How the transformation of traditional brands succeeds

04. Mar 2024 | Handelsblatt, Press-Publications

The pressure on traditional brands seems to be higher than ever before. A flood of trend brands is entering the market from social media. At the same time, many companies are under strict austerity dictates in the face of inflation and the economic downturn.

What consequences does this have for traditional brands? How can established brands remain relevant, especially for new generations of customers? Christopher Spall talked about this in an interview with Handelsblatt.

The decisive ability for traditional brands today is
the ability to transform without losing their own core.

Christopher Spall

3

The interview was conducted by Michael Scheppe.

Tradition – a sign of quality?

According to the definition in the Duden dictionary, tradition is something that has been developed and passed on from generation to generation throughout history and continues to endure. A traditional brand is therefore a brand whose lifespanextends beyond the usual product cycles. Traditional brands have existed successfully on the market for a certain period of time and are characterized by a strong brand identity. They are often consumed for a lifetime and recommended across generations.

Why are the classic brands still having such a hard time at the moment?

The influence of social media

Today, brands can test new products on social media and build a community. Those who understand this game can launch new products and brands with a high probability of success.

Chinese fashion giant Shein is leading the way: A new top is presented on social media and made visible via influencers. If the response is good, the product is produced within ten days and offered for sale online.

New qualities are required: testing and further development. And with maximum speed.

Attractiveness beats tradition

Tradition alone does not sell. In order to remain attractive to their customers, brands must regularly solve a relevant problem for their consumers. They are spoiled for choice: studies show that – from the customer’s point of view – 75% of brands could be replaced by equivalent ones. So even more choice is not really needed.

In the search for a suitable problem solver in the jungle of abundance, brands give consumers orientation and security.

However, this search for the familiar is offset by brand manufacturers’ interest in increasing sales. This is why they are constantly flooding the market with new products, which then compete with the traditional brands for the favor of consumers. Brands without a clear monopoly position have no chance of survival in this competition. They are crushed in the sandwich position between the respective No. 1 brand and the own and trend brands.

This is because new trend and own brands are blossoming, particularly on the breeding ground of Instagram, TikTok & Co. They are relegating traditional brands to the back of the queue – on supermarket shelves and in the rankings of online retailers.

The principle of natural selection applies: Brands without an appropriate margin will, sooner or later, be stamped out – tradition or not.

Consigned to the garbage can:
Traditional brands that have disappeared

Disposed of_Disappeared traditional brands

Wrigley's chewing gum

The classic from 1893 came to an end after 150 years. Nowadays, customers prefer chewy lozenges instead of chewing gum strips, according to manufacturer Mars.

Vittel

According to Nestlé, the former “in” water no longer meets margin expectations and was withdrawn from the market in February 2022. The brand was in the spotlight tics, as the groundwater in the French town of Vittel is sinking. Nestlé intends to concentrate on the premium brands San Pellegrino and Aqua Panna on the German market in future.

Nestea

The brand was discontinued in March 2023 after more than 75 years. This was due to the high sugar content and the hype surrounding influencer iced tea brands such as Bratee (by rapper Capital Bra) and Dirtea (by rapper Shirin David). Another reason was the end of the joint venture between Nestlé and Coca-Cola in 2017, which made Coca-Cola responsible for the distribution of Nestea in almost 50 countries.

Gala coffee

The Tchibo coffee brand has been discontinued. The alternative is sold under the traditional Eduscho brand at a higher price.

Onken

The yogurt brand, which was sold by Dr. Oetker to Emmi in 2010, was discontinued in 2022. The reason for this was the stagnating growth prospects for yogurt and quark in Germany.

Punica

The cult drink was merely a follower in the fruit juice market segment. And fell victim to a strategic portfolio realignment following a change of ownership. Goodbye Punica Oasis.

If you don’t move with the times, you move with the times.

Christopher Spall

How the transformation succeeds

Traditional brands are under massive pressure. On the one hand, they offer security and orientation, especially in times of upheaval. They convey a sense of harmony and – in the face of war, climate change and economic crisis – the good old days. On the other hand, many new trends are entering the market. And the increase in private labels in the retail sector is leading to further selection, as consumers are looking more closely at prices due to inflation.

Serving these needs while solving a relevant problem for today’s customers is the task for all managers of traditional brands. They are faced with the challenge of keeping the DNA of the brand and Darwin in focus. In other words: to adapt the brand to rapidly changing market conditions in the best possible way based on its own identity.

Traditional brands that follow the 3F strategy have the best prospects of remaining number 1 for their customers, even in fast-moving times.

The 3F strategy of Spall.macht.Marke

Future focus

Consistently exploiting megatrends such as sustainability and individualization.

Customer focus

Keeping an eye on customer needs: Only those who are close to their customers will remain relevant.

DNA focus

Don’t lose your own core: Protect and develop core strengths in times of change. Show attitude and win customers as ambassadors. A credible identity is what makes identification with the brand possible in the first place. Brand identity makes the difference.