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Brand Orientation - A

Brand Orientation - A

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Published by Zulfikar K Sheikh

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Published by: Zulfikar K Sheikh on Mar 29, 2013
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 CONSUMER MARKETING
18
Brands Today
The future of many companies lies in brands.By using brands as a starting point in theformulation of company strategy, animportant precondition for a new direction –brand orientation – is created. Establishedbrands have a great potential for increasingthe ability of companies to compete as well asgenerating their growth and profitability.Awareness of this potential will make brandsimportant in the formulation of companystrategies as a source for sustainablecompetitive advantage.The purpose of this article is to illustratethe transition from product focus to brandorientation. Managing a brand-orientedcompany involves organizing and controllingthe operations in such a way that an attractiveadded value can be created. The aim is thatthis should be accomplished with unchangedor increased total brand equity (Aaker, 1991).Today the division of responsibility withinmany companies is not clearly defined withregard to brand-related issues, for example,product, positioning and corporate identity.Moreover, decisions in this area are oftenmade on a low organizational level, leading tolack of overview and coordination (King1991; Murphy, 1990). Therefore, the brandissues should be coordinated and given higherpriority and the strategic decisions bepromoted to the company management orboard level.In this article a basic model of a brand-oriented company is presented based onempirical research, carried out during theperiod 1990-1993. All citations in the articleare from interviews conducted by the author.The purpose of the model is to give anoverview of the value adding process throughan analysis of the fundamental relationshipsbetween product, trademark, positioning,corporate name, corporate identity, targetgroup and brand vision – the essence of thebrand-oriented company’s strategy.By way of illustration, experiences gainedfrom the pharmaceutical company PhamaciaNicorette, which made the transition fromproduct focus to brand orientation during1991-1993, are used. In this company brandissues were made management issues whenformulating a brand vision. In the light of abrand strategy discussion, an inventory of thecompany’s brands and patents revealedvaluable intangible assets (Parr, 1991). Oneof the conclusions drawn by the managementof the brand orientation process is theimportance of synchronization of thecommunication. Today the perspective on theoperations at Pharmacia Nicorette has been
 Journal of Consumer Marketing, Vol. 11 No. 3, 1994, pp. 18-32© MCBUniversity Press, 0736-3761
Brand Orientation – AStrategy for Survival
Mats Urde
 
broadened and the long term goals aredirectly related to the building of aninternational brand. All efforts and resourcesare directed toward the fulfillment of thisbrand vision.The model of the brand-oriented companyis gradually presented along with the case of Phamacia Nicorette. As a background thearticle starts with three driving forces of brand orientation with examples fromdifferent companies.In the future, managements capable of exploiting the potential of brands can gain along-term competitive advantage, which for agrowing number of companies may become astrategy for survival.
The Three Drivers of Brand Orientation
Three trends of development can be identifiedwithin industry and commerce today, makingbrand orientation a strategic choice:decreasing product divergence, increasingmedia costs and integration of markets. Thesetrends can be perceived by companies withbrands either as a threat or as an opportunity.In order to avoid the former and exploit thelatter a company may opt for the strategy of brand orientation. The alternatives open tocompanies today are summarized in Figure 1using these trends as a basis.
Decreasing Product Divergence
A product’s superiority
 per se
is no longer aguarantee of success (King, 1991). Thisrealization was made by the management of Tetra Pak, an international manufacturer andsupplier of complete systems and material forpackaging food products, when their technicaledge was threatened by a Japanesecompetitor. Claes Nermark, vice-presidentMarketing of Tetra Pak, was convinced of thevalue of brands as a competitive tool: “At thetrade show Tokyo Pak 1985, our Japanesecompetitor Shikoku presented a copy of themachine system Tetra Brik under the name of UP-Fuji-MA60. This opened our eyes to theimportance of brands. We realized that wehad three legs to stand on: machinery,packing paper and brands. They could copyour machines, despite our objections based onpatent rights, and the paper for our machineswas already being sold by the US companyInternational Paper. Brands, on the otherhand, gave us stronger protection”.This bold action by the Japanese companychanged the competitive situation of Tetra Pak,sparking off intensive discussions on strategy,in which the company’s reputation togetherwith its brands emerged as the core of the newcompetitive strategy. This marked thebeginning of a thorough review of Tetra Pak’sintangible assets as well as their identity.
 1994
19
ThreatLevelingAnonymizationMarginalizationOpportunityDifferentiationPositioningInternationalizationTrendDecreasingproduct divergenceIncreasingmedia costsIntegration ofmarkets
Figure 1.Three Trends Compelling Companies with Brands to Choose Whether or Not to Incorporate Their Brandsinto the Company Strategy
 
The example shows that decreasingproduct divergence may be a motive forbrand orientation. In Tetra Pak’s new strategy,the risk of leveling is counteracted bydifferentiation in terms of corporate name,brands and corporate identity.
Increasing Media Costs
Making existing corporate assets work harderis paramount in a cost control world (Tauber,1988). For the British food-producingcompany Rank Hovis McDougall (RHM), theincreasing media costs are a particularlydifficult problem threatening to anonymizetheir brands. Their portfolio of brands for theBritish includes well-known names such asBisto gravy, Hovis bakeries and Saxa salt.Despite an increased media budget, RHM iswitnessing their “share of voice” beingreduced, due to soaring costs of mediacoverage and to the increased volume of advertising in general. Prioritization of brandsis an important mission according to ElaineUnderwood, Marketing Director RHM FoodsUK: “Because we have so many brand nameswe cannot afford to put marketing in all areas.We are wrestling with the classifying of brands into groups. The core brands areHovis, Mr Kipling (packaged cakes andfrozen deserts), Sharwood’s (chutney saucesand ready to eat exotic foods) andMcDougall’s (household flour and homebaking products).”Today RHM are concentrating theirmarketing efforts on the positioning of thesestrategic brands (cf. core brands) for thecompany’s long-term competitiveness,growth and profitability. The four brandsprioritized will gradually be extended toinclude several other products. Consequentlyone important idea behind this is moreefficient use of media investments as well asof the brand equity.
Integration of Markets
The integration of markets, e.g. the EuropeanUnion and the North American Free TradeAgreement, intensifies the globalcompetition. This trend affects thepreconditions for branding strategies of bothnational and international companies. Forexample, many companies experience that itis one thing to be big actor on a small market,but another to be a small actor on big market.Internationalization, not necessarilystandardization, seems to be one of the mosteffective ways to avoid marginalization.For the multinational package foodmanufacturer Nestlé, the world market haslong been a reality. However, their brandingstrategies have to a great extent been adaptedto national conditions. Today Nestlé’smanagement are striving towardinternationalization of key brands like Nescafécoffee beverages and Buitoni Italian foods.The uniform brands (but not always identicalproducts) can realize economies of scale indistribution and marketing. Nestlé’s aim is tocapture market shares on a global basis.Camillo Pagano, former Head of MarketingDivision, Nestlé, has described the situationon the European market for packaged foodsin somewhat pointed words: “If you arenumber one: terrific. If you are number two:terrific. If you are a distant number three, youhave problems. The dealer will tell you he’llput his own brand on the shelf instead of yours.”According to Pagano, the competitiveability of Nestlé’s brands is related to theirmarket share. Unless the company has asubstantial market share, they risk beingconfronted with marginalization of theirbrands, which may result in the substitutionof, for example, the distributors own labels.To sum up, the market trends – decreasingproduct divergence, increasing media costsand economic integration – have an influenceon the branding strategies of the companies
 CONSUMER MARKETING
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