Lucozade: A Case History

Gerard Smith Institute of Practitioners in Advertising IPA Effectiveness Awards, 1992

Title: Author(s): Source: Issue:

Lucozade: A Case History Gerard Smith Institute of Practitioners in Advertising IPA Effectiveness Awards, 1992

Agency: Ogilvy & Mather

Author: Gerard Smith

Lucozade: A Case History

SYNOPSIS This paper describes how advertising was used to reposition a famous brand. The effects of the advertising were immediate, and yet the case shows how the brand's subsequent growth was made possible purely by the advertising. It did so by encouraging a new target audience to view a familiar brand in a new light; generating a desire for purchase. The scale of the success is remarkable. Annual volume in 1991 was five times higher than in the year preceding the launch of the new campaign, in 1984. In the soft drinks market only Coke and Pepsi have higher sales by value. Injecting new life into old brands is not a new strategy for SmithKline Beecham, the parent company. It has been achieved through new packaging and product formulations for Ribena, and to a limited extent for Lucozade itself; but what this case shows is how the successful implementation of the strategy was critically dependent on advertising. INTRODUCTION This paper describes how advertising was used to reposition a famous brand. The effects of the advertising were immediate, and yet, as we shall see, the brand's subsequent growth was made possible purely by the advertising. It did so by encouraging a new target audience to view a familiar brand in a new light; generating a desire for purchase. The scale of the success is remarkable. Annual volume in 1991 was five times higher than the year preceding the launch of the new campaign, in 1984. In the soft drinks market only Coke and Pepsi have higher sales by value. Injecting new life into old brands is not a new strategy for SmithKline Beecham, the parent company. It has been achieved through new packaging and product formulations for Ribena (see 'Advertising Works 2' IPA 1983), and to a limited extent for Lucozade itself ( see 'Advertising Works' IPA 1981); but what we shall see in this case is how the successful implementation of the strategy was critically dependent on advertising. Throughout the case, graphs showing sales have been indexed to protect client information. The average bimonthly sales between 1971 and 1984 = 100. BACKGROUND
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Lucozade is made predominantly from a mixture of Glucose syrup and carbonated water. It was first developed in 1927 by a Newcastle chemist for his son who was recovering from jaundice. Over time it became popular, and was bought by Beecham, who launched the brand in the classic yellow cellophane wrapped bottle in 1938. The glucose in Lucozade is in a form that can be easily assimilated into the body, so that in illness, when there is appetite loss or food is difficult to keep down, a drink of Lucozade can help provide the energy the body needs to recuperate. The brand was consistently promoted on this basis, and older readers will recall the advertising campaigns of the 1950s and 60s, during which time the brand grew in sales and profit contribution, eventually to become the company's biggest brand. However, during the 1970s the brand started to decline. Lower levels of sickness, less frequent flu epidemics and increases in real price all contributed to a decline in consumer demand. Between 1974 and 1978 alone sales fell by 30%. REPOSITIONING (1) 1978 To address this problem, the 'ups and downs of the day' advertising campaign was developed in 1978, designed to extend usage for the brand by positioning it as an in-health pick-me-up for housewives. This campaign was shown to have increased sales by 11%, but although the prior decline was arrested, growth was not maintained for long, and by the end of 1979, sales had plateaued. Nevertheless, this campaign was only part of the company's effort to get in-health usage, and in 1980, a new 250ml widemouth bottle was introduced in the 'one-shot' market. Despite a successful introduction of the new packaging format, which carried the new brand positioning 'Lucozade replaces lost energy' (replacing 'Lucozade aids recovery'), by 1982 sales were no higher than in 1978, before the launch of the new bottle. Sales in the original large bottle were failing faster than they were increasing in 250ml. Whatever short term benefits had accrued from the advertising and packaging initiatives, it was clear from a Usage and Attitude (U&A) study conducted in 1982 that the underlying character of the brand, as far as consumers perceived it, had not changed much from its historical norms. Housewives and children were still the predominant users, and illness and recovery the main reasons for consumption. TABLE 1: USAGE OF LUCOZADE
Current Users Housewife Children Husband Other adults
Source: Lucozade U&A 1982

% 64 22 20 43

Reasons for consumption Illness Recovery Refreshment Pregnancy

% 58 27 19 8

REPOSITIONING 1983 These results cast doubt over the strategy of pursuing growth through 'extended usage' amongst housewives, and soon
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afterwards, it was decided that the best growth opportunity for the brand was in the Carbonated Soft Drinks (CSD) market , the rationale being:
The brand's strength in CTNs

In formulation, packaging (250 ml), in store positioning, and distribution (as well as near perfect distribution in grocery outlets Lucozade already had 50% sterling weighted distribution in CTN's for both packaging formats), the brand shared many of the characteristics of a CSD.
The scale of the opportunity

The volume potential in the CSD market was enormous. The market was large (700 million litres in 1982) and growing (up 19% on the previous year). However these positive aspects needed to be set against factors standing in the way of a straightforward market entry.
Target Audience

The CSD market is dominated in every respect by two brands, Coke and Pepsi (45% share between them), but more importantly it is a fashion market, whose principal consumers are teenagers and young adults. For this group, Lucozade brought with it a lot of negative 'baggage', as something their mums had given them when they were ill as kids.
Price

Compared with other CSDs, Lucozade would be extremely expensive (75% more than Coke). It was felt that these problems could be addressed via advertising that would do two things. It would justify a price premium via a USP, and in execution use imagery which this new young target audience would find motivating. The USP (Unique Selling Proposition) to justify the price premium was based on the brand's particular benefit claim Lucozade is the only soft drink that is delicious, refreshing, and can quickly replace lost energy.' The creative solution was to be found in sport which simultaneously resolved both problems. It was the perfect environment in which to demonstrate the rational claim, and was entirely suitable for the aspirations, interests and motivations of the new target audience. Recognised at the time as the world's greatest athlete, Daley Thompson was signed as the spokesman for Lucozade, and in July 1983 he featured in a Lucozade ad for the first time. RESULTS
Sales

The results were mixed. Sales of 250 ml increased significantly but these coincided with the hottest summer since 1976, and again, the original large bottle failed to respond. By year end sales were at the same level as the previous pre-CSD level.
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Advertising awareness

Moreover, there was concern that the Millward Brown advertising awareness tracking data showed the Daley advertising to be significantly less efficient at generating awareness (awareness index 5) than its predecessor , the 'ups and downs' campaign, (awareness index 7). However these results were amongst housewives (it was not until 1985 that the Millward Brown sample was changed to include men and children/teenagers), so might not be a reliable indication of a poorly performing ad. To check this and to help creative development, the ad was researched qualitatively, in group discussions amongst teenagers and young adults. This research showed quite clearly that the advertising was not working. The analysis boiled down to two principal problems, and we have used verbatims from the groups as illustrations of each point:
Verbal versus visual

The ad relied too heavily on what was said to communicate its message; I like watching him, but I didn't take in what he said. Personality versus Brand personality The ad was using Daley as a 'bolt-on' addition who was therefore left to argue on behalf of the brand; You don't need him to tell me that he needs Lucozade, he's a great athlete whatever he drinks. Models of Advertising Whilst the analysis of the advertising was not undertaken in these terms at the time, it is worth introducing more up to date research to the analysis of the past. Recent work by Davies Riley-Smith and by Gordon Brown suggests fairly clear, discrete ways or 'models' in which advertising may work. These are described and discussed more fully in Appendix 1, but for the sake of brevity we shall adopt the Davies Riley-Smith nomenclature here. Their work suggests four models of advertising, 'sales response', 'persuasion', involvement', and 'salience'. The 'Training' ad was developed according to the 'persuasion' model, implicitly assuming that consumers required a 'reason why' to justify purchase, and that the justification would be provided by claims made in the ad. Yet the CSD market is characterised by advertising according to the 'involvement' model, where people develop a direct relationship with advertising and find the brand more approachable by finding the advertising more approachable. A new brand entering a competitive market needs advertising with a difference from the market norm, but 'persuasion' was not the way to go. The qualitative research confirmed this analysis. 'Training' lacked soft drink credibility, the competitive street values, presence and style needed to break into the arena the advertising had been developed according to the wrong model.
The 'Traffic Lights' Campaign
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From this assessment came the 'Traffic Lights' TV commercial an embodiment of energy visually, symbolically and structurally. Traffic Lights sought to portray the energy of Lucozade rather than 'explain' it. Post rationalising, one could say that all the elements of the ad said 'energy', but this was not how the ad 'worked'. It worked as a film in its own right, with Daley shown simply as a performer in heroic slow motion. The Iron Maiden music was chosen for its wind down and slow build to thunderous crescendo and the 'Stop Lucozade Go' traffic lights device embodied the before and after promise of dynamic energy, at the same time branding the advertising unmistakably. In the vocabulary of the 'models' of advertising mentioned earlier, the film worked according to the newest model of advertising, the 'salience' model. According to this model, the brand is accessed immediately via the ad rather than its 'message' rather in the way that most lager advertising works. The CSD market shares some of the characteristics of the lager market, targeting consumers who have grown up with advertising and who have a sophisticated understanding of its 'rules'. This advertising 'literacy' raises certain expectations of advertising.
Short-term Effects Sales

The advertising was first shown in July 1984, and in the first year of the new advertising, with no significant gains in distribution or changes in price, and with media weight more or less the same as a year ago (1030 TVRs versus 970), volume sales of 250ml increased by 40%, and were accompanied by sales increases in the original large bottle of 4%.
Short-term Effects Advertising Awareness

Millward Brown data suggested that the 'Traffic Lights' campaign was more impactful than the previous campaign. Later studies amongst men and children/teenagers showed 'Traffic Lights' produced awareness indices of 30 and 25 respectively. The effectiveness of the advertising with these audiences is borne out by TGI data showing the changes in penetration between 1985 and 1983 (pre and post advertising). The aim of the advertising was to attract a new brand franchise, and there was powerful evidence of its success.
Short-term Effects Consumer Perceptions 1. Housewives

Far from engendering negative attitudes, image attributes measured by Millward Brown all moved in the brand's favour, despite the fact that the traditional franchise were no longer the primary target for advertising : TABLE 2: DATA FOR 12 WEEKS ENDING OCT 1984
% Agreeing Suitable for all members of the family Suitable even when not ill Gives natural glucose energy Is a refreshing invigorating drink Better for you than other fizzy drinks 88 80 73 67 57 % change versus yr ago +22 +17 +12 +13 +10
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Source: Millward Brown

2. Young adults

Again, amongst this group, qualitative research was at this time the only available means of evaluating advertising. Indications from work undertaken amongst teenagers were that the new consumers who had been sought for the brand readily identified with the new imagery. Far from being a sickness aid, it had become an empowering energy drink.
Longer-term Effects

The 'Traffic lights' advertising clearly worked in the short term, but this would be a partial portrayal of its real success. We aim to show that the explosive increase in sales that followed was made possible by the advertising. By the end of 1991, the brand had grown to a level of annualised volume nearly five times greater than before 'Traffic Lights'. The brand now comprises Original, Barleys, Lucozade Light, and Sport and is available in large bottles, 250ml bottles, cans and very recently a 'sports pouch'. Daley Thompson and the 'Stop Lucozade Go' structure has been used for nearly all of these introductions, although he eventually 'retired' in 1988, and Sport was launched using John Barnes.
The effect on sales of new brand 'extensions' (Wouldn't sales have grown anyway?)

It is our premise that the advertising, by successfully positioning Lucozade as a CSD, created a platform for further brand extensions. However, we cannot prove that these introductions were solely dependent on the existence of the advertising. What we can demonstrate is that these introductions could not of themselves have been the sole cause of the sales growth. We have used an econometric model (described more fully in Appendix 2) , to model sales from 1971 to 1984, just before 'Traffic Lights', and then used this to 'predict' the sales thereafter. The model of sales is based on a number of variables, one of which is the introduction of 250ml (as measured by its distribution gains). In this way the effect of new format introductions per se is allowed for in the model. This model 'fits' the 13 years' data before the 'traffic lights' advertising very well. In theory, therefore it should accurately predict sales thereafter. Actual sales are now on average 250% higher than predicted. We are not imputing this difference to the weight of advertising, which in fact has declined over the last 20 years, but to the advertising execution. CONCLUSION What we have seen in this case is a portrayal of a brand re-positioning, made possible by advertising. It is an illustration of the difference between advertising's contribution to sustainable, profitable growth, rather than 'blips' in sales. The company is unprepared to release details of brand profitability or sales value. Such is the scale of the increase however, that it has repaid the advertising investment many times over. APPENDIX 1 'HOW ADVERTISING WORKS'
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'How Advertisers Think Advertising Works' Davies, Riley-Smith Et. Al.

Synopsis

Few people involved with generating or evaluating advertising would disagree with the proposition that not all advertising campaigns work in the same way. Despite this, research tends to adopt the same approach, the same measures, the same assumptions and the same judgement criteria regardless of the way the advertising was designed to work. To develop a practical response to this situation, the authors therefore set out to identify models of the different ways that advertising is thought to work: not based on academic theory, nor on researchers' judgements about what does or doesn't signify success, but on what advertisers and their agencies actually do. Their research identified four models:
1. The Sales Response Model Key assumptions Main reference point Advertising works directly on behaviour, and intermediate measures do not predict this. Ultimate sales effect indicates whether a campaign is working or not.

2. The Persuasion Model Key assumptions Advertising works (following common sense) in a linear sequence, starting with awareness and working step by step through understanding to preference and purchase influence. Effect on consumer perceptions of the brand at all stages in the persuasive process.

Main reference point

3. The Involvement Model Key assumptions People develop a direct relationship with advertising and find the brand more approachable by finding the advertising more approachable. Ultimate effect is that people respond by making personal connections, imagining further possibilities and taking stances on what the advertising "says", so that their attitudinal commitment to the brand is enhanced.

Main reference point

4. The Salience Model Key assumptions Difference is most important: advertising works by not fitting the product field, so people change values without necessarily changing attitudes etc. Ignores intermediate stages and goes straight for the end result of making a brand more significant.

Main reference point

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'How Advertising affects the sales of packaged goods brands' and 'Two kinds of sales effects (and how to know if you've got a good ad)' (conference paper) Gordon Brown
Summary

There are three types of Advertising effects (on sales/behaviour). Types 1 and 2 are short term, but most ads are type 3, with long term (and often hard to distinguish) effects :1. Type 1 ads work by Immediate challenge where there are new and/or interesting product stories. but this is advertising as 'window' on a good product (i.e. it's the client who's been clever). 2. Sometimes, however, immediate sales effects can be got by advertising alone through Strategic innovation when 'the agency invents their own new, relevant and credible thing to say. This is about the cleverest thing anyone can do via advertising. One example was Lucozade... they produced an ad using Daley Thompson... the strategic inspiration was brilliant'. 3. But these effects are often short lived, because all the people that the ad will work on will respond fairly quickly. Most big brands got big and stayed big, with consistent theme advertising. This works by creating
Interest

Channelling random switching by involving advertising memories;

Status

Advertising affecting perceptions of fashionability or size or simply 'heard a lot about';

Enhancement

Creating an expectation that is fulfilled when the brand is experienced 'you're right, this chair really is comfortable'. APPENDIX 2 ECONOMETRIC MODEL OF LUCOZADE SALES Readers are referred to previous papers for good general descriptions of this technique (multiple regression analysis) in particular 'Dettol a case history' from the first competition in 1980. In this case the technique was used to model sales over the thirteen years (79 observations) prior to the 'traffic lights' advertising (there is nothing significant about thirteen years, it simply corresponds to the period for which bimonthly data is available ). The model was then used to make an 'out of sample' prediction for the remaining period (Jul/Aug 1984 to Feb/Mar 1992). The independent variables are :Real price

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Lucozade's price, adjusted to allow for inflation.

Time trend

a linear trend used as a surrogate for the long term decline in 'sickness' as measured by a panel of Doctors these data were only collected each winter, between October and March.
Seasonality

an index allowing for the general pattern of Lucozade sales through the year.
'Ups and Downs'

a 'top hat' dummy variable used to represent the initial change in strategy (this takes the value of 1 for the period covered by the campaign and 0 otherwise it therefore looks like a top hat when graphed).
Distribution

expressed as the brand's aggregated sterling distribution, with distribution for each format added to the total, thus allowing for any effect the mere availability of the format itself might have on sales. All variables are significant at the 95% confidence level, and together explain 75% of the variation in sales. NOTES & EXHIBITS

An awareness index is a measure of the increase in advertising awareness generated by each 100 TVRs, over and above the level to which awareness would decay in the absence of advertising. It is therefore a way of assessing the relative effectiveness of different campaigns.

'How Advertisers Think Advertising Works a new approach to advertising research', Davies Riley-Smith Maclay 1991, and 'How advertising affects the sales of packaged goods brands, A working hypothesis for the 1990s', Millward Brown International.

Copyright IPA, Institute of Practitioners in Advertising, London 1992 Institute of Practitioners in Advertising 44 Belgrave Square, London SW1X 8QS, UK Tel: +44 (0)207 235 7020, Fax: +44 (0)207 245 9904 www.warc.com All rights reserved including database rights. This electronic file is for the personal use of authorised users based at the subscribing company's office location. It may not be reproduced, posted on

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