Variant strategy does the trick for FMCG firms

Earlier this year, Hindustan Lever introduced two new versions of Dove soap, one was an exfoliating bar and the other was aimed specially at the summer months. This was followed up by the introduction of Vaseline Aloe Fresh a variant aimed at pushing up summer sales.

The exercise of introducing variants of existing products to cater to a specific need is the current flavour of the season as far as FMCG companies go.

Rather than go in for new brand launches, companies prefer to introduce variants, which may or may not be the same product category as the mother brand. And the best part for the companies is that some of these innovations are actually working!

Colgate Palmolive, which introduced an Active Salt toothpaste last year, said that within a year of its launch the product is already contributing 5 per cent to the company's total toothpaste revenues.

Similarly, Hindustan Lever, which brought in Brooke Bond Natural Care with specific herbs added to it said that the brand is doing very well for the company.

And since the product caters to a consumer segment different from that of the mother brand, it doesn't eat into the latter's performance.

On the financial front too, companies say that this strategy is viable as launching and promoting a variant is far more cost effective than introducing a new brand.

But, while companies may be going all out to cash in on the 'variant strategy', industry watchers aren't too thrilled. "So far, a variant has never managed to do better than the mother brand," pointed out Harish Bijoor, CEO, Harish Bijoor Consults. Even in cases where the variant has been successful, it hasn't resulted in more than 12-13 per cent of the overall brand sales.

Traditionally, the variant strategy has worked better at the top end of the market, where consumer needs are narrower, said Bijoor. This has resulted in a number of niche variants like Surf Excel Gentle Wash for delicate fabrics, or Nescafe 3-in-1 sachets being introduced. And this is no longer restricted to the same product category anymore.

Marico, which has been actively expanding its 'Parachute' brand through value-added hair oils is now prototyping a Parachute Jasmine soap as well.

While the variation strategy isn't new, most companies had abandoned it a few years ago to introduce a slew of new brands. This resulted in a confused customer and a very large product portfolio for companies to pay enough attention to.

As a result, the less popular brands suffered, which ultimately lead to rationalisation through power brand strategy. Now that these brands are well established, companies are building on the equity of existing brands to drive the new variants.