Natural partners bring unexpected bonuses

Natural partners bring unexpected bonuses
rory Sutherland - Market Leader 2011

Rory Sutherland pushes the principle of complementarity to its logical conclusion: category not just brand promotion

 Until 1993, when I first travelled to the US, I was one of the least valuable consumers of cola in Britain. This was not because of price or availability (I grew up in a self-employed family where wholesale crates of Coke littered the house). No, my Damascene moment happened when I found the US does not share the European belief that ice is a luxury good, to be supplied sparingly if at all.

Staying in American hotels, we found there was usually an ice machine in the corridor outside the room. I soon made the fascinating discovery that, with abundant ice, a drink that was slightly insipid lukewarm became delicious when properly served.

Ice and Coke would be described by economists as ‘complementary goods’ – or goods with a ‘negative cross-elasticity of demand’, meaning a fall in price of one good will increase demand for the other. The example usually given by economists would be hotdogs and hotdog rolls, but you can extend the concept further if you wish – to computer hardware and software, to popcorn and cinema tickets or even film rental and pizza delivery. One of the cleverest ways of using the idea of complementarity was the suggestion – never implemented, as far as I know – that pizza delivery businesses should be equipped with hardware to burn DVDs on demand, so that you could order American Beauty along with your American Hot.

I first came across this concept in an interesting way – in a paper by Gary Becker and Sean Murphy which suggests that some advertising works not by changing consumer preference but by creating emotional attributes that are complementary to the value of the product. Just as free peanuts increase the enjoyment – and hence consumption – of beer, so free (to the buyer) Ford advertising increases the net value of owning a Ford.

Whether advertising mostly works this way need not matter much to marketers (the debate is chiefly of interest to economists) but it is a concept that is useful to us all. Big ideas such as the Michelin Guide or the Guinness Book of Records have arisen from asking the question: ‘What complementary value can we create for our product?’ In the case of the Michelin Guide, the idea arose from asking what information might be complementary to the consumption of tyre rubber. The answer was to give people a list of places for which it was worth journeying further afield.

But, as you may have noticed, complementarity, though powerful, often works at the category level,  not at the brand level (except when a brand controls both goods, as with locked mobile handsets or proprietary systems such as Nespresso or printer cartridges). Michelin and Guinness would have had few qualms about this, since in 1900s France or 1950s Ireland (where the two ideas originated) the market share of the two brands was so huge as to make category growth their main concern.

But as a recent experiment at some branches of Sainsbury’s seems to show, these ideas still have potential. The creation of a ‘cocktail pod’ in the drinks aisle, where mixers, lemons, limes and ice were stocked together, has led to a reported increase of 9% in overall sales of spirits. Once in the booze aisle, even if I contemplate the purchase of gin instead of wine, my decision may be swayed by the knowledge that limes are on a shelf 200 yards away, and against the flow of traffic.

Supermarkets could give more thought to this notion – why is sugar, including sugar lumps, stocked next to baking goods, rather near tea and coffee? But, more important, is too much thought devoted to brand-level questions, leaving little attention spare for category-based interventions?

As Winston Fletcher observes in Powers of Persuasion, category-level advertising, once common (with ads such as ‘If you want to get ahead, get a hat’), has all but disappeared.

What seems so strange about this is that, as consumers enjoy more discretionary income, and as self-limiting notions of class and identity evaporate, the number of consumer decisions that operate at the category level is increasing. When money is constrained, categories are often predetermined, and brand selection is the only sphere of choice: Pontins or Butlins? Thomas Cook or Lunn Poly?

In the 1950s, spirits were unaffordable to most households (in 1951 Swansea, Kingsley Amis remarked on his family’s new-found prosperity by observing that there was now ‘drink in the house’).

Add to this the fact that new digital marketing activities quite often work at the category level not the brand level (notions such as branded utility are often 21st-century versions of the Michelin Guide) and it seems likely that the time has come for a reapportioning of budgets, or at the very least a redirection of thinking.

Rory Sutherland is executive creative director and vice-chairman of OgilvyOne London and Ogilvy Group UK. [email protected]

 

 


Newsletter

Enjoy this? Get more.

Our monthly newsletter, The Edit, curates the very best of our latest content including articles, podcasts, video.

CAPTCHA
17 + 0 =
Solve this simple math problem and enter the result. E.g. for 1+3, enter 4.
This question is for testing whether or not you are a human visitor and to prevent automated spam submissions.

Become a member

Not a member yet?

Now it's time for you and your team to get involved. Get access to world-class events, exclusive publications, professional development, partner discounts and the chance to grow your network.