Thursday, March 23, 2006
Big companies buy small brands with big values
By Theresa Howard, USA TODAY
NEW YORK — Consumers have shown they are willing to pay a premium for "natural" products from values-oriented companies that make them feel good, and big marketers want a piece of the profitable trend.
Colgate (CL) on Tuesday became the second multinational corporation in a week to buy a small company with a social responsibility message. It bought 84% of Tom's of Maine, the all-natural personal care brand based in Kennebunk, Maine, for $100 million.
Friday, French cosmetics giant L'Oreal bought London-based retailer The Body Shop, a personal care chain known for its avoidance of animal testing and its support for human and animal rights causes.
It's no wonder small brands with values messages are popular. They can turn commodity products into premium products. All-natural personal care products represent a $3 billion market that's growing 15% per year, according to Colgate.
Marian Salzman, a trendwatcher at ad agency JWT, New York, calls it the "Rise of Ethical Consumers" in her upcoming book, Next Now. "Good for you and good for the planet is the ultimate win-win," she says. "Being a consumer can make you feel selfish, but buying such brands can make you feel selfless."
The buyer's marketing challenge is to maintain the smaller brand's roots and cachet. "If you lose the edge of being of the community, then you are just a big brand," Salzman says.
Marketing expert Marc Gobé said the buyers aren't just after profits. The smaller companies "have a discipline of ethics they want to emulate in their own companies," said the CEO of marketing agency Desgrippes Gobé Group and author of Citizen Brand: 10 Commandments for Transforming Brands in a Consumer Democracy.
NEW YORK — Consumers have shown they are willing to pay a premium for "natural" products from values-oriented companies that make them feel good, and big marketers want a piece of the profitable trend.
Colgate (CL) on Tuesday became the second multinational corporation in a week to buy a small company with a social responsibility message. It bought 84% of Tom's of Maine, the all-natural personal care brand based in Kennebunk, Maine, for $100 million.
Friday, French cosmetics giant L'Oreal bought London-based retailer The Body Shop, a personal care chain known for its avoidance of animal testing and its support for human and animal rights causes.
It's no wonder small brands with values messages are popular. They can turn commodity products into premium products. All-natural personal care products represent a $3 billion market that's growing 15% per year, according to Colgate.
Marian Salzman, a trendwatcher at ad agency JWT, New York, calls it the "Rise of Ethical Consumers" in her upcoming book, Next Now. "Good for you and good for the planet is the ultimate win-win," she says. "Being a consumer can make you feel selfish, but buying such brands can make you feel selfless."
The buyer's marketing challenge is to maintain the smaller brand's roots and cachet. "If you lose the edge of being of the community, then you are just a big brand," Salzman says.
Marketing expert Marc Gobé said the buyers aren't just after profits. The smaller companies "have a discipline of ethics they want to emulate in their own companies," said the CEO of marketing agency Desgrippes Gobé Group and author of Citizen Brand: 10 Commandments for Transforming Brands in a Consumer Democracy.
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