Homegrown: Rewriting the rules — the growth of value brands
by Lynne Gordon (@lynne_gordon) As markets grow more cluttered and consumers face increased economic pressures, it’s up to marketers to look for smart new strategies for growth. And with a full third of South Africa’s consumers living in households with an income of less than R5000 a month (AMPS household 2014), the value segment is an opportunity for growing brand penetration and new consumption.
But designing a brand to win on affordability is easier said than done — and the leaders are those who play by a new set of rules.
The rules of value
To win in the value segment, brands need to think differently and be ready to reconsider the rules of branding and business to service new needs.
Value doesn’t mean cheap products or services.
Consumers seeking value brands are no less demanding or discerning than those buying premium brands. In fact, value-seeking consumers often look for reassurance of quality, as they are more cognisant of the loss from products that fail to deliver. Successful value brands understand that trust is a foundation of brand-building, and use a range of smart tools to reinforce a trusted quality product.
Jive cool drinks — the value competitor in the soft drinks category — uses the endorsement of cricketer Vernon Philander to drive credibility and quality. Iwisa maize meal incorporates superiority into its name with “Iwisa No1 Super Maize Meal”. Bic shavers provide a value offering with a promise of a close comfortable shave for 10 days; a specific quality claim that underpins the brand’s value to consumers.
Value offers “more” of what counts
Value is derived from the equation between benefits and pricing, and value brands that win offer “more” — more of the benefits that matter, more impact per rand spent.
Spekko rice is known as the “1 cup 4 cups” rice, promising four cups of cooked rice for every one cup of uncooked rice, a clear value message that offers more tummy-fill to smart shoppers. But it’s by amplifying its four-cups message into a promise of “more love” that Spekko really drives value home, reminding moms that their cooking is about more than just feeding the family.
City Lodge supports its value brand, Road Lodge, with the playful campaign promising “We use our 1 star for what counts”, focusing on more of the benefits that matter without paying for added frills.
Value doesn’t follow the category rules
Sorghum beer offers value consumers a beer that’s more affordable than their usual brown bottle by stripping the alcohol category to its essential components — basic packaging, widespread direct distribution, and a tasty product. Joburg Beer is prolific on the streets of Soweto, flouting the rules of an alcohol category conventionally governed by brand image and extrinsic benefits with unshowy, functional 1l packs and completely informal distribution.
Outsurance introduced value to insurance by challenging the established indirect sales model and offering consumers cash back with the Outbonus, a radical departure from longstanding category rules.
Value brands understand the informal trade
Drink-O-Pop, a powdered soft drink concentrate, may not be front and centre in the drinks aisle of your local Pick n Pay, but is the branded market leader in the powdered soft drinks category. Distributed in spaza shops across SA, a 5g sachet retails at less than R1 and is mixed to make more than 2l of soft drink. As with Jive and Take5 juice sachets, these brand custodians understand the importance of grass-roots distribution to bring their brands to street corners where their consumers live and shop, making affordable refreshment available where it counts, and challenging giants such as Coca-Cola for their share of value consumers’ consumption.
Lessons for marketers
For most marketers, designing brands to win in the value segment doesn’t come naturally. The consumer is not intuitively understood from the safety of marketing desks, and the rules of branding that drive winning solutions in the rest of the market may be more hindrance than help. But, for marketers seeking new opportunities to win with value:
- Start by understanding your consumer’s needs and life up close. Speak to consumers earning less than R5000 a month, in their world, in their language. Ethnography offers a powerful way to meet consumers in their real lives, understand their needs, and their strategies to derive value from the products and services they use every day. Getting to grips with real needs offers fuel for customised strategies to unlock new growth.
- Deliver simple benefits with impact. Value brands are built on focus — simple, singular benefits delivered with clarity and backed up by a quality product that delivers just on that central benefit. From the production line to packaging, this challenges marketers to get the basics right and trim costs without losing quality where it counts.
- Reconsider the rules. Really assess which assumptions and norms of the category in which you operate are holding you back from achieving better value. Reinvention of packaging, product, distribution and cost models may all be needed to win in the value segment.
Lynne Gordon (@lynne_gordon) is the managing director at strategic marketing consultancy Added Value. Read more about inspiring collaboration and other cultural trends for 2015 at www.culturalthemes.com.
Lynne learned marketing on-the-job and is fascinated by the streets of South Africa, where small entrepreneurs — untrained as marketers — apply the art and science of branding to their businesses.
Her monthly MarkLives column, “Homegrown”, explores everyday businesses and the lessons corporate marketers can learn from the streets of Mzansi. Share your own observations, photos and examples of marketing from SA’s roadside with @lynne_gordon on Twitter.
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