Mark Ritson
Mark Ritson
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Mark Ritson on Branding: Small is beautiful

Brands across the spectrum could find smaller formats will widen their reach and increase sales

It's a big deal when a new chief executive takes the helm. All eyes, therefore, were on Fabrizio Freda at Reuters Global Luxury Summit in New York last week. Freda is about to become the head of Estée Lauder, and he took the stage to outline the future direction of the huge cosmetics group, which includes brands such as Clinique, M.A.C. and Crème de la Mer.

His big message? Smallness. Estée Lauder's market data suggests that consumers are opting in ever greater numbers for smaller SKUs - even when bigger formats offer significantly better value for money. Freda says he is planning smaller formats of fragrances and cosmetics, with lower entry price points and, hopefully, better sales.

Freda wasn't the only soon-to-be chief executive preaching the gospel of minimisation last week. Bob McDonald, who steps up to the helm of Procter & Gamble on 1 July, says his focus will be on global expansion and the ability of P&G to adjust its range to meet the needs of consumers in emerging markets.

McDonald cited Pantene, one of the brands he oversaw in India while head of haircare, as a prime illustration of the future direction for P&G. Pantene is sold in mini-sachets in India, as many consumers cannot afford bigger formats and prefer smaller, single purchases. Smallness triumphs because it fits the needs of emerging markets better.

At the other end of the pricing spectrum, smallness is proving key for several of the world's luxury brands. Bain & Company's 2012 Luxury Market Update suggests that leather goods brands such as Louis Vuitton, Gucci and Hermès will return to prosperity faster than ‘pure' fashion brands such as Christian Lacroix or Valentino.

The reason for their superior resilience is not related to leather itself, but rather the preponderance of smaller accessories that typically make up part of the offer of leather goods brands. In cash-strapped London or New York, smaller accessories allow fashion mavens to enjoy participating in luxury without the big bills to match.

For the growing army of luxury fans in the BRIC economies, these smaller accessories are providing an accessible introduction to European brands. In luxury, it seems, smallness works across both the traditional old-world markets and the white-hot new world.

The trend for miniaturisation is also at the heart of one of the biggest shifts in British consumer behaviour. According to a Mintel report published last week, British wine consumption is declining for the first time in more than a decade. Meanwhile, vodka drinking in the UK has risen 40% over the past two years.

The reason? Commentators have offered a range of explanations, from superior marketing to demographic changes, none of which rings true. How about a more basic explanation? When faced with the choice of a bottle of wine or a shot of vodka, today's consumer is likely to choose the smaller option.

Today's brands can win big by thinking small. Smaller perfume bottles; smaller servings of shampoo; smaller accessories; smaller drinks.

In honour of this trend in branding, I am going to end this week's column a little differently. Rather than my usual 620 words, I offer you 10% less. Instead of a bracing conclusion, I am going to leave you with a paragraph of fresh air. Because... well... you get it.

Mark Ritson is an associate professor of marketing and consultant to some of the world's biggest brands

30 seconds on marketers who believe small is the new big

  • Todd Stitzer, Cadbury's chief executive, is launching Dairy Milk Shots for the Indian market. ‘We seek to reach out to all of those consumers that are away from the cities and sell small piece products at low price points,' he said.
  • ‘The best value per ml is still in the 100ml, but the absolute price point in the 30ml size is much lower. We are selling more of the 30ml,' said William Lauder, Estée Lauder's outgoing chief executive, at last week's Luxury Summit in New York. ‘The consumer doesn't have as much money, so she'd rather spend a little bit now.'
  • According to Nikhil Gharekhan, senior vice-president of Millward Brown, luxury brands that offer smaller, entry-level products are faring much better than brands such as Cartier that focus on the higher end. ‘Brands that offer luxury treats are less vulnerable,' he said.
  • ‘Small can be premium,' Mark Templin, vice-president at Lexus USA has claimed. ‘It's an emerging segment, and we're watching it closely.'