8. August 2016

Mainstream makes brands interchangeable – the problem of “Middle Brands”

It is very dangerous for a brand to become part of the interchangeable mainstream. Why the middle is a bad position and how a brand can get out of it again is demonstrated by the fashion label s.Oliver.

It is one of the fundamental laws of brand management: A brand has to give consumers orientation. If it does not, customers' willingness to pay declines and the brand quickly maneuvers itself into arbitrariness. Even long established brands have experienced this.

Some brands don't seem to abide by that law. They do not emphasize a unique feature that would set them apart. And they don't seem to think this is something to strive for. You get the impression that they are much for comfortable in the mainstream: Where volume production kicks in and the mass makes the sale.

Other brands do not occupy this position voluntarily: They are pushed to the middle of the market, perhaps by new competitors. External influences – for instance changing social trends – can also trigger market dynamics that may force a brand toward the middle.

This begs the question: Is a position in the middle advantageous for a brand or not? Why the middle is extremely dangerous for the brand value and how a brand can get itself back out of that position is demonstrated by a mid-priced mainstream brand in the fashion sector: s.Oliver.

Mainstream means interchangeability

Do you remember the brand's big mystery campaign in 2014? Tall buildings sported the question "Who is Sir Oliver?" in huge neon letters. Mysterious messages made the rounds in the World Wide Web. In addition, renowned fashions bloggers were deployed to spread rumors about the fashion brand. Massive budgets were invested. Effect: Nobody remembers. Or did you?

This allows us to stipulate the following hypothesis: Mainstream brands do not produce memorable experiences. Mainstream means interchangeability.

For a brand, interchangeability means:

  • It has no profile.
  • It cannot offer a differentiated promise.
  • It does not conquer a position in consumers' minds.
  • It does not generate desirability or brand attractiveness.

These are reasons why interchangeable brands do not manage to get into consumers' relevant set during the purchase process – they lack the suggestion of a psychological and emotional added benefit. The consequence: Marketing efforts have no effect. The company's returns are jeopardized by dwindling brand loyalty.

Storytelling needs to relate to the brand

The mystery example of s.Oliver shows: What was actually a well-constructed storytelling element is not remembered, because it does not relate to the brand. Testimonials also remain ineffectual because the lack of brand self-conception prevents an association between brand and testimonial.

The large tanker s.Oliver managed to maneuver itself into this unfortunate situation – surrounded by the speed boats of the Inditex Group (e.g. Zara, Massimo Dutti, Pull&Bear) and the H&M subsidiaries (e.g. Cheap Monday, & Other Stories, COS). As a typical mainstream brand, s.Oliver had increasing difficulty reacting to new market conditions. The company had to capitulate to its competitors, who use highly vertical fast-fashion models.

With their multi-brand strategies, s.Oliver's competitors move about the fiercely competitive market with amazing agility. They acquire new growth potential and protect themselves from the unattractive ubiquity of their products. They gradually drain the buying power in the medium price segment – in stationary shops as well as in e-commerce. The middle brand s.Oliver can no longer defend this segment because of its sinking attractiveness. The company is feeling this internationally as well, as profits have been stagnating for years. The brand was ruthlessly pushed to the middle without even a chance of defending itself.

"Mainstream“ brands have to get out of the middle

The situation forces s.Oliver to act. A first step is taken with the umbrella brand strategy adopted in August 2016, which calls for the formation of independent sub-brands:

  • Under the brand umbrella s.Oliver, two sub-brands now dominate: the new brand "s.Oliver Red" (evolved from the fashion line s.Oliver Casual) and the premium label "s.Oliver Black" (formerly s.Oliver Selection).
  • With independent subsidiaries, s.Oliver lays the foundations for re-conquering the market. Market entry barriers can be raised and the reaction time to external changes can be greatly improved.
  • Beyond that, pure "s.Oliver Black" or "s.Oliver Red" stores have a much easier time entering the market in new countries. In the past, this was done haphazardly in a not very strategic manner.

These are the lessons learned for preventing a middle position:

Lesson 1: A clever structure of the brand system helps to better dominate the overall market.

A new brand architecture can be the key to achieving the long-desired goal of product range superiority: with a slim product portfolio, a low cannibalization rate, and a sharpened brand profile. The unambiguous internal differentiation creates more clarity for the customer, and also allows the company to present more targeted offers via the individual brands.

By returning to the strength of the sub brand QS and emphasizing its peak performances in the denim sector, s. Oliver could, for instance, achieve new growth in its home market, without even having to further instrumantalize the s.Oliver brand. It also enhances differentiation from the competition and generates an image in consumers' minds

Lesson 2: Sharp positionings formulate a binding brand promise and differentiate from the competition.

A diversified brand portfolio can be used strategically to pull the brand in recurring cycles out of the mass and into niches on the edge. This opens up broader fields of action to transform the brands in turn.

For instance, using incremental or disruptive innovations can create new impulses that increase the brand's attractiveness. Novel concepts – in the dressing rooms, with virtual fitting in the online shop, with individual personal shopping incentives, or with sustainable products – help the brand to leave the purely product-oriented level and establish breeding grounds for experiences that appeal to the customers' life scarcities.

The customer is automatically tempted to make cross purchases, word-of-mouth communication is stimulated, and the customer is given more reasons to be loyal toward the brand. The accepted price premium can also increase.

Lesson 3: Brands must continuously move toward the edge of the market, where growth is possible due to increasing brand attractiveness.

Sweeping marketing campaigns cannot take hold if they are not underpinned by performance, large investments evaporate without success. Increasing awareness does not lead to escape from the suction that pulls toward the middle. In fact, it has the opposite effect.

Lesson 4: Pure communication policy in the middle does not generate brand attractiveness.

Currently, the brand s.Oliver is still highly prevalent in wholesale with distributors like Wöhrl, Karstadt, and Peek & Cloppenburg. Ipso facto, their own retail shops and flagship stores are visited much less frequently. Paired with a trend toward dying inner cities and progressing closures of department stores in wholesale, this makes an explosive mixture for the German textiles giant.

In the retail segment, it should be considered whether the cluttered flagship stores, which make the presentation of the brands seem indistinct, should make room for small, boutique-style shops. The brand positioning at the edge would then be secured and it would prevent over-distribution of the labels.

The wholesale multi-brand business has to transfer this positioning strategy onto its own segment to preserve the customer journey. It's the only chance for the brand to once again be the sovereign of its sales floors.

Lesson 5: The sales structure can be used to avoid the middle.

The thesis mentioned in the beginning was validated by the observation of the example s.Oliver: Middle brands are threatened by acute risk of being mistaken for others. The image of a comfortable mainstream position is an illusion – the risk of slipping into oblivion is too great.

s. Oliver now has a chance to use independent sub-brands to avoid the typical sandwich position of middle brands. By compressing its brand power, the unmistakable character of the brand is emphasized – a prerequisite for consistent re-building of the brand.



Dr. Judith Scholz


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