The Rising Tide of Premium Brand Extensions

I read about P&G’s introduction of Tide Basic with surprise and disappointment. To me it’s a tactical move that will increase short term profit, even as it erodes brand equity.

P&G identified a large enough group of cost conscious consumers who prefer to pay a little less for detergent that comes without bells and whistles. According to the Wall Street Journal, “It lacks some of the cleaning capabilities of the iconic brand — and costs about 20% less.”

 

You don’t need an MBA to know that if you put the venerable Tide logo on this kind of “new” product, enough customers will buy it to justify the investment in a product launch. After all, Tide is one of the most recognized and valued detergent brands; if consumers can get that endorsement AND pay less, everyone wins, right?

It’s pretty much the same argument that put Mercedes into the $30,000 car. But it’s also brand treason. A brand is a promise that forms the basis for consumer relationships. Trading down in quality or performance requires a premium brand to do the one thing any strong brand must avoid: break the promise. Unless you get your jollies killing the goose that laid the golden egg.

Is Mercedes a more profitable company today than it would have been absent its C Class? Probably. But what does the Mercedes brand stand for after this and other related moves. At the core of its brand identity lies the phrase “automotive luxury”. Now one has to add “and less” to get an accurate description. In the long term, the piper will be paid. The premium earned by the Mercedes logo, in some form of market adjustment, must inexorably yield. It’s the law.

I’m pretty sure that the road Tide has just taken leads to the same destination. I know they used a yellow package to try to explain the difference. Doesn’t matter. After decades of standing for more (new and improved; the latest in whiteners and brighteners; innovations in concentrates and fragrances; functional packaging, etc., etc. etc.), Tide now also offers less.

Consumers must recalibrate their understanding of the brand universe once more, as another premium brand trades down.

Perhaps you feel P&G is on the right track with this, and that I need a more flexible concept of brands. If you do,  let me know.