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BRAND MANAGEMENT [ELECTIVE]

DEVELOPING & MANAGING BRANDS

BOOK CH.6

BRAND MANAGEMENT [ELECTIVE]

Developing & Managing Brands

Since the1990s companies have been well aware that brands are an asset [to] be reinforced and nurtured by tangible innovations and intangible added values.

The Rules of Brand Management

1. Act as leader, be passionate about raising category standards. 2. Sustain brands through innovations in line with their positioning.
3. Create direct ties with end customers, especially in markets where the trade pushes its brands. 4. Deliver personalized services.

The Rules of Brand Management

5. Reward customers who become active promoters of your brand.

6. Encourage communities that share your values.

7. Quickly globalize the brand and its products. 8. Be ethical: big is not beautiful any more.

NEW Rules of Brand Management needed WHY? The traditional model for managing brands, developed & practiced by successful global FMCG companies like P&G and Unilever, is now outdated & obsolete.

WHY?

The New Rules of Brand Management: The Traditional Model The Traditional Model was based on the belief that: 1. A SUPERIOR PRODUCT was a winner as it responded better to a customers expressed need.

2. Linear thinking works: Promotions Trial Repurchase Loyalty

The New Rules of Brand Management FOUR Stumbling Blocks

1. [Superior product?] Absence of durable, meaningful differences between products.

2. Shortage of shelf space, superstores/ wholesalers pushing own products.

3. Split audiences who are also out of the range of mass media. 4. Depleted loyalty - promotions making customers even more sensitive to

The New Rules of Brand Management: There are Cheaper Alternatives!

Cheaper alternatives to major brands now hold significant market shares in most sectors: from FMCG sector to Electronics.
Chinese/ Korean imports replacing many B2B/ B2C brands.

The New Rules of Brand Management: Surge in Private Labels

In Carrefour outlets (UK): Danone yogurts had replaced Nestle.

Now, Carrefour yogurts have replaced Danone.

Tropicana was the leading juice brand at Tescos. Now Tesco Finest is replacing Tropicana.

The New Rules of Brand Management: The Market is Changing

1. Cheaper imports demonstrate that traditional brand = universal brand i.e. the response to all customers needs. 2. Markets are now more & more segmented by price - different brands excel in different price segments. 3. Ability of brands to be present & visible in every segment is A BIG CHALLENGE.

How P&G Has Been Managing its Brands!

At P&G every one of its brands has to be the superior product. P&G only launched mass-consumption products that spoke for themselves & made the difference in use. Pampers: keeps the baby must be drier; Ariel washes better, & the difference must be visible to the naked eye

How P&G Manages its Brands

Sunny Delight, an orange-flavored drink without real oranges, must taste infinitely better on the tongue WILL THAT STRATEGY WORK IN FUTURE? In its luxury products division brands like

Hugo Boss & Lacoste, P&G use different rules: superior claim is ineffective.

The New Rules of Brand Management: Is A Great Product = A Great Brand?

Maybe! Continued ad infinitum it may lead the brand to deliver diminishing returns. WHY? Investing for ever & ever in making a Michelin tyre safer would result in prohibitively higher price & affect sales.

One Dimensional Marketing

WHAT IS: ONE-DIMENSIONAL MARKETING? A One-Dimensional figure is A LINE, a line segments, a ray etc.
One-dimensional marketing is based on

a single, linear idea: BEST PRODUCTBUY!

Limits to one dimensional marketing

One-dimensional marketing strategy has reached its limits! WHY? 1. A superior product is hard to CREATE, MAINTAIN & SUSTAIN. 2. Cost of marginal improvements is becoming higher & higher. 3. Customers notice the higher price easily, but the benefit increment goes unnoticed.

Limits to one dimensional marketing

EXCEPTION: Gillettes one-dimensional model still works. the art of planned obsolescence. Over 3 decades, it has increased prices significantly & out-run competition, through continuous innovation: GII Contour Sensor Sensor Excel Mach3 Fusion/ Fusion Power Proglide.

Limits to one dimensional marketing

WHEN does a BEST PRODUCT fail? When best is defined without taking the customers point of view. Customers assess brands based on tangible as well as intangible. Brand with no intangible value e.g. trust, pride, emotion, or familiarity capital, can be easily substituted, by a cheaper alternative.

New Brand Realities!

NEW APPROACH TO BRAND The MANAGEMENT is the outcome of
the adaptation of companies to the new business environment.
HOW HAS THE BUSINESS

ENVIRONMENT CHANGED?

New Brand Realities!

A. THE RISE OF THE SHOPPER:
i. Shopping a favorite past-time: malls, arcades, shopping centers, factory outlets draw shoppers. ii. Shopping is no longer a race it is either a chore or a leisure activity. Shoppers & consumers are often not the same person. iii. Service and variety have become important considerations.

New Brand Realities!

B. FRAGMENTING MARKETS & VOLUMES:
i. The mass-market is dead or dying: A SMALLER PERCENTAGE OF CONSUMERS ARE CONSUMING A HIGHER PERCENTAGE OF PRODUCT In France, 8% of Diet Coke buyers consume 40% of the volume.

New Brand Realities!

B. FRAGMENTING MARKETS & VOLUMES:

ii. Segments have to be BROKEN DOWN into Fragments: Peugeot launched its 207 in seven versions;

Ralph Lauren has 10 sub-brands to cater to needs of weekdays & weekends, & different demographics (age, gender).

New Brand Realities!

iii. Retailer brands dominating in superstores: Retailers, Super- & Hyper-markets investing in brands & match Mass brands.
WHAT IS THE FUTURE OF BRANDS Nutella, Mars, M&M, Orangina, Boursin are LIKE single product specialty brands - Is their future secure?

New Brand Realities!

C. FRAGMENTING MEDIA: CHALLENGE OR OPPORTUNITY: i. More TV programs & hours to choose from. ii. TiVo in 32% households in the US creating TV without advertising.

iii. Internet a major rival of network TV: In Europe 50% of media consumption is now interactive.

New Brand Realities!

C. FRAGMENTING MEDIA: CHALLENGE OR OPPORTUNITY: Google bought MySpace in 2006 & YouTube.com some months later. Google has launched Google TV: a totally a la carte service. IS FRAGMENTATION A CHALLENGE OR OPPORTUNITY?

New Brand Realities!

C. FRAGMENTING MEDIA: CHALLENGE OR OPPORTUNITY: iv. New media is growing rapidly, but it is unlikely to completely dislodge major traditional media such as TV or Print. v. Print media: going online!

New Brand Realities!

C. FRAGMENTING MEDIA: CHALLENGE OR OPPORTUNITY:

vi. TV is reasserting itself as an AUDIENCE AGGREGATOR with redesigned Talk Shows, News formats, iReporters, news/ videos on Websites, news on Twitter etc

New Brand Realities!

D. CONSUMER EMPOWERMENT Technology rewriting rules of engagement:

i. More mobile phones sold than TV sets;

ii. Nearly 20% internet users visit sites dedicated for comment on products. iii. Traditional media pick up conversations from blogs.

New Brand Realities!

D. CONSUMER EMPOWERMENT Internet is no longer a vision it is easy, practical, offering a variety of services, information & games; Blogs = the truth of the market; Brand websites have become the official consumer magazines.

New Brand Realities!

E. THE BIRTH OF THE CHOICE ECONOMY Brands have lost their leverage [no quality differential between brands; minimal between branded & unbranded products. Growing demand for: Product personalization, Services & image-based social differentiation. iPod & iTunes users create own programming.

New Brand Realities!

F. THE POWER OF COMMUNITIES:
Community marketing has a special status in the US: Hispanics, AfricanAmericans, Chinese Americans, affect brand creation & communication. Internet: a major facilitator of interconnected marketing communities.

New Brand Realities!

THE POWER OF COMMUNITIES:
Phone companies offer services to sports fans by providing updates on matches; Danone & Nestle websites are especially designed to advise young mothers; Nikes involvement at street level with rappers & sports enthusiasts is community marketing.

New Brand Realities!

G.THE LIMITS OF MONODISTRIBUTION
Coca-Colas strength is its multiple distribution channels Virgin Cola unable to compete in distribution Danone is weak. WHY?

Over-dependent on big supermarkets.

LOral successful as a brand for selfservice stores. NOW, more & more selfservice stores are promoting THEIR OWN brand.

Building the Brand

in Reverse!

The Traditional Way of Building the Brand

STEPS:
1. Develop Product/ Brand 2. Achieve optimal distribution 3. Launch marketing communication.
Unfortunately, the traditional model is now being openly questioned! WHY?

It has become too predictable!

Experts suggest an alternative approach

Building the Brand in Reverse

starting much early .with communication.

Building the Brand in Reverse

Idea popularized by a French expert as the Concept of Brand In Reverse.
HOW DOES IT WORK? 1. Rearrange sequence of brand introduction. 2. Convert a brands first set of customers into brand ambassadors GET A CONVERSATION STARTED.

Building the Brand in Reverse: So, What Comes First?

It is at the moment of conception of the product or service (of choosing the name, packaging etc.) that it is necessary to inject the power of contagion not at the end, when it is too late.

Building the Brand in Reverse: So, What Comes First?

Nike launched its Converse brand of shoes using a community approach by creating the CONVERSE GALLERY involving customers. Advertising is not used for Converse..
UPDATE: On Sep. 12, 2013, Converse & Maison Martin Margiela celebrate the launch of a new collection: Sep 12, 2013.

Building the Brand in Reverse: So, What Comes First?

BMW before launching the 3-, 5-, 7Series in the US, uploaded long-duration (4-5 min) films on the net, for viewers to see at their leisure and experience the performance of the car. The response was simply outstanding!

From Brand Power to Brand Passion

For a new & highly innovative product it is easier to be differentiated but for how long? Too many brands aim only at preference via product or service big brands sell a BIG IDEA! Successful major brands today, are based on an intensely personal feeling - a passion & a big belief!

From Brand Power to Brand Passion

Entrepreneurs like to change the world with their ideas. They succeed, because they turn their idea into a source of passion for others! For LOreal: a womans happiness can only be found in science and its ability to turn back the years.

From Brand Power to Brand Passion

For Nissan low supplier prices lead to LOWER PRICED CARS. For Toyota QUALITY is the obsession.