July 7, 2020
Do Brands Always Matter? They do for Licensing.
Do Brands Always Matter? They do for Licensing.

The Direct-to-Consumer business ‘Brandless’(https://brandless.com) collapsed earlier this year but has recently been bought and is apparently ready to rise from the ashes. The business was built on the premise of selling non-branded consumer goods at a fraction of the price you might expect from big-name brands. Eliminating what they call the ‘brand tax’.

I don’t believe that selling non-branded product was the entire reason for the initial failure of the business, and let’s hope not otherwise the second go-around may short-lived, but might it have been a contributor? Brandless is of course, a brand, but the name does not appear on any of the products, so it got me thinking – “do brands matter?”

If we think about a supermarket environment, we find products from well-known brands: Ben & Jerry’s ice cream, Lurpak butter, Kellogg’s cornflakes, but we also find plenty of supermarket ‘own brand’ alternatives. On-shelf and in blind-tasting tests, supermarket’s own brands are often mistaken for the closest well-known brand version and they are almost always significantly cheaper and yet still some of us would not dream of buying a supermarket-branded Cola or cornflakes that were not made by Kellogg’s.

Head versus heart

A well-known brand’s product and a supermarket’s own equivalent product could have almost identical ingredients and it’s not beyond the realms of possibility that the products could even be made in the same factory, but yet often there is a pull towards the familiar, trusted brands with which we have gained an emotional connection. Our head tells us that the alternative will taste almost the same, clean the kitchen as well, and will save us money, but our heart says something different.

It’s also the case however, that there are plenty of consumers who have become wise to the big brands charging higher prices and the rise of supermarkets like Aldi and Lidl are showing that consumers are now more brand and marketing-savvy and are often more concerned with price than with the brand name.

Do brands matter in a pandemic?

A recent article in the Sunday Times indicates that the pandemic has caused a shift in consumer behaviour back to the tried and tested brands. The CEO of Unilever said, “Crises always bring people back to the big brands. Brands are marks of trust, so whenever people are feeling anxious, or there’s a need for security, we always see big brands doing well.”

Miguel Patricio, Chief Executive of Kraft Heinz, was also quoted as supporting that view, “In times of uncertainty, consumers turn to brands that they trust. They want to experiment less. That’s what we’re seeing right now.”

This is probably true, but we also have seen that when products became scarce and we need toilet paper for example, we are going to buy whatever is available and not be too concerned about whether it’s Andrex or Asda.

So, do brands always matter?

The answer is not a simple one, and is probably best summed up as, ‘it depends’. Our decisions are influenced by many factors: our budget, product availability, our brand loyalty, perceived quality and reliability and so on.

What we do know for sure is that brands matter for licensing.

Extending a brand into a new category is only possible when there is consumer demand for the brand. And the better known and loved the brand is, the more likely it is that the license will be successful.

Consumer interest = manufacturer and retailer interest = licensing opportunities.

Consumers have come to know and love the Bailey’s brand and consequently, Bailey’s have been able to leverage this consumer appreciation and enter new product categories.

You can now find a range of licensed products including ice cream, ready-to-drink cold brew, confectionery and celebration cakes.

The principles don’t only apply to Food & Beverage brands. When consumers think that brand matters, many different extensions are possible.

Febreze is known as an air freshener/odour eliminator but consumer knowledge of and confidence in the brand means that it has been able to extend into carpet care, laundry additives, home décor candles, footwear insoles and even cat litter.

If you have a brand that matters to consumers then it is very likely that you’ll also be able to license your brand into new categories.

If you need any advice with any aspect of Brand Licensing, please contact Esther Jolley at esther.jolley@iamstobbs.com.

Food & Drink /  Advertising /  Brand Valuation /  Brand Intelligence /  Brand Extension (licensing)

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