February 16, 2012

Podcast Interview - Rick Steinbrenner "The Global Brand Guy!"

One of the smartest brand guys that I get to work with is Rick Steinbrenner, The Global Brand Guy, and he offered to be interviewed on timforrest.com for your information and insight. It is my hope that you will gain knowledge and helpful marketing action tips to grow and brand your product offerings after hearing Rick share his decades of expertise with the biggest and best players in the food and CPG world: Kraft, General Mills, Remington, and Black/Decker. He and his teams have launched more than 20 items with sales of more than $200 million and growing!

Tim Forrest: "What is branding in the consumer packaged arena today?"
Rick Steinbrenner: Branding today is still all about creating a psychological bond with the consumer.  Positioning your product vs. competitive brands or alternatives is at the heart of this.  Trout & Ries said (the fathers of positioning) “Positioning is not as much what you do to the product as what you do to the mind”. 
It’s also helpful to consider what brand truly is and what it is not.  People get them easily confused.
The key to having a successful brand today is a combination of product uniqueness in the marketplace combined with the right kind of brand equity.  Both are equally important in this equation.  You can’t REALLY have a successful product offering without the right kind of brand and it needs to be correctly positioned in the minds of consumers.
This also means consumers have to associate that brand with your product offering.  There are numerous examples of products that failed simply because companies pushed their branding equity into product categories where consumers just wouldn’t let them go.  i.e. New vs. Old Coke, Colgate Frozen Entrees, and Bic ladies underwear – just to name a few.

Tim: "How have you seen it change over the years?"
Rick: Unfortunately, a lot has been written about the decline of “legacy” national brands and the rise of “new age” and/or store brands in recent years.  The combination of both retailer and manufacturer consolidation combined with shareholder pressure to have successive quarterly earnings growth has done a lot to commoditize the consumer product businesses both in consumer package goods and consumer durables.  In addition, most national brands have simply stopped innovating thinking their current brands would never decline.  A simple list can illustrate what I mean:

One of the distinguishing characteristics of national brands vs. new age/store brands is they tend to be owned by Fortune 500 companies and/or private equity groups.  These companies tend to be mature, large in scale and in product categories that are either declining in volume and/or highly competitive.  Whereas the new age and/or store brands tend to be owned either by smaller and/or new companies that didn’t exist 50 years ago and have either redefined a product category’s value proposition by EITHER by lower price or new feature/benefit innovations resulting in a higher price. 
Store brands compete mainly on price; but they are not the cheap “private label” alternatives they used to be and quality can and usually matches/exceeds national brands.  They now account for ¼ of ALL volume in grocery/drug and big box retailers.  Moreover, 80% of consumers now believe store brands quality is equal to/exceed national brands.  This trend continues to threaten the “legacy” national brands in terms of their long term viability. 
While national brands tend to look in their rear view mirror and store brands are trying to mimic what national brands have already done; “New Age” brands are thinking outside the box.  They continue to look for consumer “need gaps” and are willing to invest in the future to build a completely new brand.  While this sounds costly and risky what makes them different 1) is a laser-like focus on new feature/benefit product innovations; 2) they create new brands virally via the new digital marketing medium of either direct response and/or e-commerce.  Since digital marketing tends to be more cost effective than the traditional media programs of TV/print their payback is less.  Moreover, consumers are now using the internet to gather information on solutions to problems or perceived problems.  This develops an opportunity for a whole new consumer “experience” which builds new age brand equity in a completely new way by focusing less on mass marketing and segmentation and more on developing one-on-one relationships with consumers/customers.  Finally, new age brands aren’t afraid of cannibalizing their own business to launch an even better, innovative product (i.e. continuous iphone innovations).  They truly seem to have a continuous flow of new products and thus their business franchise continues to grow.

Tim: Can you share with us your background in consumer brand management and marketing?
Rick: I’ve led and managed leading global brands at General Mills, Kraft, Remington Products and Black & Decker, just to name a few.  I’ve led businesses as large as $200MM, covering multiple product categories – both in B2C and B2B spaces.  I started my career in consumer packaged goods, then migrated to consumer durables and most recently have been in the automotive aftermarket selling hard parts.  I made these moves as I saw the need to evolve consumer durable brands and bring my CPG branding discipline to product categories having lower product sales velocities. 
In addition, I have strong new product development skills and expertise and considered a subject matter expert in that space.  If you talk to people who know me, they will tell you I’m really good at creating new “things” from a blank sheet of paper and converting them into multi-million dollar businesses.  In fact, my teams and I have developed and launched over 20 new products generating over $200MM+ in sales.

Tim: Is it true you sold a million in one day of Black Decker brand?
Rick: Yes, it is.  I was fortunate to sell $1MM in just one day with the Black & Decker Scumbuster – the category’s first and only to this day – truly waterproof motorized wet scrubber.  The Scumbuster was a motorized battery operated scrubber designed to handle tough grime in/around the bathroom and other household surfaces without a lot of scrubbing.  It is waterproof up to three feet of water and also features the Versapack rechargeable battery system.  I was able to get on QVC with a “Today’s Special Value” placement and generated 20,000 units of sales at roughly $50/pop – all in one day of on-air demonstrations.  No other Black & Decker product since then generated has so many sales in just one day.  This is a good example of product uniqueness combined with excellent brand equity.

Tim: Any advice to the folks in marketing today? Is it an agency business now?
Rick: There has always been two aspects of marketing – product marketing and brand marketing.  The only difference was in the past this was done by one person responsible for the P&L of a particular business – whatever it was – and he/she did both types of marketing.  This was because back then, the “academy” CPG companies like P&G, General Mills, Kraft, General Foods, Heinz and others trained people fresh out of B-School on how to become the “complete” marketer.  However, today these companies don’t train people that way anymore and have sliced up the complete marketer role into product, brand and now trade/channel marketing functions – due in part to P&L decision-making centralization and technology.  Training today is more about those roles vs. a general management perspective.  This has led to a consolidation of P&L/budget decisions now residing in more centralized/higher roles like CMO’s – and even some of that responsibility has migrated to both sales and finance.  This has led to a whole new generation of marketing people who really don’t know how to run a business.  While they maybe experts in their functional area they can’t make decisions about complex business policy tradeoffs simply because they don’t know how.  What I suggest to today’s marketers is to be sure they get a well-rounded experience in ALL aspects of marketing – product, brand and trade/channel as much as they can.  In this way, when they have the opportunity to assume more senior general management roles down the road they will be more effective and successful.

Tim:  What are the principals for working with retailers? Do you focus programming on consumers or give the goods to retailers to market?
Rick: The best model for working with retailers is bringing them first, products having a sustainable competitive advantage or “value”.  This means three things 1) You own the concept from an intellectual property point of view 2) competitors don’t have it (or don’t realize they do) and 3) Consumer REALLY want it.  This is the essence of differentiation.  If you bring a product to retailers they can’t get anywhere else and you can prove it will sell with minimal effort on their side, generally they will give you primary shelf placement at the price you want.  Second, you need to “sell” the retailers on the viability of your products.  Sometimes, this means listening to their concerns/ideas and be willing to make changes – as long of course it makes strategic sense.  Like it or not, they get a “vote” in the distribution process.  If you can’t get placement, consumers will not have the chance to “vote” on your product.  Finally, you need to have a continuous flow of new products that continues to create differentiators in the marketplace.  If you try to rely on a “one-trick” pony and hope it will become an annuity for your company – think again.  There are plenty of examples of retailers “knocking off” your idea and putting their brand on it at a lower price.  Best recent example is Wal-Mart announcing they will develop their own Keurig one-serve coffee-maker claiming the original branded version is not at a price “their” consumer is willing to pay.  If you leave retailers to make decisions for you, they will do it every time and you will not have a long term business franchise.
Tim: Is private label a viable alternative for branded companies?
Rick: It can be and in some case already has.  Tier 1 companies like P&G, Clorox and others do offer some store brand programs on some of their older commoditized businesses.  Store brand volume can assist with overheard absorption in plants producing both branded and store brand products.  However, having store brand offerings does add another level of complexity and competition.  Retailers will generally want changes in the packaging/product/offering beyond where you might want to go – making internal management of these items difficult.  Moreover, there is a whole industry of private-label co-packers out there who have potentially already knocked off your product and are just waiting to offer them to retailer at prices sometimes below your production cost.  This is because overheads usually for smaller companies are much smaller and they are willing to work on less margin than you.  However, ignoring store brands are not a good idea either.  Like it or not, they now account for ¼ of ALL volume in grocery/drug and big box retailers.  Moreover, 80% of consumers now believe store brands quality is equal to/exceed national brands.  The key is to have a blend of new products, commoditized brand products and potentially store brand products that will give you a portfolio of pricing/margin profiles that will help grow your overall business in the categories in which you compete.

Thank you, Rick for your excellent information and insight today!
You can reach out and learn more about Rick at http://globalbrandguy.com/ or send Rick an email: Rick.Steinbrenner (at) comcast.net.

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