The new strategic brand management (Omnichannel Management), Sintesi del corso di Brand Management

Scarica The new strategic brand management (Omnichannel Management) e più Sintesi del corso in PDF di Brand Management solo su Docsity! New Strategic Brand Management, Advanced Insights and strategic thinking Introduction, 1, 2, 5, 6,7 Introduction: Building the brand when the clients are empowered Brands are one of the very few strategic assets available to a company that can provide long-lasting competitive advantage. The best kind of loyalty is brand loyalty, not price loyalty or bargain loyalty. Big brands have both a high penetration rate and a high purchase frequency per buyer. People want to give meaning to their consumption, only brands that add value to the product and tell a story about its buyers can provide it. To resonate with present and future consumers, brands must realize that, apart from market share competition, there is also a value competition. It taxes more then branding to build a brand. Today clients are empowered as never before, only brands that maximize delight will survive, whether they offer extremely low prices or rewarding experience, service or performance. Retailers are also more powerful then many of the brands they distribute. Branding decisions are determined by the business model and cannot be understood without this perspective, in fact in growing number of advanced companies, top managers salaries are based on three critical criteria: sales, profitability and brand equity. The goal of strategy is to build a sustainable advantage over competition, and brands are on of the very few ways of achieving this. The value of a company is on the minds of potential consumers, is outside. The value ofa brand lies in its capacity to generate such cash-flows long term. Chapter 1: Brand equity in question Brands penetrate all spheres of our life: economic, social, cultural, sporting and even religion. Brands are now recognized as part ofa company's capital, they are intangible assets, that produce added benefits for the business. What is a brand? The financial approach measures brand value by isolating the net additional cashflows created by the brand; the additional cashflows are the result of customers’ willingness to buy one brand more than its competitors’ even when another brand is cheaper. Why? Because of the beliefs and bonds that are created over time in their minds through the marketing of the brand. So, customer equity is the preamble of financial equity. Brands have financial value because they have created assets in the minds and hearts of customers, distributors, prescribers, opinion leaders. These assets are brand awareness, beliefs of exclusivity and superiority of some valued benefit, and emotional bonding. Customer-based definition: a brand is a set of mental associations, held by the consumer, which add to the perceived value of a product or service. These associations should be unique (exclusivity), strong (saliency) and positive (desirable). This definition has two problems: a. It focuses on the gain in perceived value brought by the brand, but brand management starts with the product and service as the prime vector of perceived value, while communication is there to structure, to orient tangible perceptions and to add intangible ones. b. It focuses on cognitions, but strong brands have an intense emotional component. Brand as conditional asset a. Brands are intangible assets b. Brands are conditional assets An asset is an element that is able to produce benefits over a long period of time; brands in order to deliver their benefits, their financial value, they need to work in conjunetion with other material assets such as production facilities. There are no brands without products or services to carry them. Brands need also profitable business model. Legal perspective Internationally agreed legal definition for brands: “a sign or set of signs certifying the origin of a product or service and differentiating it from the competition”. The registration day is a key point: from that day they become a property, which needs to be defended against infringements and counterfeiting. Brand rights disappear when they are not well enough defended, or if registration is not renewed. One of the sources of loss of rights is “degenerescence”: it occurs when a company has let a distinctive brand name become a generic term. A brandis a name with the power to influence What really makes a name become a brand is the fact that this name commands trust, respect, passion and even engagement. Brand must convey certitude, trust and emotion. They are a risk reducer. It takes time to build brand saliency (brand awareness), trust (trusted beliefs about the brand’s unique benefits) and emotional bonding. Brand power to influence buyers relies on representations (system of mental associations*) and relationship. *the associations (brand image) cover the following aspects: -brand territory -level of quality -qualities -most discriminating quality or benefit (perceived positioning) -typical buyers The pull power of a name is also due to the specific nature of the emotional relationship it develops: a brand is an attitude of non indifference knitted into consumers” hearts. A brand exists when it has acquired power to influence the market. What makes a name acquire the power of a brand is the product or service, together with the people at points of contact with the market, the price,, the places, the communication — all the sources of cumulative brand experience. One should speak of brands as living systems made up of three poles: product or service, name and concept. Brand concept (remarkable value proposition) tangible and intangible values Brand name and Product or service symbols, semiotic experience at invariants contact points - Brandvalue: ability of brands to deliver profits. A brand has no financial value unless it can deliver profits. Only separating brand assets, strength and value will one end the confusion of the brand equity domain. Brand value is the profit potential of the brand assets, mediated by brand market strength. IU iii Li RAIN {lit tatt 101: (tiS'2) Brand awareness Market share Net discounted cashfiow” Brand reputation (attributes, Market leadership attributable to the brand benefits, competence, Market penetration after paying the cost of know-how, etc). Emotion Share of requirements capital invested to Perceived brand personality Growth rate produce and run the Perceived brand values Loyalty rate business and the cost Reflected customer imagery Price premium of marketing Brand preference or attachment Percentage of products the Patents and rights trade cannot delist The arrows indicate a conditional consequence: the same brand assets may produce different brand strength over time: this is a result of the amount of competitive or distributive pressure. The same assets can also have no value at all by this definition, if no business will ever succeed in making them deliver profits, through establishing a sufficient market share and price premium. For instance if the cost of marketing to sustain this market share and price premium is too high and leaves no residual profit, the brand has no value. The table also shows an underlying time dimension behind these three concept of assets, strength and value. Brand assets are learnt mental associations and affects. They are acquired through time, from direct or vicarious, material or symbolic interactions with the brand. Brand strength is a measure of the present status of the brand: it's mostly behavioral. Not all of this brand stature is due to the brand assets. Some brands establish a leading market share without any noticeable brand awareness: their price is the primary driver of preference. There are also brands whose assets are superior to their market strength: they have an image that is far stronger than their position in the market. Brand value is a projection into the future. Brand financial valuation aims to measure the brand’s worth, that is the profits it will create in the future. To have value, brands must produce economic value added (EVA), and part of this EVA must be attributable to the brand itself, and not to other intangibles (patents, knowhow...). Tracking brand equity Brand: name that influences buyers. Source of its influence: set of mental associations and emotional relationship built up over time among customers or distributors. Brand tracking should aim at measuring these sources of brand power. minimum of four indicators of brand assets (equity): a. Aided brand awareness: whether the brand has a minimal resonance; b. Spontaneous brand awareness: measure of saliency, of share of mind when cued by the product; c. Evoked set, also called consideration set: does the brand belong to the shortlist of two or three brands one would surely consider buying? d. Has the brand been already consumed or not? But every company and every nation measure brand equity in a different way. Tracking studies are not simply tools for control. They are tools for diagnosis and actions. Transformation ratios tell us where to act. Comparing brand equity profiles Brand Perceived Trial (enTLCCTA PTUOLLIC LUltIUR: TEILSÀ IRR TOTI Samsung 99 75 42 28 Sony 99 86 42 33 LG 93 60 22 16 Nespresso 99 66 18 18 Dior 98 mn 14 16 Apple 98 65 12 16 BMW 99 n 6 14 This is an example on how you can compare brand equity: comparing brand awareness, perceived high quality, trial and consider in the future. Goodwill: the convergence of finance and marketing Companies now believe that their most important asset is their intangibles, among which brands and patents come first. It°s important to realize that in accounting and finance, goodwill is in fact the difference between the price paid and the book value ofthe company. This difference is brought about by the psychological goodwill of consumers, distributors and all the actors in the channels. A close relationship exists between financial and marketing analyses of brands. Accounting goodwill is the monetary value of the psychological goodwill that the brand has created over time through communication investment and consistent focus on product satisfaction, both of which help build the reputation of the name. What are the effects of this customer and distributor goodwill? - Favorable attitude of distributors that list some products of the brand because of their rotation system. - Support of wholesalers and resellers in the market for slow moving or industrial goods - Desire of consumers or end users to buy the product. The brand is a focal point for all the positive and negative impressions created by the buyer over time as he comes into contact with the brand’s products, distribution channel, personnel and communication. By concentrating all its marketing effort on a single name, the latter acquires an aura of exclusivity. The brand continues to be a byword for quality even after the patent has expired. How brands create value for the customer Brands do not necessarily exist in all markets. In several product categories, buyers do not look at the brand when they are making their choice. Brand trust Brand reduce perceived risk, and exist as soon as there is perceived risk. The perceived risk is greater ifthe unit price is higher or the repercussions of a bad choice are more severe. Thus the purchase of durable goods is a long term commitment. It is imperative that the external signs highlight the internal qualities of these opaque products. A reputable brand is the most efficient of these external signals. Examples of other such external indicators are: price, quality marks, the retail outlet where the product is sold and which guarantees it, the style and design of the packaging. From trust to stimulation Beyond trust, brands can also bring excitement, joy, empathy and stimulation. Soft drinks are low involvement, low risk category, but Coke and Fanta are strong brands, because they went from a no risk function to a stimulation function. How brand awareness creates value: the halo effect Brand awareness is correlated with many valuable image dimensions, its a collective phenomenon. Awareness is mostly correlated with aspects such as high quality, trust, reliability, closeness to people, a good quality/price ratio, accessibility and traditional styling. It has zero correlation with innovativeness, superior class, style and seduction. Transparent and opaque products Three types of product characteristics: - Qualities are noticed by contract, before buying (socks) - Qualities are noticed uniquely by experience, thus after buying (automobile market) - Qualities cannot be verified even after consumption and which you have to take on trust (upmarket cars) The brand is a sign whose function is to disclose the hidden qualities of the product which are inaccessible to contact and possibly those which are accessible through experience but where the consumer does not want to take the risk of trying the product. A brand, when it is well known, adds an aura of make-believe when it is consumed, for example the authentic America and rebellious youth of Levi”s. The information role of the brand varies according to the product or service, the consumption situation Identification Tobe clearly seen, to quickîy identify the sought-after products, to and the individual. A brand is not structure the shelf perception. always useful. It becomes necessary practicality To allow savings of time and energy through identical repurchasing once the consumer loses his and loyalty. traditional reference point. A brand provides not only a source ofinformation but performs certain Guarantee To be sure of finding the same quality no matter where or when you buy the product or service. other functions which justify its Optimization Tobe sure of buying the best product in its category, the best . . performer for a particular purpose. attractiveness and its monetary return when they are valued by Badge To have confirmation of your selfimage or the social image that buyers. These functions are the one You present to others: ofthe right. The first two are Continuity Satisfaction created by a relationship of familiarity and intimacy mechanical and concern the essence with the brand that you have been consuming for years. ofthe brand (functions as a È d bi I . di t Hedonistie Enchantment linked to the attractiveness of the brand, to its logo, Tecognized symbol in order to excitament to its communication and its experiential rewards. facilitate choice and to gain time). The following three reduce the Ethical Satisfaction linked to the responsible behaviour of the brand in its . - relationship with society {sustainable development, CSR, perceived risk. The last three have a employment, citizenship, advertising which doesn't shock} Corporate brands are a new hot managerial topic, one reason is the defense of reputation. Companies have become very sensitive about their reputation. Reputation takes the company as a whole; it reunifies all stakeholders and all functions ofthe corporations. Because changes in reputation affect all stakeholders, companies monitor and manage their reputation closely on six factors: - Emotional appeal - Product andservices - Vision and leadership - Workplace quality - Financial performance - Social responsibility Companies need to build a reputational capital among advocates and stakeholders; plus a global reputation, because even specialized stakeholders wish the company to be responsive to all stakeholders. There”s a link between reputation and share performance. How do corporations relate to product brands? The latter are there to create client goodwill, build growth and profits. In modern mature markets, consumers do not make a complete distinction between the product brand and the corporations. Reputation focus versus brand focus In corporate circles, the word reputation was once preferred to that of brand. Now many CEOs encourage their managers to promote the company as a brand. Reputations is measured by the sum of all opinions held by all major stakeholders of the company. Corporate and communication directors are typically in charge of this reputation management. A brand is a champion of the values it promotes. Reputation is company focused and introverted. Brand focus is market oriented and value oriented, and take into account competition. Companies should become brands, that is to say champions with a vision. From managing the brand to managing by the brand Companies are faced by two major challenges: a. Mobilizing the workforce or staff b. Sustaining demand by recreating desire Paradox: corporations hope consumers will be loyal to their brands; on the other hand, during the recession, millions of people have lost their jobs. People realize they are simply part of the workforce and tend to get far less involved in their companies. Today's main challenge is how to mobilize them again. The brand has the power to mobilize, for it appears as one of the few valuable things that bring pride both inside and outside. As long as the brand keeps its attractiveness, it's motivating to work for it. Everyone needs to keep this attractiveness high to sustain market demand. This is why corporate focus is moving from reputation to brand. Reputation is the sum of all opinions among all stakeholders about the company. It expresses an enduring concern about what others say or think of the corporation. Brand means leadership. The brand perspective is that of being the champion of something. In this process of moving from corporate reputation to corporate brand, corporations need to involve the employees. Brand platforms cannot be decided only by technicians, even if they are marketing experts. Brand do not belong to marketing. In fact brands are made by people. Taking the brand seriously entails more than speeches, but a whole interactive process of sensitization of the staff. 10 Chapter 2: Strategic implications of branding What does branding really mean? Branding means much more than just giving a brand name and signaling to the outside world that such a product or service has been stamped with the market and imprint of an organization. It requires a corporate long-term involvement, a high level of resources and skills to become the referent. Branding consists in transforming the product category Brands are a direct consequence of the strategy of market segmentation and product differentiation. As companies seek to better fulfil the expectations of specific customers, they concentrate on providing the latter, consistently and repeatedly, with the ideal combination of attributes. Companies want to stamp their mark on different sectors and set their imprint on their products. The first task in brand analysis is to define precisely all that the brand injects into the product and how the brand transforms it: - Whatattributes materialize? - What advantages are created? - What benefits emerge? - Whatideals does it represent? This deep meaning of the brand concept is often forgotten or willfully omitted. Branding is about being within something. A brand not only acts on the market, it organizes the market, driven by a vision, a calling and a clear idea of what the category should become. According to the objective the brand sets itself; transforming the category implies endowing the product with its own separate identify. In concrete terms that means that the brand is weak when the product is “transparent”. A brands a long-term vision The brand should have its own specific Brand point of view on the product category. management Brand strategy is too often mistaken for processi op-down company strategy. The latter most often Core brand values results in truisms such as increase customer satisfaction. Specifying brand purpose consists in redefining its raison d’etre, its absolute necessity. Brand draws its strength from the company's financial Brand perception process: bottom-up DIIe CI variants ; ; ; Strategic benefits and attributes and human means, but it derives its Tfr or five prioritend) energy from its specific niche, vision and ideals. If it does not feel driven by an intense internal necessity, it will not carry the potential for leadership. MEN ‘ Outside of Outside of Multi segments brands need to brand Product A... Product B... Product N... Typical brand actions brand territory territory redetermine their own purpose. What unifies the products of a brand is not their Permanent fluctuations of the market " . Evolution of competition, lifestyles, technology marque or common external signs, it’s their religion: what common spirit, vision and ideals are embodied in them. Major brands can be compared to a pyramid: the top states the brand’s vision and purpose. This level leads to the next one down, which shows the general brand style of communication. Indeed, 11 brand personality and style are conveyed less by words than by a way of being and communicating. The next level presents the brand” strategic image features: amounting to four or five, they result from the overall vision and materialize in the brand’s products, communication and actions. Lastly, the product level, at the bottom of the pyramid, consists of each model’s positioning in its respective segment. Consumers look at the pyramid from the bottom up. They start with what s real and tangible; the wider the pyramid base is, the more customers doubt that all these products can emanate from the same product concept. Brand managements consists, for tis part, in starting from the top and defining the way the product is conceived by the brand, in order to determine exactly when a product is deserving of the brand name and when it no longer is. Permanently nurturing the difference It is often argued that certain products of different brands are identical. This view fails to take into account both the time factor and the rules of dynamic competition. Any brand innovation necessarily generates plagiarism. The role of the brand name is precisely to protect the innovation: it acts as a mental patent, by becoming the prototype of the new segment it creates. Brands can’t be reduced to a mere sign on a product, a mere Brand graphic cosmetic touch: they guide a Weak Strong creative process, which yields the new —rr 2 product A today, the new products B and C Different tomorrow, and so on. brand management alternates between phases of product differentiation and brand Produet image differentiation. The typical example is Sony, whose advertising focuses on Compatition and ma-t00s, innovations when they exist, and on image Banal i changes in customers’ . expectations in between. Brands act as a genetic programme A brand act as a genetic programme. What is done at birth exerts a long-lasting influence on market perceptions. Indeed revitalizing a brand often starts with re-identifying its forgotten genetic programme. This table shows how brands are built and exert a long-term influence on customers’ memories, which in tum influence their expectations, attitudes and degree of satisfaction just like a DNA. Oi Memory (present) LCA First best-selling product Brand prototype Legitimate extensions for First channel of distribution Associated benefits the future [what other areas First positioning Brand image of new products) First advertising campaign Brand competence and knovehow First events First CEO Corporate visions and values In the life of a brand, although they may have been forgotten, the early acts have a very structuring influence. They mould the first and long-lasting meaning of this new name that designated Brand X or Y. Once learnt, this meaning gets reinforced and stored in long term memory. Then a number of selective processes reinforce the meaning: selective attention, selective perception, selective memory. 12 A brand succeeds when it looks incomparable. Its pull power stems from this ability to stand out in the crowd and deliver unique benefits as against the competition, through very significant innovations and excellent customer relations and care. In brand management the key concept is brand identity: identity is an answer to a simple but fundamental questions “what makes you you? What makes a BMW a BMW?” Kernel theory makes some radical statements as far as brands are concemned, largely overlooked by the marketing academic community: - Abrandisa system made up of kemel traits and peripheral traits; - Kerneltraits are unconditional; their absence signals that this is not the real brand; - Peripheral traits are conditional; they may be present or absent depending on the product within the range or the segment, - Peripheral traits may in the long term become kernel traits. Peripheral traits allow an adaptation of the brand to different segments; - To identify kemel traits one should not use direct questioning or the classical image questionnaires, instead one should ask: if the brand does not have X or Y, is it still the brand? Kernel traits exert a halo effect all across the range, from low end to high end. The halo effect is the capacity of the brand name to influence what people perceive, in this case the products and what qualities they seem to have. For kernel qualities, all differences of perception are significant and positive. Peripheral traits exert a halo effect, but conditionally: it depends on the segment of this vertical line extension. Some peripheral traits do not exert any significant effect on perception. The consequences for brand management are clear cut: brand managers must decide what should be the very few kernel values of their BRAND PERIPHERAL VALUES brand (also called core values) and exetrt all their talent and pv. | pù energy to build it consistently BRAND through time , products, consumer PV, E a relationships and care, store and web experience, and pricing. It TANGIBLE |INTANGIBLE starts by writing these few kernel Po Pv; values and getting them known / \X inside and outside the company: , PW this is called a brand platform. The brand kernel values should n È Products utility Brand added value not be generic of the category unless one creates this category, . . . . HIGHER [UTIENEESI Branded (e11ale] in which case the brand itselfis PRODUCT Ere pren + MESETTO PREFERENCE the prototype of the category. LINE CECCO] CONI value To summarize, how brands . influence choice: Peripheral Vi, 7 Kernel values are, MEDIUM Unbranded paio Branded Brand necessarily of 2 kinds: PRODUCT attribute —°> attribute + | symbolic: — PREFERENCE tangible and intangible; if LINE perception perception value there is no intangible . Ì value, the brand is only a Peripheral Vs name for a supenor . ENTRY Unbranded Branded (5112) roduct, but it°s not likel PRODUCT attribute attribute MESI symbolic PREFERENCE DI 4 ly LINE PRTOSTO CONI value to create consumer PeripheralVa 15 identification, a consumer community and hence emotional loyalty and engagement. - Kernel tangible values exert an unconditional “halo effect” on products’ perception across the range, from low end to high end. - Kernelintangible values (like fashion, class...) add their own specific utility to the perception of products” utility (once the brand is known) all across the range. - Peripheral values also can be either tangible or intangible. They are conditional. It depends on the consumer or product segment. - Peripheral values may add their own utility, but conditionally. Some do and some don't, depending on the product line (low, middle, high). This utility may be negative. - Preferences (versus competition) are the result of the sum of tangible and intangible utilities. Brands thrive by adding intangible utilities (symbolism) to tangible ones (for instance on credence traits such as solidity and reliability). When assessing the value ofa brand name, also called financial brand equity, the valuation methods try to measure the “brand added value”: how knowledge of the brand enhances the perception of the products themselves (halo effect) and adds to it the pull power of the symbolism of the brand (what it says about the buyer). Brand value is a differential concept. Each brand needs a flagship product Suppose the bran A pursues durability, brand B practicality and brand C innovation: the spirit of each brand will be especially noticeable in certain specific products, those most representative or typical of the brand meaning. They are the brand’s prototype products. Each product range thus must contain products demonstrating the brand’s guiding value and obsession, flagship for the brand’s meaning and purpose. The problem arises when brands within the same group overlap too much, with one preventing the other from asserting its identity. Each brand has to exaggerate its outward appearance in order to be easily recognized. Advertising products through the brand prism Products are mute: the brand gives them meaning and purpose, telling us how a product should be read. A brand is both a prism and a magnifying glass through which products can be decoded. Brand can only develop through long term consistency, which is both the source and reflection of its identity. Brand identity never results from a detail, yet a detail can, once interpreted, serve to express a broader strategy. Details can only have an impact on a brand”s identity if they are in synergy with it, echoing and amplifying the brand’s values. That is why weak brands do not succeed in capitalizing on their innovations: they do not manage either to enhance the brand’s meaning or create that all important resonance. A brandis thus a prism helping us to decipher products. It defines what and how much to expect from the products bearing its name. an innovation which would be consider very original for a Fiat, for instance, will be considered commonplace for a Ford. Once a brand has chosen a specific positioning or meaning, it has to assume all of tis implications and fulfil its promise. Brands should respect the contract that made them successful by attracting customers. They owe it to them. Brands versus other signs of quality In many sectors, brands coexist with other quality signals (food industry). Choosing between brand policy and collective signs is a matter of strategy and of available resource allocation. Often, quality certificates reduce perceived difference. Unknown small brands can also receive them. Brands 16 define their own standards: legally, they guarantee nothing, but empirically they convey clusters of attributes and values. In doing so, they seek to become a reference in themselves, if not the once and only reference. Thus, in essence, brands differentiate and share very little. Brands distinguish their products. Strong brands are those that diffuse values and manage to segment the market with their own means. Even without a brand, the small company’s product can thus step out of the ordinary, thanks in part to the legal indicators of quality. Obstacles to the implementation of branding Within the same company, brand policy often conflicts with other policies. Current corporate accounting, as such, is unfavorable towards brands. Accounting is ruled by the prudence principle: consequently any outlay for which payback is uncertain is counted as an expense rather than valued as an asset. This is the case of investments made in communications in order to inform the general public about the brand’s identity. Because it’s impossible to measure exactly what share of the annual communications budget generates retuns immediately, or within a specified number of years, the whole sum is taken as an operating expense which is subtracted from the financial years” profits. Yet advertising, like investments in machinery, talented staff and R&D, also helps build brand capital. Accounting thus creates a bias that handicaps brand companies because it projects and undervalued image of them. The principle of annual accounting also hinders brand policy. Every product manager is judged on his yearly results and on the net contribution generated by his product. This leaders to short terminism in decision making: those decisions which produce fast, measurable results are favored over those that build up brand capital, slowly no doubt, but more reliably in the long term. Moreover product based accounting discourages product managers from putting out any additional advertising effort that would serve essentially to bolster the brand as a whole, when the latter serves as an umbrella and sign for other products. Managers thus only focus on one thing: any new expenditure in the general interest will be charged to their own account statement. Today intangible assets (know how, patents, reputation) are what make the difference in the long run. A high personnel tumnover disrupts the continuity a brand needs. It°s significant that brands that have maintained a continuous and homogeneous image belong to companies with stable brand decision makers (luxury brands). Also failing to manage innovations has a very negative impact on brand equity, also communications mistakes. When a producer supplies a distributor’s brand with the same product it sells under its own brand, it will eventually erode its brand equity and, more generally, the very respectability of the concept of a brand. This means that what customers pay more for in a brand is the name and nothing else. When the brand is dissociated from the product it enhances and represents, it becomes merely superficial and artificial, devoid of any rational legitimacy. Companies pay a price for this as sales decrease and distributors seize the opportunity to declare in their advertising that national brands alienate consumers, but that consumers can resist by purchasing distributors” own-brands. This justifies the sluggishness of public authorities regarding the increasing amount of counterfeit products among distributor’s own brands. Such practices foster a false collective understanding of what brands are, even among opinion leaders, which contributes to the rumors that nowadays all products are just the same. 17 Are they brands like the others? The big brands have long regarded distributors’ brands with condescension, and would deny their new type of products the sacred title of brands. For them, stores were distributors, a revealing term, since it refers more to logistics and transport than to a talent for composing an overall offer or for managing the shelves. Stores insist on being called retailers. The rise of the distributors” own brand (DOB) is all the harder to accept since it signifies the end of a particular type of marketing. Is the distributor’s brand managed like a manufacturers brand? From a managetial point of view distributors” are brands like any other. They have all the features ofa brand, but in addition they have to respond to two different constraints simultaneously. Management of these brands does not have the same autonomy as a producer’s brand. Their image positioning is based on that of the company. The distributor’s brand often takes on the form of the umbrella brand: Carrefour products or Tesco products. Bringing everything together under the umbrella of a name is not an end in itself: the brand is there not to save money, but to create value for customers. How retail brands innovate The function of the national brand, the big brand, is to supply progress through innovation, change, fashion, design and so on. Can the distributors’ brand also innovate? Its business model assumes light marketing — in order to reduce the costs linked to the dozens of product managers — and the fact that it follows quickly in the wake of what is already working, that is the innovations of the successful manufacturers, by copying them to within a few details. The distributor’s brand business model is that of copying, of imitation taken to the maximum. Distributors” brand does not seek to innovate: its price is obtained through tuming the efforts and investments of the manufacturer’ s brand to its advantage, profiting from its strong position in the relationship, which means that the manufacturer needs the store far more than the store needs the manufacturer. When the distributor 5 Sette TA È tera “ behave like a true brand, it opts for own brands, 3 Pampers 83 9 Kelloggis 39 and becomes the store of the brand and not the 4 Marks & Spencer 42 10 Boots 37 brand of the store. (example gap, decathlon) 5 McDonald's 42. 11 Colgate 32 Examples of distributors becoming creators: 6 88C 40 12 RoyalMail 32 Consumer relationship with distributors’ brands For consumers in mature countries, distributor’s brands are perceived as genuine brands, with their attributes of awareness and image always combined with an attractive price. Engagement — personal involvement with the brand — measures a strong relationship with the brand, meaning that if the brand were not there, the client would prefer to wait than buy an alternative. For the consumer, there is no substitutability. This engagement comes from two sources: a- Strong perception of proximity with the brand b- Satisfaction linked to a perception of difference in product performance It's important to see that the repeat purchase of the distributor? brand is always contingent on the price: it is highly conditional. This is why distributors’ brands have difficulty creating loyalty to the store, as is often observed in studies. This doesn’t mean that all distributors brands are perceived to be equal: the image of the store reflects on everything that bears its name, therefore firstly on the distributor’s brand. 20 Why sell distributors’ brands? Why do distributors come to set up their own brands, to the point that — like Gap or Ikea — they eventually sell nothing else? The true economic motor of the unstoppable growth of distributors’ brands lies with the industry: the distributors and producers themselves. In the mass consumption sector, the early distributors’ brands are almost always bom of a conflict between the distributor and the producer. Dissatisfied with the poor treatment it receives, the distributor has its goods produced elsewhere, in order to plug a gap, and sells them either under its own name or under a private label. The atmosphere of conflict persists, particularly since brands now typically depend on a very small number of distributor clients. Consumers are selective. They decide in which categories they are most tempted to buy distributors’ brands: those in which they have a low degree of involvement. Remember that brands exist wherever customers perceive a high risk in purchasing; conversely, where they see no risk, they are tempted by the distributor’ brand, particularly if they consider that distributor to have a good reputation and an image of quality. In reality, the distributor’s brand is based on supply, not demand. Whenever distribution is concentrated, and the size of the domestic market makes it economically possible, there is no other way for the retailer of increasing his return on investment (ROI). Should manufacturers produce goods for DOBS? Those industrialist in favor of producing DOB goods advance the following arguments: - Itrelieves the burden of fixed costs - It allows them to benefit from economies of scale - It maybe intrinsically profitable, since there is no need for marketing, communication or sales force - Ifthey do not do it, their competitors will. In contrast, those who oppose it are right to argue that it will undermine the long term legitimacy of the company’s own brands, since the industrialist will not be capable of producing a bad product. Whether or not to manufacture distributors’ brand products is a strategic choice, and should by analyzed as such. Refusal to do so is clearly the result of a long term vision. There is no correlation between any classic company description and profitability in DOB production: rather, profitability is linked to the manner in which it's implemented. They should operate in the least commoditized segment possible, those where there is still innovation. Which distributors should they work with? Selectivity in the choice of distributors proves to be rewarding in terms of profitability over turnover. The financial equation of the distributor’s brand In a competitive market, the distributors’ brand is a logical stage in the growth of the distributor. It satisfies the need to maintain ROI once all other approaches have been exhausted. Alternatively it may have been the key differentiating component from the outset. Net Margin = Gross Margin — Costs Stock Rotation = Sales per square metre / Investment per square metre ROI = Net Margin x Stock Rotation If a distributor wants to increase ROI from 20% to 22% (an increase of 10% of the current ROI)? Suppose that this is a major distributor with a net margin of 2% and a stock rotation of 10%. Two possible options: - Increase sales by 10% per square metre (giving a rotation of 11) 21 - Increase net margin from 2% to 2.2% through selling private labels and demanding even more price concessions from brand producers, or a share of the profits from their advertising/promotional campaigns. The second option is much easier. This is why all distributors are choosing the distributor’s brand if they wish to make the optimal profits. The first lever for improving ROI arises from the fact that the margin on DOBs is better than that on national brands. The second reason for introducing a distributor’s brand relates to the increase in negotiating power with the manufacturer. Not only does the distributor improve its margins on the DOB, it also receives better margins from markers of national brands, who with to persuade it not to go further. A third effect on distributor profitability induced by the introduction of DOBs, relates to the increase in the number of innovations launched by the manufacturer. Distributors receive listing fees on these products. Moreover, they are rarely low price innovations. Distributors hope that their distributors’ brands will contribute to increasing loyalty to the store itself. In theory these are products that can only be found there. The three stages ofthe distributors’ brand Three stages: a. Oblative (or Reactive): it results from the refusal of sale by the major industrialists; this is how may own brand products are born. It is also strengthened through identifying gaps in the ranges of the major producers. A category management approach quickly identifies those segments where something should be offered to the client, but where the major brands have nothing to offer, since it is not their strategy. These gaps need to be filled. b. Imitative: the distributor examines its competitors’ distributor” brand ranges, and sets about imitating them, producing the same products typically supplied by its other competition. The distributor’s brand core offer is constructed, created from all the references common to all the distributors’ brands. This is also typically a phase during which the distributor, for lack of investment in its own distributor’s brand identity, chooses to imitate, trait for trait, the packaging of the brand products that it’s targeting. The objective of this copycat approach is clear: a deliberate intent to take market share from the big brands by allocating more space to one’s own distributor’ brand, a similar copy, and to increase the average price ofthe big brands in order to attract clients to the distributor’ brand. This approach borders on trademark infringement, and sometimes give rise to court cases by the outraged and wronged producers, complaining of either an infringement of their brand rights, or unfair competition, or economic parasitism. The real aim of this approach (the imitation of the essential attributes of branded product packaging), which dominates mass distribution, is to cause confusion, profiting from the average attention span of the shopper in the aisle. Through lack of attention, the consumer may take the distributor’s brand instead of the major brand product. The unconscious recognition factors in the aisle are, in decreasing order of importance: color, packaging shape, key designs, name, typography and so on. Where the private label copy/original product pairs are placed in decreasing order of resemblance, the stronger the perceived resemblance in trade dress, the more the consumer infers that the producer of the two products is one and the same — and the more confidence the copy inspires. The discovery of a quality distributor’s brand created a less positive attitude towards the leading brand. c. Identity: the distributor’s brand is used to capture market share from competitors. It becomes a genuine instrument of strategic differentiation, expressing the identity, values and positioning of the store itself. It should generate loyalty not just to itself, but also to the store. During this stage, the distributor’s brand management is no longer in the hands of the purchaser alone. A purchaser strives for an optimal mix of purchase and resale conditions. 22 When are more retail brands too much? The rate of sore brands at a given retailer is strategic. Different retailers may differ about this. Some want to go beyond 50%; others wish to differentiate by having far less than this. But the trendin FMCG (fast moving consumer goods) is to go upwards: this is the result of retailer concentration. Since private labels do compete against the best products of the retailer’s main supplier, this is a source of friction between them both. Retailers tend to see no limit to the growth of their private labels. They should. Certainly supply created demand: there is a strict correlation between the amount of supply and their market share. Retail brands use a push strategy. However there is a point where increasing the share of supply of private label SKUs on the shelves ofthe store actually changes the store’s positioning and creates frustration among consumers, who may move to another retailer, at first from time to time and later more frequently. The growth of the private labels is a supply driven phenomenon. From one year to another category managers ofretailers tend to push the number of SKUs of their own label, but this may prove counterproductive in terms of profitability. Increasing the presence ofretailer brands is most often not followed by any increase in sales of the private labels. This marginal analysis should be made category by category by the retailer. Fewer private labels does not mean more big brands The above results do not imply that big brands should take the shelf space left by retailers” own brands. Retailers might as well introduce more brands, but niche or regional ones. In our fast changing economic world, new trends emerge. Retailers have to detect them and send signals to consumers that they are being reactive fast enough. Many signs of alterconsumtpion are visible. More and more people are looking for an alternative to the present system without being anticapitalist. They look for organic foods, if possible bought directly from farms... big brands are not likely to embrace these weak signals, precisely because they are weak. The door is open: either to niche brands that will bring the trend addicts back into the store; or to private labels, which will then act as innovators, with no competition from big brands. The benefit is that these private labels can charge more: they do not have to be priced 25% less than the market leader. Chapter 6: The new brand management The 10 key principles of strategic brand management are known: - Capitalize on very few strategic brands, which all convey a big idea, a vision, and are driven by the desire to change the customers life. No brand should be without a strong intangible component. - Nestall variants and sub-brands under these mega-brands, to nurture them. - Actasaleaderandbe passionate about increasing the standards of the category. - Sustain the brands by a constant flow of innovations in line with their positioning. - Create direct ties with your end customers to deepen the link and the attachment, especially in markets where the trade pushes its trade brands. In fact the main competitor of many so- called strong brand is now the trade brand. - Deliver personalized services. - Reward customers’ involvement to make them become active promoters of your brand, not simply loyalists. Word of mouth is indeed the real sign of success: customers become active ambassadors because they feel passionate about the brand — as a result of what it did to them and the community of values. The rate of promoters among the customer base is directly correlated to the growth rate ofthe company or the brand. - Encourage communities that share your values, on the internet or elsewhere. 25 - Quickly globalize the brand and its products. - Beresponsible: big is not beautiful any more, an consumers have become cynical about size. Do not adopt only the perspective of individual benefits, also take into account collective benefits. The above principles have remained constant, but their implementation has been challenged. Brand building runs into four stumbling blocks today: a. Are there durable, meaningful differences between products these days? b. Is there still a large amount of shelf space available for brands in the big superstores or with wholesalers, which are now pushing their own brands? c. Are there still mass media, takin into account the fractioning of the audience and the appeal of the internet? d. Are there still loyalists? The rise in the rate of promotions make customers more sensitive to price, less faithful, more opportunistic. The limits of a certain type of marketing The one dimensional strategy (everything starts with one product and hinges upon it, it remains a pillar of the great brand) begins to seize up when it continues ad infinitum: then we reach the zone of diminishing retums. There comes to be an imbalance between the additional cost of marginal progress, and the customer’s perceived needs. The incremental improvements are no longer perceptible or meaningful; on the other hand, the increase in price is. Consumers can thus make considerable savings by buying distributor brand products with an equivalent degree of functional satisfaction. The loss in terms of function is minimal compared with the economy achieved. With experience, consumers see no difference, except for the price. The weakness of the idea of best product is that it°s often defined without taking the customers point of view- that is, without considering the use to which it will be put. The end of brands as we knew them Our traditional definitions of a brand are changing. They started as a distinguishing name or symbol, proof of authentic origin of products, which differentiated them from those of different suppliers. Later, brands were conceptualized as associations that add value to those already evoked by product itself. It implies that a brand is meant to add a halo of perception to a product with little utility itself. This conceptualization is based on consumer studies demonstrating that branded products have a higher perceived value than the same product but unbranded. The emphasis on added value has encouraged brand management to become communication management. It has been said that perception is reality, because the halo effect creates a desirable perception, many consumers may have been badly treated. This practice will not survive the internet, the source of renewed consumer power. What will tomorrow’s world be? The world consumers will experience from now on will be new and problematic as it never was before, at least in peaceful times. It will be a world of disequilibrium. - Economic disequilibrium - Financial disequilibrium - Ecological disequilibrium - Political disequilibrium - Demographic disequilibrium 26 The co-existence of four mentalities Our world has never been so global. In the meantime the world is divided in to separate socio- economic continents that do not converge. Four mentalities have been identified, each one with its value hierarchy, mode of conduct, behaviors and type of relationship: TRADITION MATERIAL SUCCESS INDIVIDUALISM RE-ALLIANCE I melt into my Individuals acquire The individual is the Asking about community some freedom from centre of his/her the links again the group own life The first has been dominant for thousand of years. Its the traditional one. You are what your parents are. The notion of self doesn’t exist. People inherit their religion, tastes, the way of being dressed, the vision of the world... sometimes they don’t even choose their own partner. Although it was thought that this mentality was declining, the retum of integrism, that is to say the purity of the sources, puts this model back at the forefront in many countries. The second one is dominating in China today, it praises material success. Becoming a person is the number one goal. Since political expression is under control, freedom to be oneselfis achieved through choices of clothing brands, furniture, consumer electronics... “I buy therefore I am”. The third has been that ofthe West till now: a hymn to individualism and the reification of the person, leading to egoism at the extreme and a self-centered vision of human relationships. The last one should be called “me-us”, that is to say a deeper me, but in connection with the collectivity. This is a mirror of Web 2.0, the social networks, but it means also that no individual benefit can be fully experienced ifit does not deliver collective benefits too. The me and the us are one again in alliance. The problem is that these mentalities are superposed on one another at a specific time and place. No one adheres to just one ofthem. What are tomorrow s brands? The best predictors of the brands of tomorrow are young consumers. when they are interviewed about the brands they are passionate about they quote specific characteristics: - Being known, a normal prerequisite, and very active in communication; - Symbolizing a unique and strong value proposition; - Moved by deep, authentic and long term values; - Being flawlessly incarnated into products or services that change consumers’ lives; - Being brands one can meet, interact with and experience through people and places and by whatever mode; - Being very ethical. Brands and price Brands are here to make people forget price. This is true of Apple, LV, Nespresso, Krups and Audi, as well as Zara, Bic, EasyJet and Wal-Mart. Does one ask the price of an Audi? Audi is worth it. 27 From brand activation to brand activism Modern brand management talks fist about brand activation, because values do not exist unless they are activated and today unless they are experienced by the clients themselves, fully, at each point of contact, now renamed point of equity building. To act asa brand is to exert quality and experience control all along the value chain. Once this is achieved, brand will need to be perceived as key actors in their category: innovation does this. Only innovation created value by raising the standards and providing progress. Innovation makes people forget the price. Everyone is pleased: the end user, the retailer and the brand. Some brands are more than actors, they are activists: they act as stimulants of the whole category and beyond. They raise debates and stimulate issues. As such they are more than suppliers, they demonstrate energy and concern for the future of the category and the well being of the end users. This kind of brand is able to raise a community and have followers. Today, fostered by the internet revolution, which made salient the forgotten major role of social influence, brands are community builders. A community is much more than a group or a segment: it’s a set of people interacting together, physically or virtually, connected by the pursuit of common goals or common ideals and likings. In a community some people are passionate; others are engaged; some are followers. To create passionate people the brand itself needs to be passionate. This is why the words and concepts used by traditional brand management do not match the challenges of today. The rise of the shopper What we call shopping has become one of the three favorite pastimes. Marketing shows little interest in the shopper, but talks only of consumers. the two are very different. The consumer writes the list of products and brands to buy. It is the shopper who decides on the spot whether to take this or that. It's the shopper who has now become so electric and who passes from a large, gleaming store to a discounter or a bazaar in the same afternoon. Shopping has become exciting, surprising, the key being the possibility of doing business, enjoying oneself at the same time by wandering through places designed for the pleasure of the shopper. In the B2B sector, the consumer and the shopper are separate entities: the user and the purchaser. Each has different criteria and objectives, hence they also have conflicts of interest. The rise of shopper is general: shopping is therefore no longer a race, but a way to exercise one’s talent and to gain money by spending less ofit. People also shop on the internet, which explains the rise of e- commerce. Shops, like internet sites, become complete destinations for an afternoon full of “retail- tainment” (retail + entertainment). Markets are fragmenting, and volumes too Nowadays we no longer talk about segments, but rather fragments. The segment remains a valid notion at a macroeconomic level: for example in the car trade, there are the segments B1,B2,M1... there are divisions of the car market according to the range level. Media fragmentation Normal advertising communications now face a real problem in reaching their targets. People channel-hop, they get up during commercial breaks, they are online or on the phone or on their PlayStation. This is why television channels are trying to remain faithful to their etymology. Television has to demonstrate its ability to be an audience aggregator; this involves the production of successful series, of talk shows that mirror todays’ society... sport is an ideal means for reuniting the exploded audience around an intense emotional ceremony. 30 With the internet, the consumer has seized power All traditional marketing was founded on the asymmetry of power in the manufacturer?s favor. Customers found it hard to become well informed and therefore based their buying decisions on the familiarity of the brands, small distributors were grateful to the major brands for letting them deliver their goods, and competition was waged by every means except on price. This is over: the consumers has never had so much power. This is also true for B2B clients. Web 2.0 has set the seal on client or consumer power. The internet is no longer visionary or prophetic: its easy, practical, social, abounding in services and information or games. Blogs have become the truth of the market, the true consumer magazine, while the brand websites, and in particular consumer magazines on glossy paper, they are official truth. The power of communities Nowadays it’s no longer consumers who build brands, but communities. Today in the US the talk is all of community marketing. Marketing plans are highly differentiated according to whether they are addressed at African Americans, Chinese-Americans... what does the notion of community add to the notion of segment? A segment is a marketing abstraction designating people with the same profile or the same expectations. a community is a living group, daily weaving new links through communication, exchange and participation. A community exists, lives, grows and has an identity. A segment is defined and measured: it agglomerates. The community expresses, and brings together. It lives through social medias. We have entered B to B to C marketing In many sectors we have passed form B to C (business to consumer) marketing to B to B to C. we need to integrate the whole chain into the discussion, and ask ourselves what added value we bring to it. The brand that does not have the luxury ofindependent distribution of its own must first of all consider the manner in which it will help the distributors/retailer to reach its own objectives. It°s the distributor that must be convinced first of all. The indisputable fact that brands that no longer have their own distribution circuits are in fact engaged in B to B to C marketing is not given enough recognition. It°s time that the distributor ceased to be considered as a distributor. This word stems from the vocabulary of logistics, like stockiest, dispatcher or wholesaler. A distributor is above all a retailer with its own differentiation strategy and therefore its own brands. It’s necessary to envisage it as a partner, and to start from its key problems, which are the same as those of the brand: the differentiation of its name, creating loyalty to its name, and profitability. The power of business models The brands not a self-sufficient asset. By itself, it can do nothing: it’s therefore conditional. It only produces its effects in interaction with the business model that supports it. Building the brand at contact points If managers think of the brand in a top down manner, beginning with its essence and its values, then moving toward the tangible, its concrete activation, consumers proceed in the opposite manner. Brands that are only products must add an experiential dimensions that will involve the client. Involvement is the prerequisite for engagement with the brand: that is, a true affective loyalty and not a repeated purchase for the sake of gaining miles or points. 31 Everyone will have noticed the tendency of brands to create a brand universe for themselves in increasingly large flagship stores, designed as experiential places, where the client feels he brand 120%. Retail as experience AIl the exemplary cases of recent success, those that are praised to the skies worldwide in management seminars and symposia, are brans that have integrated distribution into their value offer (Starbucks, Zara, Amazon, Dell, Sephora...). Some of them did not bother with advertising, on the contrary, they invested in training, men, women, architecture, the sensory contact, ergonomy, touch and the like. All the stars of modern management, presented in all the management seminars, are brands whose shops are source of enjoyment for the shopper: through the environment, choice, atmosphere and so on. The enlarged scope of brand management Brand management itself is much influenced by the revolution that has shaken marketing theory and practice: a shift from a mere transactional perspective to a relational perspective. This has led theorists to ask new questions, and propose new working methods, new modes of thinking, new tools, which often claim to be substitutes for the former old ones. From transaction to relationships The focus of marketing has moved from conquering clients to keeping them, from brand capital to customer capital. The new buzz words of good efficient brand management are share of requirements, shared loyalty and CRM. The focus is on building lasting relationships through time, and on post purchase activities, all of which is subsumed under the term “relationship marketing”. The focus on research has moved from predicting choice to classifying the different types of relationships consumers have with brands, or different types of interactions companies engage in with their clients, beyond selling a product or service. Relationship marketing is a financially driven concept: customers are still segmented, but the distinctions are behavioral. In traditional marketing, segmentation is aimed at maximizing the value created by the brand or company for its customers. In relationship marketing, segmentation is based on the value a customer brings to the company: only profitable customers should receive repeated attention. Hence the concept of lifelong customer value. Internet technology has created the means to meet this demand for more and more efficacy in tracking, analyzing, servicing and selling to each one of these important customers. These two approaches are complementary. The best loyalties are not based on mere calculus and loyalty cards: they are internalized as voluntary loyalty, as brand commitment. On the other hand, weak brands need to start somewhere. Behavioral loyalty programmes create the conditions for deepening the customer-brand relationship, and create emotional connections between consumers and the brand. From purchase to satisfaction and experiential delight Another consequence of this shift towards post-purchase phenomena is the focus on product/service satisfaction. In this process the conditions of the consumption situation need to be taken into consideration. A product is always consumed in a context. The nature of this context affects the degree of satisfaction that the consumer reports, through the notion of a rewarding experience. Experiential marketing = how to get customers to sense, fell, think, act and relate to your company and brand. 32 How co-branding grows the business Products that have two creators and advertise the fact through double branding, are on the increase. The rise of co-branding is symptomatic of our era, with its culture of networking and partnerships. It's also the result of a desire to remain within the company’s key competences, to the point of looking else where for those competences that are missing. Why this rise in co-branding? Co-branding is fundamentally a response to the need for continual growth. This is the era of alliances, partnerships and the networked economy, where each party retains its specialization and its key competence, and utilizes those of others to the fullest extent. In the pursuit of growth, it's not long before we encounter the difficulty in reconciling this with maintaining the brand”s specificity and the company’s expertise. In the web the brand is the name for a specific expertise or state of mind (in Asia the brand is far less specialized). When trying to grow, the brand can reach the limits of its own identity and its specificity: it therefore has need of an ally to fill the gaps where it’s not competent or legitimate. When this ally is competent but not legitimate, the partnership does not give rise to co-branding. When two images complement one another, both brands strongly endorse it. Thus, in order to please the youth of today, increasingly seduced by computer games and consoles, Lego decided to add an electronics line to its products. However Lego not only has no industrial competence in this field, crucially its brand image would not lend credibility to the new products. The signature of a brand with a strong reputation in electronics among young people would remove this obstacles. Mattel had already worked with Compag to create a line of interactive, high tech toys. Several strategic questions arise on the subject of co-branding: - Will the visible alliance oftwo brands create a favorable impression among clients? - Is there a high degree of complementarity between the two brand images that will create value? - Is there a good fit between these two brands, given the perceived status of each? - Will the innovation be attributed to both partners, or only to one of them? Typical situations that lead to co-branding a. Co-branding is necessary to increase the chances of success for a brand’s extension beyond its original market. b. Co-branding is necessary when the brand’s image makes it difficult to communicate with a particular target. c. Co-branding makes it possible to develop a product line that is often sold in a separate distribution channel. The goal, in addition to selling to a previously reluctant clientele, is to nurture certain traits of the brands identity kernel. d. Co-branding makes it possible to move up a level. e. Ingredient brands are also a way to send the client message about the product’s superior quality, and to lift it above the more ordinary copies, thereby justifying its higher price. £. Co-brandingis also a response to the fragmentation of the market an the emergence of communities. g. Co-branding, in the form oflicenses, was one way to boost sales for car models at the end of their life cycle, when the product itself no longer has the value of technical novelty. h. Co-branding sometimes aims to provide a buzz around the brand among opinion leaders, to create an image. i. Co-branding is the visible, confidence inspiring, sign of a brand union. 35 Co-branding, alliances and partnerships The modern world is a world of alliance and partnerships between groups, companies, brands and so on. Co-branding is the symbol of an alliance that neither party is seeking to hide. Certain forms of behavior, such as alliances, undergo considerable growth, and even saw new, hybrid forms emerge. One of these is “coopetition” — an alliance with a competitor. An alliance is indeed a strategic decision, with long term implications, aiming to bring together complementary competences in order to develop innovative processes and product/services, and finally new markets. Its therefore distinct from a simple partnership, which is limited both in time andin the scope of the cooperation. Coopetition refers to alliances involving two mutually competitive companies. In strategic terms, an alliance is an alternative to acquisition and fusion. This latter is a common type of company growth, buying out key competences or market shares through the sacrosanet critical mass. Alliances preserve the cultures, identities and legal forms of the companies that come together in a common, large-scale, project. In terms of visibility, the members of alliances are not always clearly identified. However, it's sometimes the case that the parents are clearly identified by their name and logos. Enhancing Creating PETITE] Same product Co-branded Image strategy Component loyalty cards — Orangina Lee co-branding — Air France Cooper cans — Collective AMEX — Orangina {Intel/Lycra} — Smiles Kookal — Proprietary {Damart) Line extension/ Limited series Endorsement variant — Peugeot 205 — Weight Lacoste Watchers by - Renault Clio Fleury Michon Kenzo — Max Havelaar and coffee brands News full line Co-creation — Tefal line designed by/for Jamie Oliver — Philips-Alessi — Hilfiger-Thierry Henry Value innovation$ Co-creation disruption — Danoe {Minute Maid-Danone) — Nespresso-Krups — Lacoste-Citroèn 36 Chapter 7: Brand identity and positioning A brandis not the name of a product. It's the vision that drives the creation of products and services under that name. that vision, the key belief ofthe brands and its core values is called identity. It drives vibrant brands able to create advocates, a real cult and loyalty. Modern competition calls for two essential tools of brand management: brand identity, specifying the facets of brands” uniqueness and value, and brand positioning, the main difference creating preference in a specific market at a specific time for its products. For existing brands, identity is the source of brand positioning. Brand positioning specifies the angle used by the products of that brand to attack a market in order to grow their market share at the expense of competition. Brand identity: a necessary concept The concept of brand identity is recent. Today, most advanced marketing companies have specified the identity of their brand through models such as brand key, footprint, bulls eyes, and brand stewardship, which organize in a specific form a list of concepts related to brand identity. However they are rather checklists. What is identity? Having and identity means being your true self, driven by a personal goal that is both different from others’ and resistant to change. Thus, brand identity will be clearly defined once the following questions are answered: - Whatis the brand’s particular vision and aim? - What makes it different? - Whatneedis the brand fulfilling? - Whatis permanent crusade? - Whatare its value or values? - Whatis its field or competence? Of legitimacy? - Whatare the signs which make the brand recognizable? These questions could indeed constitute the brand’s platform. Brand identity and graphic identity charters Formal aspects, outward appearance and overall looks result from the brand’s core substance and intrinsic identity. Choosing symbols requires a clear definition of what the brand means. While graphic manuals are quite easy to find nowadays, explicit definitions of brand identity per se are still very rare. The brand’s deepest values must be reflected in the external signs of recognition, and these must be apparent at first glance. Many firms have unnecessarily constrained their brand because they formulated a graphic charter before defining their identity. Not knowing who they really are, they merely perpetuate purely formal codes by, for example, using a certain photographic style that may not be the most suitable. Knowing brand identity paradoxically gives extra freedom of expression, since it emphasizes the preeminence of substance over strictly formal features. Brand identity defines what must stay and what is free to change. Brands are living systems. They must have degrees of freedom to match modem market diversity. 37 brands, customers make a choice, but with products, they make a comparison. They make two questions: a. What do they compare it with? For this we need to look at the field of competition: what are do we want to be considered as part of? b. What are we offering the customer as a key decision-making factor? A brand that doesn't position itselfleaves these two questions unanswered. Communicating this information is the responsibility of the brand. The aim of positioning is to identify, and take possession of, a strong purchasing rationale that gives us a real or perceived advantage. It implies a desire to take up a long term position and defend it. Positioning is competition-oriented: it specifies the best way to attack competitors” market share. It may change in time: one grows by expanding the field of competition. Identity is more stable and long-lasting, for it’s tied to the brand roots and fixed parameters. How is positioning achieved? The standard positioning formula is as follows: “For ... (definition of targeted consumers) Brand X is... (definition of competitive set and subjective category) Which gives the most ... (promise or consumer benefit) Because of ... (reason to believe)” The target specifies the nature and psychological or sociological profile of the individuals to be influenced, that is, buyers or potential consumers. The frame of reference is the subjective definition of the category, which will specify the nature of the competition. This is a strategic decision: it marks out the field of battle. It must not under any circumstances be confused with the objective description of the product or category. The third point specifies the aspect of difference which creates the preference and the choice ofa decisive competitive advantage: it may be expressed in terms of a promise or benefit. The fourth point reinforces the promise or benefit, and is known as the reason to believe. There are some products that can’t make promises (perfumes for examples). Faced with this conceptual dilemma, there are three possible approaches: the first one is to define positioning as the sum of every point that differentiates the brand. Brand Key, mini opus, explains how to define a brand across the entire world, starting with “Brand Key builds on and replaces the brand positioning statement...” there are eight headings to Brand Key: 1. Competitive environment Target Consumer insights on which the brand is based Benefit brought by the brand Brand values and personality Reason to believe Discriminator (single most compelling reason to choose) 8. Brandessence This collection forms the positioning of a brand. Two tools are needed to manage the brand: one defines the brand’s identity, while the other is competitive and specifies the competitive proposition made at any given time in any given market. The tool called brand platform will comprise, first, the brand identity, that is to say, brand uniqueness and singularity throughout the world and whatever the product. Brand identity has six facets, and is therefore larger than the mere positioning. It°s represented by the identity prism. As its center one finds the brand essence, the central value it symbolizes. Second, the brand platform comprises brand positioning: choosing a market means choosing a specific angle to attack it. Brand positioning must be based on customer insight relevant to this market. Brand positioning exploits one of the brand identity facets. Positioning can be summed up in four key questions: for whom, why, when and against whom? It's summarized in one brand platform. qOUASWN 40 Brand’s proposition, which forms the basis of the chosen positioning at a given moment in a particular market, may be filled by various edges contained within the brand”s identity: Differentiating attribute Objective benefit Subjective benefit Aspect of the brand’s personality The realm of the imaginary, of imagery and meaning Reflection of a consumer type . Deep values What is the connection between identity and positioning? It’s the degree of freedom between identity and positioning that enables a brand to change over time while still remaining itself. What is the connection between the positioning of the brand and the positioning ofits products? It's true that today?s brands are increasingly based on multiple products. The products positioning promotes a consumer attribute or benefit, while the parent brand specifies the value proposition that this attribute and benefit enables the consumer to reach. When a brand consists of multiple products, care should be taken to ensure that their respective positioning converges on attaining the same core value (that ofthe parent brand). If this is not the case, either the product requires repositioning, or the question should be asked whether it’s part of the right brand at all. Hr pogp The six facets of brand identity Leaving the classical stimulus-response paradigm, modern brand communication theory reminds us that when one communicates, one builds representation of who speaks (source re-presentation), of who is the addressee (recipient re-presentation), and what specific relationship the communication builds between them. This is the constructivist school of theorizing about communications. Since brands speak about the product, and are perceived as sources of products, services and satisfactions, communication theory is directly relevant. As such it reminds us that the brand identity has six facets: brand identity prism. PICTURE OF SENDER The identity prism Physique Personality The brand identity can be represented by a hexagonal prism: a. It has physical specificities and qualities, its physique. It's made of a combination of either salient objective features (which immediately PICTURE OF RECIPIENT come to mind when the brand is quoted on a survey) or emerging ones. It°s both the brand’s backbone and its tangible added value. b. Personality. By communicating, it gradually builds up character. The way in which it speaks ofits products/services shows what kind of person it would be ifit were human. Brand personality fulfils a psychological function: it allows consumer either to identity with it or to project themselves into it. It's also the main source of tone and style of advertising. Relationship Culture EXTERNALIZATION Reflection Self-image 41 INTERNALIZATION c. A brandisa culture. Strong brand are a vision of the world. They are much more than product benefits or a personality; they are an ideology too. It's the most important facet of brand identity. The cultural facet of brands’ identity underlines that brands are engaged in an ideological competition. d. A brandisa relationship. Need brands are often at the crux oftransactions and exchanges between people. This is particularly true of brands in the service sector and also ofretailers. This facet defines the mode of conduct that most identifies the brand. This has a number of implication for the way the brand acts, delivers services, relates to its customers. e. A brandisa customer reflection. A brand will always tend to build a reflection or an image ofthe buyers or user which it seems to be addressing. Reflection and target often get mixed up. The target describes the brand’s potential purchasers or users. Reflecting the customer is not describing the target, rather, the customer should be reflected as who wishes to be seen as a result of using the brand. f. A brandspeaks to our self-image. If reflection is the target’s outward mirror, self-image is the target’s own internal mirror. Through our attitude towards certain brands, we indeed develop a certain type of inner relationship with ourselves. These are the six facets which define the identity of a brand as well as the boundaries within which its free to change or to develop. The brand identity prism demonstrates that these facets are all interrelated and form a well-structured entity. The content of one facet echoes that of another. The identity prism derives from one basic concept — that brands have the gift of speech. Brands can only exist if they communicate. The brand identity prism also includes a vertical division. The facets to the left — physique, relationship and reflection — are the social facets which give the brand its outward expression. All three are visible facets. The facets to the right — personality, culture and self-mage — are those incorporated within the brand itself, within its spirit. This prism helps us to understand the essence of both brand and retailer identities. Clues for strong identity prism Identity reflects the different facets of brand long-term singularity and attractiveness. As such it must be concise, sharp and interesting. Good identity prism is recognizable by the following formal characteristics: a. There are few words to each facet b. The words are not the same on different facet c. AIl words have strength and are not lukewarm: identity is what makes a brand stand out. Sources of identity: brand DNA Identity research must start from the typical products endorsed by the brand as well as on the brand name itself, the brand symbol if there is one, the logo, the country of origin, the advertisement and the packaging. The purpose of all this is to semiologically analyze the sending process by trying to discover the original plan underlying the brand’s objectives, products and symbols. When dealing with a weak brand, we might not discover any consistent plan at all: in this case, the brand is more like a name stuck on a product than a real player in the field. The brand’s most typical products The product is the first source of brand identity. A brand indeed reveals its plan and its uniqueness through the product it chooses to endorse. A brand injects its values in the production and distribution process as well as in the corollary services offered at the point of sale. The brand’s value must therefore be embodied in the brand’s most highly symbolic products. 42 What is wrong with current brand platforms? Everywhere in the world the forces of commoditization are growing and the brands have to recede, this is because many brand platforms do not work. companies realize they spend an awful lot of time answering all the questions of the brand platforms, but at the end of the year market shares are often once again declining when facing private labels, for instance, or low cost competition. Brand platforms have become a merely formal exercise Why are most brand platforms leading companies astray in practice? - Their authors become enamored of their own sophistication. - Most companies are now global (misunderstanding from managers all around the world). - The establishment of a new brand platform is very time consuming, and requires consultants form costly strategic consulting companies to help the brand managers answer the many questions or even understand the concepts themselves. - The more sophisticated they are, the more they give a false feeling ofrobustness to management. - The more questions there are, the more redundancy there is between the questions. - They lead the brand to get entangled in a net of complexity. - Brand platforms are often static n their concepts and wording. - Many brands in the same category pursue the same goals and try to provide the same core category benefits. - Models of brand platforms are based on conceptual models unable to meet the new demands of the markets and of the new competitive situation. Brands now have to create communities. - Brand platform models are implicitly driven by micro theoretical notions stemming from consumer psychology and now the neurosciences, which have made inroads into marketing academia. But for a brand to get social resonance, to create proselytes and use its social impact, individual psychology or individual consumer choice models are irrelevant. We need to tum much more towards understanding society as a whole: more sociology and more cultural anthropology are needed. What should one expect from a brand platform? We recommend not using ready made platforms hired from another company. Each brand should build its own one as long as it fulfils six major conditions and goals: a. Energize: set a high level of ambition for the brand; Inspire: what deep consumer insight or what societal tension does it address? Passion: what is the big ideal or crusade for the brand? Consistency: we needa common creative activation all across the range; Deliver: products matching real needs, with passion and edge; Facilitate: for global understanding and adhesion, only a few words are suitable. nopos Forget brand essence: be inspirational Brand platforms are often called brand equity platforms, within companies when they are used to detail what the brand wants to stand for across all its products or product lines, and to demonstrate the means-ends internal coherence, from high-end values to down-to-earth product differentiators. Such platforms remind people what the equities of the brand should be. Then market research companies yearly measure the progression ofthese associations in the target’s mind. This is why the 45 brand equities, also called pillars of equity or PODs, look like typical items one finds in an agree/disagree questionnaire. What brands need to do is re-create consumer engagement. The problem is that brand essences are too static. Brands stand for something in people’s hearts only through a great collective benefit, uncompromising execution, obsession with detail and a clear creative territory. Brand platforms should be springboards for product development and creativity, a tool to inspire great campaigns that have an impact on consumers, not a maze ofredundant words with no clear priority between them, or a generic sentence true for all actors of the product category. Brands need brand content, a radical new managerial concept stemming from the digital revolution. When intrusive media advertising held sway, people came across it, but did not look for it. The internet has introduced a major revolution. On the web people look directly for content, most often peer to peer. If brands now want to reach consumers, the only way is to provide their own interesting content. This does not means advertising or just banners. Brand content asks brands to be more than single benefits attached to a name. they must have depth and content if they want to edit content on the web. Why the brand exists is the most important item People are looking for authenticity. They give their sympathy according to it. You cannot build a community just by selling a product, you have to be a pure business plus having a cause to defend at all costs. 10 questions to ask in order to build the platform: 1 Why must this brand exist? Mat would customers be missing if the brand did not exist? 2 Vision What is the brand's long-term vision of the product category? 3. Ambition. MMat does the brand want to change in people lives? 4 What are our values? What will the brand never compromise on? 6. Knoa-how. What is the brand's specific know-how? Îts unique capabilities? 6. Heritage. What are ow brand truths? z Territory. Where can the brand legitimately provide its benefit, in which product categories? 8 Typical products or actions. Which products and actions best embody, best exempiify the brand's values and vision? 9. Style and language. MMat are the brands stylistic idiosyncrasies? fts semiotic invariants? 10. Reflection. Who are we addressing? What image do we want to render of the clients themseives? 46 What should the brand platform be if the brand covers multiple categories? With time and in order to grow, brands come to cover a wide array of markets and product categories. Should one build a platform for the overarching brand, or many platforms, one for each category? In fact both. Ifthe brand has been extended to a number of categories its because its identity and crusade — its values — are very meaningful in each of these categories. They should be stated, along with the major consumer insight or vision that justifies them. The Masterbrand platform should specify the level of ambition of the brand, and its role in the group portfolio, so that all managers become conscious of the stakes. The common executional activation across categories must also be clearly stated. In order to guide the judgements of advertising execution and tone of voice, it°s necessary to specify what is called brand personality. Since brand exist only through product lines, it's also necessary to build a platform for each line. Naturally each line will repeat the Masterbrand values, but the product line platform will also contain specific items: - Whyisita business opportunity? - Whatis the product or category insight? - How does this product line contribute to building the Masterbrand equity? From brand platform to product lines Brands are experienced bottom up. People do not buy a brand; they buy products or services from a brand, in a store or on the web, and consult communications, attend events... the key numbers of brand experience are: 360° and 24/24. It°s important that most of the range tells the same story. Brand architecture: the relationship between the brand and its product lines. Building brands should avoid sub-brands as long as the brand does not mean something clear in people’s minds. Brands need variants. Managers have a tendency to secessionism. While the brand is still being built in people’s minds, those inside the company may be too much in love with sub-brands, that is to say in practice other brands, somehow distant from the parent brand. It's not possible to build a family spirit if all the offspring go their own way. Brand engagement should be activated through the same creative idea all across the line. Brand platform should specify for each of the product lines: 1. Vis there a BRAND IDENTITY + BRAND INSIGHT = BRAND ENGAGEMENT opportunity? 2. Whatis its Product A Product B Product C Tita specific target? Specific business Specific business Specific business Specific business 3. What insight opportunity opportunity opportunity opportunity drives the Specific target Specific target Specific target Specific target creation of the & insight & insight & insight & insight product itself? How can the Specific role Specific role Specific role Specific role Masterbrand inthe engagement. intheengagement —’intheengagement —’inthe engagement values translate into specifio il sl IT features here? 4. How does the Specific Specific Specific Specific experience experience experience experience product line contribute to 47