It takes time to turn a ship and it takes time to build a brand. If
you want to turn a ship to the left, you turn the wheel to the left
... and then you wait and you wait and you wait. Finally the ship
turns to the left.
Marketing is like steering a ship. If you don't wait long enough
for a marketing effect to run its course, you can draw exactly the
wrong conclusion.
Take the 1981 introduction of Bud Light by Anheuser-Busch,
virtually the last major brewer to introduce a light version of its
regular beer.
I asked management, "Won't that hurt sales of Budweiser regular?
Instead, why don't you introduce a totally new brand?"
"Oh, no," came the reply. "We're not positioning Bud Light
against Budweiser. We're going to take business from Miller Lite,
Coors Light, Schlitz Light and all those other light beers out
there.""
Sure enough, the 1981 introduction of Bud Light did not hurt the
regular Budweiser brand. Year after year, sales of regular
Budweiser went up.
1982 ... Budweiser was up 4.1%
1983 ... Budweiser was up 6%
1984 ... Budweiser was up 3.9%
1985 ... Budweiser regular was up 4.2%
1986 ... Budweiser regular was up 3%
1987 ... Budweiser regular was up 3.1%
1988 ... Budweiser regular was up 2%
Seven years of sales increases seemed to prove me wrong. "And
you thought that Bud Light would hurt our regular Budweiser brand?
Are you crazy?"
Then came 1989, which saw regular Budweiser down one-fifth of
1%, the start of the deluge.
As of today, Budweiser volume has fallen every year for 20 years
in a row, to 23.5 million barrels in 2008 from 50.6 million barrels
in 1988.
Does anyone have any doubt that regular Budweiser will someday
become a marginal brand in the U.S. market? We call line extension
the "hockey-stick effect." Short term, you get the blade and score
a few goals. Long term, you get the shaft.
Oddly enough, what gave Anheuser-Busch confidence in its
line-extension strategy was the track record of Miller Lite.
Introduced nationally in 1975, Miller Lite also did not hurt sales
in the short term of Miller High Life, the company's regular
beer.
Year after year, Miller High Life climbed up the beer ladder,
from 5 million barrels in 1971 to 20.8 million barrels in 1978, the
most explosive growth ever recorded by a beer brand. That was the
year Advertising Age named John Murphy, Miller president and CEO,
"Adman of the Year."
What drove the brand to such heights?
"Miller Time," in my opinion the most effective advertising
strategy ever developed for a beer brand.
The target market: cowboys in hard hats. The psychological hot
button: a reward at the end of the day for blue-collar men doing
rugged jobs in outdoor occupations. (What Miller Time did for men,
McDonald's was doing for women with "You deserve a break today," a
campaign which coincidentally was also launched in 1971, the same
year as Miller Time.)
By 1979, the combination of Miller High Life and Miller Lite
(34.8 million barrels) outsold Budweiser (30.0 million barrels) by
a significant margin. No wonder Anheuser-Busch pushed the panic
button.
Too bad. If they had had a little more patience they would have
realized that line extensions are inherently unstable. A successful
line extension almost always damages the core brand ... over the
long haul.
It's like a teeter-totter. When one side goes up, the other side
goes down.
For Miller Brewing, 1979 was a year of high hopes. That was the
year Miller broke ground on a new $411 million brewery in Trenton,
Ohio.
That was also the year Miller High Life started its long
decline, from 23.6 million barrels in 1979 to 5 million barrels in
1992, where it remains today.
The Trenton brewery? It sat idle for almost a decade and didn't
open until 1991.
We kept forgetting the teeter-totter principle. When Bud Light
declined this year, its first decline in 27 years, all hell broke
loose. There were stories in all the major media.
"Anheuser-Busch InBev NW plans to tweak its marketing campaign
for Bud Light and ratchet up spending," reported The Wall Street
Journal, "in the hopes of reviving a brand that is facing a rare
slump."
What slump? Bud Light is up 5% this year, not down 2.5% as
reported in the media.
How can that be when everybody else is reporting a decline? The
difference is that we included Budweiser's lime extension in Bud
Light's volume. Bud Light Lime is the fastest-growing beer in
America, with 1.2% of the market, and naturally that success came
at the expense of Bud Light.
Budweiser, Bud Light and Bud Light Lime are not three brands
with three different marketing strategies. They're one brand with
three different flavors and three different marketing strategies
that often cause confusion.
Line extension is a loser's game. It doesn't usually work, but
even if it does, it almost always damage the core brand.
On the other hand, there's the well-documented evidence that a
line extension doesn't hurt a leading brand as much as it does an
also-ran. Why is this so?
A leading brand has a very strong position. It's the leader. And
nothing works as well in marketing as leadership. Google in search.
Hertz in rent-a-cars. Hellmann's in mayonnaise. Heinz in ketchup.
Campbell's in soup. Thomas' in English muffins.
Many No. 2 or No. 3 brands become successful by narrowing their
focus to segment the market, either demographically or in some
other way. Miller High Life targeted the blue-collar segment.
Bud Light didn't destroy Budweiser's leadership perception. But
Miller Lite definitely undermined Miller High Life's blue-collar
perception.
What's a Miller? Over time, Miller became known as a light beer.
And the cowboys in hard hats weren't about to drink a light
beer.
What's a Budweiser? It's still perceived as the leading beer,
but now available in a number of different flavors.
In the years that followed the fall of High Life, Miller Brewing
tried to inject new life into its Miller brand with a raft of line
extensions including: Miller Genuine Draft, Miller Genuine Draft
Light, Miller Genuine Draft 64, Miller Lite Ice, Miller Lite Ultra,
Miller High Life Light, Miller Chill, Miller Genuine Red, Miller
Reserve, Miller Reserve Light, Miller Reserve Amber Ale and Miller
Clear.
They even spent $60 million introducing Miller "regular"
beer.
All for naught. Today, Miller sells considerably less beer under
the Miller name than they did in the glory days of 1979.
So it is in many marketing situations: What works in the short
term often doesn't work in the long term.
Well, you might be thinking, what about the trend towards light
beer? It's true that light beer is now the largest segment of the
market, but regular beer still accounts for 44%.
Why not have your beer and drink it, too? Why not try to
dominate both segments with two separate brand names? Like Toyota
and Lexus. Or Black & Decker and DeWalt.
Or Hanes and L'eggs.
Marketing people are often sheep when it comes to categories.
Once a line extension becomes a big success, all the competitors
get in line and say, me too.
Without giving a second thought to the possibility of launching
a new brand that could clearly define the new market as a separate
category.
It happened in light beer. It happened in diet cola. It happened
in lithium batteries. It has happened in many other categories.
In 1995, to pick one year at random, the top 40 brands of light
beer all used "light" in their names -- even Amstel Light, a brand
that didn't have a "regular" version.
Line extension is a teeter-totter, but not necessarily in the
short term. In the short term, both sides often go up. It takes
time to turn a ship. It takes time to kill a brand.
You can't know whether a marketing move is effective or not
until enough time has passed. Yet many companies are driven by
short-term thinking -- promotions, coupons, special offers and
discounts. And line extensions.
If it took Bud Light seven years to damage the regular Budweiser
brand, how long are you taking to measure the success of your
programs?
A month? Three months? Six months? A year?
Marketing is messing with minds. Getting into minds and changing
them is not for the faint-hearted or for the impatient. You need to
launch a marketing program and then have the patience to wait and
wait and wait.
Which reminds me.
Maybe my misspent youth will start to pay a dividend. The House
of Representatives has just passed a bill providing a monthly
stipend to those who served in the U.S. Merchant Marine.
Good things happen to those who have patience.
