Is your core business dying, or just sleeping?
An interesting challenge was raised during a recent workshop with a leading food company. "My core business is dying," said a worried looking marketer. "Cans are out of date, not on trend and have become commoditised. All the action is in chilled. What should I do?"
My response was to ask if the core was really dying, or in fact just sleeping [older UK readers will get the reference to the famous Mothy Python "Dead Parrot" comedy sketch, here].
A sleeping core can be renovated and revitalised. But other times you really are standing King Canute-like as the waves of change wash your core business away. Think Kodak and film. Or Sony Music and CDs.
In this post, we'll look at how to assess the health of your core, and what to do if it is sleeping, not dying. We'll look next week at what to do when it really is in terminal decline.
1. Is the core decline company or consumer-driven?
Start by seeing if the declining core reflects company neglect, rather any real change in consumer demand. Some of the problems to look out for:
– New toy syndrome: stealing money from the core to invest in sexy new products, many of which end up failing in market. For example, Heinz invested heavily trying to extend beyond canned soup into the sexier chilled market. However, the brand struggled against dominant leader brand Covent Garden, and eventually pulled out to re-focus on canned soups.
– Death by 1000 cuts: a series of cuts in quality to save money, where each one is shown to have no change in consumer preference, but over time the cumulative effect kills you.
– Lack of excitement: companies sometimes talk themselves into believing that commodity status is inevitable, when all that is needed is to inject a bit of va-va-voom into the category to refresh it.
2. Is the core still relevant?
Second, figure out if the core business still has underlying relevance, and some strengths which have not been fully leveraged. Older, more established categories like "big box" washing powder often offer some highly relevant benefits, and not just to older consumers: value for money, convenience and lack of fancy frills for example.
3. Core is sleeping: refresh the core like Birds Eye
If the problems with the core are more to do with mis-management, then you could "do a Birds Eye" and revitalise your core.
Back in 2005, the focus in food in the UK was all on chilled products. Frozen food was seen as, yup, a commodity, even by some within Birds Eye's owners at the time, Unilever. Since then Birds Eye have done a great job of revitalising the category and getting it growing again. This started in the Unilever days, and picked up pace when the business was sold to private equity group Permira, with a new team led by Martin Glenn. The UK business is now growing again after many years of stagnation or decline, with 2010 sales reported as being up 3%.
Here's a few of the things they did:
– Remember and refresh: Birds Eye stopped worrying about what they weren't (new, sexy, premium) and started celebrating and amplifying their strengths. In particular, they communicated the fact that frozen vegetables were actually better than fresh because the goodness was protected. This wasn't a new idea. Birds Eye was advertising that its peas were "sweet as the moment when the pods went pop" half a century ago, here.
The new ad campaign below did a job in provoking people to think again about frozen food, both outside and inside the company. My concern at the time was that it felt more like category advertising: the branding was weak.
– Revamped packaging: new pack designs by JKR helped refresh the look and feel of the brand, and communicate the idea of naturalness with a "transparent" logo which showed the food behind it. The new team under Martin Glenn have also got smarter at branding the "fresh is better" claim. A "Field Fresh" descriptor is now used on packaging. And the website talks about Birds Eye being "fresh frozen".
– New innovation: Birds Eye also launched innovation to revamp the core business, such as "Steam Fresh" technology which allows quick and easy microwave cooking of vegetables and fish.
In conclusion, in many cases a declining core is sleeping, not dying, owing to company neglect. In this case you an revitalise the core like Birds Eye, by refreshing the relevant underlying benefits.
However, in other cases the core really is dying. We'll look at this in next week's post on Kodak.