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My First Vegemite: Branding Lessons For Start-ups

My First Vegemite highlights perils of spin-off products

By Michelle Hammond
Thursday, 17 February 2011

A branding expert says start-ups must tread with caution with launching spin-off products or they run the risk of undermining their brand.


Erminio Putignano, managing director of FutureBrand Australia, says companies who frequently diversify their original product can appear as if they are losing direction.


Putignano’s comments come on the back of an announcement by Kraft brand Vegemite, which has launched its latest product, My First Vegemite.


The new product is aimed at children aged one to three, claiming to contain extra vitamins and a heavily reduced sodium content.


Aimed at health conscious parents, Kraft has said it hopes the new product will lift overall Vegemite sales by 5%, describing My First Vegemite as a “new arrival in the Vegemite family”.


Putignano says because Vegemite is an iconic Australia brand, deviating too far from the original product can be a risk.


“When businesses are launching secondary products, they really need to assess the need for it. In the case of Vegemite, there is need for a healthier product,” he says.


“At the same time, a brand like that should be careful. If they diversify a lot, the whole overarching brand could lose – or appear to be losing – its sense of direction.”


Putignano cites Vegemite’s iSnack 2.0 as an example, a spin-off product launched as part of an interactive campaign in 2009. Consumers were invited to rename the product but the campaign failed as a result of its inability to engage with customers.


According to Putignano, the campaign was too gimmicky and not in line with the brand, which confused consumers.


“Vegemite is a brand of reliance. With the iSnack 2.0 campaign, people would have thought, what the hell is this?” he says.


Mark Whalley, consumer analyst at market research agency Datamonitor, says while the campaign generated short-term sales and brand awareness, consumers became suspicious that it was simply a marketing ploy.


“The campaign reflects the dangers of relying purely on immediate gains without consideration for the long-term impact on brand equity,” Whalley says.


Brian Walker, managing director of The Retail Doctor, says business must be very clear about the market they wish to pursue and why they believe an opportunity exists.


“Ensure the innovation and penetration of the product is very much in that segmented space otherwise the danger of overlapping [into another market] and confusing consumers can be quite high,” Walker says.


According to Erminio, businesses looking to launch any product need to ask themselves what they stand for.


“Make sure [any spin-off product] is clearly aligned in an intelligent way with the master brand,” he says.


Erminio says there are no time restraints as to how long a business should wait before launching one new product after another, but should spend time doing its homework.


“If you look at the sheer number of products that are launched every year, a big percentage fails. It’s a very risky business,” he says.


“Business should launch with a big fanfare –you want people to start talking about the product in order to gauge straight away whether or not it is working.”

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