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10 Truths of OTC No. 10: Stretch brand novelty through line extensions

BY Sara Jones and Nick Vaus

Truth 10: Stretch brand novelty through line extensions

Given the cost and challenge to create new brands entirely from scratch, and the fact that 40-50% of all new products fail, it’s hardly surprising that brand extensions now make up the majority of ‘new’ product launches every year, according to Nielsen. But even brand extensions aren’t always easy: failures like Cheetos Lip Balm litter the discount shelves.

Extension isn’t an art or a science. It’s both. There’s no magic formula, but there are key factors for success.

We categorize 21st century brand extension into three overarching themes: Migration, Marriage, and Metamorphosis.

Migration, moving to a new category, builds on marketing professor Ed Tauber’s 1979 model. It’s about knowing what business you’re in, and what your brand is actually known for, whether that’s ingredient-led or technical expertise, preventative, curative, or otherwise. Being a me-too product isn’t enough. Successful migration requires meaningful added value for customers.

Marriage is extension through multi-brand collaboration. It has the same strategic considerations as migration, but pools the resources of two or more brands to achieve it. It can be practical as with Puffs and Vicks, or more inspirational like Lipton and Theraflu, and offers myriad extension possibilities (and pitfalls).

Metamorphosis is the unicorn of brand extension – transforming a product proposition into a brand personality that’s completely free from category constraints. As consumer attention fragments across ever more channels, brands have to be playful, human and they have to take risks. Think limited editions, competitions or KFC flavors or fragranced nail varnish.

Extension is hugely pertinent to an OTC industry that’s consumer insight-led, but is manifestly not as prevalent as in CPG, with most stretches merely vertical (different flavor varieties, strengths or gallenic forms, for example).

In large part, this is due to OTC’s pharma-first approach, rather than a consumer-led approach that begins by understanding what the brand is actually about in order to extend it meaningfully. Extension successes in OTC are mostly from CPG companies for brands like Oilatum and Aveeno. Or witness P&G’s Vicks, which leveraged its 120 year-plus history of congestion relief to massively extend from a simple decongestant product to a brand portfolio that now includes sleep aids and devices like purifiers, steam inhalers and humidifiers.

But OTC is starting to get it. Nelsons, the homeopathic remedy, introduced a new Rescue Plus range for stress, energy and sleep, including flavored lozenges and gummies. Dr Scholl’s moved up the leg into pantyhose, and Canesten now has women’s intimate freshening products.

Others are jumping into the OTC space – Neutrogena has an anti-acne light mask and hearing aid manufacturer Starkey Technologies launched a range of Ear Health products with solutions for earwax, earaches and itchy ears.

There’s so more that can be done. We mooted the concept Cadbury's Nytime, which combines two sleep cues from Cadbury's Hot Chocolate and Nytol (a popular sleep brand in the U.K.) – one of gentle enjoyment and one of efficacy – to create something powerful with added value. 

Or consider the idea of Schweppes Indian Tonic Insect Repellent. As a contrast to Deet and other competitors, this could leverage the quinine ingredient (with its history as an insect repellent and malaria treatment), with the added consumer benefit of a pleasant zesty orange and lemon peel fragrance.

Similar OTC migrations might include allergy relief brands like Claritin or Allergra moving into anti-allergy skin spray or sunscreens to prevent and tackle prickly heat or sun rash, for example.

So many opportunities exist. It just requires the courage to forensically examine your brand and consumer needs-led insights to see what else might add value to its journey with consumers.

Over the last 20 years, DewGibbons + Partners has helped design some of the world’s most iconic and successful OTC brands, resulting in a deep appreciation of the visual and physical cues — and regulatory limitations — in the self-care and OTC marketplace. The need to challenge those cues and limits is becoming far more frequent.

This is the tenth and final truth, all part of a 10-part series from Sara Jones and Nick Vaus of DewGibbons + Partners. The series has been published weekly and featured in the DSN Health and Wellness newsletter for almost the past quarter. Links to the first nine truths are below.

The first truth was recognizing there’s a problem in the first place.

The second truth unveiled that OTC medicines are more often in the brand-building business as opposed to the pharmaceutical business.

The third truth spoke to the duality of technology, the pace of technological advances may leave some OTC brands behind even as those same advances are seized as opportunities by new brands.

The fourth truth addressed the evolution of OTC offerings from acute sick-care to preventative health and wellness solutions, mirroring a health system that's becoming more outcomes focused.

The fifth truth tracked the consumer purchase path toward OTC medicines, which more and more is incorporating a digital element.

Truth No. 6 highlighted the need for product development to be driven by consumer insights.

Truth No. 7 revealed that restrictive regulations on what can or cannot be said about an OTC medicine is no excuse for poor messaging.

The eighth truth focused on the value inherent in cleverly-designed packaging that attracts the attention of potential buyers.

The ninth truth took a 360-degree approach to OTC brand marketing in helping to transform a clinical if-sick-take-this message into a campaign that better resonates with consumers.


Sara Jones
Partner and client services director, DewGibbons + Partners
Sara runs DewGibbons + Partners alongside NickVaus, and heads up the client services team, leading branding and communications programmes for household names in OTC and health care. She’s always had a bit of a secret passion for OTC branding. Her Grandma was a pharmacist in London’s West End, leaving her with an abiding curiosity about active ingredients and how medicines work. She’s (in)famous for reading patient information leaflets cover to cover. Email her, follow her on Twitter or connect on LinkedIn.

Nick Vaus
Partner and creative director, DewGibbons + Partners
As well as running the agency with Sara Jones, Nick leads the studio in providing solutions that are innovative, creative, economic, and effective. Powered by Beautiful Thinking – a unique combination of right and left brain thinking that seamlessly binds together strategy, design and brand communications – he ensures that his clients’ businesses, brands and consumers are at the heart of each and every brief. Email him, follow him on Twitter or connect on LinkedIn.

 

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CEOs of CVS Health, Aetna say merger will offer new front door to healthcare

BY David Salazar

The heads of CVS Health and Aetna took to CNBC’s “The Squawk Box” Monday morning to outline how the two companies’ proposed $69 billion cash-and-stock merger will impact consumers. Larry Merlo, president and CEO of CVS Health, said that its acquisition of the Hartford, Conn.-based insurer would create a new way for patients to access care — and plays to areas in which both companies were looking to bolster their positions.

“As [Aetna chairman and CEO] Mark [Bertolini] and I continued to have discussions in terms of ‘How can we do things more strategically?’ it was clear as CVS Health was moving to become more of a healthcare company and getting closer to payers, Mark had a similar strategy in terms of getting closer to the customer,” Merlo told CNBC. “It’s really the perfect time to bring these two companies together to create a new healthcare platform that can be easier to use and less expensive for consumers and really create a new front door to health in our country.”

Bertolini sees the merger as a way to offer a more tailored experience to Aetna's roughly 44.7 million members through Woonsocket, R.I.-based CVS Health’s offerings from its roughly 9,700 retail pharmacy locations and roughly 1,100 MinuteClinic locations

Think of an idea where we have 10000 new front doors to the healthcare system, where people can walk in, they can ask for some help, get guided through the system,” Bertolini said. “We can make the insurance the back room of the operation, we can waive prior authorizations, we can waive copays as people use the system in a way that’s more effective so we can reduce costs. It’s simpler, it’s customized for the individual based on what they need and it’s cheaper.”

The companies’ post-merger plans include turning CVS Pharmacy locations into healthcare hubs where patients can seek guidance on their conditions, health coverage and prescription medications. Merlo said that if the deal goes through — the companies expect it to close in the second half of 2018 pending regulatory approval — its efforts to leverage both companies’ strengths would start immediately.

“Upon closing, there’s things that we’ll be able to do out of the gate,” Merlo said. “At the same time we’ll begin to pilot these concepts, we’ll learn from them, and I would expect within the next couple of years, you'll see a dramatic change in terms of the store not just being about products but also service offerings that can help people on their path to better health.”

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EverlyWell jumps the ‘Shark’

BY Seth Mendelson

“Shark Tank,” the hit ABC television series, is paying off for EverlyWell, an at-home health testing company. EverlyWell founder and CEO Julia Cheek accepted a $1 million line of credit in exchange for 5% equity on the show that aired Sunday, Nov. 26. It is the largest valuation deal for a solo female entrepreneur in “Shark Tank” history.

“You get one shot to tell your story to the sharks and to America.” Cheek said after the show. “We know that our brand and consumer education is incredibly important to our growth, so it was really a once in a lifetime opportunity to get to pitch the sharks for an investment. This has been an incredible journey, and I’m grateful that we got our retail ‘start’ at GMDC’s Demo Day. We are eager for the next chapter in EverlyWell’s growth."

EverlyWell was first pitched in front of a retail executives audience during Global Market Development Center’s Retail Tomorrow “Demo Day” in 2016, then went on to win the Chair’s Choice Award during the 2017 GMDC Health Beauty Wellness Marketing Conference. The company offers a variety of at-home lab tests — including tests for food sensitivity, metabolism, sexually transmitted infections, ovarian reserves and others, some of which also offer a DNA analysis component. The results of the tests are delivered via the company’s secure platform.  

“We knew Julia and her innovative company was poised for incredible success when the startup presented at our inaugural Demo Day,” said Patrick Spear, president and CEO of GMDC. “And that success has been rewarded by this historic – and groundbreaking — ‘Shark Tank’ deal. The sky’s the limit for Julia and EverlyWell, and we are proud of the entrepreneurial accomplishments they are enjoying.”

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