A flanker brand (also known as fighter brand) is a new brand introduced into the market by a company that already has established brands in the same product category. The new brand is designed to compete in the category without damaging the existing brand’s market share. This strategic approach to market share growth can be beneficial in many ways, however, there are some dangers to consider when planning your approach.
Most commonly used in the FMCG market, with the benefits including more shelf space and improved bargaining power with retailers, the flanker brand approach is a great opportunity to compete with new entrants to the market, protect your existing brand/market position whilst testing new product innovations.
In a world where disruptors are commonplace – consumers are seemingly more willing to try new things and look to change up their routine. However, as the saying goes – with age comes wisdom – so many consumers will still be brand loyal as long as the brand is evolving and attuned to their customer’s needs.
Understanding the ‘why’ behind creating a new brand in the same market as your existing brand is the most important place to start.
– A change in economic conditions: This can be particularly relevant if your product/brand sits at the higher end of the price range within the category.
– The need to test a change or improvement to your product: This strategy can help brands test product variations without risking their current brand position/sales.
– The need to capture more market share: Launching a flanker brand to compete against a competitive brand within the same category (i.e. competitors with an aggressive pricing strategy).
This approach, when executed with a clear strategic intent, can yield some great results. For example, when Qantas launched its flanker brand Jetstar, the strategy was to strike back against the successful launch of Virgin Blue into Australia.
The success of Jetstar was not only the result of an aggressive pricing strategy, but also of the significant cost reductions from the high-cost model that Qantas was operating in.
The clear differentiation between Qantas and Jetstar – positioned from the onset as the low-cost, no-frills airline, also allowed Qantas to reset its own pricing strategy and positioning – to that of a premium airline offering.
This point brings us to the next fatal error that can occur when launching a flanker brand – lack of differentiation.
It is vital to ensure there is enough of a difference between your existing brand and your new brand. This differentiation must be clear to customers and testing the new brand before launching it into the market is a great way to understand customer perceptions of the differences between the two brands. It is also important to compare your new brand to your targeted competitor’s brands. Understanding why consumers choose the competitor brand will help you decide what factors you need to consider. It isn’t only about price.
Be careful when launching your new brand, that it doesn’t cannibalise the sales of your existing brand. The risk of cannibalisation can occur, not only when launching a new brand, but also when attempting to reposition one of your brands within the same category as another of your brands. Over the past few years, Wesfarmers have struggled with their retail brands Kmart and Target. Australia’s leading retail brands have been fighting in the same space and in recent times, Kmart has come through as the leader with a positioning of ‘everyday low prices’, leaving Target in no man’s land with no real point of difference. The turnaround of Kmart’s performance is not only a result of a shift in the pricing strategy of the business but also from cutting down the range offered within the stores, revamping the in-store design and focusing on ‘trendy’ homewares at every day low prices. By saving Kmart, Wesfarmers has cannibalised the sales of Target. Their next move is yet to be determined, but there is the talk of Target stores being converted into Kmart stores. Another option is for Target to reposition itself and compete with Myer in a higher quality, higher priced position.
Keeping a close eye on the direction of the overall market is just as important as keeping an eye on the competition. It is not always about the functional benefits of your offer or the price.
Coca-Cola is an example of a company suffering from a major market shift. Over the years, Coca-Cola has launched several flanker brands into the same category to combat decreasing demand – but with mixed results. From Diet Coke, designed to target health-conscious females, to Coke Zero targeting health-conscious men, which was subsequently rebranded to Coca-Cola Zero Sugar to align to the new thinking around the challenges of sugar.
As the market moves more and more towards natural products, including coconut water, cold-pressed juices and herbal iced tea, Coca-Cola will no doubt need to focus on further flanker brands.
Consumers increasingly buy into the values of a company and therefore, launching a new brand that doesn’t align with your existing brand values, will more than likely fail.
If your consumers have preconceived expectations of your brand – launching a new brand that doesn’t align with these expectations will have a negative impact on the whole organisation.