Case analysis on What are Brands Good for?

The brand acts like a stake in the ground, claiming territorial rights over its

value proposition.

Signify quality

Creates barriers to entry

Serve as a competitive advantage

Secure price premium

Aggregation.

Disaggregation.

What are brands good for.

Aggregation involves treating all consumers as if they are the same.

With an aggregation approach, a company might create a single

type of product, for example, and then use mass-market advertising to deliver a single sales message

to the entire market.

The company chooses one marketing strategy and uses it exclusively, rather than designing and implementing many different strategies.

One simple strategy might not be as effective as a multi-pronged approach, such.

Disaggregation involves segmenting a market into distinct groups.

A company might design several different versions of a product,

customizing each to suit the needs of a particular segment of the

overall market.

Companies are demonstrating that they can effectively and efficiently drive consumer

behaviour through two-way communications.-------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Customized Publications



Customized e-mails



Customized Direct mails



Customized Websites



Customized call centres

The information revolution is making consumer disaggregation vastly more efficient and profitable than aggregation, the traditional source of brand power. This raises a fundamental question:

What are brands good for?

An answer can be found by examining three core areas of brand management:

1. The consumer relationship2. The channel relationship3. The organisation of brand management

The consume

r relations

hip

The most valuable strategic function that brand perform is to build relationships with consumers.

Relationships arise when a brand repeatedly and consistently fulfils its

stated promise.

But such connections are built through one-way mass communication of benefits and associations. Neither the brand nor the

communications are personalised, adaptive or responsive to individual consumer needs.

Disaggregation offers companies the possibility of establishing relationships

in which each interaction between consumer and firm builds on a history of past interactions, the firm responds to the needs of the consumer from one

interaction to the next and the consumer pulls information from the

company according to her needs.

Kraft Foods Inc., has developed and launched the most elaborate disaggregate marketing initiative in the

packaged goods industry

food & family magazine is personalised to the individual consumer. The publications has become the third largest circulation magazine in the United States, with over 11 million copies delivered.

The Royal Bank of Canada (RBC) is a pioneer in the field of disaggregation marketing. The firm is able to segment the market and respond tactically to competitor moves by offering personalised solutions to its customers without fragmenting its brand.

How disaggregation does it better

The channel relations

hip

Retailers efforts have been aimed at creating store-brand awareness and

differentiation, promoting profitable private-label lines across a wide range of products

categories, and building store loyalty.

The promotion of brands’ marketing budgets spent on retailers’ listing fee,

facing fees, trade promotions and cooperative advertising is twice as large as the promotion spent marketing the brands

to the end consumer.

Retailers argue that the economies of disaggregation favour them and that they have greater credibility in assembling an

assortment of brands that makes sense for the consumer.

Once the retailers began to use disaggregate consumer data to drive traffic,

brands were seen as a coarse and expensive mechanism for achieving traffic

volume.

Retailers used well known brands as magnets to attract consumers to the store. Those brands would be advertised often at very low prices to pull in consumer traffic.

The brandManage

mentorganisat

ion

This system allows budgets and profits to be measured and marketing initiatives to be developed at the brand level without

interference from the other brands.

Disaggregation’s impact on Brand Management

Brand management systems have much to commend them, but they were for an era of mass marketing and are not well suited to making good use of the valuable consumer

information that is now available.

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

So many organisational systems are built around brands, as switch to consumer-

centric organisation cannot happen overnight. To understand the nature of the

changes required, managers must recognise the need for three elements…

1. Relationship-building entity and mechanism

2. Targeted communications

3. Obtaining expertise and Brand development

Disaggregation does have potential disadvantages. First, if a company doesn’t segment consumers correctly, its ensuing marketing campaigns might be worthless. Suppose, for instance, that a tax-preparation service markets its services according to different pricing tiers, based on income. If nearly all its customers are in the same income bracket, the tiered pricing structure has little marketing value. The company instead should have identified segmentation factors that allow it to divide its customers into several distinct groups for targeting.

Ineffective Segmentation

costTo divide consumers into meaningful groups, a company needs data, such as what customer surveys and focus groups can offer. Once a company learns, for example, the various buying preferences of its target market, then it can categorize buyers into different segments. But such market research can be expensive, especially if a company lacks expertise and needs to hire a market research firm.

1. www.google.com2. www.bendaggers.com3. hdw.eweb4.com4. thepaperwall.com5. pinterest.com6. Flickr.com7. www.desktopimages.org8. absolutfoundry.com9. www.behance.net10.www.theleagueofmoveabletype.com11.fontfabric.com

Case analysis on What are Brands Good for?

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