MKT 421T Wk 3 – Practice: Alternative Branding Strategies for Philip B Case

Alternative Branding Strategies for Philip B

New distribution opportunities often require a new branding strategy. Selling a prestige product in a big-box retailer can offer the prospect of reaching a large number of new customers and the resulting financial gains. However, the best marketing decision isn’t always trying to sell as much as possible to as many people as possible. Big-box retailers demand lower price points for their customers and often can dilute brand equity and upset other channel members.

Companies can employ several different branding strategies, including multiproduct branding, multibranding, private branding, or mixed branding. With multiproduct branding, a company uses one name for all its products in a product class. This approach is sometimes called family branding or corporate branding when the company’s trade name is used. Alternately, a company can engage in multibranding, which involves giving each product a distinct name. Multibranding is a useful strategy when each brand is intended for a different market segment. A company uses private branding, often called private labeling or reseller branding, when it manufactures products but sells them under the brand name of a wholesaler or retailer. A fourth branding strategy is mixed branding, where a firm markets products under its own name(s) and that of a reseller because the segment attracted to the reseller is different from its own market.

Read the case below and answer the questions that follow.

Philip B (www.philipb.com) positions itself as a high-quality, ultra-prestigious brand of hair and skin care products. The company currently sells its products very selectively through high-end salons and a group of expensive boutiques, spas, and specialty retailers. Prices range from $27 for an 8-ounce bottle of African Shea Butter shampoo to over $50 for an 8-ounce bottle of its White Truffle ultra-rich hydrating shampoo with “23.2% pure plant extracts…with the purest extracts of nettle and thyme to provide aromatherapeutic bliss.” The company also has lines of hair conditioners, bath and body cleansers, and hand and body moisturizers.

Philip B established himself as one of Hollywood’s preeminent hair care experts, working with well-known actors and movie industry moguls. His niche was to provide hair care solutions to consumers with “fried, over-processed hair that won’t respond to regular conditioning treatments.” While many other shampoos had been using “botanical” ingredients for many years, Philip B saw a need and actually began making his own natural remedy product concoctions in his home using what he called proven botanicals in concentrations high enough to produce visible results. The products he developed were extremely unique, and word-of-mouth spread quickly among Hollywood’s elite and beyond. Editors of beauty magazines began writing about his products as the ultimate insider information. Forbes magazine declared Philip B shampoo as one of “the Top 100 things that are worth every penny.” In 1991, Philip B developed a hair care product line and began selling nationwide and eventually internationally. By relying on word-of-mouth and articles in beauty magazines like Vogue, Glamour, and Elle, a cult brand was developed.

Suppose Target Stores took notice of the extremely unique Philip B shampoos and approached Philip B with the opportunity to sell the company’s product in its big-box retail stores. Target is looking for a higher price-point, highly differentiated and unique product to add to its selection of shampoos.

Philip B Company would have a lot to consider with this opportunity. Target Stores would expose Philip B products to millions of consumers who have never even heard of the brand. Sales and profits for the company could increase manyfold. One concern would be how to ramp up production to meet the expected demand. Another concern would be the likely demand by Target to lower the price points to be affordable to a wider range of consumers. If Philip B is going to enter big-box retailers, company executives might also discuss the option of eventually selling its products in Walmart, Kmart, Kohl’s, JCPenney, Walgreens, and CVS Pharmacy. The biggest concern would be the impact of selling its product in Target Stores on the company’s current customer perceptions of the product and the possible negative reaction from its current distribution network of high-end salons, boutiques, spas, and specialty retailers.