Advertising and marketing are getting so expensive that just about the only way for consumer-goods innovators to launch a new product is to pin it to an old one.
As a result, the market--particularly in groceries--is going to be dominated in future years by superbrands, perhaps as few as 100 to 200 brand names with instant and valuable recognition.
At least that's the conclusion of one prominent marketing expert, John Diefenbach, president of Landor Associates. According to Diefenbach, the trend is a subtle one, but clear in the sometimes blustery and trivial, but occasionally farsighted, marketing world of which he is a part.
The problems of marketing new products become more acute when money is tight as in the current and continuing difficult economic period. Few companies are willing to risk campaigns of $20 million, $30 million or even more for untested products without the marketing help that a major brand name provides.
That's why, in Diefenbach's view, recent new product success stories carry clearly identifiable brand or corporate names, like two of 1982's marketing success stories, Jell-O Pudding Pops and Stouffer's Lean Cuisine.
"For $5 million in the '60s, you could built a program," Diefenbach said in an interview. "It may not have always made sense but it was efficient. Everybody was putting products on the market. You didn't need names as much you needed R&D [research and development]. If you could spend $20 million to get in the race, you were in the race to stay.
"The whole marketing process was fundamentally built around the concept of brand management, with highly specific products," generally managed at middle levels of corporations, he said. "The whole thing has now come full circle to the point where brands are managed at high levels by dominant presidents."
What Diefenbach calls the "era of the superbrands" means that businesses will be relying increasingly on umbrella marketing programs. "It is our feeling that reputations built by brand names like General Electric and Pillsbury are the most certain investments a company can make," he said. "Nobody has the kind of money to build another one of those reputations. The thought of launching another major entry in the consumer-product category is remote at best."
Other names with that certain marketing magic are Maxwell House and Del Monte, both of which make considerable efforts to emphasize their identities when marketing their goods.
Diefenbach thinks the Stouffer's example fits his thesis particularly well. "Stouffer's was one of the last brand names to establish itself as a category--frozen foods," Diefenbach said. "You buy Stouffer's for what it is. It has become a standard of quality, as McDonald's is a standard for their product."
Simultanteously, the last few years have seen the development of generic or house brands in virtually every consumer product imaginable. That development has put even more pressure on products to carve their market niches or risk complete erosion of market share.
"Everybody wants what Stouffer's has--that certain recognizable look and name that guarantees shelf space," he said. As Diefenbach sees it, in categories such as paper goods and detergents, in particular, only one or two leaders, particularly those with major names, are likely to survive the next 10 to 20 years.
"You don't want to have the third, fourth or fifth brands in those markets," he observed.
If Diefenbach is right, then his warning certainly should be noted in corporate board rooms. For consumers, it also could mean the prospect of less competition in a world dominated by product and marketing giants. On the other hand, it could mean that Madison Avenue just might stop shoving needless products down the throats of gullible consumers.
But Diefenbach is in an especially good position to watch these marketing trends as chief executive of Landor, which claims to be the largest design and marketing firm in the world.
His San Francisco-based firm is one of the oldest and still one of the hottest corporate-identity, packaging, research and planning outfits. Founded by Walter Landor 40 years ago, the privately owned firm has about 75 major clients and expects to show about $18 million to $20 million in business this year. Revenues are expected to rise by about 25 percent this year.
Business is good in part because times are bad and the business environment is changing. New technology, new product distribution methods and the changing national financial structure have muddied the marketing picture. For those reasons, businesses turn to firms such as Landor to revise strategies, improve corporate identity and reposition products.
As these troubled times spawn an era of superbrands and megabudgets, Diefenbach says the generic-product boom and other trends revealed by market research indicate that consumers are smarter than ever. "People will buy Johnny Walker Black Label with one hand and generics with the other," he said. "That's a smart consumer."