Sluggish economy isn’t slowing product launches

The threat of economic slowdown has not dampened the 'damn the torpedoes, full speed ahead' spirit of Canadian marketers - or their new product launch activities....

The threat of economic slowdown has not dampened the ‘damn the torpedoes, full speed ahead’ spirit of Canadian marketers – or their new product launch activities.

With the belief that any time is a good time to introduce a unique and innovative product, marketers such as Kellogg Canada and Procter & Gamble Canada have recently brought out new brands while others, including Polaroid Canada and Clearly Canadian Beverage, are putting their weight behind brand extensions or co-branded efforts.

‘In theory, if anybody can come up with a meaningful new feature that solves a problem or mediates a deficiency that’s existed in a product category – and a deficiency that matters – they’ll be rewarded with market share if they launch it,’ says Bruce Philp, partner at Garneau Wurstlin Philp Brand Engineering in Toronto. ‘In household products and health and beauty, these things are consumed on a pretty consistent basis no matter what happens to the economy.’

Such is the case with Procter & Gamble, which recently developed a new hair-care brand to fill a void it perceived in the market.

Sally Parrott, Inner Science brand manager at Procter & Gamble Canada, says two years of technical and consumer research around the world went into the creation of Inner Science shampoos, conditioners and treatments, which address dryness, changes in texture and other effects of aging on women’s hair.

The downturn in the economy and recent restructuring at P&G are not going to deter the company from putting full and sustaining support behind the brand, Parrott says.

‘There’s a tendency when you start seeing economic downturns and you go through organizational restructuring, you become internally focused – and that’s when you take your eye off the ball.

‘We need to stay externally focused, focus on consumer needs and continue to give them the innovation in order to maintain our leadership in the market.’

Unlike some brands in the haircare market that move from top to bottom shelf and then off the shelf entirely through lack of post-launch advertising, Parrott says P&G will maintain continuous support for Inner Science. The product began to hit shelves in January, and advertising support so far has included 30- and 60-second television spots, cinema, ads and advertorials in consumer magazines and a contest.

Parrott is pleased with the response to Inner Science and says sales are meeting the company’s expectations.

Rick Wolfe, president of PostStone, a Toronto-based business research and strategic planning firm, says companies such as P&G – with strong balance sheets and active shareholders – will likely continue to be very aggressive and look for opportunities. Still, he doesn’t expect brand launches to be quite as brisk in 2001 as in the previous five years.

‘Shareholders are always after increased profits so it’s pretty difficult to sit out a sluggish economy unless your market intelligence tells you that consumers are holding onto their wallets and the most prudent thing to do is consolidate your company’s position. It’s a rare business where you can just shut the innovation doors for a long period of time.’

Wolfe says that if there is a tilt in any business model direction, it is toward partnering – even for the very biggest companies.

‘It’s simply spreading and managing risk to partner on innovation. That just makes good sense unless you are an entrepreneur with laser vision and nothing to lose.’

Vancouver’s Clearly Canadian is following this path with its recent new brand launch by partnering with Reebok. The result of three years work, Reebok Fitness Water contains vitamins, minerals, electrolytes and other enhancements that appeal to fitness-conscious consumers. The new brand is being introduced into the U.S. market first and will likely make it to Canada early next year, following approval of the formulation by Health Canada.

Jonathon Cronin, VP of marketing for Clearly Canadian, says the benefits of this dual branding was evident in testing. Consumers were very interested in the concept of an enhanced water beverage with the Reebok name attached. ‘It provides credibility and a foot in the door.’

Cronin says when it comes to the alternative beverage market, the more innovative and unique your brand, the better the chance for success. ‘It’s a very competitive field. There’s constantly new beverages being introduced so you have to be different – and you have to be easily understood in a crowded, busy field.’

Reebok Fitness Water will play a big part in Reebok’s advertising and marketing activities, including its Court Training infomercial for exercise equipment, events and sponsorships. There will also be stand-alone event marketing and sampling supporting the new beverage.

Another category rife with innovation, where share is hard-fought and profits scarce, is the cereal market.

To keep pace, Kellogg Canada has been launching new products regularly since early 1999, when it introduced Vector, an innovation in both the meal replacement and cereal categories.

This year the company has brought out Eggo Centres, a brand extension for the leader in the frozen breakfast category, and most recently Vive, a cereal that is Kellogg’s first venture into the soy food category.

Mark Childs, VP of marketing for Kellogg Canada, says innovation, new products and development of proprietary foods and food technologies are an important part of the Kellogg Canada strategy for growth. But, he adds that new

products and brands are only successful if the innovation makes a difference in the category in which they participate.

‘I always ask the question, why should I care about this innovation? It really comes down to, is it distinctive enough, is there a consumer need and benefit that is valuable and valid?’

When it comes to Vive, Childs says the answers are yes. The cereal, a mix of grains, granola and soy, is targeted to the 35- to 45-year-old group but, because of the health benefits associated with soy it will really appeal to a much broader group of health conscious Canadians, he says.

Other categories that are forced to launch updates frequently are those in the youth market, an area often driven by trends.

In the case of Polaroid Canada, the camera maker recently introduced an extension of its popular two-year-old I-Zone brand – a camera that prints either photo stickers or mini-photos. The instant pocket camera is targeted to teens by encouraging them to be social and express their creativity.

Polaroid has used sponsorship and promotions heavily to support I-Zone with efforts involving popular names such as Britney Spears and the Backstreet Boys.

The company has also set up a separate Web site for I-Zone, called i-zone.com, where visitors can chat online and incorporate pictures into their chat sessions. The average session time on i-zone.com is 17 minutes.

The extension, the I-Zone Convertible Instant Pocket Camera, allows teens to personalize their camera with changeable faceplates to match their mood or their outfit.

Christina Smith, senior marketing manager for Polaroid Canada, says looking at the cell phone faceplate phenomenon and teens’ interest in fashion and accessories, the Convertible I-Zone was a natural step.

‘Polaroid is a new products company, so it’s essential that we continue to introduce products that are relevant to our consumers. A slowing economy doesn’t change the way we do business,’ says Smith.

‘In fact, we have to work even harder to make consumers aware of our products’ positive attributes over competing brands.’