Implications of Brand Equity Concept in Brand Management?
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.
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 groups 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 brands 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 brands 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 Danones 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 Danones 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 Scotchs
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 corporations
mega brands, the Nestle managers tarnished the latters image by
slightly outdating it.
| The value of brand name | Sustaining long term brand name | Co-Branding | | Brand equity concept | Luxury brand management | Brand contract requirement | | Brand identity | Renew brand differences | Branding obstacles | | Brand management recognition | How to start branding your business quickly and easily |