ANALYSIS: Marketing - Nationalism rears head in Aussie drug war. Can local brands succeed by playing the nationalist card?

The gloves are off in Australia's world of pain relief marketing. Battered by a series of extortion attempts which saw sales slide and forced some product repositioning, major brands Herron and Panadol are keen to wrest back control. In the process, the brands have launched into a marketing war of the kind rarely seen in the grocery analgesic category. Boldly bypassing the standard brand equity communiques, Panadol and Herron have plunged the category into a new regime of comparative advertising, publicly and starkly airing their differences. Australian-owned Herron took the first stab, launching a campaign, which stated that market leader Panadol was foreign-owned. Unusually, the advertisements encouraged consumer participation, featuring a polling device which invited viewers to ring in and vote on whether they thought Australian ownership was important. "We were overwhelmed to receive 3,000 calls from Australian consumers in the first 24 hours the commercial aired," Herron chief executive officer Euan Murdoch said. "Of the 3,000 calls, 84 per cent were for the yes number, indicating Australian consumers are as passionate about Australian ownership as we are." Panadol took the issue to court. But, thwarted by a failed injunction, Panadol's parent GlaxoSmithKline opted instead to redress the balance through its own marketing attack. The response was a campaign, which claimed that Herron's top-selling product Capseals was made in America - a move, which pushed Herron to complain to the Australian Competition and Consumer Commission (ACCC). Herron is still awaiting a response from the commission. "We said, well fine, let's take the advertising message that we want and air it to get rid of the confusion that has been created," GlaxoSmithKline chief executive Alan Schaefer said. "What we found out was that going to court was a very unpopular battlefield - we would be portrayed as a multinational trying to put a local out of business. "While it can be effective between two multinationals, it can still get pretty messy. For us, we're going to wage war in the marketplace." Herron's Murdoch is equally determined. However, he claims his intent is more benevolent. "I believe it's a debate that we as a country need to have: whether something is Australian-made or foreign-owned," he says. "Herron isn't anti-foreign investment; our country is built on it. But our perception is that, all things being equal, we think people will support their home team." He is not alone. Numerous major brands have seized upon the concept of local heritage to kick up their sales of late. Examples include Golden Circle which recently launched a campaign highlighting competitive products that were not Australian-owned brands. And, Aussie pizza chain Eagle Boys was taken to court recently when Pizza Hut took objection to an Eagle Boys ad, which made statements about Pizza Hut's foreign parent. In the case of Herron versus Panadol, the approach seems to have hit its target. Panadol's share slipped five points to 42 per cent on the basis of the first Herron attack. By contrast, Herron, which spent 14 years edging up its share to 18 per cent, has seen its slice bulge to 32 per cent. Panadol then managed to claw back two-thirds of its market share when it tested its anti-Capseals ad in Adelaide. The changes are magnified by the fact that every share point in Australia's grocery analgesic market is worth A$1 million (US$519,490). But amid the scuffle, other brands have also taken the opportunity to try and steal some of the ground for themselves. Last month, Reckitt Benckiser launched a new commercial designed to re-focus its Disprin brand for the youth market. The strategy is also a play to regain market share after languishing at a share of around 10 per cent. Meanwhile, neither Panadol nor Herron were prepared to concede to each other, but Herron's Murdoch believed the campaign had reached an end. "Our next campaign won't necessarily be competitive. I think that it has just about run its course," he says. But Panadol's Schaefer remains poised to retaliate if necessary. "As long as they put the message out in the marketplace (implying we are foreign-made), it will be met with an immediate and swift response."

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