Consumers, co-branding and co-marketing were the mantra of some 200 top-level marketing executives assembled in Amelia Island, Fla., last week for the 87th annual meeting of the Association of National Advertisers.
Nearly all speakers on the conference theme of "brand champions" cited the consumer as the single most important factor in brand building. But marketers, preoccupied with competition, price pressure and promotion, have lost touch with that constituency, they said.
THINKING ABOUT CUSTOMERS
"Perhaps we should think less about our brands and more about our customers," said Paul Higham, senior VP-marketing and communications at Wal-Mart Stores.
No. 1 U.S. advertiser Procter & Gamble Co. had "become [its] own worst enemy" by creating a system whereby "75% of our dollars are trying to win the loyalty of brand switchers," said North America President Wolfgang Berndt.
P&G, he said, is returning to the tried-and-true practices of hard-sell, demographic advertising and heavy sampling along with a focus on product innovation (AA, Oct. 7).
P&G also is carefully eyeing the cost of TV advertising.
"We are trying to let people know if they set their prices too high we will have to look at alternatives," he said. "We are currently not very heavy in print media, where we are conducting studies about efficiencies. And new media is expanding."
To encourage product innovation, the marketer has established a fund "to support [product] concepts outside our current categories" and has made 20 grants to date.
The new mindset is reflected corporately within SmithKline Beecham as well, said Doug Cox, VP-director of marketing services and corporate communications. His company has changed the titles of brand managers to brand equity managers.
Landor Associates Chairman Clay Timon said marketers are realizing that brand equity is the process of defining a brand's essence, but brand building is the action one takes to reinforce that essence.
ABANDONING THE CONSUMER
"Consumers don't abandon brands," said Phil Dusenberry, chairman of BBDO/New York. "Brands abandon the consumer. [Marketers] pour millions of dollars into a brand that can be sold at a premium price, and then give [it] away like distressed merchandise."
"Deliver the price and never lose sight of what the consumer wants," Wendy's International Senior VP-Corporate Marketing Don Calhoon told the ANA.
To deliver the price without compromising the brand, marketers increasingly are turning to co-branding.
STRENGTHS OF CO-BRANDING
"Co-branding stretches the dollars further and makes two plus two equal five," said Ron Cox, the new ANA chairman and group VP of Wm. Wrigley Jr. Co.
Carl Gustin, senior VP-chief marketing officer at Eastman Kodak Co., said Kodak was studying co-branding by testing a fictional entertainment device marketed by themselves and hypothetical partner Sony Corp. of America.
The result of the test: 20% of prospects said they would buy the product under the Kodak name and 20% would buy it under Sony. When both brand names were involved, the intent-to-purchase score soared to 82%.
Mr. Calhoon said Wendy's was in discussions with Exxon Corp. for a co-branding relationship, and will test some sites in Philadelphia as well as other venues beyond service stations, including theme and amusement parks.
And decorating doyenne Martha Stewart said she's planning a huge co-branding venture with Kmart Corp., applying her name to a full line of soft goods at the beginning of next year.
Mr. Higham showed 60-second commercials branding both Wal-Mart and a product sold there--Windex cleaner, Valvoline oil and Champion batteries--that were fully paid for by the package goods brands in a co-marketing agreement, another increasingly popular tool (see related story, Page 25).
The program is 3 or 4 years old, he said, but "this year, for the first time, vendors are coming to us" with co-marketing proposals.
He wouldn't identify any, but it's known that P&G is a major Wal-Mart partner and is moving greater funds into co-marketing funds from its national budget.
John Holzman, director of worldwide brand marketing for Apple Computer, sang the praises of his company's globally integrated co-marketing effort with Paramount Pictures' "Mission: Impossible," which produced the first positive press for the marketer in some time and which he credits with yielding a boost in sales.
APPLE AND THE STONES?
Apple is now looking for a co-marketing linkup with a music group and was rumored to be interested in the next Rolling Stones tour.
Visa International, an experienced practitioner of both co-branding and co-marketing, is looking to do more in the area of entertainment partnering, said Bob Pifke, director of sales promotion.
Mr. Pifke declined to be more specific, though music and movies are an obvious choice.
The simple reason for the increasing interest in co-branding and co-marketing, Mr. Pifke said, "is [that] it works. It's true and it has been proven by all the co-branded credit cards."
SEARS AND THE CIRCUS
Sears, Roebuck & Co. Senior Exec VP-Marketing John Costello said the retailer will exceed $1.2 billion in marketing spending in 1997, and will continue promotional relationships with Ringling Bros. and Barnum & Bailey Circus and singer Gloria Estefan.
Sears, which already has an extensive Hispanic marketing effort, is getting ready to test an African-American effort in 1997 through Burrell Advertising, Chicago, and may expand its targeted marketing to Asian-Americans.
Copyright October 1996 Crain Communications Inc.