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Brand Management

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Brand Management (MKT624)
VU
Lesson 5
BRAND CHALLENGES
If brands are strong and powerful, they also face challenges regarding sustenance and growth.
These challenges vary in degree and intensity for various markets.
The basic determinant of challenges is the level to which a certain market is mature. Maturity
holds the key. If a market is very mature, the challenges are intense; if a market is less mature,
meaning still growing and robust, the challenges are less strong.
Markets become mature due to overall purchasing levels reaching a plateau. This simply
implies that demand in the category is no longer elastic and has no further room to grow. And,
the consumers are buying various brands in a certain pattern of frequency and quantities which
are optimal and, hence, their buying behavior will not give further impetus to overall growth of
the category. We can also call it maturity of the economic cycle.
Under the circumstances just explained, markets seem to lose vitality in terms of growth, but
not in terms of availability of loads of products. This can be further simplified by saying that
the size of the pie reaches the most optimal level from where it does not increase unless there is
growth in population. Whatever changes take place they take place within the pie in the shape
of competitive wars.
Competitive pressures and wars have led to a few difficult situations that companies have to
face as challenges. The following are the typical ones:
·  Brand proliferation
·  Consumer revolt
·  Retailer power
·  Media cost and fragmentation
Brand Proliferation
Owing to the reason of low growth, the classic response of marketing people has been (and
is) to develop new brands or extending/stretching existing brands into different varieties.
Brand extension and stretching essentially is an exercise meant for having different
varieties of products under the same brand name.
In trying to do so, marketing people may not create products that really are new. That is, an
inevitable response to the dynamics of markets may not generate a real new product for the
simple reason that innovations do not come by so very easily and frequently.
The result has been a variety of products that are very similar not having differentiated
features that can attract consumers. Creating distinctions without differentiation does not
make a product stand out and convince consumers to go for it.
In many instances, products carry the label of "new" indicating new features. But those are
not recognized by consumers as really new. The result is "irritated consumers" who think
their buying decision has been made complicated into an unnecessary effort. The net result
is no increase in sales.
To meet this challenge, manufacturers have to introduce products with real meaningful
added features that can be perceived as "performance benefits" and not just cosmetic
changes.
Consumer Revolt
Because of the little differences that are not found meaningful, the consumers are not
willing to pay premium prices in most of the cases until real performance benefits are
perceived by them.
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Brand Management (MKT624)
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The manufacturers find it hard to amass profits. For this reason, marketing departments get
under pressure to produce results. Such pressures lead them to get into the following
options:
o Introduce more brands
o Introduce brand extensions
o Advertise or promote existing brands
The net result of introduction of more brands and extensions is high expenditure with no
guarantee of increased sales with good profits. Actually, it leads to proliferation with no
new benefits to consumers. Consumers' unenthusiastic attitude to buy as much as
companies would wish is tantamount to a revolt.
The option that is most widely used by brand managers is to promote the existing brands
with the help of some attractive promotional features, like "buy-one-get-one-free" or
something similar.
The promotional schemes, in other words, come into being not so much for adding value to
brand with a long term perspective, but rather stem from short term pressures of increasing
sales in competitive markets.
Experience has shown that promotions have a short term effect, but are damaging in the
long run. The costs are high and the results do not have an element of permanence.
Promotions are discussed as part of the communication strategies in lecture 35.
Retailer Power
Here, retailer exploitation comes into play. Knowing brand managers being under pressure,
retailers like to keep them under pressure for promotions that suit retailers more than
anyone else in the trade sections.
Growth of brands has given rise to retailing all over the world. With retailers'
concentration, the balance of power between the manufacturer and the retailer has tilted
toward the retailer.1 Whether it is introduction of new brands or promotion of the existing
ones, marketing people find retailers existence in either case extremely significant.
The pressures mount and brand and marketing managers find themselves pressed from two
fronts ­ internal (finance and top management) and external (retailers).
Media Cost and Fragmentation
The style of mass advertising campaigns of yesteryears does not hold too strong a ground. It
has become too expensive to go national on the TV network with no specific plans for
points of attack and reinforcement in relation to brand's potential in different areas. In other
words, marketing people should concentrate on those areas, which offer better prospects of
brand's growth.
With technical advancements, number of channels has increased manifolds. Developments
of cable and satellite systems offer enormous choices, with the help of which you can reach
fragmented audiences.
Under such circumstances, it has become challenging for brand managers to be practically
aware of the media costs and the effects of fragmenting a TV campaign. Not only that, they
also have to be able to plan an integrated communication campaign with various tools of
communication at their hands. The managers have to capitalize on the factor of
fragmentation and align their campaigns accordingly.
Summary of the overview
We have seen what a brand is, how it differs from a generic product and what it takes to turn a
product into a brand. With that understanding the definition of brand management makes sense
in all its manifestations.
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Brand Management (MKT624)
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There are a few fundamentals that are at the heart of brand management. Of those, dimensions,
characteristics, and layers of brands are very central to the concept of brand management, while
commitment of management is the cornerstone of the development process. Management has to
stay committed all along the road to the destination.
Good and committed management creates brands full of value and power. Management creates
value for the consumer and for the company through good brands.
Despite having value and power, brands are vulnerable to competitive attacks. The road to
destination is full of challenges and threats. It again is the responsibility of good management
to face those challenges through practical decision making. Decisions made on realism reflect
the level of your ability to cope with the dynamics of the market. Any shortcomings that may
come to the surface offer you opportunities to gear up against the odds and come out as winners
­ whether it is a question of growth in a stagnant market, dealing with powerful retailers, or
circumspection required to come up with an optimal, integrated communication approach.
Very macro in its nature and form, the preceding overview is essential for your basic
understanding before we embark on the strategic process of brand management.
Strategic Brand Management Process
With the overview in place, we now move on to the strategic process as it emerges while you
develop a new brand or sustain an existing one. For the sake of consistency of tutorial, the
brand management approach is going to be a reflection of the process explained by Scot Davis
in his book "Brand Asset Management". All the chapters are included in the tutorial. There,
however, are a couple that are added for your benefit.
The understanding will come into a better light if viewed from the standpoint of developing a
new brand. Comprehensive in nature, it will automatically point out the measures needed to
refresh an existing brand, whenever and wherever the need arises.
Vision
The point of departure toward the process is to have a clear vision for your brand. Vision
should not frighten you, for it is not something poetic or philosophical that you may consider
only blessed ones having been endowed with.
If you are a person of average intellect, that most of us are, then you should not have any
problems developing a vision. It is all about where you want to see your brand at the end of a
certain period of your definition. In very simple words, vision is the journey from here
(present) to there (future).
Being the brand manager, you are responsible for the destination planning of your brand in
terms of its future movements relating, for example:
·  The volume
·  Share of the market
·  Markets to serve
·  Distribution improvements
·  Quality parameters and benchmarks
·  Overtaking competition
·  Product innovation or extension, to name a few
With the vision in place about your brand's movement, the next step for you is to take top
management into confidence. The top management is extremely interested in the planned
brand's movements as envisioned by you and your department.
If the top management has an overall vision, then the brand vision should automatically fit into
that. The brand vision, therefore, is an extension of the overall business vision. It flows out of
the latter.
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Brand Management (MKT624)
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Brand vision tells us about a brand's growth and future direction. It is the most important
statement before we undertake the strategic management process. It tells us how our brand is
going to help the company achieve its goals ­ financial and strategic.
Before going any further, it is important that we learn how the strategic management process
(SMP) works! An understanding of the basics of the process will allow us to easily fit the
vision into it and then see how to proceed with every successive strategic step of importance.
Consisting of five steps, the SMP can be explained easily with the help of the following figure:
Figure 9
Strategic Management Process
Step 1
Step 2
Step 3
Step 4
Step 5
Business
Setting
Evaluating
Crafting
Implementing
Vision
Objectives
performance
Strategy
Strategy
The figure being self-explanatory, it explains that forming the vision is number one task,
followed by setting objectives (both financial and strategic), crafting the right strategies to
achieve designated objectives, implementing the crafted strategies, and evaluating performance
for any corrective actions or adjustments anywhere along the sequential process.
Very early in the strategy making process, managers ask themselves the question:
·  What is our vision for the company?
·  Where is the company headed?
·  What kind of enterprise we want to build?
·  What should be the company's future make-up?
A careful analysis of and answers to the questions lead them to conclude:
·  Where the company stands today and where should it reach in say 5 to 10 years? This
addresses the question of reaching from here to there!
·  What businesses they should be handling? This relates whether they should extend their
brand into similar products, or diversify into unrelated areas.
·  What customers should they serve? Decision about extension or diversification will
pinpoint the target customers.
·  Do they need more brands to serve more businesses? This indicates whether they should
be keeping their existing brand name or go for new ones.
·  What capabilities and resources they need to have to achieve all that they envision? A
very careful analysis of what is it in terms of financial, human, and technological
resources that they need to succeed is required here.
The above analysis creates organizational purpose and identity and form very clearly the
"VISION" of the company. You can feel from the discussion how important it is to have a clear
vision for the company and, also, how closely related that is to creating vision for the brand!
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Brand Management (MKT624)
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Key point
An understanding on your part of the SMP is important in that you must appreciate the
elements that top management considers toward company's business planning. That will enable
you to better integrate your function of brand management into the overall business whole.
Bibliography:
1. Geoffrey Randall: "Branding ­ A Practical Guide to Planning your Strategy"; Kogan Page
(37)
Suggested readings:
Thompson Strickland: "Strategic Management - Concepts and Cases"; McGraw Hill (27-36)
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Table of Contents:
  1. UNDERSTANDING BRANDS – INTRODUCTION:Functions of Brand Management, Sales forecast, Brand plan
  2. INTRODUCTION:Brand Value and Power, Generate Profits and Build Brand Equity
  3. BRAND MANIFESTATIONS/ FUNDAMENTALS:Brand identity, Communication, Differentiation
  4. BRAND MANIFESTATIONS/ FUNDAMENTALS:Layers/levels of brands, Commitment of top management
  5. BRAND CHALLENGES:Consumer Revolt, Media Cost and Fragmentation, Vision
  6. STRATEGIC BRAND MANAGEMENT:Setting Objectives, Crafting a Strategy, The Brand Mission
  7. BRAND VISION:Consensus among management, Vision Statement of a Fast Food Company, Glossary of terms
  8. BUILDING BRAND VISION:Seek senior management’s input, Determine the financial contribution gap
  9. BUILDING BRAND VISION:Collect industry data and create a brand vision starter, BRAND PICTURE,
  10. BRAND PICTURE:Brand Value Pyramid, Importance of being at pinnacle, From pinnacle to bottom
  11. BRAND PERSONA:Need-based segmentation research, Personality traits through research
  12. BRAND CONTRACT:The need to stay contemporary, Summary
  13. BRAND CONTRACT:How to create a brand contract?, Brand contract principles, Understand customers’ perspective
  14. BRAND CONTRACT:Translate into standards, Fulfill Good Promises, Uncover Bad Promises
  15. BRAND BASED CUSTOMER MODEL:Identify your competitors, Compare your brand with competition
  16. BRAND BASED CUSTOMER MODEL:POSITIONING, Product era, Image Era, An important factor
  17. POSITIONING:Strong Positioning, Understanding of components through an example
  18. POSITIONING:Clarity about target market, Clarity about point of difference
  19. POSITIONING – GUIDING PRINCIPLES:Uniqueness, Credibility, Fit
  20. POSITIONING – GUIDING PRINCIPLES:Communicating the actual positioning, Evaluation criteria, Coining the message
  21. BRAND EXTENSION:Leveraging, Leveraging, Line Extension in detail, Positive side of line extension
  22. LINE EXTENSION:Reaction to negative side of extensions, Immediate actions for better managing line extensions
  23. BRAND EXTENSION/ DIVERSIFICATION:Why extend/diversify the brand,
  24. POSITIONING – THE BASE OF EXTENSION:Extending your target market, Consistency with brand vision
  25. DEVELOPING THE MODEL OF BRAND EXTENSION:Limitations, Multi-brand portfolio, The question of portfolio size
  26. BRAND PORTFOLIO:Segment variance, Constraints, Developing the model – multi-brand portfolio
  27. BRAND ARCHITECTURE:Branding strategies, Drawbacks of the product brand strategy, The umbrella brand strategy
  28. BRAND ARCHITECTURE:Source brand strategy, Endorsing brand strategy, What strategy to choose?
  29. CHANNELS OF DISTRIBUTION:Components of channel performance, Value thru product benefits
  30. CREATING VALUE:Value thru cost-efficiency, Members’ relationship with brand, Power defined
  31. CO BRANDING:Bundling, Forms of communications, Advertising and Promotions
  32. CUSTOMER RESPONSE HIERARCHY:Brand-based strategy, Methods of appropriations
  33. ADVERTISING:Developing advertising, Major responsibilities
  34. ADVERTISING:Message Frequency and Customer Awareness, Message Reinforcement
  35. SALES PROMOTIONS:Involvement of sales staff, Effects of promotions, Duration should be short
  36. OTHER COMMUNICATION TOOLS:Public relations, Event marketing, Foundations of one-to-one relationship
  37. PRICING:Strong umbrella lets you charge premium, Factors that drive loyalty
  38. PRICING:Market-based pricing, Cost-based pricing
  39. RETURN ON BRAND INVESTMENT – ROBI:Brand dynamics, On the relevance dimension
  40. BRAND DYNAMICS:On the dimension of knowledge, The importance of measures
  41. BRAND – BASED ORGANIZATION:Benefits, Not just marketing but whole culture, Tools to effective communication
  42. SERVICE BRANDS:The difference, Hard side of service selling, Solutions
  43. BRAND PLANNING:Corporate strategy and brands, Brand chartering, Brand planning process
  44. BRAND PLANNING PROCESS:Driver for change (continued), Brand analysis
  45. BRAND PLAN:Objectives, Need, Source of volume, Media strategy, Management strategy