An executive summary for managers and executives can be found at the end of this article

Reinventing the brand: bridging the gap between customer and brand value
Stan Maklan and Simon Knox

Introduction This paper outlines a new approach for managing brands that brings the process into line with recent advances in the management of modern, teambased organizations. In the 1980s, the discipline of creating brands out of products and services spread from the consumer goods industry to financial services, travel, retail and certain industrial sectors (de Chernatony and McDonald, 1992). Company after company invested in new identities, converting their goods and services into branded portfolios through advertising, direct mail and publicity. These investments yielded substantial returns when they were accompanied by sustained efforts at increasing customer value by improving quality, service and optimizing the cost base. British Airways, Andersen Consulting, Häagan Daz, First Direct, BMW and Virgin stand out as examples of well-branded and well-delivered customer value propositions. Branding unsatisfactory However, the experience of branding has not been universally satisfactory (Court et al., 1993). For instance, banks have retreated from the wall of product brochures that used to greet customers; British Rail marketing is the subject of jokes; Mercedes has suffered tremendous losses through the recession and customers now refuse to pay a premium for the traditional computer brand leaders such as IBM, Digital and Apple. In retailing, UK petroleum brands have lost one-quarter of their market to grocery retailers Tesco and Sainsbury almost overnight. More worryingly still for the advocates of branding is the serious loss of brand equity, the differential effect that brand knowledge has on consumer response to the marketing of that brand (Keller, 1993), which has been widely experienced in companies such as Unilever, Coke, Philip Morris (Marlboro) and Procter & Gamble. This led The Economist magazine to publish an article in 1994 entitled, “Death of the brand manager” which questioned the future role of brands and, indeed, the marketing department itself as organizations flatten and move toward horizontal structures. We believe that questions raised recently over the effectiveness of branding are due to the gap that has arisen between brand value and customer value. Traditional branding no longer adds sufficient customer value because it is generally a standardized offer which is the result of a functional management hierarchy not structured to be sufficiently broad enough, nor responsive enough, to satisfy modern customer demands. Customer value is increasingly being generated by business processes traditionally outside the remit of brand management. If the gap continues to grow, business will abandon one of its greatest assets, the equity of its brands. The authors argue that the management tool, the Unique Organization Proposition (UOP), can bridge the gap between customer and brand value.
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The UOP integrates a company’s core business processes into a visible set of credentials that adds customer value through the supply chain. The metaphor for the UOP is that of a cable sheath that holds, directs and provides a consistent purpose to the individual “wires” of business processes. The sheath is the visible embodiment of the organization’s reputation, performance, network of relationships and portfolio of its brands and customers. Cable sheath With this view of the world, marketing management’s task is to design and build a cable sheath that represents the UOP in a compelling manner to the organization’s stakeholders. In so doing, it allows companies to build powerful and branded value chains that deliver superior customer value while differentiating the company’s offering. The UOP allows companies to return to competition and pricing based on value added. The activities which develop and sustain the UOP are very different from the conventional branding practices that it replaces. Designing the UOP means integrating the core business processes which we call Supply Partnership, Asset Management, Resource Transformation, Customer Development and Marketing Planning. The ways in which the UOP is a useful tool for linking these core business processes to customer value are addressed in the main part of the paper. Next, we explore the decline of brands in more detail and identify some of the main factors which have been instrumental in eroding brand equity. Is the brand dead? Brand marketing is in crisis. One brand icon after another has been shaken, if not permanently damaged. Senior management openly questions the value of their traditional marketing activities and marketing departments (Brady and Davis, 1993). Brand engineers A generation of marketers has been trained as brand engineers, manipulating well-tried stimulus-response mechanisms such as advertising, promotion and direct mail to engender brand preference. This used to create demand and customer loyalty which generated power in the supply chain, healthy margins and a platform for new products. However, it is increasingly evident that traditional brand engineering no longer works and traditional marketing managers no longer lead the most important customer value-adding processes. In the 1990s, a gap has arisen between brand value and customer value wherein customer value is increasingly generated by business processes traditionally outside the remit of brand management (Doyle, 1995). Drivers behind this are: • The brand as guarantor of product performance and status is increasingly less effective as a means of product differentiation. Customers are more confident about their own choices and no longer pay premiums for brands unless performance so justifies. Customer value increasingly arises through a relationship with a supplier for a stream of products and services over time, rather than individual products and services.
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The customer no longer wants a choice of products and services; the customer wants what the customer wants. Customer value is created through the ability of a supplier to understand customer needs and effectively meet them through modern JIT supply chains. The products and services add less value than the “problem-solving” activities around them. Customer needs are increasingly met through alliances of companies; more and more customers buy multi-branded solutions.

• Disillusioned about value of brands

If the gap between brand and customer value continues to grow, business will become disillusioned about the value of brands and their ability to differentiate on the basis of market positioning and a unique selling proposition (USP). Companies will then be competing on the basis of building “appropriate” quality for ever-decreasing prices while adding costly, new added-value services to sell their commodity goods and services. Marketers have begun to respond to these challenges. Consumer marketers are reducing the premium of their brands to lower priced competitors (Richards, 1996), rationalizing their product portfolios and improving supply-chain management, particularly with large retailers. Services marketers are trying to “productize” their offerings in an attempt to differentiate themselves from competitors. Business-to-business marketers have invested in quality, service and lower prices. While all these are logical responses, they do not offer a permanent strategy. There is a limit to price and portfolio reductions consumer brand owners can offer. The benefits of “productizing” services have been difficult to prove. Business-to-business marketers are struggling under the relentless pressure to provide better quality, better services and all at lower prices. Many are on a treadmill of constantly increasing the customer value that they provide with less and less margin from which to do so. By redefining customer value and integrating the sources of added value, both within the company and throughout the supply chain, the brand can be reinvented as the device which customers use to assess the company’s value proposition beyond its products and services. Redefining customer value Traditionally, branding has been concerned with enhancing companies’ products and services in the expectation that their investments in added functionality, emotional value and service would create customer value and loyalty (Figure 1).

Figure 1. Traditional brand value creation*
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The definition of customer value identified here is based in economic theory, namely, that customer value is the surplus between the perceived benefits of owning/consuming a product or service and the perceived total life-cycle costs of its acquisition (Christopher, 1996). Emotional benefit Owning and consuming a product or service creates value-in-use as well as emotional benefit. Customers’ costs comprise the initial acquisition, its maintenance over its useful life, inconvenience and perceived risks associated with its performance. Conventionally, brands have created customer value by augmenting the core functionality and emotional values of their offering, namely: • • • • Improving product quality to reduce the life-cycle cost of ownership or use. Adding services that reduce the cost and hassle of acquisition and maintenance. Enhancing product functionality to increase value-in-use. Creating status and prestige for owners of the product or service.

While these activities still create customer value, companies are finding it increasingly difficult to differentiate themselves just by augmenting their products and services. Differentiated customer value is increasingly created by: • Reducing cost through the entire supply chain (e.g. UK retailers such as Marks & Spencer and Tesco that work in close partnership with their suppliers). Reengineering service delivery systems to reduce cost and time for the customer (e.g. telephone banking and insurance). Mass customization that maximizes value-in-use for each customer (e.g. Dell Computer). Virtual companies that outsource noncore activities or enter into meaningful alliances to provide clients with a unique combination of world-class resources (e.g. the Computer Sciences, Andersen Consulting, AT&T and Bell Atlantic partnership to serve JP Morgan).

• • •

Maximizing customer value

All businesses must be dedicated to maximizing customer value in today’s competitive markets. Since branding seeks to differentiate a company’s value proposition from its competitors, the brand management process must concern itself with integrating supply-chain leadership, alliances, business process reengineering and customizing the brand’s unique selling proposition. In other words, by integrating and developing the organization’s competences and capabilities as marketing assets, marketing management can create greater customer value (Hooley and Saunders, 1993). In the next section, the authors develop this approach to value-added marketing by introducing the cable sheath metaphor as a mechanism by which the UOP can be constructed to close this value gap that traditional branding approaches are failing to do. From unique selling proposition to unique organization proposition Today’s marketing challenge is to bridge the widening gap between customer and brand value and help the return to competition based on adding value, leadership of the supply chain and healthier margins. Traditional branding no longer adequately meets this role because it is generally a standardized offer which is the result of a functional

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management hierarchy not enabled nor sufficiently enlightened to acknowledge the need for change. Creating unique selling propositions for brands and exploiting them through predictable stimulus-response tools is falling short of customer perceptions. Modeling tool We suggest that the concept of the UOP can provide the modeling tool with which marketers can bridge the gap to customer value. The UOP integrates a company’s core business processes into a visible set of credentials that add value through the supply chain. The best metaphor for the visible UOP is that of a cable sheath that envelops, holds and directs individual strands or wires, each representing a core business process that potentially adds customer value. The sheath is the organization’s reputation, the performance of its goods and services, its brand and customer portfolios and the network of relationships that it has developed (Figure 2). Marketing management’s task is to design and build a cable sheath that reflects the UOP in a compelling manner for the organization’s stakeholders. To do so, marketing must ensure that core processes are integrated effectively to deliver value to customers and other stakeholders at each point of contact with the organization. The cable sheath is a far more relevant metaphor than the brand engineer for modern marketers. The activities which develop and sustain the UOP are very different from the conventional branding practices that it replaces. Designing the UOP means integrating the core business processes that we call Supply Partnership, Asset Management, Resource Transformation, Customer Development and Marketing Planning. The way in which the UOP is a useful tool for linking these core business processes with customer value is discussed next. Supply partnership Modern competition is based on rapid exploitation of opportunities, quick response to customers’ increasing expectations and experimentation with new technologies and techniques to avoid getting “caught-out.” Such change in one’s core products and services is hard enough to manage, but few, if any company, can drag a long supply chain with them as they move quickly from opportunity to opportunity. Companies which increasingly rely on strategic

Figure 2. Bridging the value gap
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supplier-partners to remain competitive in the future will be competing for the best partnerships (Webster, 1992). Enhance attractiveness There is, therefore, a growing need for companies to enhance their attractiveness to the supplier market. This is made easier when companies can define and communicate their UOP to potential supplier partners. The UOP becomes the bridge between the organization’s purchasing program and its own customers’ expectations of price, quality, delivery and innovation. As supply chains grow more complex and geographically disparate, the design and management of the cable sheath provides a powerful tool for integrating supply partners. Examples of excellence in this regard include Toyota and Marks & Spencer. For instance, suppliers of fresh sandwiches to Marks & Spencer are closely networked, with shared bestpractices and in-bound supplies regularly shifted throughout the network to ensure that day-by-day fluctuations in consumer demand can be met. Management at Marks & Spencer encourage and develop this network and provide their know-how and advice, such as recommending third-party hauliers, on a regular basis. The lead supplier, who has been in partnership with the retailer for over ten years, is the lead innovator of new varieties which are presented to retail management at regular meetings. The systems and processes at the boundaries of the two organizations are clear and well managed which means that both remain very responsive to changes in consumer preferences where innovation is the key to continued market growth (Knox and Maklan, 1996). Suppliers will support companies that move in this direction. The clearer definition of their role in the value chain will allow them to compete on value as much as cost, guide their own R&D efforts and support customer relationships based on shared objectives. Asset management Because the focus of brand management has been on functional attributes and emotional benefits this has meant that, with rare exception, companies are missing opportunities to make their assets work in synergy with customer and product development. These assets include items traditionally capitalized on the balance sheet as well as the off-the-balance capabilities that are perhaps of greater importance, such as methodologies, know-how, training, relationships and access to markets. Since many of these assets are the responsibility of functional managers who are not customer facing, they are often guided by measures of cost, efficiency and utilization. These measures are not based on customer value. Progressive companies share their know-how, capabilities and other assets with suppliers and customers to enhance their role in the value chain. This policy transforms assets into processes which add value to customers (Petrash, 1996). The architecture of the UOP provides a management tool for deciding which assets should be made most visible and accessible to clients and engages corporate capabilities far more actively than traditional branding.
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Support customer relationships

Resource transformation No area of management has been so closely examined as the process by which assets are deployed against supplies to create products and services. The process of creating and sustaining these products and customer services has been the principal object of successive waves of management initiatives: total quality management, kaizen (continuous improvement) and, most notably, business process reengineering (Hammer and Champy, 1993). Systems analysis These programs originated in systems analysis and not from a profound understanding of customers’ purchase motivations and competitor strategies. Many companies have embarked on ambitious improvement programs without referencing their customer value proposition and ensuring that it is sufficiently differentiated from competitors’ offerings. It is, therefore, not surprising that they often complain of “initiativitis” and “consultancy-led change” that exhausts management without necessarily generating customer value. Of course, reengineering is a vital part of remaining competitive. However, without it being based on a full appreciation of customers and competitors, it is as much by chance than by design that process improvements increase customer value. For example, Cadillac won the prestigious Baldrige Quality Award for its quality process in producing cars that the market did not wish to buy; companies outsource after-sales service without managing the brand image created by its outsourcing partners; banks reinvent themselves as financial advisors while not resolving customers’ legitimate complaints about basic services and the accuracy of their accounts. The UOP helps to ensure that the fundamental processes of creating and sustaining the goods and services are organized in a manner that builds customer value through the supply chain. The cable sheath communicates a clear, consistent and credible customer proposition at every point of contact with the organization and business partners acting on its behalf. Customer development In OECD countries, most markets are now in the mature phase and developing the organization’s customer portfolio becomes at least as important as its brand and service portfolio. In many organizations, there is a gap between the management of customers and products. Traditional brand management’s focus on portfolios of brands limits the companies’ ability to develop and manage their portfolio of customers (Knox, 1996). For example, the customer service department is often managed as a cost and operational center and sales departments are often driven only by short-term targets and immediate transactions. Far fewer companies optimize their portfolio of customers in the way they do products, hence they are missing the opportunity to develop strong relationships with their potentially most profitable customers. To grow in mature markets, companies must manage their customer base from a detailed knowledge of customer motivation, purchasing styles and purchasing strategies (Marsh and Marshall, 1996). This understanding needs to be based on research and systematic analysis. Marketing, in this scenario, will increasingly be based on branding the relationship with customers more than developing sales propositions for individual products and services. The
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cable sheath is a more relevant management tool for branding relationships than the USP. Marketing planning Marketing planning is still developed from the organization’s mission statement and business objectives. However, the brand-by-brand build up of a mid-term operating plan no longer suffices since the customer impact of organizational capabilities cannot just be thought of as simply a brand portfolio today. In order to develop the superior value customers now demand, marketing planning must change to meet the needs of crossfunctional management and ever-increasing numbers of stakeholders. It has therefore to assume a broader role directing companies’ business processes from supplier through to the customer. The strategic role of marketing is to manage the design of the UOP and ensure that it is properly resourced and then presented by the company in a manner that enhances company reputation throughout the supply chain. Employee participation Successful implementation of marketing planning today is dependent on employee participation at the functional level, across process teams and at the boundaries with outside stakeholders (Christopher, 1996). Planning should be influenced by their contribution, whether through implementing marketing programs, marketing research feedback or by direct management involvement with these stakeholders. Managerial implications and recommendations Vertically-organized companies often have a lead function that dominates management by virtue of its ability to generate more customer value than other departments. Where brands are king, brand managers and marketing rules. Where customer relationships are, key account management and sales dominate. If project management or operations are top priority, operations run the company. Where innovative new products are vital, science and engineering may dominate. In the 1980s, many companies felt it necessary to become “marketing-led” and brand management structures were extended from their traditional base in consumer goods companies through the service and business-to-business sectors. For a while, it appeared as though all companies would become marketing organizations. Widening gap However, during the 1990s, a widening gap between brand and customer value has emerged which brand management alone cannot bridge. In response, many companies are creating cross-functional, systems-led organizations (Katsanis and Pitta, 1995). As we have already discussed earlier, without reference to the customer value proposition, systems improvement does not necessarily increase customer value, differentiate the company’s offering or enhance profitability. We argue that the UOP is a more appropriate tool for directing company processes since customer value is created throughout the whole organization and in the supply chain. The management challenge is to ensure that the UOP creates more customer value than other competitive organizations and that this customer value can be sustained over time.
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Creating and managing UOP requires a different skill-set to those normally present in brand marketing departments. The conventional marketing and brand-building approach, characterized by a narrow, product-focussed selling proposition no longer adds sufficient customer value. The marketing task must move from brand engineering to UOP architecture. Creating customer value Marketing, with its traditional focus on understanding customer motivations and competitors, is well placed to lead UOP management. However, if marketers are to regain their role at the heart of the value-adding process, they must relegate their traditional brand engineering tools, such as advertising and promotion, to an appropriate place in the overall UOP architecture and focus on the bigger issue of what creates customer value.
References Brady, J. and Davis, I. (1993), “Marketing’s mid-life crisis”, The McKinsey Quarterly, No. 2, pp. 17-28. Christopher, M. (1996), “From brand values to customer value”, Journal of Marketing Practice, Vol. 2 No. 1, pp. 55-66. Court, D., Freeling, A. and George, M. (1993), Marketer’s Metamorphosis, McKinsey and Company, London. de Chernatony, L. and McDonald, M.H.B. (1992), Creating Powerful Brands, ButterworthHeinemann, Oxford. Doyle, P., (1995), “Marketing in the new millennium”, European Journal of Marketing, Vol. 29 No. 13, pp. 23-41. Economist, The (1994), “Death of the brand manager”, 9 April. Hammer, M. and Champy, J. (1993), Re-engineering the Corporation, Harper Collins, London. Hooley, G.J. and Saunders, J. (1993), Competitive Positioning: The Key to Market Success, Prentice-Hall, Hemel Hempstead, pp. 86-96. Katsanis, L.P. and Pitta, D.A. (1995), “Punctuated equilibrium and the evolution of the product manager”, Journal of Product and Brand Management, Vol. 4 No.3, pp. 46-60. Keller, K.L. (1993), “Conceptualizing measuring and managing customer-based brand equity”, Journal of Marketing, Vol. 57, pp. 1-22. Knox, S.D. (1996), “Empirical developments in the measurement and management of brand loyalty at the portfolio level”, in Baker, M. (Ed.), 2021 – A Vision for the Next 25 Years, brand management section of CD, Glasgow. Knox, S.D. and Maklan, S. (1996), Extracts taken from a personal interview with the Commercial Director of the leading sandwich supplier to Marks & Spencer, Luton, UK. Levitt, T. (1983), The Marketing Imagination, Collier Macmillan, London. Marsh, H. and Marshall, S. (1996), “Can soaps simplify choice?”, Marketing Week, 19 April. Petrash, G. (1996), “Dow’s journey to a knowledge value management culture”, European Management Journal, Vol. 14 No. 4, pp. 365-73. Richards, A. (1996), “P & G brings its price war to British aisles”, Marketing Week, 15 February. Webster, E.E. (1992), “The changing role of marketing in the corporation”, Journal of Marketing, Vol. 58, pp. 20-38. (Stan Maklan is Principal Consultant with Computer Sciences Corporation, Farnborough, and Simon Knox is Professor of Marketing, Cranfield School of Management, Cranfield University, Cranfield, Bedford, UK.)

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This summary has been provided to allow managers and executives a rapid appreciation of the content of this article. Those with a particular interest in the topic covered may then read the article in toto to take advantage of the more comprehensive description of the research undertaken and its results to get the full benefit of the material present

Executive summary and implications for managers and executives
The brand is dead. Long live the brand! The jury is out on whether the brand is dead. Some observers see, in the move toward relationship marketing and the stress on quality and customer service, a declining importance for the brand. Others assert that far from helping the consumer, brands represent a tax on consumers via premium pricing. These people go on to say that across most product categories consumers are no longer fooled and cite the success of own label and unbranded goods. Yet another set of observers opine that the brand is shifting from something applied to individual products to a concept more appropriate for an entire organization. And some stick to their belief in individual product brands. The price cut on Marlboro cigarettes a while back jolted brand managements. It was this event that led to the opinion that brand management was finished as the dominant marketing organization. Here Maklan and Knox develop this change while acknowledging that the brand still has relevance as a short-cut for consumers in making buying choices. Their Unique Organization Proposition (UOP) is predicated on the branding of organizations rather than individual products. After all, as they point out, customer value is not determined solely by intrinsic qualities of the product. Availability, convenience and customer service all matter more than ever to the product marketer. The classic unique selling proposition (USP) that dominates consumer goods marketing assumes that it is something about the product which will make the customer buy. What Maklan and Knox claim is that customers seek a relationship with their supplier rather than a relationship with an abstract branding concept. There is no doubt that the success of many retailers comes from the investment in the store brand rather than simply dynamic and efficient management of the processes involved. By using a model acknowledging this principle marketers can focus on how to exploit partnerships, customer relations and the business’s assets as the basis of branding. The metaphor of a cable sheath surrounding and protecting business processes demonstrates the need to create something attractive and flexible – something consumers can understand and utilize in their decision making. It all sound pretty basic really – marketers need to concern themselves with more than just the external image of the products and shifting boxes. All the business’s activities affect the chain from creation to consumption and therefore relate to the brand. It’s no longer a question of getting the product wrapped up nicely and giving it an appealing name. The production and distribution process, customer service, corporate image and much else will affect the consumer’s impression. And as those consumers become better informed they will start to reject brands from unspecified organizations. All but the very strongest individual brands will gradually die away. So how should marketers prepare for this new world of branding. Here are some suggestions: • • Stop thinking that marketing is the bees knees with other processes a poor second best. Pin the finance director in the corner and tell him that this new branding concept used to be called goodwill and is worth lots of money.
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• •

Encourage every employee, every shareholder and every customer to become an advocate for the company. Stop using the term “stakeholder” – at best it means nothing to the average employee or customer and at worst it suggests they own the business. They don’t. Start calling people what they actually are. Nobody minds you making a profit but don’t do it in an underhand way. Get your pricing so clear even a five-year-old can understand it. Pull away from short-term discounts and offers by investigating ideas such as efficient consumer response. Think about relationships. Not with numbers on a print-out but with real people. Look at the branding success of Tango using the Internet and exciting, different advertising. Set a base assessment and a target for your corporate image. Design marketing programs to match this target. Remember that the brand franchise – and the extra profits associated with it – come from a partial monopoly either in fact or in consumers’ minds. If you don’t invest in keeping that “monopoly” you will soon stop making profits.

• •

Corporate image, whole firm branding and identity have often been dismissed as irrelevancies. What matters is the short-term sale. Maklan and Knox show us that developing differentiation across the whole organization is an effective way to build a lasting brand franchise appropriate to efficient processes and sophisticated consumers. Finally, if you want an example of how a total corporate image can work take a look at Virgin with its reputation for innovation and youthful appeal. Or look at Nordstrom with the one paragraph staff handbook including the wonderful exhortation – “use your best judgement at all times.” Or learn lessons from the past – from Cadbury which built a company town for its staff or the UK’s Prudential Insurance which employed a vast network of reps each one known as the “man from the Pru.” (A précis of the article “Reinventing the brand: bridging the gap between customer and brand value.” Provided by Marketing Consultants for MCB University Press.)

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