Brand Mix

Which strategy works the best--a narrow, specialized positioning where a product focuses on one feature or an all-in-one solution where products offer a range of features? That's the question Alexander Chernev tries to answer in some new research (Source: Kellogg Insight Focus on Research review).

He tested various packaged good categories including toothpaste, the fruit fly of consumer marketing. His (not altogether too surprising) results show that consumers expect whitening-only toothpaste to whiten teeth better than toothpaste that both whitens and prevents cavities. This happens because consumers rely on a "zero-sum heuristic" which devalues the perceived performance of features if they are bundled together compared to a product with just one feature. Some thoughts about the implications of this research:

1) Pricing: Chernev shows that pricing can eliminate this effect. If the all-in-one product is priced higher than the single-feature product, consumers don't devalue its multiple features. This means that the common practice of pricing all-in-one products at the same price as specialized products is counterproductive from both a margin and revenue standpoint. It also suggests that marketers of single-feature products should raise prices to match competitive all-in-one products to benefit from this heuristic effect.

2) Product development: Tempting as it may be to add new features to a single-feature product to make it appealing to a wider range of consumers, this study suggests that this approach will likely fail. If the competition sticks with single-featured products, consumers are likely to discount each new feature you add for no net gain in benefit.

3) Line extensions: This research suggests that you can only successfully add an all-in-one product to a product line which includes single feature product(s) if you are prepared to have a higher price point for the all-in-one. And that will screw up all your price promotions so you probably won't want to do that.

4) Brand architecture: Maybe there are some brand architecture work-arounds? For example, I wonder if P&G's addition of branded, extra features (Tide with a Touch of Downy) breaks the zero-sum heuristic? I think Microsoft came up with a great solution way back in time when it decided to bundle its spreadsheet, word, and presentation products together as Office but keep the individual Excel, Word and PowerPoint brands. Previous bundled products like Ashton-Tate's Framework didn't do that and consumers thought that individual products like Lotus 1-2-3 and Harvard Graphics were better (as I understand it because it was, of course, way before my time).

And now a real leap:

4) Marketing specialists vs. generalists: Does the same principle apply to marketing consultants as well? Do marketing specialists have a perceptual advantage over those who bundle together a bunch of skills whether they are, in fact, any more qualified? Can marketing companies offering a range of skills use a Microsoft-like branding solution to overcome this perceptual disadvantage?