A new approach to brand management involves an increased focus on the customer, rather than the product. In an extract from their book 'Moment of Truth: Redefining the CEO's Brand Management Agenda', Andreas Bauer, Bjorn Bloching, Kai Howaldt and Alan Mitchell explain this new strategy.
Top-line growth, higher margins, greater competitive advantage: better brand management is not a complete answer to any one of these ever-present challenges – but it is part of the answer to all of them.
Strategic brand management helps set the direction for the entire organisation, orienting it positively towards markets and customers while also facilitating disciplined, effective execution. But the challenge of better brand management goes deep. Most brand management today is not strategic. Instead it is plagued by common misunderstandings about how brands work and where superior margins come from.
Phoney opposites continue to divert practitioners. Is marketing and branding a creative or analytic process? Is it just external gloss or a strategic input? Is it about appealing to people's emotions or delivering hard, tangible product and cost benefits?
In addition, too many brand programs get lost in the market maze and brands are managed in a fragmented way. Issues of value alignment – which revolve around product and service attributes, pricing, operations, and R&D – are handled by different people, using different processes and different metrics from those dealing with external communications aspects.
The net result is major disconnections between strategy and tactics, between operations and communications, between marketers and their corporate peers: poor coordination and poor execution lead to poor performance. But this is not the fault of the marketing department. It represents a strategic, organisational and structural failure.
There is a different approach to brand management, an approach which overcomes or avoids many of these problems, which are by-products of marketing's 'product push' history. The alternative approach requires that we enter the marketing maze from a different starting point: starting not with the product and its attributes, or even customers and their specific functional needs, but with the person and his or her values. Everything else follows from this different point of departure.
A VALUES-BASED APPROACH
Only if we have understood people's values can we understand how these values are made manifest in their product, service, and communication preferences, and the emotions which colour their judgments.
Value-smart shopping is not just about rational price competition. It is also about the emotions of being smart: not having the wool pulled over your eyes; the thrill of the bargain hunt. If we understand consumer values, then we can divine what products and services they will want, what emotions they will bring to these products and services, and what communications they will respond to. The values-based approach to brand management therefore provides us with the insight that creates a seamless connection between the emotional and the rational, the product attribute and the communication. It helps create the moment of truth that leads to purchase.
But values-based analysis does more than deliver the insights that help build great brands. Because it is based on hard, robust data that connects each individual's values data to his or her demographic details, product usage, shopping habits, media consumption habits, and so on, it also assists implementation down to the finest details of, for example, media buying. The same analysis generates insights and helps implement them. This makes marketing both more efficient and more effective.
In addition, because different values groups are attracted to different brands it also helps address more complex meta-problems of brand portfolio and architecture. Thus it creates a powerful link between strategy and tactics.
It also works internally as well as externally. It turns hard data into easy-to-understand visuals that help create a common language for all those involved. It helps employees and business partners understand what they are trying to do, and why.
UNDERSTANDING VALUES
This general approach is applicable to both consumer and B2B markets. Different businesses have different values that shape their decisions, and effective marketing understands and addresses these values.
A B2B company that values precision and excellence, for example, tends to behave very differently from one that values innovation or solidity. A business that values total ownership cost is different from one that values purchase price. It is as important to understand these values in business relationships as it is to understand them in consumer relationships.
A values-based approach to brand management also helps set strategic direction and encourages focused innovation. It's an occupational disease for producers to get fixated with their products' attributes. In the past, walkmans were new and cool, then MP3 players became new and cool. The underlying value 'new and cool' didn't change, but how it was made manifest and addressed did.
Companies that focus on product attributes while losing sight of the values they express risk being left behind by the markets they serve. Only by continually jumping between the two levels – underlying values and specific manifestations – can we remain aligned to our markets to keep delivering moments of truth.
THE CEO AGENDA
But none of this can happen if brand management is left to an isolated marketing department. The strategic approach to brand management is a major cross-functional challenge embracing:
- Setting the organisation's direction: which markets and which customers are we going to address and how?
- Operations: delivering the right products and services for the identified target markets at the right price
- R&D and innovation: continually realigning value propositions to best address targeted values
- Channel strategy: making these value propositions available via the customer's preferred channels
- Human resources: training and motivating staff so that they deliver the right brand experience, consistently, at every touch point
- Communications strategy: making sure the right messages get through to the right people, via the channels and media they prefer, at the lowest possible cost
Making strategic brand management happen therefore is the CEO's moment of truth: confronting the organisational, structural and cultural implications.
Companies that are organised around products tend to lose sight of their customers. Banks, for example, are traditionally organised around product silos, with one division delivering current accounts, another delivering loans or savings, and yet another offering credit cards. Marketers working within each division naturally focus on the market for each of their products, each one of them seeking to identify, target and reach good prospects.
Even if the same individual buys all four products he or she remains invisible because the data is held in product silos which don't 'talk' to each other. Likewise, a consumer products company like Procter & Gamble is organised around many different product-based divisions including hair care, skincare, baby care, fabric care, surface cleaning (floors, dishes) and dental care. Once again, the same individual may buy many of these products, but this information may not be visible to marketers working in each separate division.
Companies that organise themselves around product silos in this way risk becoming so product focused that they end up not being customer focused. That is why overcoming this division has become such an important agenda over the last few years.
Banks have invested immense effort in trying to get different product-oriented databases to 'talk' to each other to create a single customer view. Procter & Gamble's 'golden household' project sought to identify those households that buy not just one P&G brand but many. In each case, marketers hope that focusing more on the customer rather than the product will lead to efficient, effective marketing.
BETTER BRAND MANAGEMENT
Historically the product defined the brand, and the brand then presented the product's attributes to the customer. The approach described here turns this process on its head. Branding starts with the person, not the product. The consumer's values define the brand, and the brand then presents these values to the company, requiring the company to construct a particular mix of product, service, distribution and communication attributes to fit the demands of the brand. In this way the brand works its way 'inside' the organisation – ultimately to change the way it works and organises itself.
It's a well-known insight that structure should follow strategy. Values-based brand management takes this one step further: structure follows brand, brand follows strategy. Once it has been defined which values it is going to appeal to, everything about the organisation – its structures, priorities, technical skills, operational requirements, even culture – needs to be aligned to this core purpose.
What is needed is a chief brand officer role – an authoritative, senior position capable of bringing together all the necessary specialisms and functions to deliver the brand's requirements. In some cases, the CEO might take on this role. In other cases, a separate role might be needed. Either way, the central strategic importance needs to be recognised in organisational structures and reporting lines. Brand management needs to become a strategic process.
