STRATEGIC BRAND MANAGEMENT

What is a Brand? A brand is a name, term, sign, symbol, or design which is intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors.

The Concept of Brand Equity stresses the importance of the brand in marketing strategies. Brand equity is defined in terms of the marketing effects uniquely attributable to the brand.

Brand equity relates to the fact that different outcomes result in the marketing of a product or service because of its brand name, as compared to if the same product or service did not have that name.

The Key to Branding: For branding strategies to be successful, consumers must be convinced that there are meaningful differences among brands in the product or service category. Consumer must not think that all brands in the category are the same.

PERCEPTION = VALUE

Strategic brand management involves the design and implementation of marketing programs and activities to build, measure, and manage brand equity.  The strategic brand management process is defined as involving four main steps:

            1)  Identifying and establishing brand positioning and values

            2)  Planning and implementing brand marketing programs

            3)  Measuring and interpreting brand performance

            4)  Growing and sustaining brand equity

Strategic Brand Management Process

WHY STRATEGIC MARKET MANAGEMENT?

Strategic market management is often frustrating because the environment is so difficult to understand and predict. The communication and choices required within the organization can create strain and internal resistance. The most valuable organizational resource, management time, is absorbed. The alternative of simply waiting for and reacting to exceptional opportunities often seems efficient and adequate.

Despite these costs and problems, however, strategic market management has the potential to

* Precipitate the consideration of strategic choices. What is happening externally that is creating opportunities and threats to which a timely and appropriate reaction should be generated? What strategic issues face the firm?

What strategic options should be considered? The alternative to strategic market management is usually to drift strategically, becoming absorbed in day-to-day problems. Nothing is more tragic than an organization that fails because a strategic decision was not addressed until it was too late.

* Force a long-range view. The pressures to manage with a short-term focus are strong and frequently lead to strategic errors.

* Make visible the resource allocation decision. Allowing allocation of resources to be dictated by the accounting system, political strengths, or inertia (the same as last year) is too easy. One result of this approach is that the small but promising business with "no problems" or the unborn business may suffer from a lack of resources, whereas the larger business areas with "problems" may absorb an excessive amount.

* Aid strategic analysis and decision making. Concepts, models, and methodologies are available to help a business collect and analyze information and address difficult strategic decisions.

* Provide a strategic management and control system. The focus on assets and competencies and the development of objectives and programs associated with strategic thrusts provide the basis for managing a business strategically.

* Provide both horizontal and vertical communication and coordination systems. Strategic market management provides a way to communicate problems and proposed strategies within an organization; in particular, its vocabulary adds precision.

* Help a business cope with change. If a particular environment is extremely stable and the sales patterns are satisfactory, there may be little need for meaningful strategic change—either in direction or intensity. In that case, strategic market management is much less crucial. However, most organizations now exist in rapidly changing and increasingly unpredictable environments and therefore need approaches for coping strategically.
    George Yip studied strategy development in 13 firms and concluded that strategic market management approaches have particular value for businesses that:

* Need multinational strategies; one marketing-oriented firm used them to provide a strategic role for functions other than marketing.

* Need to achieve synergy among multiple markets.

* Need to coordinate the strategies of multiple brands.
* Are involved in complex markets where multiple or layered channels, regional variations, or multiple elements of the marketing mix are involved.

STRATEGIC MARKET MANAGEMENT - CHARACTERISTICS AND TRENDS:

Several distinct characteristics and trends have emerged in the strategy field, some of which have already been mentioned. A review of these thrusts or trends will provide additional insight into strategic market management and into the perspective and orientation of the balance of the book.

External, Market Orientation

As already noted, organizations need to be oriented externally—toward customers, competitors, the market, and the market's environment. In sharp contrast to the projection-based, internally oriented, long-range planning systems, the goal is to develop market-driven strategies that are sensitive to the customer.

Proactive Strategies

A proactive strategy attempts to influence events in the environment rather than simply react to environmental forces as they occur. A proactive strategy is important for at least two reasons. First, one way to be sure of detecting and quickly reacting to major environmental changes is to participate in their creation. Second, because environmental changes can be significant, it may be important to be able to influence them. For example, it may be beneficial for an insurance firm to be involved in tort reform strategy.

Importance of the Information System

An external orientation puts demands on the supporting information system. The determination of what information is needed, how it can be obtained efficiently and effectively, and how it should best be analyzed, processed, and stored can be 1cey to an effective strategy development process.

On-Line Analysis and Decision Making

Organizations are moving away from relying only on the annual planning cycle and toward a more continuous, on-line system of information gathering, analysis, and strategic decision making. The design of such a system is demanding and requires new methods and concepts. The system must be structured enough to provide assistance in an inherently complex decision context, sensitive enough to detect the need to precipitate a strategic choice, and flexible enough to be applied in a variety of situations.

Entrepreneurial Thrust

The importance of developing and maintaining an entrepreneurial thrust is increasingly being recognized. There is a need for the development of organizational forms and strategic market management support systems that allow the firm to be responsive to opportunities. The entrepreneurial skill is particularly important to large, diversified firms and to firms involved in extremely fast-moving industries, such as high-tech firms or industries that produce "hit" products such as video games, CDs, or movies. The strategy in such contexts must include providing an environment in which entrepreneurs can flourish.

Implementation

Implementation of strategy is critical. There needs to be concern about whether the strategy fits the organization—its structure, systems, people, and culture—or whether the organization can be changed to make the strategy fit. The strategy needs to be linked to the functional area policies and the operating plan. Chapter 15 is devoted to implementation issues.

Global Realities

Increasingly, the global dimension is affecting strategy. Global markets are extremely relevant to many businesses, from Boeing to McDonald's, and it is a rare firm that is not affected by competitors either based in or with operations in other countries. The global element represents both direct and indirect opportunities and threats. The financial difficulty of a major country or a worldwide shortage of some raw material may have a dramatic impact on an organization's strategy. Chapter 14 focuses on global strategies.

Longer Time Horizon

A major problem for many businesses is the development of effective long-term objectives and strategies. Many observers have suggested that the visible success of Japanese firms is due, in part, to their ability to operate strategically with long time horizons. Furthermore, some of the competitive problems of such industries as the automobile, consumer electronics, and steel industries have been attributed by management theorists to a short-term orientation. As managing with respect to a longer time horizon is more difficult and places heavier demands on the strategic decision-making process, there is an increased need for better constructs and methods that reflect a long-term perspective.

Empirical Research

Historically, the field of strategy has been dominated by conceptual contributions based on personal experience and insights, as the writings of Alfred Sloan, the architect of General Motors, and Peter Drucker, the author of the classic book, The Practice of Management, illustrate.⁶ More recently, an empirical research tradition has begun. The qualitative case-study approach provides useful hypotheses and insights. In addition, a host of quantitative research streams compare and study the performance and characteristics of samples of business units over time. These research streams can now be found in most of the basic disciplines and in the field of strategy itself. They are an important indication that the field is finally reaching a maturity in which theories can be, and are being, subjected to scientific testing.

Interdisciplinary Developments

One purpose of this book is to draw on and integrate a variety of disciplines that are making important conceptual and methodological contributions to strategic market management. Among these disciplines, which have been remarkably isolated from strategic market management and each other, are the following:

Marketing

Marketing is by its very nature concerned with the interaction between the firm and the marketplace. During the last decade, strategic decisions have received increasing attention. Tools and concepts such as product positioning, the product life cycle, brand equity, brand loyalty, and customer-need analysis all have the potential to improve strategic decision making.

Organizational Behavior

Organizational behavior theorists have built on the classic works of the early 1960s on strategy and organizational structure. They have also considered the link between strategy and other elements of the organization, such as systems and the management of people. Of particular relevance is the concept of corporate culture and its impact on strategy.

Finance and Accounting

One major contribution of these disciplines to strategy is shareholder value analysis (covered in Chapter 7)—the concept that strategists should be concerned with the impact of strategy on the value of the firm. Another is a rich research tradition relating to diversification efforts, acquisitions, and mergers, Finance has also contributed to an understanding of the concept of risk and its management.

Economics

The industrial organization theory subarea of economics has been applied to strategy using concepts and methods such as industry structure, exit barriers, entry barriers, and strategic groups. Furthermore, the concept of transaction costs has been developed and applied to the issue of vertical integration. Finally economists have contributed to the experience curve concept, which has considerable strategic implications.

Strategy

The discipline of strategy is not only increasingly overlapping with other disciplines, but is itself maturing. One sign of this maturity is the emergence of quantitative research streams; another is the maturity of some of its tools and techniques. In addition, the premier strategy journal, Strategic Management Journal, has given exposure for more than two decades to the top academic efforts that provide theoretical and empirical insights into strategy.

Strategic Market Management

Strategic market management, or, simply, strategic management, is motivated by the assumption that the planning cycle is inadequate to deal with the rapid rate of change that can occur in a firm's external environment. To cope with strategic surprises and fast-developing threats and opportunities, strategic decisions need to be precipitated and made outside the planning cycle.

Recognition of the demands of a rapidly changing environment has stimulated the development or increased use of methods systems, and options that are responsive. In particular, it suggests a need for continuous, real-time information systems rather than, or in addition to, periodic analysis. More sensitive environmental scanning, the identification and continuous monitoring of information-need areas, efforts to develop strategic flexibility, and the enhancement of the entrepreneurial thrust of the organization may be helpful. An information-need area is an area of uncertainty that will affect strategy, such as an emerging consumer-interest area. Strategic flexibility involves strategic options that allow quick and appropriate responses to sudden changes in the environment.

Strategic market management is proactive and future oriented. Rather than simply accepting the environment as given, with the strategic role confined to adaptation and reaction, strategy may be proactive, effecting environmental change. Thus, governmental policies, customer needs, and technological developments can be influenced—and perhaps even controlled—with creative, active strategies.

Gary Hamel and C. K. Prahalad argue that managers should have a clear and shared understanding of how their industry may be different in 10 years and a strategy for competing in that world. They challenge managers to evaluate the extent to which

* Management has a distinctive and farsighted view, rather than a conventional and reactive view, about the future.

* Senior management focuses on regenerating core strategies rather than on reengineering core processes.

* Competitors view the company as a rule maker rather than a rule follower.

* The company's strength is in innovation and growth rather than in operational efficiency.

* The company is mostly out in front rather than catching up.

In that spirit, strategic market management actually includes all four management systems: the budgeting system, the projection-based approach of long-range planning, the elements of strategic planning, and the refinements needed to adapt strategic decision making to real time. In strategic market management, a periodic planning process is normally supplemented by techniques that allow the organization to be strategically responsive outside the planning process.

The inclusion of the term market in the phrase "strategic management" emphasizes that strategy development needs to be driven by the market and its environment rather than by an internal orientation. It also points out that the process should be proactive rather than reactive and that the task should be to try to influence the environment as well as respond to it.

Business Strategy

Before discussing the process of developing sound business strategies, it is fair to ask what a business strategy is in the first place. A business strategy, sometimes termed competitive strategy or simply strategy, is here defined by six elements or dimensions. The first four apply to any business, even if it exists by itself. The remaining two are introduced when the business exists in an organization with other business units. A business strategy specification includes a determination of

1.     The product market in which the business is to compete. The scope of a business is defined by the products it offers and chooses not to offer, by the markets it seeks to serve and not serve, by the competitors it chooses to compete with and to avoid, and by its level of vertical integration. Sometimes the most important business scope decision is what products or segments to avoid because such a decision, if followed by discipline, can conserve resources needed to compete successfully elsewhere.

2. The level of investment. Although there are obvious variations and refinements, it is useful to conceptualize the alternatives as

* Invest to grow (or enter the product market).

* Invest only to maintain the existing position.

* Milk the business by minimizing investment.

* Recover as much of the assets as possible by liquidating or divesting the business.

3. The functional area strategies needed to compete in the selected product market. The specific way to compete will usually be characterized by one or more functional area strategies, such as a

           * Product line strategy.

* Positioning strategy.

* Pricing strategy.

* Distribution strategy.

* Manufacturing strategy.

* Information technology strategy.

* Segmentation strategy.

* Global strategy.

4. The strategic assets or competencies that underlie the strategy and provide the sustainable competitive advantage (SCA). A strategic competency is something a business unit does exceptionally well, such as manufacturing or promotion, that has strategic importance to that business. A strategic asset is a resource, such as a brand name or installed customer base, that is strong relative to that of competitors. Strategy formulation must consider the cost arid feasibility of generating or maintaining assets or competencies that will provide the basis for a sustainable competitive advantage.

The concept of a business strategy for a group of business units is introduced, and two additional components of strategy are needed:

5. The allocation of resources over the business units. Financial resources, generated either internally or externally, plus non-financial resources such as plant, equipment, and people, all need to be allocated. Even for a small organization, the allocation decision is key to strategy.

6. The development of synergistic effects across the businesses—the creation of value by having business units that support and complement each other. It is only logical that multiple business organizations that can achieve synergistic effects will have an advantage over those that ignore or fail to achieve synergy.

All six elements of the strategy concept can be capsuled into three core elements as shown in

Fundamental ways to keep your product strong and viable

Here are some fundamental ways  to keep your product strong and viable.

1. Develop new uses. Give your product or service a new function that the other guy hasn't thought of yet. It makes the buyer feel smart, like he's getting something for nothing. Be a hero for solving two problems for the cost of one. It's a great way to preempt a category. The WD 40 company has built its whole product line (which consists solely of WD 40) around new uses for the product. If a new computer scanner can function as a copy machine and a fax machine-and save money-the buyer will be delighted.

2. Make a minor cosmetic change. There are a zillion computers on the market, but Acer did something special: They made theirs black. It's high-tech, and also fits nicely into home decorating schemes. Frank Purdue created a frenzy in the chicken business when he capitalized on the fact that his chickens had a brand name and yellow skin. This convinced consumers that Purdue chickens were healthier, prime chickens. It reassured them that they were buying the best for their families and it gave them a point of comparison when they put their yellow-branded Purdue chicken next to pale chickens.

3. Develop a new name. Choose a name that buyers can remember. Stay away from neutral names that no one really loves or hates. Snuggles is a great name for a fabric softener, especially when it's positioned for kids clothes. Gobblestix, a name for a turkey jerky product targeted to moms and kids may sound simplistic at first to us marketing mavens... but not to moms and kids.

4. Make it more convenient. But don't make it too easy. Your package should allow consumers to rationalize the added expense. When Colgate introduced its first pump back in the fifties it was considered frivolous and didn't sell. But in the eighties the company learned that consumers would rationalize the added expense of the pump as being easier and less messy for kids to use. The Internet offered the greatest information retrieval system known to man, but it was the user friendliness and easy-to-use graphics of the World Wide Web and America Online that really sparked interest.

5. Put in a new performance cue. Then tie it into a product benefit that stirs emotions. A wall and floor cleaner without a strong. Or even obnoxious residual scent is considered ineffective by consumers because it fails to reinforce the fact that the user has done her job.

6. Make the product fun. Don't be afraid of a little whimsy. My computer keyboard is black, yellow and purple. Why did I buy it? Because it caught my eye. Even a product as simple as basic household sponges can be fun when we cut them into shapes like little animals.

Key Strategies for Successful Marketing Thinking

1. Solve problems. Think in terms of benefits rather than features. Successful marketing propositions don't start with a product, but with the answer to a customer's problem. Know what customers want to buy and WHY they're buying it. If you don't know the driving forces, learn them. That way there are no misdirection or expensive false starts.

2. Learn to manage chaos and manage in chaos. Things don't happen in order, even though management types often crave linear time and work flows. The successful marketer manages chaos-in the corporate world, and in buying patterns. He finds sales patterns where none seem to exist on the surface and builds on them.

3. Build relationships  as well as sales. Most people can sell a good product once. But it's the relationship that spurs future sales. Especially in a service environment, the company is buying you, not just your product.

4. Stay in tune with your customers. Know that consumers buy on emotion first and physical benefits next. How one sells to the consumer is just as important as how it is sold. There will be much more on this in the coming chapters.

5. Borrow ideas from the competition. Do this freely and without remorse. Know how the competition will react to your marketing strategy and the plusses and minuses about competitive products. Become your competitor's best friend and customer until you know almost as much about competitive products as they do.

6. Listen. Listening is an underrated art form. Customers will give you as much information as you need if you probe correctly. Successful marketers ask-and then listen! The second part is where most people go wrong. It's physically impossible to talk and listen at the same time and the weak marketer spends more time babbling than listening. Customers will tell you everything you need to know about how to make them buy your product when you ask the right way. Successful marketers ask questions and know when to shut up.

7. Continuously think of ways to make your product better. Constantly evolve your products and your strategic thinking. Avoid tunnel vision by always looking for peripheral strategies and markets. The ideal product and target market has never been invented. Improve your product and look for new target markets even before the product or strategy hits the market.

8. Never see yourself as a victim. It's an easy mind-set to get into: you feel your product is not ideal, the competition too strong. These are all temporary conditions. Moses had hundreds of thousands of followers hanging on to his every word. But many people don't know that Moses had a speech defect (Exodus). There always will be negatives but you will overcome almost any negative with solid marketing that puts a spin on the product and turns a negative into a selling point.

9. Think proactively 100 percent of the time. Locate problems before they occur, along with potential solutions. There are always going to be problems that you didn't think of when you started a strategy. Find remedies for potential dysfunctional situations before they occur.

10. Fill your bead with minutia about anything and everything. It doesn't have to be related to the task at hand. Mind chatter feeds on those little scraps of information you keep in your head. The answers to questions rest in your subconscious waiting to be set free at the proper moment.

11. Live and breathe marketing. Keep a twenty-four hour vigil for new opportunities. Opportunities don't come and kick you in the butt; they always have to be probed and ferreted out. And opportunities don't work the 9-5 shift. In our business society we have put marketers on a daily nine-hour schedule. But our body and brain rhythms don't fit that schedule. New ideas usually opt to surface at weird times when you're actually thinking of something else-i.e., driving a car, taking a shower, and even making love (unfortunately).

12. Take a break now and then. Having time away from work isn't just a good idea. It's mandatory. Continuous work brings circular thinking. When batteries are recharged during a vacation, you get a fresh look at your ideas and your marketing proposition.

Marketing and Selling