Written for AdWeek
The business environment today is clear: If you own a brand, it’s either growing or dying. The question I keep hearing is, “How do we grow our brand without cannibalizing our existing business?”
It’s a daunting question. More than 60 percent of innovation projects fail to produce bottom line growth. I have watched many brands use different approaches to try to achieve growth with various levels of success. And I have two truth bombs to share. First, vision and goals determine growth trajectory. The closer your innovation is to the parent brand, the less likely it will produce long-term growth. Meaningful innovation that will create exponential growth is hard if your team is focused on short-term sales.
So, it would seem that shooting for the moon would be normal, but according to Nielsen, 70 percent of marketers said their company is more interested in mitigating risks when it comes to launching new products than finding a breakthrough innovation.
Secondly, food and beverage created a new age of disruption.
This is a problem because the new better-for-you brands have created an innovation mindset that has put more established, traditional brands on their heels. Clean ingredient foods and beverages are driving the real growth in grocery.
So, what do you do if you need real growth?
Start by thinking about the needs state of people who do not use your products. Ask yourselves what problems these consumers have that your brand cannot address with your current offerings. Then, using your brand promise and brand positioning as guardrails, begin the process of innovating toward these future customers.
While many effective methods will help you grow your business without cannibalization, here are three effective ways to start blazing your trail toward growth.
Keep pace with health-conscious eaters
Many brands have found their core products no longer fit into the lives of health-conscious eaters. This can be really daunting because a low-fat version of what you make isn’t likely to tip the scale in terms of adding customers and probably won’t drive velocity at the shelf.
So what do you do? Invest in your brand’s core values by finding ways to bake them into products that match today’s healthier lifestyle. Study trends to find unmet consumer needs. One really good, convenient product that captures the imagination and appetite of healthier eaters could slingshot your brand’s entire product portfolio back into their consideration.
That’s exactly what Kodiak Cakes did. Although their original flapjack and waffle mix was a good source of protein, the brand struggled to get the message out because many health-conscious eaters moved away from traditional breakfasts like pancakes and waffles. Health-conscious eaters might not favor pancakes (except on race-day), but they do love convenience and permissible indulgence.
Enter flapjack in a cup (like Cup Noodles). Innovations that are tipping the scale for Kodiak Cakes include microwaveable flapjacks in a cup and microwaveable muffins in a cup. The cup allowed them to add oatmeal and granola, brownies and cookies, which extend the brand beyond the breakfast daypart into snacking moments. Success with innovation has caught shoppers’ and retailers’ attention.
Acquire brands that successfully bookend your category
How do you get the lion share of a fast-moving consumer goods (FMCG) category that plays on impulse? If it has had any success in the world of FMCG, your company likely has deep expertise in manufacturing, product development, distribution and marketing. Leverage it and mindfully acquire brands competing for the same dollar. Study shopping cart data to learn which brands are in your current loyal consumers’ consideration set.
This is easy-to-follow logic: work to build and acquire brands with the goal of bookending the category. Bookending simply means that you have a variety of brands available that reach different consumer preferences, such as flavor profile and ingredients.
When your category’s consumer preferences evolve (and they always do), you can move into better-for-you brands with clean ingredients. This will definitely help your company win over the current brand’s competitors because a better-for-you play will increase the goodwill associated with your beloved brand. But the goal behind such an acquisition is to capture a chunk of the next tier, premium-priced consumer spend.
Hershey bookends the chocolate category by meeting both the flavor and variety preferences as well as playing at various price points. As the landscape for consumers has shifted, it was smart of Hershey to acquire both Dagoba, for those who want a single source, and then Brookside, for those wanting to feel like they are making a healthier choice by eating fruit with their chocolate. But they get extra credit for acquiring brands with the goal of bookending the snacking category.
Remember in 2015 that Hershey’s surprised everyone by acquiring Krave Jerky, a non-confection brand that had disrupted an aging category by capturing a younger, more epicurean audience. And the surprises didn’t end there. In 2017, as a way to bookend grab-and-go snacking, Hershey acquired Amplify Snack Brands, makers of SkinnyPop.
Disrupt your manufacturing process to create a new category
By studying the lifestyle and needs of people who use products you don’t currently manufacture, a conventional brand can successfully extend their brand into products that will not cannibalize sales of their current offering. It requires symbiosis between the brand team and the product development teams, with the goal of both a manufacturing product win and a brand positioning win.
Once your manufacturing rethink has proven to the world that you are onto something, it’s logical (and much easier) to extend your new creation into adjacent trending categories.
Califia Farms did this by disrupting their manufacturing process for juice into one for almond milk. Their almond milk has been so successful it has completely eclipsed their juice business. Brand extensions like cold brew coffee, yogurts and smoothies feel effortless because they drive the category of dairy alternatives by achieving over four times the category’s annual growth.
The world of FMCG continues to evolve quickly as preferences change, investment money is knocking at the door and advances in technology allow imaginative flavor diversity. With all due respect to the folks who are busy creating watermelon-flavored juices and CSDs, you can grow your brand without cannibalizing your current offering. But if you take a braver approach and allow your team to think of your brand and its relationship to human behavior over the long term, meaningful growth through innovation is possible.