This paper discusses conventional marketing strategies with specific references to the following theories:
(1) The importance of a brand name and the impact of changing a brand name
(2) The need for product differentiation from competition
(3) The need for category variation and the use of multi branding solutions for distinct demographics.
These marketing theories will be applied to brand ‘Zyrus’ , belonging to the small and independently owned New Zealand Company Natural Care Products (NCP). NCP specializes in skincare and healthcare products that include facial products, bath products and therapeutic products. The objective is to methodically chalk out solutions for specific, practical marketing issues faced by the company as its Marketing Head and to build a strong case and justify the steps taken. The paper will also provide information on the Natural Care Product market globally and arrive upon effective marketing solutions that would allow NCP to achieve its objective of achieving a 20% share of the natural skincare market over the next five years.
Products that are used for health and hygiene make up personal care products
and these could be hair shampoo, conditioners, moisturizers, soaps, tooth bushes, bathing gels etc. The Personal Care product industry has been witnessing a steady growth over the past few years due to increasing consumer health awareness. The new buzzword worldwide is ‘natural’ and products that are deemed as organic are increasing gaining popularity as a way of life. Consumers are selecting this ‘natural’ phenomenon as a lifestyle as these products are advantageous to the environment and also to the body.
The personal care products industry is closely linked with the healthcare and food industry. According to Ferrier, Grant. (2004), in 2003, the Nutrition Business Journal (NBJ) had pegged the global nutrition market to be approximately $172 billion. The journal has put the United States, Japan, Europe and Asia as the primary markets for natural health products and functional foods. Out of this 3% of the global market is accounted for by Canada.
The industry, in general can be divided into four sub-sections: Face Care Products (Toners, scrubs, creams, astringents, cleansers, moisturizers etc.), Hand and Foot Care Products (foot scrubs, cuticle care products, nail care products and hand and foot creams), Hair Care Products (hair conditioners, hair styling products, hair glaze, hair spray, Shampoo and hair coloring, to name a few) and Cosmetics (lip make up products, eye make up products and face make up products).
According to Fashion Products, a B2B Marketplace of Fashion and Beauty, The face care product segment is currently growing at double digits while the hand and foot care segment grew to a total of 338.2 million dollars, with a growth rate of 5.9% in 2005. In 2004 and 2005, the hair care segment has been the largest with sales reaching $350 million. There has been considerable growth in the Cosmetics market in developing countries such as key markets in the Asia-Pacific region, Latin America and Eastern Europe. Germany, France, Spain, UK, USA, Brazil, Italy and Russia are amongst the major manufacturers of personal care products. The women’s beauty industry is growing at USD 202.254 billion year on year and the global market for cosmetics alone stands at USD 30.33 billion. This growth is being fueled by an increased demand due to increased awareness, a tremendous rise in consumer spending and lifestyle changes across the world. The market in the United Kingdom is worth $6.2 billion and is growing at over 5.3% per annum. The cosmetics market is predicted to be worth $351 million by 2009 and the total expenditure on male grooming products reached $1.5 billion in the year 2008.
A Shift to Natural Products
Many of the raw materials that are used for making Personal Care Products are derived from petroleum products. For instance, Propylene Glycol and PVP/VA Copolymer are derived from petroleum products and may contain some toxic elements. There is a growing awareness that constant use of these products could prove detrimental as they can be absorbed via the skin and enter the users bloodstream causing health problems. In addition, protecting the environment has also taken center stage and people refrain from using products that could be harmful to the environment. Hence, herbal and natural products are gaining popularity over synthetically manufactured ones. A study conducted by the Natural Personal Care Consumers: Unlocking Future Potential (2007), shows that the organic products market in the United Kingdom alone is predicted to rise from USD 18.19 million in 2007 to USD 24.26 million in the year 2011. The largest number of natural cosmetic products under their private labels is in the UJK and German markets. Concept stores like those launched by established brands like Korres and Aveda are chalking out a new trend across Europe. According to the information from Organic Monitor, sale of natural cosmetics comprises 5% of the total cosmetic sales in Germany. Retailer private labels have gained immense popularity in Europe and around the world. Alongside, the neutraceuticals and functional food industry is gaining pace globally, in particular in developed and rapidly developing countries. If one were to consider the per capita spending, Japan has established itself as a major market for functional foods. The US, UK, Sweden and Switzerland also have large markets for functional foods.
Natural Care Products (NCP) is an independently owned company specializing in skincare and healthcare products that has been established 8 years ago in New Zealand. The Company manufactures entirely natural products that include facial products, bath products and therapeutic products, all under the same brand name – ‘Zyrus’. All products are manufactured in small batches and sold online or in retail outlets in the lower and central North Island of New Zealand.
Company: The Goals of NCP are extremely basic in that they want to increase market share from the existing 5% to 20% over the next five years, without compromising their innate culture as a small and independently owned company.
Customer: The customer base is relatively small, targeting women who do not want products with chemical ingredients and who prefer natural based products, although there is tremendous potential to raise the number with more diverse product offerings. The main value driver for the customer is the fact that all products manufactured by NCP are 100% natural. There have been recent retailer feedback and customer enquiries on whether the Company will be introducing a product line for male consumers. The market potential for the same is currently being assessed.
Competition: At this point, we are able to assess competition only based on our strengths and market position. There is a growing need to differentiate our product from the competition and capitalize on the product benefits viz. unique fragrance, all ingredients used are 100% natural, some of the ingredients used in the product are locally grown and the company is not utilizing solely imported ingredients, manufacturing is conducted in small batches and there is great attention paid to each product, they feel great on the skin and are extremely effective.
Product: With specific reference to the product, there is increasing debate that ‘Zyrus’ is not a suitable brand name. The management is looking at the possibility of a name and image that would reflect the ‘outdoors’ in terms of the natural plan extracts that are contained in the ingredients. Discussions are underway on a brand name change and whether re-branding will generate an additional interest in the product. While the quality of the product is of the highest standards, based on retailer feedback there is scope for improvement in the product packaging and also of expanding the product line to cater to the growing needs of the market.
Pricing: The pricing strategy has been working for the company until now, but we will have to revisit this area and accommodate pricing variables in case there is a marked increase in manufacturing volume.
Distribution (Place): Again, at this point the distribution of all products manufactured by NCP are being handled online or via retail stores. The company is considering the possibility of expanding sales to the South island of New Zealand and also entering the Australian market. Additional distribution channels such as direct, distributors and intermediaries and also logistics including transportation, warehousing and order fulfillment will have to be explored at a later stage depending on the expansion plans laid in place by the company.
Promotions: Promotional Strategies are not being employed at this point. However, promotional programs, advertising and public relations campaigns could be successfully embarked upon in order to further drive sales.
This report has been prepared in order to assess the following:
(1) The importance of a brand name and the impact of changing a brand name
(2) The need for product differentiation to set a brand apart from competition (3) The need for category variation and distinct brand names under the same banner & the use of multi branding solutions for the same product to cater to distinct demographics. The three points mentioned above are being applied to three scenarios faced by Brand Zyrus and we will then arrive upon recommendations on each of the above.
If the brand name ‘Zyrus’ is changed, how would it impact the brand?
The fact is that the brand name and existing image of a business are vital to its success. According to Bill Schley & Carl Nichols, Jr. in the book ‘Why Johnny Can’t Brand’ (2005)
“The sweetest word in the brand universe is your brand’s name.”
‘Zyrus’ as a brand name has been a successful one for the company thus far and has established a strong reputation amongst patrons.
“in an age of globalization, brands are growing ever more valuable. They have to differentiate one product from another, position the offer and also be adaptable both to changes in product lines and ranges, and to evolving consumers’ expectations.”
A brand should ideally tell the customer what to expect from your product. A strong brand equity enables one to charge more for your brand than an unbranded counterpart. For eg: Coke Vs. a generic Soda. (John William, Branding Basics, Entrepreneur.Com n.d.). There are some situations that warrant a change of brand name. These could be things such as the arrival of new competition, a change in company strategy, failure to connect with your audience, etc. The change of a brand name needs to be accomplished gently and consistently.
In my opinion, if one were to consider the possibility of changing the brand name ‘Zyrus’, I do believe that now would be an opportune time. Given that the company is looking at expansion of product line and reach, a re-branding exercise would provide the company the opportunity to develop media campaigns and promotional activities, thus increasing awareness of the brand amongst existing and potential customers. The new brand name needs to suggest something about the product, be easy to spell, be short and memorable and represent the fact that all ingredients used in the product are 100% natural. In the case of Zyrus, since there have been complaints regarding the packaging colors etc., the branding changes need to be larger in terms of revamping the logo and colors. This could rekindle the interest of existing customers and also instill an interest in new customers. Packaging is the end of the product line and is the deciding factor in the customer picking up the product from the shelf. The packaging in my view needs to reflect the heart and soul of the brand and really connect with the customer and hence the package structure, brand identity, color, topography, brand cues and every other design element is of extreme importance.
How can ‘Zyrus’ be differentiated from competition?
With very few businesses being one-of-a-kind, it is absolutely essential that a company is able to stand out in the world of homogeneous competition. Products win when differentiation is based on features or benefits, which are valued by customers.
For instance, Charles Revson, founder of Revlon, always said he sold hope, not makeup. Many airlines base their USP on providing friendly service when others focus on their ‘on-time-service’.
The one thing that sets Zyrus apart from the rest of the products in the same space is not the fact that it is 100% natural but the fact that it embodies the true spirit of its founder Anne Smith. ‘Zyrus’ represents personal success. It provides customers a reliable and trustworthy product from a small, independent business house. This would be the USP (Unique Sales Proposition) that the brand Zyrus can be pegged on – that of personal success.
I truly believe that positioning ‘Zyrus’ as a brand that stands for ‘personal success’ would provide a platform of product differentiation. Given that all the products manufactured by NCP, cater to the enhancement of the consumer’s self-image and appearance, this peg of ‘personal success’ would give the customer the choice of identifying with the brand. In addition, women (who are the current target market for the product) will be able to associate the product with the founder Anne Smith’s business success.
Can the name ‘Zyrus’ be used for skincare and healthcare products and across the board for products for men and women?
There are arguments both for and against changing an established brand name and the associated brand imagery. Many feel that established brand names have a great deal of brand equity infused in them and changing a strong brand name could be detrimental to company sales. However when Rhone-Poulenc and Hoechst, merged to form Aventis, they proved this theory wrong. Aventis today has top of mind recall amongst players in the pharmaceutical industry, according to Paul Temporal’s Branding Tips ‘Big Names – Brand Dilemmas – the problem posed by Acquisitions and Mergers’ (2001). The fact of the matter is that one needs to be extremely cautious with regard to branding.
For ‘Zyrus’ since the customer base is as yet minimal, a change in the brand name will not completely destroy customer loyalty and asset value. Since it has been only eight years since the launch of the brand, a change in the brand name to distinguish the facial products and bath products from the healthcare products would provide clarity in the minds of the customers. At this point there is no difference in the name of the personal care product and the healthcare product and this could confuse a customer greatly. In my opinion it would make more sense to multi-brand the products and perhaps retain them under the larger banner of NCP.
I also believe that it would be important to have two different brand names for the grooming products intended for men and those that already exist for women. With growing importance to grooming and the metro-sexual man, the average man today is very aware of personal care products and would not buy a product that could also be used by women. Even women, would, in my mind not want to share their products with those used by men. If one were to consider the findings of the study conducted by Hershey H. Friedman & William S. Dipple Jr. in ‘The Effect of Masculine and feminine Brand Names on the perceived taste of a Cigarette’ (2007), one can conclude that the brand name greatly influences both men and women in their choices. Subjects were given identical cigarettes with two names, Frontiersman,” a masculine name, and ‘April’, a more feminine sounding name. It was found that the men preferred the masculine named cigarette and the women the feminine sounding product.
It is clear that there is no hard and fast rule that works with regard to marketing and branding of a product. A brand name must reflect the true values of a company and customers need to be able to identify with the same. Brand stories connect with people and form a bond with them. Some examples of natural product brands that became successes according to Ted Mininni, ‘Successful Branding & Packaging Natural Products’ (2007), are brands like Lightlife, Cascadian Farm and Spectrum Organics, Annie’s Homegrown, Stonyfield Farm, Organic Valley. Every company needs to find the right fit and tailor make solutions that will suit their respective marketing needs. This paper clearly substantiates that a re-branding exercise would benefit Brand ‘Zyrus’ and there is a distinct need for product differentiation from competition. We have also demonstrated the need for category variation in branding and multi-branding to cater to different demographics.
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