy. How do consumers perceive each brand and how do they use digital media with respect to each product category? The answers to those questions are key to RB's media and content decisions.

Corporate RB is also social, with 236,000 FB likes, 13,000 Twitter followers, and a YouTube presence. In addition, RB pursues an active social responsibility and sustainability agenda.

Reckitt Benckiser's Vision: Healthier Lives, Happier Homes

The mission of multinational household/health products giant Reckitt Benckiser is to make a difference by giving people innovative solutions for healthier lives and happier homes. The company, known for brands such as Mucinex, Strepsils, Dettol, Durex and French's, operates according to four values: achievement, entrepreneurship, partnership and ownership.

Now, updating the preview example from chapter 1 of my Essential Guide to Marketing Planning, here's more about Reckitt Benckiser's marketing plan for future growth.

The company is launching innovative products under established brands such as Nurofen to build profitable turnover in emerging markets like Latin America. CEO Rakesh Kapoor says: 'Scarcity is the mother of invention'. His point is that an abundance of resources is not needed to stimulate innovation--in fact, people become more creative when they don't have everything they need to develop a new product.

What about communications and creativity? Reckitt Benckiser's brands are now reaching online audiences through captcha advertising activities.

As at left, when an Internet user has to show that he or she is a person, not a bot, the captcha at right achieves that goal with a touch of brand-related whimsy. Users drag the rusty penny into the Cillit Bang cleaner--linking the brand with its benefit.

Finally, Reckitt Banckiser is currently considering a major strategic change: Whether to sell its pharmaceuticals business, which is under pressure from lower-priced products.

De-escalating price promotions

Reckitt Benckiser--the corporate name behind so many familiar household brands--wants to get off the price promotion treadmill. 'When consumers’ only criteria is to do BOGOF [buy one, get one free] or half price, then you can do the most engaging campaign but they don’t care. They will buy the competitor if they are half price', says RB's Jérome Lemaire in a Marketing Week interview. So RB is in talks with its retail partners about other kinds of promotions.

Of course, after years of store promotions by retail chains trying to retain market share and increase shopper visits during the recession, de-escalating price promotions will not be easy for any brand. Supermarkets have been locked in a battle for price, position and image, as well, which affects how brands on their shelves are perceived by shoppers.

RB invests heavily in adverts to remind shoppers of its brands and benefits. It's on Facebook (88,000 likes), Twitter (9,500 followers), YouTube, Weibo (China) and other social networks. Even when RB markets digitally, it must rely on retail partners to actually sell the products, at least until its e-commerce strategy is tested and implemented. Meanwhile, the company has considerable sales momentum worldwide this year, thanks in part to its brand-by-brand and overall corporate marketing plans.

This post updates the opening example in Chapter 1 of Essential Guide to Marketing Planning.

Reckitt Benckiser adds to its health and hygiene brands

Reckitt Benckiser (RB) is the company behind such best-selling brands as Clearasil spot cream, Air Wick air fragrances, Strepsils throat lozenges and Cillit Bang cleaner.

The company's vision 'is a world where people are healthier and live better'. Its purpose 'is to make a difference by giving people innovative solutions for healthier lives and happier homes'.

 With the acquisition of Schiff Nutrition International, RB has now expanded its health and hygiene portfolio of products. Before the acquisition, health-related products accounted for 21% of RB's revenue, hygiene products accounted for 38%, home products accounted for 21% and the remaining 20% of revenue was provided by pharmaceuticals, foods and portfolio brands.

Looking at digital communications, RB recently concluded a deal with WebMD, a health information website, that will reportedly allow RB to more precisely time and target ads for Mucinex and other products to consumers. The idea is that as consumers use WebMD to search for symptoms of flu, colds and similar ailments, RB will be able to understand when and where flu outbreaks occur and immediate implement online ads highlighting appropriate products. WebMD says no personal data or identification will be involved in this arrangement.

What's next for RB as the company seeks to help consumers live healthier and happier lives?