julian mears

Public Affairs in the E U

Portoroz

24 September 2004

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Julian Mears (Britvic Soft Drinks)

CORPORATE AND BRAND MANAGEMENT IN A CHANGINGCONSUMER ENVIRONMENT

May 20 2005

AGENDA

• The changing landscape of brands

• The ‘No Logo Generation’ and its affects

• The changing consumer environment

• Youth marketing

• Engagement with brands – the web of influence

• Brand management

• Positioning

• Brand equity and mind share

• Issue management in the media

CORPORATE AND BRAND MANAGEMENT IN A CHANGING CONSUMER ENVIRONMENT

JULIAN MEARS Britvic

THE CHANGING LANDSCAPE OF BRANDS

• Consumer loyalty to brands can no longer be relied upon

• Brand disloyalty means that consumers are increasingly likely to be led promotion and placement (accessibility and visibility), not price

• In the early days, ‘added value’ became the mantra of branding. But then ‘added value’ degenerated into a cost-plus approach to business – always add, never take away. This resulted in complexity for marketeers and consumers, until ‘added’ and ‘value’ no longer went hand in hand

• Further, in many organisations, brand building degenerated into brand narcissism – levying a brand premium as the purpose, rather than a by-product of good branding

• So, brands lost the focus on the needs of the consumer, in favour of the needs of the brand – how to stand out in a crowded market

• 21st century consumers are cash rich and time poor. Branding has to work at a subconscious level and create an association with the consumer

JULIAN MEARS Britvic CORPORATE AND BRAND MANAGEMENT IN A CHANGING CONSUMER ENVIRONMENT


• Marketeers ended up dismissing the core category benefits that mattered to consumers and piled effort and resource into add-ons that consumers don’t really care about – added cost without added benefit

• Then, way down in brand economics, a revolution began…

• The first wave was the quality movement:– In the long-run, it’s cheaper to provide quality products than shoddy ones. The price/quality trade-off

was being challenged at its most fundamental level

• The second wave was lean production:– This is an application of marketing principles; to look not just at products, but at everything

companies do, right down to cost structures, from the point of view of the consumer. What is a real consumer benefit and what is just waste?

• Lean systems eliminate any and every process, activity, department or function that doesn’t add value, to focus only on things that do. The net result is much better consumer value, at lower prices, leading to higher volumes and greater loyalty – what branding is all about. This came from the motor industry, but is now applied by brands like Tesco and easyJet



• But lean branding isn’t stopping there

• Migration to customer service – often the best service is no service: the ‘right first time’ philosophy

• Reducing consumer’s time can reap huge rewards. Not ‘adding value’, but delivering what the consumer actually wants – no more, no less


THE ‘NO LOGO GENERATION’ AND ITS EFFECTS

• Naomi Klein’s ‘No Logo’ kick-started an onslaught on brands, causing tremors within multi-nationals, including Nike and Starbucks

• In it, she argued that big companies, empowered by brands, were exploiting the world’s poor

• The book made headlines, but what was its impact upon brands and businesses?

• The impact was intangible, but it didn’t hit their bottom lines and had little effect on the value of companies or brands.

• However, what it did do (and which companies are waking up to) is begin to erode brand equity – the positive perceptions that people have in their minds about a brand. It pricked businesses consciences and made them more aware of CSR

• People are looking for brands to be more responsible. People can’t change the world or global issues, so they look to companies to do it for them


THE ‘NO LOGO GENERATION’ AND ITS EFFECTS

• Fundamentally, branding and selling is about creating a need and satisfying it. Part of this is selling a dream, to which consumer aspire to. If companies are exploiting workers, then the ‘dream’ becomes less aspirational

• Consumers are now more savvy and are demanding responsibility and accountability from the companies they purchase from

• Consumers are fast-talking, globally-aware and young. They might voice their disapproval, but still continue to buy the ‘offending’ brands. Young consumers understand that without business, there would be no civil society

• But society shouldn’t berate marketeers for stimulating a want amongst consumers without understanding that consumers have a choice

• Brands need to stop talking at consumers and begin to trust and involve them, recognising that they are not perfect

• CSR is still an issue at the bottom of the priority list and far from a key force behind brands


THE CHANGING CONSUMER ENVIRONMENT

• As a set, consumers now have more disposable income than ever

• We are exposed to over 1500 commercial messages every day

• The population is getting older. By 2010, the population will be older than ever before

• Children are staying in the parental home longer, because of high house prices

• Consumers are information-rich, but knowledge poor meaning marketeers are facing a challenge in how to turn awareness into action

• The social gap is widening

• Markets have become segmented and marketeers are not embracing this shift

• Marketing has become too focussed on short-term gains


THE CHANGING CONSUMER ENVIRONMENT

• Tokenism is becoming too prevalent

• Marketeers need to bridge the gap between wants and needs

• Has marketing become too intelligent for its own good? Are consumers confused?


YOUTH MARKETING

• Marketeers are being blamed for targeting children with inappropriate messages, against a growing volume of protests from parents and authorities

• Young people make potentially valuable consumers due to their high level of disposable income – UK teens are Europe’s richest, with annual income per child reaching £775 in 2003 (Datamonitor) and this income is expected to rise by 10% in 2008

• But do marketeers have a moral obligation to market products more responsibly to them?

• Parents expect companies to self-regulate

• Who is most at risk?– Sportswear manufacturers– Mobile phone companies– Credit card companies– Fast-food manufacturers


YOUTH MARKETING

• Marketing to children should not be reduced. Rather, it should convey information in a clear, straightforward fashion

• Young people are often grappling with their own identity, so instead of exploiting this to ‘sell’ them the image of a lifestyle they should cling to, marketeers should take more time to find out what kind of information is most useful to them


ENGAGEMENT WITH BRANDS:THE WEB OF INFLUENCE

• Communications is all about keeping your options open, to reach people in the only way that matters: through the people, organisations and media that influence them throughout the day and in every aspect of their lives

• To really understand any audience, you must understand its web of influence. That means creating a detailed map of relationships with and between key influences, identifying those that have the greatest impact in the right areas

• The goal is to infiltrate the influencers with simultaneous, consistent communication, to ensure brand investment is focused on the activities and audiences that will have the greatest impact

• The channels of influence that can play a role in shaping the perceptions and behaviours of individuals and specific audience groups


ENGAGEMENT WITH BRANDS:THE WEB OF INFLUENCE

• The Internet:– Regulators, local government, national

government• Interest Groups:

– Online communities, discussion forums, specialist websites, weblogs

• Businesses:– Competitors, partnerships, third parties

• Other Marketing:– Outdoor advertising, direct mail

• Government:– Regulators, local government, national

government• Media:

– National media, specialist consumer media, local/regional media, vertical/trade media, published books

• Peers:– Colleagues, business peers, student unions,

business personalities, celebrities• Friends and family:

– Close family, friends/extended family, neighbours/acquaintances

• Advisors:– Marketing specialists/analysts, service

specialists, general

JULIAN MEARS Britvic

Advisors

Friends &Family

Peers

Media Government

OtherMarketing

Businesses

InterestGroups

The Internet

BrandEngagement

CORPORATE AND BRAND MANAGEMENT IN A CHANGING CONSUMER ENVIRONMENT

BRAND MANAGEMENT

• As consumers we are influenced by a barrage of marketing messages — in the grocery store, on billboards and, of course, flashing all over the Internet. Partly as a consequence of this competitive intensity, the importance of a strong brand is more crucial than ever

• Well-managed brands get stronger. Poorly managed brands lose their power. That’s why brand managers must remain focused on communicating the full value of the products and services their products offer and on promoting an understanding of who and what it stands for

• Effective brand management is a creative, disciplined undertaking that requires the same attention that the management of any asset requires. The focus must fall on three key principles — clarity, coherence, and control


BRAND MANAGEMENT

• ClarityConsumers (current and future) are unlikely to make an effort to figure out what the brand offers, why its offering is superior to others, or what value it can deliver. Brand management means ensuring that managers articulate clearly and consistently what the brand is about and why it is preferable

• CoherenceEffective brand communications are coherent and logical, and reinforce brand promises. Brand messages and presentation must be consistent and, over time, tell and re-tell the big story, as well as creating a framework for presenting all the other relevant messages

• ControlControl is crucial to any branding initiative. Good brand management offers guidelines and direction that are adaptable to marketing needs while still reinforcing a lucid and consistent message


POSITIONING

• Positioning is the technique used to try to create an image or identity for a product, brand or company. It is the 'place' a product occupies in a given market as perceived by the target market. Positioning is something that is done in the minds of the target market. A product's position is how potential buyers see the product. Positioning is expressed relative to the position of competitors

• Successful positioning strategies are usually rooted in a product's sustainable competitive advantage. The most common basis for constructing a product positioning strategy are:

– positioning on specific product features – positioning on specific benefits, needs, or solutions – positioning on specific use categories – positioning on specific usage occasions – positioning against another product – positioning through product class dissociation


POSITIONING

• Three types of positioning concepts

• Functional positions:– solve problems – provide benefits to customers

• Symbolic positions: – self-image enhancement – ego identification – belongingness and social meaningfulness

– affective fulfilment

• Experiential positions: – provide sensory stimulation

– provide cognitive stimulation


POSITIONING

• Generally, the product positioning process involves eight stages:

– Identifying competing products – Identifying the attributes (also called dimensions) that define the product 'space' – Collecting information from a sample of customers about their perceptions of each product on the

relevant attributes – Determine each products' share of mind – Determine each products' current location in the product space – Determine the target market's preferred combination of attributes (referred to as an ideal vector) – Examine the fit between:

• the positions of competing products • the position of your product • the position of the ideal vector

– Select optimum position


BRAND EQUITY AND MIND SHARE

• Calculation of brand equity is at best an approximation (a comparison of the expected future revenue from the branded product with the expected future revenue from an equivalent non-branded product)

• This value can comprise both tangible, functional attributes (e.g. twice the cleaning power or half the fat) and intangible, emotional attributes (e.g. the brand for people with style and good taste)

• It can be positive or negative. Positive brand equity is created by a history of effective promotion and consistently meeting or exceeding customer expectations. Negative brand equity is usually the result of bad management

• Positive brand equity can be a significant barrier to entry for prospective competitors. The greater a company's brand equity, the greater the probability that the company will use a corporate branding strategy rather than an individual brand strategy. This is because corporate branding allows companies to leverage off the equity accumulated in the core brand. This makes new product introductions less risky and less expensive


BRAND EQUITY AND MIND SHARE

• Positive brand equity, resulting from consistent messaging from PR, advertising and marketing, establishes mind share amongst consumers

• When people think of examples of a type or category of product, they think of a limited list (an evoked set). Any product included in an evoked set has mind share. The more easily remembered (referred to as top of mind), the greater the share of mind of that product

• Dominant mind shareAt the extreme, mind share is the status a brand can achieve when it co-exists with deeper, more empirical categories of objects. Kleenex, for example, can distinguish itself as a type or brand of tissue. But, because it has gained significant mind share amongst consumers, it is frequently used as a term to identify any tissue, even if it is from an opposing brand. One of the most successful firms to have achieved this is Hoover, whose name was for a very long time synonymous with the vacuum cleaner (and Dyson has subsequently managed to achieve similar status, having moved into the Hoover market with a more sophisticated model of vacuum cleaner)

• Legal RiskA legal risk of having dominant mind share is that the name can become so widely accepted that it becomes a generic term, and loses trademark protection


BRAND ISSUE MANAGEMENT

• Traditionally, FMCG companies have associated issues to brands, rather than taking corporate responsibility. This has meant that negative perceptions would only affect one brand and not others

• But consumers are demanding greater responsibility and accountability for the companies they purchase from

• A top-down approach: corporate positions should be distilled down to brands

• For example, Britvic has a corporate position on marketing to children. This is the position taken by all brands (e.g. Pepsi, Tango, Robinsons all have the same position)

• Compiling an issues audit should be a priority for corporate and brand managers

• Issues brief must consider its accountability in many areas including policies on the environment, packaging, marketing, corporate governance, CSR and asset management


ISSUE MANAGEMENT IN THE MEDIA

• A changing media landscape – journalists are more interrogative of authority and there is more pressure on them for exclusives as there are many more media outlets

• Turnover of stories is normally quick as consumers always demand something new


ISSUE MANAGEMENT IN THE MEDIA

• Some issues become hot topics for the media (e.g. obesity is currently high up on the British media’s agenda)

• This results in a highly biased, sensationalist and misrepresentative view of issues, which presents a dilemma for brand managers – should they take a proactive or reactive stance?

• The challenge is to try and open up the debate and better represent both sides of the argument

• Whilst people want companies to act more responsibly, most people understand that companies objective is to make money

• Corporate brand managers should attempt to reduce the impact on a single brand, by moving the focus to the corporate portfolio. The key is to emphasise consumer choice


SUMMARY

• Consumers are brand disloyal, cash rich and time-poor

• Move towards a ‘lean system’ of marketing

• Consumers are more savvy and demand that companies are accountable

• Society understands that companies operate to make a profit and that marketeers are there to create a need amongst consumers

• The industry must understand that marketeers need to reach all parties in their web of influence in order to better engage with them

• Clarity, coherence and control are still the best principles of brand management

• Positioning is fluid in the minds of consumers and relies heavily on brand equity

• Brand issue management is a corporate responsibility

• Media issue management – important to acknowledge an open and honest debate


Julian Mears,

Director of Corporate and Public [email protected]

julian mears

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