Branding strategy - strategy for using brand names to sell product in a media-saturated, consumer cynical age

Business Horizons, Sept-Oct, 1996 by Richard C. Leventhal

We have been told that brands are dead, or at least on their last legs. So goes the argument, bringing to light one of the most visible elements of turmoil in marketing in recent years. But are brands really dead? On the contrary, they are alive and well. But their place in today's marketing environment is very different from their position in the past, and they are severely misunderstood. As marketers take a much broader perspective in their activities, they will view the goal of marketing strategy not as building the size and share of market demand, but as increasing the size and their share of the total surplus--or profits--in their industry.

Brands have been, and will continue to be, an important vehicle for capturing that surplus. The new marketing environment--featuring demanding consumers, fragmented channels of distribution, and a complex technological landscape--creates substantial opportunities for new types of brands but also new requirements for branders. It is no longer obvious that the manufacturer should be the brander within categories. Every participant in the industry channel, from suppliers to manufacturers to retailers, can be a brander. But this position may not come easily; they need the competitive "right to brand."

THE ABILITY TO WIN BRANDING RIGHTS

Surprisingly, perhaps, there is considerable disagreement over what a brand actually is. For some, it is a relatively narrow notion of a trademarked name; for others, it is an image that can be used to communicate benefits and points of differentiation. However, from a much broader context branding encompasses both the tangible and the intangible benefits provided by a product or service. It covers the entire consumer experience and includes all the assets critical to delivering and communicating that experience-- the product name, the advertising, the product or service, and, in many cases, the distribution channel.

Over the years, nationally advertised manufacturer's brands have dominated the market. For the past 50 years, these brands took advantage of low consumer confidence and relatively high channel power. They also benefited from economies of scale in mass production technology and the advent of a single major choice in advertising media--television--to develop distinctive value for consumers and build consumer loyalty. In turn, this allowed marketers to capture high price premiums from consumers and achieve strong bargaining positions with retailers.

This branding concept thrived in a much simpler world than that which exists today. Marketers could focus on the consumer--on the benefits to be offered and on the advertising communications--and ignore other elements of the industry chain and other communications media. Now the need to adopt a total system perspective on marketing means these convenient simplifications are no longer valid. But that does not mean brands are no longer important. Quite the opposite.

Branding strategies will continue to be the cornerstone of marketing. And marketers focusing on gaining a share of the market surplus will continue to need brands. They will succeed based on their ability to build brands and, as before, their goal will be to develop a sustainable relationship with a consumer. But whereas the 1950s brander faced homogeneous demand, fewer media, and a minimum number of distribution channels, today's branders face fragmented demand, multiple media, and proliferating distribution channels--all creating new challenges.

* Knowledgeable consumers. The success of many of the original televised brands was based on trust. Whether it was a manufacturer's brand such as Tide or a retailing brand such as Sears, the relationship--and a price premium--was rooted in a perception of trust among a group of consumers who were generally naive about what constituted value. Today, consumers' confidence and their ability to seek value are so high that trust, as it was once known, is not worth much. Instead, branders need to find ways to deliver sharply articulated value to an increasingly cynical set of consumers. At the same time, fragmenting demographics and needs have created a wide variety of attractive market segments within even the most homogeneous of product categories.

* Media. The world full of media interactivity may still be several years away, but multiple channel media and sophisticated direct marketing programs have substantially enhanced marketers' abilities to communicate efficiently to smaller and smaller segments of the population. Coca-Cola, for example, is already using 20 variations of its ad across the U.S., and more and more marketers are likely to follow suit.

* New channels of distribution. Providers of packaged goods, apparel, durables, and financial services are all experiencing the proliferation of available channels. This adds to the complexity of serving the specific needs of unique segments. Several companies are effectively using new channels. Cott, for example, sells Sam's Choice cola through the Wal-Mart chain. Such innovative approaches escalate and widen the competition for branding rights.