If you’re like me and grew up with Danone, you’re probably wondering why the French CPG giant decided to open three yogurt bars in the Paris area this month. Surely, there has to be better, more efficient, cheaper ways to distribute something as banal as yogurt?
“Something as banal as yogurt.”
This is the commodity-kiss-of-death many consumer product businesses are trying to dodge.
Products can be replicated, priced down, commoditized. But experiences are magic; much harder to copy, if not impossible.
This is why so many premium brands, from Apple to M&Ms, and now Danone, are investing in strategies that look more like retail or services than like the traditional “product manufacturing” business model.
Why? There’s 3 key trends that make it harder for products to succeed.
THREE CRUSHING TRENDS FOR PRODUCTS.
- Modern Trade Uniformisation. Today’s retail giants own the shopping environment. The likes of Wal*Mart, Carrefour, Sephora and Best Buy don’t let manufacturers make their products stand out on uniform shelves, or run spectacular brand theater, like they used to years ago.
- Reduced Advertising Effectiveness. Fragmented, cluttered, more expensive than ever, traditional advertising dollars don’t perform as well as in the past (and don’t bet on an improvement).
- People Own The Conversation. What people say about your category, your products, or your competition, is increasingly in the hands of people, no longer in yours.
Three powerful forces all brands face today, all contributing to a spiral of commoditization for products. Undifferentiated, unglamourous, unexciting, Products are a bad business to be in these days.
So how can premium brands retain what makes them truly unique, special… in short, magical?
By taking control back on the Product Experience. I’m not talking “Experiential Marketing” here. I’m talking about Marketing The Experience - the shopping, consumption and sharing rituals that a product fits in. Soda on its own may not be the most exciting product… but if you’ve learned to enjoy a Pepsi with a pizza or burger, the experience of having a pizza or a burger will never be complete without Pepsi.
Traditionally left to third party distributors, or the privacy of consumers’ home, the Experience is now the battleground brands need to dominate.
THREE WAYS TO OWN THE EXPERIENCE MAGIC.
1. Flagships – owned shopping experience that educate and inspire.
Danone’s Yogurt Bar efforts fit in this strategy. So does the M&M Store, the Hershey Store, the Lego Store and countless other recent examples. Sure, there has to be a strictly business/revenue rationale for these ventures; but I believe their main reason is not the bottom line they generate. Walk into an M&M store, and you’ll be surrounded by the magic of chocolate and colors; you’ll enter a world where M&Ms can seduce and captivate you. Same for Lego, where the shopping experience ‘educates’ young and old brick-fans in the the 1,001 ways Lego brings imagination to life. As for Danone, wouldn’t you see yogurt as a little less banal if the bar inspired you to consume it in dozens of new delicious ways?
2. Vertical Bundles – everything needed to enjoy you at your best.
What’s the best way to enjoy beer? Not bottles, it’s draft. But that’s not the product consumers can get in their fridge… at least it wasn’t until Heineken came up with Beer Tender, a high quality version of the keg-and-tap that brings the perfect draft experience home.
Do you know how to brew the perfect cup of coffee? Most people actually don’t, so the blend fine-tuning efforts of coffee champions like Kraft or Nestle are mostly wasted in botched preparation. That is, until the Nespresso and Tassimo systems offered a bundled alternative. Integrating a simple machine with single-serve coffee pods, they deliver the perfect cup, every time.
In both cases, high value for the consumer who gets the perfect beer experience, the perfect coffee experience… and high value for the brand who premiumizes otherwise commoditized markets.
3. Full Control – simply owning everything!
It’s a deeper commitment, but also not a surprise that the brands that capture the highest forms of consumer loyalty and love, are those with full control over the experience, both at retail and at home.
Take Apple – from the physical stores, to the closed OS, to the iTunes and App stores – the experience is fully owned by Cupertino’s teams. And the benefit is a level of quality, simplicity and consistency no other computer or phone brand can replicate.
Take Nespresso – from the day you buy a machine, you will only buy and drink pods ordered through their own high street or online stores. Your coffee issue forever solved.
OVER TO YOU.
It takes a mindset shift – stop seeing yourself in the business of selling products, start seeing yourself in the experience business…
What experience and rituals does your product fit in and elevate?
What is your product’s experience at its best?
How can you move up the chain and gain share of the full experience?