The fact that brands
are a part of the company equity is now a universal concept, however
what this awareness implies has not yet been fully analyzed. As is often
the case, phrases such as ‘brands are our equity’ become company
leitmotivs. The truth is that, when taken at its word, this brand equity
awareness has actually revolutionized operational marketing. The most
salient aspects of this development are described below.
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Implications at the top:
The first noticeable change in the fact that top management itself is
now in the habit of paying close attention to their brands. In the beginning,
brands were considered as a mere communications issue, then the sole
prerogative of the marketing managers, nowadays; CEOs themselves consider
brands to be their responsibility. A former CEO of Nestle, Thailand,
declared: ‘Brands can no longer be entrusted to the marketing people
only’. They have thus disowned in a certain way, as they are no
longer the only ones in charge of brand policy.
Nowadays, financial, accounting, technical and legal managers, and of
course managing directors, are all participating in this task. The new
situation has also led multi brand groups to redefine the position held
by the communications managers. No longer serving the marketing departments,
they now directly report to general management. This is the case at
Whirlpool Europe, thanks to their new position, communications managers
are now able to manage fund allocation for the creation of a new brand
independently from market share constraints and from the relative power
pressure exerted by the group’s various brands.
In terms of organization,
companies have become aware that their structures are often too ephemeral
for efficient brand management. A company must have people who ensure
continuity in and respect for the brand’s intangible attributes
once they have been defined. On the other hand, companies have become
aware that a given brand can be linked to several different technologies.
Buitoni, for instance, is a brand that sells frozen, canned and vacuum-packed
foods, all produced by different companies and marketed by different
sales teams. It became necessary to create a new profession: brand management
across companies.
Finally, the typical pyramid-shaped marketing structures have caused
responsibilities to be diluted and managers to specialize more and more
in one particular facet of the brand. That is why the Danone group has
flattened its hierarchy down from four to three tiers, thus leaving
a brand marketer, a brand marketing manager in charge of the brand’s
overall management and a marketing director in charge of coordination
and, more specifically, of the ‘mega-brands’.
The end of dispersal:
Apart from the brands new internal environment, the notion of brand
equity means it is essential to manage the value of this equity. In
doing so, they key word is ‘capitalization’. Yet it seems
impossible to capitalize on several brands at the same time, unless
the company is a powerful multinational. Most companies therefore reduce
their brand portfolios and focus only on one of several brands. As a
matter, brand portfolios are often overloaded, due more too successive
acquisitions than to thorough planning of what each brand needs to do,
both for its consumers. This tendency is even stronger in the industrial
sector, as many companies pursued their growth through buy-outs, they
now have to cope with a stack of local brands, product or product-line
brands and company brands, as well as with a set of problems for which
they are not prepared.
Reducing the brand
portfolios has a corollary effect; few brands now encompass more products.
Products whose brands no longer exist must be allocated to existing
ones. Danone, for instance, covers more than 100 product lines. It has
therefore become necessary to create intermediate product line brands
in order to structure Danone’s overall product range, such as Taillefine
for waist-conscious consumers, Charles Gervais for gourmet adults, id
for children, Bio for health conscious, etc. Each product line brand
has its own target market and its own positioning, and is meant to encompass
several sub brands itself. At Danone, product brands are now history.
The full product range is hierarchically organized both within Danone
and with the different product line brands. In order to ensure that
the structure benefits Danone and does not represent a mere patchwork,
each product line brand sets its own brand image objective, yet all
of them share two features inherent to Danone’s identity, proximity
and health. In a similar way, the Nestle Company has selected a limited
number of master brands, each of them acting as a source brand for a
wide range of products and sub brands.
The End of new
brand proliferation:
This urge to capitalize has thus put an end to the proliferation of
brands and product names which has so far worked against all major groups.
It is true that any product manager in charge of launching a new product
is tempted to give it a name of its own, its own brand name. This is
especially true in industry where the naming process is practically
the only way for both the manager and the new product to gain instant
recognition from all.
That is why companies registered bucket loads of brand names and for
their new products, encouraged by the classical procterian ideology
of the product brand. Those times are over. Not only did it prove expensive
but also inefficient, most of the names remained unknown, legally defined
as brands, but meaning nothing whatsoever to buyers. It would have been
wiser just to retain the best know names and to break them down into
umbrella brands. That is the only way to capitalize.
Having experienced
the same syndrome, Nestle decided to create a brand management department
in their headquarters in Vevey, Switzerland, uniquely entitiled to create
new brands all over the world. The results are radical, in 1991, Nestle
launched nearly 101 new products worldwide, but only created five new
brands. Thus 96 innovations were launched either under the umbrella
or the endorsement of existing brands. For example, chocolate flavored
cereals were launched under the Nesquik brand name because they serve
the same purpose, to provide mothers with a means of coaxing their children
into drinking milk.
In order to prevent itself being perceived as a censor and arbitrary
ruler, 3M distributed worldwide and internal booklet specifying both
the market conditions under which creating new brands would be authorized
and the most prevalent ones under which the innovations must bear one
of three name possibilities, the generic one plus the 3M brand name,
its own surname within an existing product line brand. This made it
possible to internalize some basic management principles. This explains
why requests for new brands at 3M dropped from 244 in 1981 to 70 in
1991.
That year only four were accepted, versus 73 in 1989 and is how 3M,
all brands is intrinsically global and international, hence creating
local brands is now strictly forbidden. The only time the creation of
a new brand can be envisaged is when a new primary need is discovered,
such was the case for Post it. Creating new sub brands such as Scotch’s
“magic’ can be done only if using the brand name (Scotch in
this case) does not allow sufficient differentiation among products.
Building Brands
with innovations:
Seen from a distance, these rules may seem to limit and restrict the
creative drive. From within, though, they have proven to be the only
means of renewing existing brands, enhancing both their value and their
worldwide impact. Brands manage to grow only if they constantly renew
themselves and if the new products end up accounting for a significant
part of their turnover.
Brands demonstrate their contemporary relevance by showing their ability
to market new products that satisfy new needs and meet modern expectations.
Yet most of the time product managers would prefer to launch innovations
under their own new brand name. This amounts to depriving existing brands
of the aura modernity conveyed by new products. When naming their new
instant mashed potatoes Mousline instead of Maggi, one of the corporation’s
mega brands, the Nestle managers tarnished the latter’s image by
slightly outdating it.
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