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