Is Peak’s Premium Status Threatened?

Unconfirmed reports indicate that the sachet extension of Peak milk, introduced in November 2009, is receiving more patronage than the mother brand. Blessing Nwobodo writes that the development may negatively affect the premium status of the brand.
Owing to the present downturn in the economy, consumer spending has reduced tremendously. Rather than trade up, they cut down on expenses and go for cheaper brands. In fact the current downturn is different from previous ones in several ways. It is global, very deep and even the rich are feeling the pang. To this end companies are devising various marketing strategies to survive the current trend. Some are resorting to promos, others are packaging lower versions of the mother brand, while others are deploying lower quality brands with price in mind, aiming to capture the lower ends of the market.
But this is where the problem lies. Experts say, if you have what the public perceives to be a premium brand, in trying to measure up to market dynamism, you will be doing long term damage to the brand by either lowering the price or introducing sub-brand offerings that use the premium brand name at a lower price point.
Objectively, defining what a premium brand is can be challenging.  However a brand is said to be premium if it has a unique value in a market either through the design, engineering, and quality; mostly if these combine to position the brand as leader in its segment.
Peak milk is one of such brands which consumers perceive to be of high quality, consequently placing it at the high end of the market. For several years, the brand has played god in the Nigerian dairy market as there is no evidence that it has been overtaken by any competitor. However, in recent times, the premium brand decided to reach out to the lower end of the market by introducing the sachet version of the milk in both powdered and evaporated variants. At the launch of Peak evaporated milk sachet which contains the same rich and creamy quality as the 170g tin, Siska Schipper, marketing manager, Friesland Campina Wamco, stated that the introduction of Peak evaporated milk in sachet would enable consumers who like the creaminess of the peak evaporated milk in 170g tin but cannot afford it access to the same creaminess in the sachet version.
Months after the sachet extension was introduced, M2 gathers that it is selling faster than the tin version. While some marketing gurus see the packaging extension as a step in the right direction, some others have reservations about it.
The Nigerian market according to experts is primarily a price driven market. Most buyers are more concerned about price and affordability, and they care less about the value or size as long as it meets their immediate needs. This is made more pronounced with the downturn and has altered a lot of things in the marketplace. “The only lifeline any outfit would have is to frame its operations to reflect the current market circumstances. It is good for a brand to identify with its customers at all times. It makes no sense to serve a particular segment of the market that will hardly keep you in business. Mind you, some of these buyers are probably those who had all the money yesterday but suddenly, situations changed in their economic lives. We still need milk, no matter our social status and the product must be within reach anytime we want it.” Tony Ajah, principal strategist, TA Strategic Solutions, a Lagos based firm into business growth and development, points out.
Substantiating Ajah’s opinion, Victor Ononogbu, managing director, Tamariska Knowledge Hub (TKH), reasons that the bulk of the dairy market is at the mass market end and that market forces must have informed the premium brand’s decision to play also at the lower ends. According to him, consumers are beginning to see through the premium garb. He explains, “Certain brands have produced milk products which match the lushness and creaminess of Peak, but they are positioned and sold at medium/low price levels. Disposable income is very low currently and consumers shop to make savings. Demand for Peak must have been affected tremendously. Thus, Friesland has no option but to come down to the mass market where the buck is. In summary, it is a game of survival now.”
More so, he opines that it is an objective and intelligent move from the leader to defend the premium brand while confronting the followers in their domain by introducing flanker brands positioned at the competitors bread-and-butter level. In his words “competition will be preoccupied with surviving the leader’s onslaught (in this case Friesland) to think of attacking the premium leading brand Peak.” This ultimately means winning on both ends of the market.
However, a school of thought says that there are two problems with adding extension offerings that use the premium brand name at a lower price point. The first is possible cannibalization, in that buyers will shift to the cheaper version; the second is the risk that extending the brand down will taint the brand name. M2′s attempts to reach Jide Olorunfemi, senior brand manager, Friesland, to comment on the report that the sachet extension of the milk brand is currently recording higher sales volume than the mother brand were futile.
Perhaps since both versions offer the same quality, odds are that the earlier Peak brand may be experiencing cannibalization. This is because consumers who would ordinarily have bought the tin offering may still be attracted to the same product at a lower-priced packaging as long it bears the endorser’s name.
Also, there is the fear of diluting the position of the Peak brand with the introduction of the extension which has made it an all comers affair.
For Akinyemi Lofindipe, creative director, Brand Believers, a brand strategy and communication firm based in Lagos , a brand is a badge which a consumer wears. It stands out the consumer and indicates the social status. He opines that extending a premium brand like Peak to all and sundry simply connotes loss of its value proposition. “If an upper middle class buyer buys peak, he is doing so because it affords him a certain value system. When you trade down the brand, you are telling him that other people have access to the exclusivity of the club. Chances are that the consumer may migrate and then if he does and the time comes for the brand to reclaim its initial position, it becomes extremely difficult,” he argues.
He warns that brands should be careful about how they toil with their positioning. According to him, the world is a global village; it is not just about the Nigerian market. Nigeria, like any other country, has access to trade both at the local and international level. Therefore, while the Peak brand is busy trading low because of the downturn which will end someday, some other brands from nowhere will capitalize on the gap, trade up and then take over as market leader.”
Instead, he advises that a better approach to catching the attention of the mass market if there is a need to would have been to introduce a fighter brand. He asserts that an entirely different brand of lower quality would have served the purpose as “all they need do is invest in branding.”
For now, Peak milk may be enjoying the leadership position at both ends of the market, but what becomes of it if a new leader does come in?