What are BRANDS good for ?

HARVARD BUSINESS SCHOOL CASE

CHANNEL MEMBERS BRAND MANAGERS CUSTOMERS

Who are the Key Players in this case ?

What is the present Situation ?

SITUATIONAL ANALYSIS

Brands lead to aggregation of consumers by influencing the mass

With the advent of Information revolution , 2 way communication has been better in ensuring consumer relationship than 1 way

communication

Consumer disaggregation is more efficient & profitable than aggregation , the traditional source of Brand power

Retailers argue that the economics of disaggregation favor them and that they have greater credibility in assembling an assortment of

brands that makes sense for the consumer.

So ,its time for Brand managers to highlight the role of their Brands

1/4

SITUATIONAL ANALYSIS

So , the new era has seen a shift in focus from :

One to one communication , personalized marketing with the

consumers

Mass communication which could not lead to Consumer

satisfaction of every consumer.

TO

2/4

So the Channel members don’t prefer aggregation through brands anymore ; they now insist on Market segmentation following disaggregation.

SITUATIONAL ANALYSIS 3/4

So , now a question mark now hangs over their future purpose and role of BRANDS

And the purpose of this case is to explore what the Brand managers could do to justify the roles of their Brands

SITUATIONAL ANALYSIS 4/4

As an example :

Kraft Foods has developed & launched the most elaborate disaggregate marketing initiative in the packaged goods industry and the program’s flagship is its quarterly personalized magazine named “food & family “.

The free magazine is an effort to build and enhance consumer relationship

As an example :

Kraft Foods has developed & launched the most elaborate disaggregate marketing initiative in the packaged goods industry and the program’s flagship is its quarterly personalized magazine named “food & family “.

The free magazine is an effort to build and enhance consumer relationship

But how does it explain the phenomenon of segmentation & disaggregation ?

SEGMENTATION

The publication arrives in consumers’ mailboxes quarterly, only after people who want to receive it have registered. This way the company has segmented the market

DISAGGREGATION

The magazine is personalized to the individual consumer. For example, someone who corresponded with the company by e-mail may receive a magazine in which the inside cover page points the reader, by name, to the relevant sections in the publication where answers to specific queries may be found.

Highlighting the objective of the company :

Kraft foods tried to enhance its consumer relationship and consumers’ satisfaction .They did that successfully by the launch of the personalized magazine .

But what about the cost spent on the program ?

The costs of the program are set against the benefits of reaching Kraft’s most loyal and profitable consumers in a targeted manner, providing opportunities to communicatedirectly with them outside of traditional media and retail channels. And some of the costs of publishing and distributing the magazine are defrayed by third-party advertisers such as Ford, Tupperware and even Campbell Soup, which are keen to tap into such targeted exposure for their brands.

This program highlights 2 central

facts of Disaggregation

1 The locus of the consumer relationship is likely to shift :

PRODUCT BRAND UMBRELLA BRAND

TO

AT THE STRATEGIC

LEVEL

2 Tactical activities such as competitive reactions, product-trial coupons and selective promotions are implemented with targeted consumers or segments rather than at the brand level

THE CHANNEL RELATIONSHIP

Retailer’s business is no longer

LOCATION BASED APPROACH

RELATIONSHIP BASED APPROACH

Its about adopting

In most of the developed countries today , major portion of the Brand’s marketing budgets is spent on Retail and Retailers

But then by this , Manufacturers are basically feeding their potential rivals

So how should they deal with this imbalance of powers ?

RETAILER –MANUFACTURER RELATIONSHIP

This can be done through “Disaggregation”

Disaggregation ( the new medium ) provides them the opportunity to influence consumer decisions that is independent of the Retailer .

So this new medium provides manufacturers’ the medium to know their consumer better than retailer

But then it’s a race as Retailers are also not sitting idle.

Initially Retailers used Brands like Coca-Cola , Tides as medium to attract consumers ….But gradually Brands were unfollowed when retailers started using Disaggregate Consumer data .

As an Example

Company used its Loyalty Card to personalize consumer’s shopping experience .

Case of a company

In 2001 P&G launched its consumer information-based marketing initiative under the banner “Golden Households

Its objective was to get the understanding of Segmented market

The ISSUE was : That the Consumer data obtained through this covered only a small segment of Consumer behavior .

So they had to merge their information with that of Tesco’s

P&G’s U.K. launch of its Physique hair-care brand was executed exclusively through Tesco channels

In 1931, P&G pioneered an organizational innovation, the brand manager, as a means of focusing the firm’s resources on key market opportunities

The Brand management organizations

Now entrenched Brand-management organizations are proving to be an impediment to the adoption of consumer-level disaggregation initiatives.

BRAND MANAGEMENT AT KRAFT :

At Kraft, the information-based marketing program is treated as an add-on to existing channels for reaching the consumer. The brand manager can choose to put money in this program or to continue using only traditional media. Brand managers continue to be concerned with the marketing and sales of their brand rather than the profitability of the entire portfolio of brands. The focus of marketing efforts remains the brands, not the consumers

But………..

Brand Management systems were designed for an era of mass marketing and are not well suited to making good use of the tidal wave of valuable consumer information that is now availableLike , in case of an automobile industry , it has been difficult to track consumer segment information while pulling Brand Information from the management systems has been a much easier game .

A Consumer

So the new focus point should now be consumers rather than Brands

But the change cannot happen overnight

To understand the nature of the changes required, managers must recognize the need for changes in any new structure

1. Relationship-building entity and mechanism.

2. Targeted communications that can exert a tactical influence on consumer behavior.

3. Obtaining expertise in new-product and brand development so that the portfolio of product brands can be continually rejuvenated.

Need for 3 Elements in the new structure

Other changes in the new structure

1. Required in the measures they use to gauge success.

2. Required in incentives & awards used to motivate people.

3. The way they deploy resources t the market.

4. The manner in which the teams co-ordinate the market opportunities.

The Value Propositions of Brands

Brands were initially confined to Packaged Goods

But now they are everywhere

In service sector In B2B sector

Brands have the power of appealing to the mass strongly

But what about the Question of Brand’s Future purpose and Role ?

Initially Disaggregate marketing was just an add-on but now it has become a completely different way of doing business

Major advances in Information Technology has made it much easier for businesses for doing one to one communication with the consumers and adopting Disaggregate marketing

So , what are then BRANDS good for in this new environment ?

Brands are an excellent means of developing and communicating a differentiated value proposition in the market

1

A manufacturer’s umbrella brand might even rightfully aspire to the ultimate prize — a relationship with the customer.

2

UMBRELLA BRANDING

Features of Umbrella Branding

1. Umbrella Branding makes different product lines easily identifiable by the consumer by grouping them under one brand name.

2. Umbrella branding generates savings in brand development and marketing costs over time and can create advertising efficiencies.

3. It is the branding strategy that gives the probability of a brand extension for every possible quality of profile.

CONCLUSION

So it is on this task companies should focus their attention on , in this new era of Disaggregation.

TAKE AWAY FROM THE CASE

Can we generalize the merger of Umbrella Branding with Consumer Disaggregation in every market Scenarios , by the Brand Managers ?

Thank You "These slides were created by Jalaj Garg(IIT-Guwahati), as part of an internship done under the guidance of Prof. Sameer Mathur (www.IIMInternship.com)"