Brands Taking Risks: Why Living on the Edge Pays Off

The global FMCG sector has fought relentlessly for growth in the face of ongoing economic uncertainty and continues to struggle. Kantar Worldpanel’s annual Brand Footprint report found that FMCG growth slowed from four to three per cent last year.

However, despite the challenges, there is still opportunity for innovative FMCG brands to grow. According to the report, 55 per cent achieved growth—with many examples of those prepared to take risks realising positive returns.

The relationship between uncertainty and risk is somewhat of a contradiction. Uncertainty breeds risk aversion and given that most FMCG manufacturers are trying to attract as many buyers as possible they are inherently risk averse.  Yet risk is exactly what brands sometimes need to embrace in order to stand out and engage consumers in uncertain times.

“The biggest risk is not taking any risk. In a world that’s changing quickly, the only strategy that is guaranteed to fail is not taking risks.”

There have been many quotes on taking risks and perhaps the most fitting for the FMCG market is the advice from Mark Zuckerberg: The biggest risk is not taking any risk. In a world that’s changing quickly, the only strategy that is guaranteed to fail is not taking risks.

Taking risks can help a brand in a myriad of ways. At the simplest level, brands taking risks often attract the attention of more buyers–even better, if for the right reason.  They can help create new connections and target new demographics and, of course, brands taking risks often achieve first-to-market advantage. Although sometimes counterintuitive, it’s the brands that take a stand in this stagnant climate that may see the best results.

Challenging the status quo

Dove’s ground-breaking Real Beauty campaign is perhaps one of the most celebrated examples of an FMCG brand swimming against the tide and reaping the rewards. Prior to this, health and beauty brands had focused largely on selling women a more idealised version of themselves.

Instead, Dove created a campaign that tapped into something more relatable and empowering that disrupted the norm and made women sit up and take notice. The crusading campaign for real beauty has evolved through the years. One of the iterations was the Beauty patch advertisement which cleverly reinforced the message of raising women’s self-esteem: it showed women’s growing confidence in how they looked and felt, only to reveal that the ‘pharmaceutical’ had no active ingredients. The lesson? Beauty comes from within.

The campaign won a plethora of advertising awards and, mostly importantly, contributed to a bump in the sale of Dove products.  Dove is one of the very few brands in the Brand Footprint ranking that has consistently grown year on year and has attracted more new households to the brand than any other in the table.  The Real Beauty campaign is one of the many risks that Dove has taken over the years, as well as successfully stretching the brand across many categories from haircare, skincare, washing and deodorants to, most recently, baby products. Men have not been ignored either – Dove Men+Care has showcased some heart-warming realities of modern fatherhood that challenge traditional perceptions.

Many brands have followed suit in recent years—notably, Proctor and Gamble’s Always adopted a similar tactic with it’s Like A Girl campaign, which challenged female stereotypes. Originally aired during the Super Bowl commercial break in 2015, it was also the first feminine care product to take this high-profile premium advertising spot—a huge risk in terms of the investment required for this highly prized slot.

Adopting purpose

When it comes to brands adopting purpose, the risk is often in the execution rather than the claim. Colgate is an outstanding example of a brand that has been both brave and successful in delivering its Keep India Smiling campaign, which aims to improve oral health in India, despite the challenges of going deep into rural villages to educate consumers. Notably, Colgate is the only brand in the Brand Footprint ranking that is chosen by more than half of the world’s households.

Two other brands that have taken a similar health-focussed approach are soap brand, Lifebuoy, and cleaning brand, Dettol – both which undertook global campaigns to spread awareness about the importance of hand washing.

Getting ahead of the curve

When Nestlé launched its first Nespresso coffee pod machine, it revolutionised the coffee market. Tapping into the growing popularity of the ‘café culture’, the new technology allowed people to create fresh coffee with a ‘full and luxurious crema’ in seconds, at home.  This could have been very risky as it was requiring people to buy a relatively expensive machine which needed premium pods, but the risk paid of spectacularly. The Nespresso machine itself has become a design feature in many kitchens with designer collaborations and new formats created to keep it fresh and desirable. Being first to market boosted Nestle’s bottom line, and it’s estimated that the sale of Nespresso pods now accounts for eight per cent of its operating profits

Conversely, in the UK, Nescafé ­– famous for its in-home Dulce Gusto coffee machines and pods – has created a new make-at-home-carry-out category with its Azera Coffee to Go brand, aiming to provide the out-of-home experience from the convenience of the consumer’s home or place of work.

The brand’s price premium is justified by convenience factors, coupled with a cleverly altered price frame—Coffee to Go costs 67p per cup, while the average out-of-home coffee sells for nearly three times as much. By addressing a completely new occasion, Nescafé has seen significant growth. In the year of launch in the UK, it achieved a 42 per cent increase in incremental category sales.

Mitigating risk through acquisition

In practice, very few FMCG brands are prepared to take such risks in fear of conceding their mass market appeal. Instead, they often choose to acquire disruptor brands that have already gone through risk-taking and have achieved success – it’s how parent companies penetrate new and niche markets without compromising their existing brand portfolio.

Mergers and acquisitions by the top 50 global consumer goods companies continue to gather pace accounting for nearly a quarter of a trillion dollars.

Mergers and acquisitions by the top 50 global consumer goods companies continue to gather pace accounting for nearly a quarter of a trillion dollars.

Notably, in 2016 Unilever bought Dollar Shave Club – a direct to consumer brand that grew thanks to its risky marketing. This included a video that went viral titled “Our Blades are F***ing Good” mocking existing shaving brands and their relationships with celebrities like Rodger Federer. The risk was not just in the content, but in the brand’s decision to break the traditional channel route.

The brand, which already had a loyal following of three million people, has grown and remains a disruptor in the market – cross-selling other products through nonconformist marketing campaigns, including one of a man surfing a wave of its Shave Butter.

This was part of a series of acquisitions by Unilever to move with the market and stay relevant. In 2016, in line with growing concerns about sustainability and the health of the planet, it also bought environmentally friendly cleaning brand Seventh Generation, and in 2017 acquired Pukka Tea, an organic tea brand.

Conclusion

A brand’s growth follows a predictable pattern. Ultimately, it is about finding new shoppers to increase the number of people who choose to buy its products. At Kantar Worldpanel we observe this to be true in every category, country, demographic and retailer.

The job of the marketer, therefore, is to increase the brand’s propensity and influence every single choice a buyer makes when they stand at the shelf or click into a basket. To do so, a brand must expand—across new categories, consumer needs, moments, targets and presence. The element of risk may be daunting for many but, when it’s done right, risk pays off.

Alison Martin

Marketing and Communications Director at Kantar Worldpanel

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