Trimillennium Management; Customers; Brands: The ten rules of Y2K branding

TRIMILLENNIUM MANAGEMENT: BRANDS
The ten rules of Y2K branding

By Nirmal Gupta

Just as we enter this millennium, the word brand is a frequently-used word in the lexicon of marketing. And brands have emerged as strategic assets. Traditionally, issues related to brands and branding were treated as product-related. This product-trap, often, led to a myopic view of brand management.

A name becomes a brand when consumers associate it with a set of tangible or intangible benefits that they obtain from the product. To build strong brands, a company must build a relationship between the brand and the customer. Relationships arise from the customer's entire brand-experience, and their strength has a direct bearing on that of the brand. The millennial imperative for brand managers is to look at the discipline of brand-management from a strategic perspective.

The millennial customer is different from her 20th Century counterpart in terms of profile, buying behavior, purchase-assortment, and mode of purchasing. Brand-proliferation, advances in technology, and the altering structure of industries are leading to a dilution in the meaning of direct and indirect competition. Brand-managers will also have to factor in 2 global cultural shifts, which are, at once, both integrative and divisive: market integration, and ethnic differentiation. The market will separate people by distinguishing between them on the basis of their socio-demographic characteristics and consumption-patterns. It will unify them by assembling people with similar characteristics and behaviours, offering products and services, and creating social spaces that will reinforce cultural identities. To manage brands in this millennium, brand-managers will have to create a new handbook of brand-management that addresses 10 relevant issues.

BRAND ALLIANCES. In the 21st Century, brand-competition will be augmented by brand-co-operation. Brand alliances can take 4 forms. One, 2 companies could pool their resources to co-brand. Two, a company could use a niche brand to build the equity of a core brand in the same product category. Three, 2 companies could develop a joint promotional campaign so as to deliver more value to the customer. Four, companies could leverage the equity of their brands to go in for a brand-franchise or brand-lease arrangements. The prevalent form of alliance this century is likely to be the joint promotion. This can help companies enter new markets, address new customer segments, piggyback on the partner's strengths, and share the costs.

BRAND EXTENSIONS. Extensions-both line and brand-will account for a large number of new product-launches in this millennium. Some companies will adopt the age-old strategy of using a line-extension to cater to a new market segment in the same product-category. The preferred form of line-extensions in this century will be those built around price. Brand-managers, especially those in-charge of premium brands, will have to use this technique to build their customer-base; yet, do so by adopting sub-branding strategies that do not dilute the premiumness of the brand.

BRAND EQUITY. Brand equity is the incremental cash-flow that flows from the brandname. The sources of this incremental cash-flow are increased marketshare, the ability to command a premium-pricing, and reduced promotional expenses. Marketers need to build better decision-frameworks and create long-term plans to enhance brand equity.

BRAND IMAGE. The greatest brand management challenge this century-given the existing levels of brand- and media-clutter- is to connect effectively with the customer. Towards the end of the previous millennium, a new paradigm of brand-positioning emerged. This global consumer cultural positioning was built on globally-shared meanings.

This is different from local consumer cultural positioning, in which the brand is associated with the local consumer culture; and foreign consumer culture positioning, in which the brand is associated with a foreign culture. Brand managers will, increasingly, use semiotics theory in brand-communication.

UMBRELLA BRANDS. Organisations will have to strike a balance between having multiple brands in a product category versus building one powerful brand. Many companies will find it difficult to manage multiple brands and create umbrella brands which provide variety through the use of sub-brands.

BRAND DIFFERENTIATION. There is a duality in brand-price relationship. At the time of a brand-launch, price is an indicator of a brand's differentiating advantages. Consumers also use price as an indicator of brand-value. As the customer learns more about the brand, the process reverses, and brand value and benefits begin to determine the price. If marketers fail to enhance those values, the price-differential erodes. In the 20th Century, companies and brand-managers focused on the first part of the process; in this century, they will have to focus on the reverse.

BRAND DILUTION. Brand managers will, increasingly, face the challenge of brand-dilution. This will happen as new brands and value-propositions emerge, and the customer no longer associates a brand with a particular class of products.

ROLE OF THE BRAND. Across categories, corporate brands and corporate identities will become important. Developing and maintaining a strong brand, especially in industrial products, requires more than just having a brandname, as managers will realise. In industrial product categories, marketers will need to arrest commoditisation and price-competition.

THE CUSTOMER AND THE BRAND. Customers build emotional bonds with powerful brands. They are deeply involved with such brands, and resist any changes initiated by the brand-owners that do not mesh with customer perceptions. Brand-managers have to keep their brands contemporary without threatening this relationship.

ORGANISING FOR BRAND MANAGEMENT. Today, several companies are strategically building their brands around lifestyles. This presents a future strategic opportunity for these companies to diversify into other categories where such lifestyles are relevant. Marketers will have to develop proper brand-information systems, develop appropriate constructs to track and monitor the health of a brand, and develop links between such constructs and brand management decisions. Today, companies need to acquire a more demand-side perspective. This century will belong to those brand managers and companies who are prepared to nurture brand-consumer relationship through innovative practices.

Nirmal Gupta is a Marketing Consultant

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