Honey I've shrunk the portion size

We’re always looking for topical blog content at Nae Bother, and we feel that the subject of shrinking consumer products is worth discussing, and it’s not only well-known branded products that are getting smaller, with no corresponding reduction in price. From the smaller portions of battered cod offered by our local fish and chips shop, to food manufacturers that offer less product, it seems to be getting more prevalent. It may seem like the ideal way to maintain profit margins with ever-increasing costs, but most consumers are not daft and don’t like being taken for a ride.

An article in the Financial Times from April 2013 highlights the problem: “Big name brands are shrinking products by up to a quarter, but the prices aren’t dropping,” Which? says in this month’s issue of its magazine. “We asked the makers of these products why they had shrunk them, and were generally told that in the face of rising costs they chose to shrink products rather than increase prices.” In addition, the survey by Which? discovered packs of Birds Eye beef burgers that have shrunk from 16 to 12 patties; Pledge Clean & Dust furniture polish cans with 50ml, or 17 per cent, less; and a 10 per cent reduction in the number of Superfluity Blue & Black Nestlé Shredded Wheat in a 525g package (http://www.ft.com/cms/s/0/d660c704-9272-11e2-851f-00144feabdc0.html?siteedition=uk&siteedition=uk#axzz2hPY9oLLg).

Both product and pricing are integral parts of the marketing mix, and by ‘tinkering’ with these key elements has the potential to destroy brands’ hard-earned brand equity. Consumers’ brand loyalty will be sorely tested if they feel that someone is trying to trick them, particularly when there’s usually an alternative product on offer, which is more appealing from a value standpoint. Once consumers get familiar with a product size and its pricing, it’s really treating consumers and potential brand advocates with complete contempt to reduce the offering whilst maintaining the pricing. According to the FT article, just 3 per cent of Britons think it’s fine for companies to sneakily shrink product sizes without commensurate price cuts.

What makes this marketing strategy particularly questionable is the fact that brands, through channels such as social media, are very keen to establish deeper connections with their customers. Surely this spirit of closer engagement and trust from brands is not compatible with trying to deceive people and is a bit hypocritical; furthermore, we think consumers would be far more receptive if brands were more honest and explained why they had to raise prices instead of underhand tactics.

Hello Kitty – the feline marketing phenomenon

At Nae Bother, we have several Japanese clients, so it’s interesting to comment on Japanese brands from time to time. The Sanrio brand, Hello Kitty, which turns 40 next year, has long been associated with all sorts of random products and market segments, from children’s toys to adult underwear and electric toothbrushes. But now we read that everyone’s favourite white Japanese bobtail cat is appearing on Hello Kitty fruit-flavoured beer in Taiwan and China. Is this a brand extension too far?

Originally targeted at pre-adolescent females, you’ve got to wonder how such a brand can also be used to sell alcoholic beverages to adults. The low-alcohol drink is clearly targeted at female consumers who are enamoured by the cute cat with no mouth, and possibly have nostalgia for the brand from their childhood; nevertheless, with such brand recognition amongst minors, it’s pretty risky positioning the brand in such a category and segment, and you’ve got to ask what the brand really stands for. Interestingly, a recent article in Businessweek shed some light on this: “The famous feline has become a global fashion icon and megabrand because her fundamental design says nothing and everything at the same time. Hello Kitty’s minimalist rendering invites viewers to bring their own meaning to the image. That’s why the image works with children’s books as well as with vibrators.” 

http://www.businessweek.com/articles/2013-09-16/hello-kitty-beer-zen-and-the-art-of-crass-marketing?campaign_id=DN091613 This explanation is profound stuff and we can just about understand what they mean, as the brand’s marketing approach is totally unconventional i.e. a brand usually means the same thing to most people; nonetheless, the brand has been around for a long time and its appeal is not waning, as shown by the parent company’s shares which have doubled this year. We wonder which product is next for the Hello Kitty treatment.

The difference between Apple and Whole Foods Market

Apple and Whole Foods Market are two brands that have traditionally targeted the premium end of their respective markets. One would think that they would have a similar approach to preserving their brand equity and serving their target markets; nevertheless, their marketing strategy has started to diverge, which will have major implications for their brands and subsequent growth.

Looking at Apple first, with the recent launch of the iPhone 5C and iPhone 5S, the company’s marketing strategy has been thrown into the spotlight, with investors pushing for the company to take the iPhone downmarket to address Apple’s shrinking market share, particularly in China. Expectations were for the 5C to be priced much cheaper than the flagship 5S model to appeal to those on a tighter budget. Although, the arrival of the 5C marks a slight change in strategy by not focusing purely on the high-end segment of the market, it’s not a snip and is only £80 less than the 5S model. When it comes to branding, Apple understands that it would dilute their hard-earned brand equity for premium priced products if they were to take the brand too downmarket and ‘try to be everything to everyone.’ This has disappointed many investors as other cheaper brands will continue to win over consumers new to smartphones in emerging markets, with a corresponding reduction in Apple’s market share; however, the company is no fool when it comes to positioning and managing its brand, along with maintaining its margins and profitability. This whole approach to branding was one thing that Nokia didn’t quite grasp as it tried to appeal to every segment of the market.

As Apple continues to focus on the top end of the market, albeit with a slight change of tack, the upmarket grocer, Whole Foods Market, has decided to target the very bottom end of its home US market. The company, renowned for its expensive prepared foods and organic produce, is planning to open more stores in lower-income, urban neighbourhoods with non-organic, lower-priced products. Ultimately, this move will mean that the brand will be competing in unfamiliar territory alongside formidable competitors, such as Walmart and Aldi.

In essence, this marketing strategy seems flawed and is in stark contrast to Apple’s continued desire to be perceived as a premium brand. This bold move by Whole Foods into underserved areas has been applauded by many; however, it risks destroying its status as a premium brand. In order to maintain growth, many a brand, such as Nokia, has tried to be in all segments of the market, with the result that consumers don’t understand what the brand stands for. At the end of the day, you can’t be everything to everyone and need to focus on a particular niche which reinforces brand equity.