If brands are strong and powerful, they also face challenges regarding sustenance and growth. These challenges vary in degree and intensity for various markets.
The basic determinant of challenges is the level to which a certain market is mature. Maturity holds the key. If a market is very mature, the challenges are intense; if a market is less mature, meaning still growing and robust, the challenges are less strong.
Markets become mature due to overall purchasing levels reaching a plateau. This simply implies that demand in the category is no longer elastic and has no further room to grow. And, the consumers are buying various brands in a certain pattern of frequency and quantities which are optimal and, hence, their buying behavior will not give further impetus to overall growth of the category. We can also call it maturity of the economic cycle.
Under the circumstances just explained, markets seem to lose vitality in terms of growth, but not in terms of availability of loads of products. This can be further simplified by saying that the size of the pie reaches the most optimal level from where it does not increase unless there is growth in population. Whatever changes take place they take place within the pie in the shape of competitive wars.
Competitive pressures and wars have led to a few difficult situations that companies have to face as challenges. The following are the typical ones:
Brand Proliferation
Owing to the reason of low growth, the classic response of marketing people has been (and is) to develop new brands or extending/stretching existing brands into different varieties. Brand extension and stretching essentially is an exercise meant for having different varieties of products under the same brand name.
In trying to do so, marketing people may not create products that really are new. That is, an inevitable response to the dynamics of markets may not generate a real new product for the simple reason that innovations do not come by so very easily and frequently.
The result has been a variety of products that are very similar not having differentiated features that can attract consumers. Creating distinctions without differentiation does not make a product stand out and convince consumers to go for it.
In many instances, products carry the label of “new” indicating new features. But those are not recognized by consumers as really new. The result is “irritated consumers” who think their buying decision has been made complicated into an unnecessary effort. The net result is no increase in sales.
To meet this challenge, manufacturers have to introduce products with real meaningful added features that can be perceived as “performance benefits” and not just cosmetic changes.
Consumer Revolt
Because of the little differences that are not found meaningful, the consumers are not willing to pay premium prices in most of the cases until real performance benefits are perceived by them.
The manufacturers find it hard to amass profits. For this reason, marketing departments get under pressure to produce results. Such pressures lead them to get into the following options:
The net result of introduction of more brands and extensions is high expenditure with no guarantee of increased sales with good profits. Actually, it leads to proliferation with no new benefits to consumers. Consumers’ unenthusiastic attitude to buy as much as companies would wish is tantamount to a revolt.
The option that is most widely used by brand managers is to promote the existing brands with the help of some attractive promotional features, like “buy-one-get-one-free” or something similar.
The promotional schemes, in other words, come into being not so much for adding value to brand with a long term perspective, but rather stem from short term pressures of increasing sales in competitive markets.
Experience has shown that promotions have a short term effect, but are damaging in the long run. The costs are high and the results do not have an element of permanence. Promotions are discussed as part of the communication strategies in lecture 35.
Retailer Power
Here, retailer exploitation comes into play. Knowing brand managers being under pressure, retailers like to keep them under pressure for promotions that suit retailers more than anyone else in the trade sections.
Growth of brands has given rise to retailing all over the world. With retailers’ concentration, the balance of power between the manufacturer and the retailer has tilted toward the retailer.1 Whether it is introduction of new brands or promotion of the existing ones, marketing people find retailers existence in either case extremely significant.
The pressures mount and brand and marketing managers find themselves pressed from two fronts - internal (finance and top management) and external (retailers).
Media Cost and Fragmentation
The style of mass advertising campaigns of yesteryears does not hold too strong a ground. It has become too expensive to go national on the TV network with no specific plans for points of attack and reinforcement in relation to brand’s potential in different areas. In other words, marketing people should concentrate on those areas, which offer better prospects of brand’s growth.
With technical advancements, number of channels has increased manifolds. Developments of cable and satellite systems offer enormous choices, with the help of which you can reach fragmented audiences.
Under such circumstances, it has become challenging for brand managers to be practically aware of the media costs and the effects of fragmenting a TV campaign. Not only that, they also have to be able to plan an integrated communication campaign with various tools of communication at their hands. The managers have to capitalize on the factor of fragmentation and align their campaigns accordingly.
Strategic Brand Management Process
With the overview in place, we now move on to the strategic process as it emerges while you develop a new brand or sustain an existing one. For the sake of consistency of tutorial, the brand management approach is going to be a reflection of the process explained by Scot Davis in his book “Brand Asset Management”. All the chapters are included in the tutorial. There, however, are a couple that are added for your benefit.
The understanding will come into a better light if viewed from the standpoint of developing a new brand. Comprehensive in nature, it will automatically point out the measures needed to refresh an existing brand, whenever and wherever the need arises.
Vision
The point of departure toward the process is to have a clear vision for your brand. Vision should not frighten you, for it is not something poetic or philosophical that you may consider only blessed ones having been endowed with.
If you are a person of average intellect, that most of us are, then you should not have any problems developing a vision. It is all about where you want to see your brand at the end of a certain period of your definition. In very simple words, vision is the journey from here (present) to there (future).
Being the brand manager, you are responsible for the destination planning of your brand in terms of its future movements relating, for example:
With the vision in place about your brand’s movement, the next step for you is to take top management into confidence. The top management is extremely interested in the planned brand’s movements as envisioned by you and your department.
If the top management has an overall vision, then the brand vision should automatically fit into that. The brand vision, therefore, is an extension of the overall business vision. It flows out of the latter.
Brand vision tells us about a brand’s growth and future direction. It is the most important statement before we undertake the strategic management process. It tells us how our brand is going to help the company achieve its goals - financial and strategic.
Before going any further, it is important that we learn how the strategic management process (SMP) works! An understanding of the basics of the process will allow us to easily fit the vision into it and then see how to proceed with every successive strategic step of importance.
Consisting of five steps, the SMP can be explained easily with the help of the following figure:
The figure being self-explanatory, it explains that forming the vision is number one task, followed by setting objectives (both financial and strategic), crafting the right strategies to achieve designated objectives, implementing the crafted strategies, and evaluating performance for any corrective actions or adjustments anywhere along the sequential process.
Very early in the strategy making process, managers ask themselves the question:
The above analysis creates organizational purpose and identity and form very clearly the “VISION” of the company. You can feel from the discussion how important it is to have a clear vision for the company and, also, how closely related that is to creating vision for the brand!
Key point
An understanding on your part of the SMP is important in that you must appreciate the elements that top management considers toward company’s business planning. That will enable you to better integrate your function of brand management into the overall business whole.
The basic determinant of challenges is the level to which a certain market is mature. Maturity holds the key. If a market is very mature, the challenges are intense; if a market is less mature, meaning still growing and robust, the challenges are less strong.
Markets become mature due to overall purchasing levels reaching a plateau. This simply implies that demand in the category is no longer elastic and has no further room to grow. And, the consumers are buying various brands in a certain pattern of frequency and quantities which are optimal and, hence, their buying behavior will not give further impetus to overall growth of the category. We can also call it maturity of the economic cycle.
Under the circumstances just explained, markets seem to lose vitality in terms of growth, but not in terms of availability of loads of products. This can be further simplified by saying that the size of the pie reaches the most optimal level from where it does not increase unless there is growth in population. Whatever changes take place they take place within the pie in the shape of competitive wars.
Competitive pressures and wars have led to a few difficult situations that companies have to face as challenges. The following are the typical ones:
Brand Proliferation
Owing to the reason of low growth, the classic response of marketing people has been (and is) to develop new brands or extending/stretching existing brands into different varieties. Brand extension and stretching essentially is an exercise meant for having different varieties of products under the same brand name.
In trying to do so, marketing people may not create products that really are new. That is, an inevitable response to the dynamics of markets may not generate a real new product for the simple reason that innovations do not come by so very easily and frequently.
The result has been a variety of products that are very similar not having differentiated features that can attract consumers. Creating distinctions without differentiation does not make a product stand out and convince consumers to go for it.
In many instances, products carry the label of “new” indicating new features. But those are not recognized by consumers as really new. The result is “irritated consumers” who think their buying decision has been made complicated into an unnecessary effort. The net result is no increase in sales.
To meet this challenge, manufacturers have to introduce products with real meaningful added features that can be perceived as “performance benefits” and not just cosmetic changes.
Consumer Revolt
Because of the little differences that are not found meaningful, the consumers are not willing to pay premium prices in most of the cases until real performance benefits are perceived by them.
The manufacturers find it hard to amass profits. For this reason, marketing departments get under pressure to produce results. Such pressures lead them to get into the following options:
- Introduce more brands
- Introduce brand extensions
- Advertise or promote existing brands
The net result of introduction of more brands and extensions is high expenditure with no guarantee of increased sales with good profits. Actually, it leads to proliferation with no new benefits to consumers. Consumers’ unenthusiastic attitude to buy as much as companies would wish is tantamount to a revolt.
The option that is most widely used by brand managers is to promote the existing brands with the help of some attractive promotional features, like “buy-one-get-one-free” or something similar.
The promotional schemes, in other words, come into being not so much for adding value to brand with a long term perspective, but rather stem from short term pressures of increasing sales in competitive markets.
Experience has shown that promotions have a short term effect, but are damaging in the long run. The costs are high and the results do not have an element of permanence. Promotions are discussed as part of the communication strategies in lecture 35.
Retailer Power
Here, retailer exploitation comes into play. Knowing brand managers being under pressure, retailers like to keep them under pressure for promotions that suit retailers more than anyone else in the trade sections.
Growth of brands has given rise to retailing all over the world. With retailers’ concentration, the balance of power between the manufacturer and the retailer has tilted toward the retailer.1 Whether it is introduction of new brands or promotion of the existing ones, marketing people find retailers existence in either case extremely significant.
The pressures mount and brand and marketing managers find themselves pressed from two fronts - internal (finance and top management) and external (retailers).
Media Cost and Fragmentation
The style of mass advertising campaigns of yesteryears does not hold too strong a ground. It has become too expensive to go national on the TV network with no specific plans for points of attack and reinforcement in relation to brand’s potential in different areas. In other words, marketing people should concentrate on those areas, which offer better prospects of brand’s growth.
With technical advancements, number of channels has increased manifolds. Developments of cable and satellite systems offer enormous choices, with the help of which you can reach fragmented audiences.
Under such circumstances, it has become challenging for brand managers to be practically aware of the media costs and the effects of fragmenting a TV campaign. Not only that, they also have to be able to plan an integrated communication campaign with various tools of communication at their hands. The managers have to capitalize on the factor of fragmentation and align their campaigns accordingly.
Strategic Brand Management Process
With the overview in place, we now move on to the strategic process as it emerges while you develop a new brand or sustain an existing one. For the sake of consistency of tutorial, the brand management approach is going to be a reflection of the process explained by Scot Davis in his book “Brand Asset Management”. All the chapters are included in the tutorial. There, however, are a couple that are added for your benefit.
The understanding will come into a better light if viewed from the standpoint of developing a new brand. Comprehensive in nature, it will automatically point out the measures needed to refresh an existing brand, whenever and wherever the need arises.
Vision
The point of departure toward the process is to have a clear vision for your brand. Vision should not frighten you, for it is not something poetic or philosophical that you may consider only blessed ones having been endowed with.
If you are a person of average intellect, that most of us are, then you should not have any problems developing a vision. It is all about where you want to see your brand at the end of a certain period of your definition. In very simple words, vision is the journey from here (present) to there (future).
Being the brand manager, you are responsible for the destination planning of your brand in terms of its future movements relating, for example:
- The volume
- Share of the market
- Markets to serve
- Distribution improvements
- Quality parameters and benchmarks
- Overtaking competition
- Product innovation or extension, to name a few
With the vision in place about your brand’s movement, the next step for you is to take top management into confidence. The top management is extremely interested in the planned brand’s movements as envisioned by you and your department.
If the top management has an overall vision, then the brand vision should automatically fit into that. The brand vision, therefore, is an extension of the overall business vision. It flows out of the latter.
Brand vision tells us about a brand’s growth and future direction. It is the most important statement before we undertake the strategic management process. It tells us how our brand is going to help the company achieve its goals - financial and strategic.
Before going any further, it is important that we learn how the strategic management process (SMP) works! An understanding of the basics of the process will allow us to easily fit the vision into it and then see how to proceed with every successive strategic step of importance.
Consisting of five steps, the SMP can be explained easily with the help of the following figure:
The figure being self-explanatory, it explains that forming the vision is number one task, followed by setting objectives (both financial and strategic), crafting the right strategies to achieve designated objectives, implementing the crafted strategies, and evaluating performance for any corrective actions or adjustments anywhere along the sequential process.
Very early in the strategy making process, managers ask themselves the question:
- What is our vision for the company?
- Where is the company headed?
- What kind of enterprise we want to build?
- What should be the company’s future make-up?
- A careful analysis of and answers to the questions lead them to conclude:
- Where the company stands today and where should it reach in say 5 to 10 years? This addresses the question of reaching from here to there!
- What businesses they should be handling? This relates whether they should extend their brand into similar products, or diversify into unrelated areas.
- What customers should they serve? Decision about extension or diversification will pinpoint the target customers.
- Do they need more brands to serve more businesses? This indicates whether they should be keeping their existing brand name or go for new ones.
- What capabilities and resources they need to have to achieve all that they envision? A very careful analysis of what is it in terms of financial, human, and technological resources that they need to succeed is required here.
The above analysis creates organizational purpose and identity and form very clearly the “VISION” of the company. You can feel from the discussion how important it is to have a clear vision for the company and, also, how closely related that is to creating vision for the brand!
Key point
An understanding on your part of the SMP is important in that you must appreciate the elements that top management considers toward company’s business planning. That will enable you to better integrate your function of brand management into the overall business whole.
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