FMCG products suffer from low differentiation.
A Dove deodorant is not that different from a Lynx deodorant.
Compare it to the purchase of a car and you’ll see what I mean. A Smart is very different from a Range Rover.
As such, FMCG companies rely on brand differentiation.
The Dove brand is clearly positioned to target middle aged women. Body confidence falls at the centre of their brand. The Lynx brand, on the other hand, is is clearly positioned to target to young men. Courting women is clearly at the centre of their brand.
From Ben Thompson’s Stratechery:
“When you can’t differ hugely on product, you find growth through winning niche by ever-more-specialized niche.”
For Unilever, Dove as a brand fulfils a niché that the product, alone, cannot. Lynx fills another and Sure fills one more.
This approach often results in the unbundling of a product, that is, multiple SKUs tailored to specific benefits. In the deodorant category, for example, there are variants that excel in strength, fragrance, stain protection, moisturisation, sensitivity, stress relief and anti-bacteria.
The same is true of the toothpaste category. The UK Colgate site currently lists 37 different paste variations, including SKUs for whitening, cavity protection, sensitivity, breath freshening, gum health and acid neutralisation.
Each variation is hoping that a shopper will choose the specialist over the generalist. Each is targeting its niché.
After a while, however, shoppers become overwhelmed by ultra focused choices. They begin to ask questions. Why can’t I have protected gums and white teeth? Why can’t I have strong deodorant and stain protection?
At this point, brands look to offer catch-all solutions. Continuing to use the same category examples, Oral-B’s Pro Expert paste has done this for toothpaste and L’Oréal Men Expert 4-in-1 has done it for deodorant.
In the tech industry, the ex-President and CEO of Netscape, Jim Barksdale, it is often quoted as saying:
“There are only two ways to make money: bundling and unbundling.”
It seems the same is true of FMCG a goods.
In immature categories, with lots of similar products, you differentiate by unbundling a product and focusing on a single benefit. In a mature category with lots of individual benefits already catered for, you differentiate by bundling the benefits back together.