Who's afraid of brand cannibals?

(From Philippine Daily Inquirer)

Byline: Dr. Ned Roberto and Ardy Roberto

Q: "YOU prescribed in last week's column that a market leader with a premium product should introduce its own low priced product when it's threatened by price brands such as generics. But won't that cannibalize its premium brand's market share and therefore lose business?"

In 1957, Kraft launched the instant orange juice drink Tang in the US with some modest success.

In 1969, it enjoyed an unparalleled popularity when Tang had the incredible good fortune of being indirectly endorsed by the American astronauts who first landed on the moon. While in outer space, Neil Armstrong was quoted by the press as saying that he and his fellow astronauts drank Tang with their breakfast.

Tang's brand managers were ecstatic and acted fast. Two days after the Apollo 11 spacecraft returned triumphantly from the moon, TV ads for Tang " the astronauts' breakfast drink" began playing across America. After that "revelation," sales of Tang soared and rode on this free endorsement for many years. (In fact, Tang is displayed in the Neil Armstrong Air & Space Museum in Ohio.)

Soon enough, instant orange drink imitators soon flooded the market with prices that were about 30 percent to 40 percent lower than Tang. Marketing lore tells us that when the brand manager of Tang thought of dropping his price to compete and protect his market share, a marketing executive proposed that they launch a fighting brand that would compete with the price brands. And so Kool-Aid was relaunched as a fighting price brand and became an instant hit as well.