Is diversification the key to growth?

The news that coffee group JAB Holding is to buy Dr Pepper Snapple has reportedly caused some confusion amongst analysts, with the FT reporting that one analyst said she was left “scratching [her] head” as to why the company is shifting away from its focus on coffee. However, if the move is to try and create a suite of products that consumers covet throughout the day (as the FT also reports), then it makes a lot of sense.

 

Today all manner of drinks now vie for the drinking occasions (e.g. to wake up or unwind etc) that were once classically held by particular drinks, and the challenge any brand faces is how to come to mind at the right time. So for brands that want to grow, there needs to be a clear understanding of what brings a brand to mind, not just what the brand evokes.

 

Consumers typically shop to address a specific need or situation, e.g. the tea they buy for their hippy sister’s visit will be different to the tea to impress their in-laws. For each situation or need, the brands that spring to mind may be quite different. Trying to be the default choice against every set is almost impossible (unless you’re the category leader).

 

This isn’t something new. In fact, since Byron Sharp’s popular concept of mental availability first entered into the marketing arena, how the industry thinks about brand positioning and campaigns has evolved significantly. Twinings investing heavily in owning “me-time” and Pernod Ricard rolling out a global framework for thinking about drinking occasions are both examples of how brands are pushing to identify the right memory structures for their brand and build them with their audience to make the brand ‘stickier’. However, it is still a challenge for many brands.

 

The challenge of how academic theories, such as Sharp’s, could be applied practically to brands’ advertising campaigns on a creative level was what drove us to develop our Headspace project. We wanted to empower CMOs to be able to map out how much headspace they and their competitors are achieving and how sticky the brands are to be able to identify where the opportunities for greater stickiness are.

 

With an aim to create a framework to enable marketers to make more informed decisions, more effective creative campaigns and, therefore, overall brand marketing, it’s encouraging to see this idea/approach has now been picked up by JAB at a portfolio level. Using consumption needs/occasions as the lens to build portfolios that don’t cannibalize one another on particular moments is a natural extension of the application to brands, but whether it works in practice is yet to be seen. We’re certainly looking forward to seeing how this develops.