"Miller High Life--the champagne of bottled beers."
"It's Miller Time."
In years gone by, such Madison Avenue-spun slogans got beer drinkers to pony up premium prices for Miller High Life. Despite the havoc that micro beers, import beers, discount beers, and such have wreaked on High Life of late, Miller Brewing Co. has found there's still some sparkle in the brand. Just not as a premium-priced brew.
Miller is one of a clutch of marketers trying to breathe new life into tired old brands. They're slashing the prices of some well-known products and repositioning them as higher-grade alternatives to the store brands and other low-priced fare that appeal to budget-minded shoppers. Procter & Gamble Co. has cut prices on a fistful of old standbys by 12% to 33% over the past 14 months, shifting them to what it terms a "mid tier" in pricing. Among them: Joy dishwashing detergent, Era liquid laundry detergent, Luvs disposable diapers, and Camay beauty soap. In its own twist on the formula, Eastman Kodak Co. is fighting store brands with a new low-priced, seasonal film, Funtime.
Such "fighting brands" have often been deployed by marketers as temporary measures to keep customers during recessions. But marketers see this current wave as more than a temporary phenomenon. They view it as a response to the fragmentation of the mass marketplace by taste and, increasingly, economic insecurity. Marketers say many consumers have become switchers, trading back and forth between branded products and store brands. The trend has spurred the growth of private-label products, which have risen from 18.2% of supermarket unit sales in 1989 to 19.7% last year, according to Information Resources Inc.
BREWING SALES. For manufacturers, the midtier brands offer several benefits. They can help a marketer corral switchers without setting off price wars on premium brands. They keep factories humming. And they save old brands from the scrap heap, letting companies milk the equity of years of ads. Miller has brought back the "Miller Time" line in ads to tap nostalgia for High Life.
Until recently, such price-tiering has been confined to a few categories. P&G has employed tiering in shampoos in the U.S., in diapers in Venezuela and Germany, and in laundry detergents in the developing world. Now, fighting brands are spreading and scoring victories. Despite a flat beer market, High Life's sales jumped 9%, to 4.9 million barrels, last year after Miller cut its price 20% or more in most markets. A 12-pack of High Life that cost $6.99 two years ago in Ohio can now be had for $4.99. "The impact was fairly immediate," says Jeffrey P. Schouten, director of pricing for the Philip Morris Cos. unit. Luvs' market share in unit volume is up from 11% to 12.9% since its price was cut by 16% last May, arresting a severe slide.
HIGH-LOW. The challenge is to calibrate a fighting brand to make it good enough to draw consumers from low-priced rivals but not so good it clobbers the marketer's top brands or its profit margins. To offset the lower margins on its Funtime film, for example, Kodak is also launching a high-end film for special occasions, Kodak Royal Gold. On Luvs, P&G eliminated jumbo packages, streamlined package design, simplified printing on the diapers, and trimmed down promotions.
Even so, industry sources say Luvs initially cannibalized Pampers' sales; Pampers recovered when it introduced a new, thinner diaper in the fall. P&G's total unit share rose to 40% in December but slipped back to 39.6% in February. That's up from last April's 39.2% but not by much.
Other marketers figure that if they can't beat store brands, they might as well make them. That's what RJR Nabisco Inc. may do: It recently disclosed plans to test-market private-label cookies and crackers in some stores. Such moves underscore the power of retailers, who love the fat margins on store brands. Retailers are said to make 8% to 12% on store-brand diapers. As part of the Luvs repositioning, P&G has said, it has fattened retailers' margins to 8.6% from 3.3%. Still, some retailers, such as most divisions of Safeway Inc., no longer stock Luvs. In the end, fighting brands won't be contenders if retailers don't give them the chance to duke it out.