harvard business review what are brands good for

What Are Brands Good For?

Brands are an indispensable part of modern business.

Brands are very efficient at aggregating consumers.

Advertising and promotions of brands drive traffic and

sales volume

consumer disaggregation is vastly more efficient and profitable than aggregation

Ways of disaggregate marketing:

CRM(Consumer relationship management) direct marketing one-to-one marketing information based marketing Using customized publications,email,direct mail,websites and call centres based on consumer information

What are brands good for in an era of disaggregation?

Examining three core areas of brand management to find the answer:

The Consumer Relationship The Channel Relationship The Organisation of Brand Management

The Consumer RelationshipRelationships arises when a brand repeatedly and consistently fulfills its stated promises

Relationships built through one-way mass communications tend to be shallow Disaggreagation offers

companies possibility of strong relationships with consumers

For e.g. Krafts Foods Inc. has developed a disaggregate marketing plan

This programme highlighted two central facts of disintegration :

Consumer's focus will shift from product brand to trusted umbrella brand1

As it shifts towards umbrella brand ,tactical activities are implemented with tageted consumers or segements rather than at the brand level.

2

It publish a quarterly food magazine along with call centres,email,website and even

cooking schools

The magazines contain food-related articles,recipes,editorials and ads.

How disaggregation does it better?

The Channel Relationship

Brands cannot directly deal with consumers,they need retailers to be the contact b/w them

In today's world,brand's marketing budgets spent on retailer's listing fees,facing fees,trade promotions and co-operative advertising is twice the money spent on brand's marketing to the end consumer

Disaggregation provides manufacturers with a new medium to influence consumer decisions that is independent of the retailer

Manufacturers must act quickly because:

consumer prefer few relationships to many

1

retailers are not sitting idle in this game

2

Recent retailers efforts have been aimed at :

creating brand awareness and differentiation

promoting profitable private label lines across a wide range of products

building store loyalty

However,retailers argue that the economics of disaggregation favor

them

• Retailers spread cost of marketing over a great variety of products

• It allows retailer to achieve a fier level of segmentation• But once retailers began to use disaggregate consumer

data to drive traffic,brands were seen as a coarse and expensive mechanism for achieving traffic volume

• The risk for manufacturers is that the consumer's relationship will be with the retailer's umbrella brand

Conclusion

Manufacturers are realizing their brand's chances of survival will be better if they become an essential element of the retailer's value proposition to particular consumer segment

The brand is percieved no longer as the focal point of the marketing

The Brand Management Organisation

• From a long time,brand management systems have become the foundation of marketing departments of many industries

• Brand-management organiztions are adopting consumer-level disaggregation initiatives.

• The focus of marketing efforts remains the brands,not the consumers

Disaggreagtion's impact on Brand Management

To understand the nature of the

changes required to switch to consumer-

centric organisation,managers must think about

these three elements:

1. Relationship-building entity and mechanism

2. Targeted communications

3. Obtaining expertise and Brand development

But it is not sufficient...

..to address the oppurtunities addressed by disaggregation,managers have to:

focus on customer profitability not on

brand-level profitability

bonuses should be tied to segment profitailty

not on

market share

customer pull v/s trade push

team coordination to tackle market oppurtunities

Brands are the ideal and natural ally of mass production

Whereas assembly lines reduced the cost of building products,

brands reduced the cost of building markets

From packaged consumer goods,brands are now helping in

services and business-to-business settings

Despite of retailer concentration,media fragmentation,niche

marketingand the advent of internet,brands have endured

and continued to flourish

Brands are an excellent means of

developing and communicating a

differentiated value proposition in the

market

Covered points:

# Difference between aggregate and disaggregate marketing

# Disaggragate is better and efficient than aggreagte marketing # As the traditional source of brand power is aggregating marketing, what are brands good for?

Conclusion:

For most productive marketing, one should use both brand and consumer marketing in a balanced manner

Tarun Gupta IITD

(during an internship by Prof. Sameer Mathur, IIM Lucknow.www.IIMInternship.com)