Total Brand Management

Total Brand Management

          
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Total Brand Management

Marketing & Sales, Consumer & Retail
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    In This Article
    • A winning brand is now more than just a name—it’s a carefully designed business system ranging from raw materials to customer service.
    • It is no longer just a product that customers purchase, but, rather, this total business system.
    • Companies that create innovative new brand-building strategies will reap long-term rewards while those that do not will slowly disappear.
     

    A business revolution has come to brands. From every side, traditional brands appear to be under attack. Costs are escalating. Consumer loyalty is eroding. Retailers are competing through private label. Store brands are commandeering valuable niches. Some observers are even speculating about “the end of brands.”

    No, brands won't disappear. But what a brand is and how best to manage it are changing. Increasingly, a brand is far more than just a name on a product. Winning brands are carefully designed business systems. These systems stretch from the choice of raw materials to final service with the customer. And it is the total system that the customer purchases, not just the product.

    When brands become business systems, brand management becomes far too important to leave to the marketing department. It cuts across functions and business processes. It requires decisions and actions at every point along the value chain. It is central to a company's overall business strategy. That's why we call it total brand management.

    Escalating Investments, Increased Focus

    Total brand management can take a variety of forms:

    • In some cases, the brand extends beyond the actual product to include the infrastructure supporting it. For example, high-end brands such as Lexus or Infiniti, and even mid-market brands such as General Electric appliances, have invested heavily in information systems that support customer service and serve as marketing attributes enhancing the core product.

    • In other cases, well-crafted umbrella brands like Gillette or Levi's stretch across many related products, enabling their owners to leverage materials innovations, marketing investments, and trade promotions more effectively.

    • In still other cases, the entire retail system itself is the brand. At The Body Shop, for example, the way products are sourced (all-natural ingredients), developed (no animal testing), and sold (in distinctive Body Shop boutiques) is as important to the company's marketing image as the actual products.

    Regardless of the particular form, total brand management has two fundamental imperatives. The first is a major escalation in the amount and kind of investments necessary to support a successful brand. It's no longer enough simply to increase the advertising budget. Companies have to invest in a broad range of costly capabilities – proprietary research methodologies for understanding subtle shifts in consumer attitudes, intertwined manufacturing and logistics networks providing superior retail service at lower cost, retail information processing capability to optimize inventory costs, and product development functions to speed innovative products.

    But, the total brand manager must also remember that such investments are only table stakes that allow entry into the game. It takes more than deep pockets to win. In particular, companies must concentrate on three key high-leverage activities:

    Maximize Synergies Across a Coherent Brand Portfolio. Financing a massive build-up in new capabilities requires spreading investments over many brands, cascading across price points and channels. Practitioners of total brand management, therefore, focus not on individual brands but on a coherent brand portfolio.

    French cosmetics maker L'Oreal, for example, knew that increased R&D was essential to competing in the new brand environment. So over a five-year period, L'Oreal doubled its R&D budget. This major investment helped spark a key innovation: the company's new “anti-aging complex,” a breakthrough in skin care that slows the onset and spread of wrinkles. But L'Oreal was able to afford this massive increase in R&D spending only because it could spread the costs over several brands in its portfolio at different price points and positions. The company introduced its anti-aging complex under the Lancôme brand, then moved it into the Vichy range and finally into broad distribution with Plénitude. It has been a tremendously successful innovation, yet couldn't have been done with one brand alone.

    The key word in “coherent brand portfolio” is coherent. It's no good to cobble together a collection of unrelated brands. This only leads to higher overhead costs, fragmented business processes, and duplication of resources.

    Not all brands contribute equally to enhancing the value of your brand portfolio. Brand managers must evaluate each existing brand along two dimensions: fit with core capability and potential for value generation. Such an assessment reshuffles the brands into four categories of investment priority, ranging from good fit/high value to low fit/low value.

    Strengthen the Brand Portfolio Through Innovation. As the L'Oreal example suggests, innovation is now more important than ever. Other forms of growth, such as acquisitions and expanding margins, have been largely played out. Spending on retailers or consumers is becoming too expensive for all but the biggest budgets. What's more, consumers are becoming more sophisticated, and harder to reach. Mere bells and whistles won't sell anymore.

    But the kind of innovation that matters is not what managers might expect. It's not the creation of new brands, an increasingly expensive proposition. Rather, it is the reinvention of existing brands through three basic techniques: repositioning, extension, and transformation.

    For example, SmithKline Beecham repositioned Lucozade, once considered a medicinal remedy, by directing it at anybody who cares about a healthy life, particularly athletes. Today, Lucozade is Britain's number-one non-cola drink. Unilever extended Flora, originally a “healthy fat” margarine low in polyunsaturates, across product categories to become an umbrella brand for a whole range of health-food oils and dairy products. And by moving quickly to exploit a technological breakthrough, Procter & Gamble transformed its traditional Pert Shampoo brand by launching a two-in-one shampoo/conditioner known as PertPlus.

    Secure the Brand Through Close Relationships with Customers and the Trade. Increasingly, customers value the reassurance and stability that comes from an enduring relationship with someone who understands and can respond to their specific needs. But this requires a broad rethinking of the value a company provides for its customers, as well as of the specific products and services it provides.

    Not long ago, for example, Japanese videogame maker Nintendo found itself in a dying market with too many players and limited shelf space. The challenge: to discover a new way to hold its brand name with customers. So, the company launched two new business initiatives: Nintendo Power, a $ 15-a-year magazine that receives 40,000 letters a month, and a 900-number line on game strategy that receives 10,000 calls a week. Both proved to be powerful customer-relationship vehicles that cut across hardware, software, education, product development, and customer service. But even more important, the magazine and 900 number have opened a direct line of communication from the customer back to new product development, which has enabled the company to forecast sales of a new product within 10 percent. Today, with annual sales of $ 5 billion, Nintendo is Japan's most profitable company.

    For many brands, the most important customer is the trade. To fend off private-label growth, brand managers must find ways to create value for the trade without simply giving away more margin. A leading office products producer, for example, has been able to work with a superstore chain to create new packaging, replenishment, and stocking systems that provide more margin to the superstore than private-label products would. With its interlocking business systems, the manufacturer is now able to secure its brand franchise and to increase margins in a win-win relationship with a heavily deal-driven retailer.

    The Role of the Total Brand Manager: Making Choices Along the Entire Value Chain

    As brand managers manage portfolios of brands, customer segments, and retailers across an entire business system, their role has become more cross-functional and strategic. Indeed, total brand management often involves redesigning the business through new partnerships, better cross-functional linkages, and innovation. To that end, brand managers must make choices at every point along the value chain, not just in marketing and sales.

    This more strategic conception of brands means that the stakes involved in launching, maintaining, and evolving a brand are higher. But so are the potential payoffs. Companies that innovate new brand-building strategies will reap long-term rewards. Those that do not will slowly disappear.

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