Product and Brnd Mgmt

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PROJECT

ON

Product and brand mgmt.

SUBMITTED TO SUBMITTED BY

Mrs.SAMEERA NABI ANAND VIKRAM SINGH

ENROL .NO. 1236


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INTRODUCTION TO PRODUCT AND BRANDMANAGEMENT AND INNOVATIONManaging the Product 2Marketing Decision Making 2

The Four Functions 2Marketing 3The Product Manager's Position 4Scope of Responsibility. 5Authority 6What sort of person makes a good Product Manager? 71. ANALYSIS AND RESEARCH 92. PRODUCT PLANNING 103. ADVERTISING 104. PROMOTION AND MERCHANDISING 105. ANALYSIS, FORECASTING AND PROFIT PLANNING 11Product and Brand Management Organisation 13Marketing Organisation 14

Product-Focused Organisations 16Market-Focused Organisations 18Functionally Focused Organisations 18Changes Affecting Product Management 20Impact of Change on Organisational Structure 23WHAT IS A BRAND? 24Early Branding 24Modern Branding 24The Development of Branding 25Successful Branding 26The Importance of Brands 27Maintaining Brand Values 28The Brand Life-Cycle 28Brand Extension 31Creative Branding 32THE SIGNIFICANCE OF BRANDING 33New Brand Development 33Maintaining Brand Equities 33The Benefits of Brands 34International Brands 34Brand Values 34HOW TO BRAND NEW PRODUCTS 35Developing a Point of Difference 35Identifying New Brand Opportunities 36Reasons for Brand Failure 36Branding by Retailers 36Brand Search 37

Testing the Concept 37BRANDING SERVICES 38Particular Problems of Services Branding 38The Need for Branded Services 39


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Managing the Product

The Role of the Product Manager

The focus of this first part of the subject is on the job of the product manager. There may not be aperson with that exact title in every marketing organisation-while many such jobs exist, the peoplewho fill them could be called brand managers, market managers, or the like. We intend the generictitle product manager to apply to different kinds of organisational structures and different kinds ofcompanies, whether they provide consumer goods, industrial products, or services.The perspective is of a manager in a company whose primary responsibility is a product or a closelyrelated product line. Broadly speaking, the product manager has two responsibilities. first, theproduct manager is responsible for the planning activities related to the product or product line. 1Thus, the product manager's job involves analysing the market, including customers, competitors, andthe external environment, and turning this information into marketing objectives and strategies for theproduct. Second, a key function of the product manager is getting the organisation to support themarketing programs recommended in the plan.

This may involve co-ordinating with other areas of the firm, such as research and development forproduct-line extensions, manufacturing, marketing research, and finance. It also involves internalmarketing of the product to obtain the assistance and support of more senior managers in the firm.

Marketing Decision Making

The Four Functions

In the broadest sense, there are only four functions in any company or organisation:

FinanceMarketingProduction Producing the product (including services)Personnel The right people properly motivated and trained, in the right place, at the right time.No matter what the title of the head of each function, such as Finance Director, Marketing Manager,1 When we use the term product throughout the subject, we are referring to all kinds of products,including services. Product is simpler to use than product/service. While there are well-documenteddifferences between marketing manufactured goods and services, the structure we present in thissubject is meant to be a template that can be used for all products.

Factories Controller, Administration Manager, each is on a par with the other in terms of importancewithin a company. Each must plan, put those plans into execution, and ensure, through detailedcontrol, that they work in practice. Each requires information from the other to carry out theseoperations effectively.


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Marketing

Since Marketing, perhaps more than any of the other three functions, is vitally concerned with theoutside world and its effects upon the company's total marketing operation, such as governmentaction, social change, new techniques, international market trends and changes, as well as the more

immediately relevant market intelligence, there should be a greater flow of information emanatingfrom Marketing than from any other function.This internal relationship is an extremely delicate one. Marketing plans will only be actionedeffectively if others carry them out with commitment. Whenever Marketing is newly incorporated intoan existing structure, entrenched positions and understandable jealousies will inevitably make lifedifficult for the Product Manager.This subject is intended to give the reader background and knowledge essential to be a successfulproduct manager.What, then, are the differences between a focus on the product manager and a more generalmarketing management perspective? One key difference is that marketing managers in charge of adivision or strategic business unit have more concerns about managing "portfolios" of products andabout the long-term strategic direction of their business groups. Because product managers in oursense are in charge of a single product or closely related product line, they are not concerned on a

day-to-day basis about the health of the general business area in which they operate.The narrow product or brand focus at the expense of the product category as a whole has given riseto a new position at many packaged goods companies, the category manager.A second key contrast is that the nature of decision making is quite different. Divisional marketingmanagers typically make strategic decisions about which products to add or drop and manage to meetan overall divisional financial objective. While product managers are intimately involved withdeveloping marketing objectives and strategies for their products, their key decisions are tactical andrevolve around the marketing mix: how much to spend on advertising, how to react to a competitor'scoupon promotion, which channels of distribution are appropriate, and similar questions.

.Finally, product managers and marketing managers face different time horizons. Product managersfocus on meeting annual (or other short-term) targets. This does not imply that they are myopic;

however, they face substantial pressure to attain short-run market share, volume, or profit targets.Marketing managers are also concerned with short-run targets, but they more often take a longerperspective of where the business is going.Thus, this subject focuses on the product manager's tasks of marketing planning, developing productstrategy, and implementing that strategy through various marketing tools. The intended audienceincludes those individuals who manage individual products.

The Product Manager's PositionSo where does this place the Product Manager, and is that a sensible title for him or her anyway?There are many influencing factors which can help to determine his/her role in differing situations.1. Is the Product Manager responsible for a group of products, or is he responsible for an individualbrand. Obviously in the latter case 'Brand Manager' would be a better title.2. Does the market breakdown make it sensible to have Market Managers or Market DevelopmentManagers?3. Can the total market sensibly be broken down into recognisable sectors.4. What does the company policy require? A single paramount company name such as Cadburys;individual brand names, or a bit of both, such as Johnson & Johnson for baby products and Band-Aidfor first aid dressings?5. How does the concentration of buying power into fewer and fewer hands affect overall marketing?

Is there an increasing need for a marketing backup for Key Accounts sales executives.


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6. Can there be justification for separate marketing service people to back Product Managers, withstatistical data.7. Is the total turnover for any one brand or product category so vast that the sheer size requires it tobe broken down into manageable portions.8. Should the Product Manager have product development responsibilities or should he be left to lookafter his/her own existing products lest they be neglected?

9. How technical is the product or market?10. To what extent is export a separate function?11. Has the company newly embraced marketing, and to what extent is formal marketing planningpractised?12. Is one restricted to a finite distribution chain but with hundreds of products?13. How large is the company overall? Is it vast requiring a large number of responsible marketingexecutives?14. How competitive is the market? Is it highly competitive, like video, or is it very specialist, such aswater purification?15. What are the relevant profit centres within the company? Each Product or Brand Manager musthave a budget and access to detailed costings, and be a profit centre.16. To what extent is top management able and willing to delegate decision making?All these considerations inevitably lead to a plethora of structures, each of which can be perfectly

sensible for individual companies. There is a constant need to review responsibilities in light of theever-changing patterns of markets and the speed at which product development and innovationoccurs. An ever-present organisational danger in such a fluid situation is the overlapping ofresponsibilities.

Scope of Responsibility.

Much of the preceding descriptions of the product manager's job and the types of marketingorganisational structures that impact on the role of product managers was general. As is always thecase, there are exceptions to the rules. Even within a specific organisation type, the productmanager's job varies between industries and between products.

Authority

Product Management is a middle management position and therefore must report to higher authorityas well as be responsible for others. But whilst this is so, the Product Manager must act asresponsibly as if he alone were responsible for his/her product. It is the reason why ProductManagers are called Managers. They must manage people and events for the benefit of the wholecompany, not simply for one product or product group, even though all their endeavours revolvearound one product group.As previously noted, there is no typical job description or even job title for a PM. In general, PMscoordinatesales, manufacturing (if applicable), and research and development (R&D). But the extent towhich a PM focuses on one area or another varies depending on the time of year, the industrysegments, and the stage of the product life cycle. Interestingly, the PM's position can becharacterised as having broad responsibility and limited authority!The Product Manager, (sometimes called the Brand Manager) should ideally be a judicious blend ofthe theorist and the practitioner, and certainly very much an all-rounder.The Product Manager under the system is ideally placed to estimate for top management the optimumbalance between sales growth and profit growth for his/her own particular product.He/she studies the market and the product, he/she forecasts the sales and recommends the price,which together make up the product's revenue; he/she plans and coordinates the advertising andsales promotional programmes which make up the bulk of the product's expenditure.


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In short, he/she can be made responsible to his/her superiors for the overall health and profitability ofhis/her product over a sustained period of time.In the execution of this responsibility there is no aspect of the product's activity which is not his/herconcern. Any criticism which management may reasonably level at the product-if the product or theadvertising are not good enough, if sales are below forecast, or expenses above budget, if problemsare not being tackled systematically, or opportunities exploited-in any of these circumstances, and

many others, management will in the first instance hold the product manager accountable.The PM has a diverse role. Responsibilities, emphasis on marketing mix variables, and skills utiliseddiffer across products even within individual companies. The two most important industry variablesseparating responsibilities are the stage in the product life cycle and the degree of technologicalinnovation.Effective marketing requires information support and people skills. Most PMs admit that they do nothave enough time and resources to be sufficiently thorough in their analyses. They feel that moresophisticated analysis tools would give them more confidence in recommending proposals to uppermanagement, especially with respect to pricing. In addition, the PMs' role as co-ordinator often bringsthem into situations in which they have no direct authority over the staff involved. Good personalrelations are therefore crucial for a PM to secure co-operation from the staff.Not surprisingly, product marketing can be a political job. Politicking is a headache in both largeand small companies. On the one hand, enterprising people at all levels often manage to bypass

bureaucratic layers to find champions among higher management levels to back a project.On the other hand, fear of politics can limit plan and program options for product managers. Thisproblem is most obvious in high-tech companies where many projects compete for managementattention and budgetary resources.Finally, the role and image of marketing differs across industries. In consumer product companies,marketing is the traditional "hub of the wheel." PMs in this segment follow the traditional marketingmodel most closely-writing a marketing plan and planning and implementing the four Ps (price,promotion, place, and product). In high-tech companies, the PM is an important intermediarybetween engineering and customers. PMs play the dual role of translating customer needs intotechnology requirements and smoothing out the rough edges of a raw product from R&D. In serviceindustry segments, the PM is chiefly concerned with distribution and channel management. Forservices, distribution is an integral part of the product itself.

What sort of person makes a good Product Manager?

- Someone able to size up a situation quickly, realistically;- who can sense the possible effects of external actions on his own plans;- who has that all-important 'feel' of the market place;- who can see the various courses of action in the circumstances, can gather all the options and takepositive action to exploit the situation;- who has the presence and commands the respect of his/her colleagues for obtaining commitment tohis/her measures;- who is logical, numerate, clear, and mature in thought as well as incisive and decisive in action;- someone not easily panicked, who is a good thinker and a good practitioner;- knowledgeable to the point of being an expert on his or her products: to an extent, a Jack of alltrades but a master of marketing:- who can systematically and single mindedly attack and attain the objectives set, with overall controland a grasp of detail;- who, with all his/her logicality, can exercise an entrepreneurial flair when the occasion demands;- who can communicate with and sell to top management, as well as to his or her colleagues,associates, equals and peers.Companies which adopt the Product Manager system gain three clear benefits from so doing:


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(a) A unity and consistency in the development of the individuals

In a large multi-product organisation, the day-to-day contact between the line management of thedifferent departments, production, research, sales, finance, etc.-is necessarily limited and intermittent.Responsibilities are heavy, the degree of specialisation is intensive. As any administrative theorist willpoint out, the greater the specialisation the more there is a problem of co-ordination.Historically, this co-ordination was provided by the chief executive of the company, who had a clear

vision of what he/she wanted to do, and did it, right or wrong. As the producing units have grownlarger and more complex, so have the purely administrative demands on the boss, pulling him/herfurther and further back from the day-to-day commercial processes and reducing his/herentrepreneurial contribution.If there was only one course of action to be taken at any one time, the task of management would beeasy. In fact, top management has to allocate the company's many resources (not the least of whichisits own most precious time) with great skill and precision. If there is a given piece of time ormoney-and it is a cliche to say they are the same thing-there will immediately be a dozen differentways of using it.Lower down the line, the factory makes the company's products, the sales force sells them all, and soon. However, left to themselves none of these departments will be utterly impartial. One product willpresent a higher labour overhead, or longer shut-down time, than another. One product will be easierto sell or easier to display than another. One will be more than another.

The only way to be certain that each product or brand has an even break, and that no worth-whileproject gets overlooked in the crowd, is to employ the age-old principle of the devil's advocate. Itseems a good idea to follow course A. Very well then, before we take the decision, let someone putforward the best possible case for course B.The Product Manager is the advocate for his/her product(s). At all times he/she is pressing for themaximum single-minded drive behind that one product, regarding the company's other products notso much with indifference, as with deep-rooted hostility. Nobody asks the Product Manager to take acool and impartial view in this situation. If everyone in the organisation, from the Managing Directorto the newest recruit under sales training, were to devote his/her entire time and effort to just oneproduct or product line, the Product Manager in question would have only one doubt in his/her mind:was the organisation working long enough hours?The resultant vigorous internal competition between Product Managers ensures that no possible

activity, on any of the brands, is passed by for want of enthusiastic backing.Top management can quickly and efficiently review the competing claims and recommendations, andallocate resources in the confident knowledge that the groundwork has been done thoroughly.(c) A pool of trained and experienced executives with a well-developed feeling for generalmanagementThe leavening of Marketing Managers, trained in the big, highly sophisticated consumer goodscompanies, has been of considerable value to commerce in this country. It has, nevertheless,contributed to a fairly widespread misunderstanding of the Product Manager system.Valuable as the other benefits are, the biggest single advantage a large company derives frommaintaining the system is in the area of management training. The concept of the "managementtrainee" in industry has been not too successful in the main. It also problems of what to do with thetrainees while they are spending time with different departments, and how to prevent them gettingbored through having no responsibility other than to observe and learn.

The immediately obvious alternative, of putting a trainee into one department and leaving him/herthere, has the equally obvious drawback that the end product is a specialist in one function, withoutthe breadth of experience to reassure his/her superiors that he/she has a general managementcapability.This then, is the system. It is time now to look a little more closely at those of the marketingassignments which are the product manager's personal responsibility under this system.The product manager's role is to develop product plans, see that they are implemented, monitor theresults, and take corrective action. This responsibility breaks down into six tasks:- Developing a long-range and competitive strategy for the product


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- Preparing an annual marketing plan and sales forecast- Working with advertising and merchandising agencies to develop copy, programs, andcampaigns- stimulating interest in and support of the product among the sales force and distributors- Gathering continuous intelligence on the product's performance, customer and dealerattitudes, and new problems and opportunities

- Initiating product improvements to meet changing market needsThese basic functions are common to both consumer - and industrial - product managers. Yet thereare some differences in their jobs and emphases. Consumer-product managers typically managefewer products than industrial-product managers. They spend more time on advertising and salespromotion. They spend more time working with others in the company and various agencies and littletime with customers. They are often younger and better educated.Industrial-product managers, by contrast, think more about the technical aspects of their product andpossible design improvements. They spend more time with laboratory and engineering personnel.They work more closely with the sales force and key buyers. They pay less attention to advertising,sales promotion, and promotional pricing. They emphasise rational product factors over emotionalones.

1. ANALYSIS AND RESEARCH

One of the characteristics which distinguishes the true marketer is that he/she is fact-hungry.He/she has the habit of automatically separating the opinion from the fact and attaching due weightto each accordingly. The jargon phrase "on judgement", used as a prefix to a statement, has becomea silent apology for not having the facts.It is not that marketing specialists are good at finding the right answers. It is rather that they ask theright questions. Most of the answers in a consumer-orientated business must come from theconsumer. Market research techniques make it possible to get some of these answers right some ofthe time. The aim is to identify the prime consumers and measure their preferences, attitudes, andactual behaviour in all matters which can affect the product.

2. PRODUCT PLANNING

There is no substitute for a good product, and a good product is a relative rather than an absoluteterm. A good product in 1995 may have become an adequate product by 1996 and a poor product by1997 as competitors improve their own products.Nor can the continuous process of product improvement be left to the inspiration of technicalresearchers. The Product Manager, acting as the advocate for the consumer, must give purpose anddirection to product development work. The brand name, the price and, where applicable, thepackaging are also vital aspects of this assignment.

3. ADVERTISING

This is a major assignment in itself, especially in the field of repeat-purchase products where it may be

the life-blood of the business and where it can consume up to half the product managers time.Advertising is the main weapon in the product's armoury, and with its aid the product managers cancommunicate to the consumer, at third hand, some tiny part of the enthusiasm and conviction he/shehimself feels about the product. The major decisions include fixing the advertising appropriation, thechoice of media, the nature of the sales message itself, and the evaluation when it is an over. All thisinvolves working closely and continuously with the advertising agency.


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marketing concept is the idea that profit is not really all that important. It is never put as baldly asthat. "You have got to spend money to make money", said the early missionaries. "Invest inmarketing the way you invest in plant."However valid this may be from the point of view of overall company philosophy, when it comes rightdown to the management of a single company brand, each chief marketing executive has to askhimself which of his/her product people qualifies for the next rung up the ladder:

Objective criteria like product share, sales, and profits are not the only yardsticks for measuring theProduct Manager's success. Fate or the Marketing Director can deal a bad hand. A product managerwho can keep cool in the face of adversity, and do a good job with a poor brand, can and frequentlydoes attract more favourable notice than the dunce who sits on top of a successful goldmine andcontributes nothing to its success.In pursuance of his/her twin goals of growth and profitability, the Product Manager's job breaks downinto a planning element and a coordinating element. Responsibility without power, is the unhappy lotof the Product Manager, since the actual execution of the tasks he/she plans is almost invariably in thehands of a separate specialist unit over which he/she has no direct authority.This means that the Product Manager can only perform as well as he/she can persuade others toperform on behalf of his/her brand the product and production technicians, the sales force, theadvertising agency, and all the other departments which have a contributory function to perform. Thisin turn means that the top flight product manager should possess a remarkable combination of

attributes, in terms of:(a) his/her knowledge and skills as a marketing craftsman;(b) his/her general/personal management ability.As far as his/her marketing expertise is concerned, this is largely a matter of training.When potential Product Managers are recruited by a manufacturing company, it is this ability toanalyse and to predicate logically from the analysis which is used to separate the possible candidatesfrom the non-starters.Intelligence and logic aside, the quality which distinguishes the able from the merely bright in productmanagement, as in all other spheres, is the capacity and the will to work really hard, and preferablyfast, over a sustained period of time. Perhaps the truism has a special importance in productmanagement, since in few other fields is a relatively youthful executive brought into such regularcontact with top management.The Product Manager is properly called upon to represent the interests of his/her product at top levelmeetings of all sorts, not always excepting board meetings, and the justification for his/her presencemust be that he/she has devoted more study and effort to that product than anyone else in thecompany. When up against his/her seniors, he/she will always find it difficult to carry his/her point. Ifhe/she has not done his/her homework scrupulously, and cannot command respect . for his/herknowledge, he/she will certainly command none for his/her experience.Diplomacy, too, is more than usually a virtue in product management, especially in the early stages,before the young product manager has won his/her spurs. The Sales Manager, with 30 years' service,or the battle-seasoned Account Supervisor at the advertising agency, do not take kindly to so called"bright young people" telling them how to do their jobs. Nor does it help that the veterans have ashrewd suspicion, based on past experience, that the young whipper-snapper will within 2 years goshooting up through the organisation like a rocket.This initial suspicion from the experienced specialists takes a variety of forms, some more insidious

than others. When the youthful Assistant Product Manager takes a rough of a poster down to theSales Manager (to obtain the necessary sales department approval) and that worthy silently picks it upby one comer and drops it in the waste-paper basket, there is no serious problem. Each knowsprecisely where he/she stands.It frequently happens, however, that there is no overt rejection process. The specialist manager inquestion, with a cautious eye on the future, is friendly and even ingratiating. Unfortunately, theadvertising agency is especially open to the temptation to serve up a judicious mixture of flattery andlavish lunches to the point where the unwary product manager becomes somewhat inflated with asense of his/her own importance. Apart from making him/her a less lovely person to know, this can


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impair his/her performance and his/her future growth by blunting the sensibilities which should beamongst his/her most important assets.Intelligence, logic, diligence, diplomacy, and sensitivity. Two other qualities are required, perhapsabove all the others.The first is tenacity-part self-confidence, part courage, and part sheer bloody-mindedness. The kindof tenacity which causes a man to stay with a task when he/she is bored with it, or stick to his/her

guns when he/she has not understood the counter-arguments, even in the face of hostile andinfluential public opinion. This is also the kind of tenacity which will get him/her into trouble everynow and then-no one wants a salesperson who has never got thrown out of a shop for trying toohard.The second quality-and heads are bared in product management circles at the mention of the word-isobjectiveness, or (in the larger dictionaries only) objectivity. To be objective is a consuming passionwith the good Product ManagerThe vital importance of being objective is, of course, closely related to the passion for facts alreadymentioned. In combination, the two allied characteristics can be maddening, but with them goes aninstant readiness to back down, without embarrassment or hesitation, in the face of superior logic ornew facts. This is a quality to be prized in any commercial operation.

Product and Brand Management Organisation

Companies producing a variety of products and/or brands often establish a product or brandmanagement organisation. The product management organisation does not replace the functionalmanagement organisation but serves as another layer of management. The product managementorganisation is headed by a products manager, who supervises several product group managers, whosupervise product managers in charge of specific products (See Figure 1)A product management organisation makes sense if the products are quite different and/or if thesheer number of products is beyond the capacity of a functional marketing organisation to handle.Product Management first appeared in the Procter & Gamble Company in 1927. A new company soap,Camay, was not doing well, and one of the young executives, Neil H. McElroy (later president of P&G),was assigned to give his exclusive attention to developing and promoting this product. He did itsuccessfully, and the company soon added other product managers.

Since then many firms, especially in the food, soap, toiletries, and chemical industries, haveestablished product management organisations. General Foods, for example, uses a productmanagement organisation in its Post Division. There are separate product group managers in chargeof cereals, pet food, and beverages. Within the cereal product group, there are separate productmanagers for nutritional cereals, children's presweetened cereals, family cereals, and miscellaneouscereals. In turn, the nutritional-cereal product manager supervises brand managers.

Marketing Organisation

The product management organisation introduces several advantages. First, the product managerdevelops a cost-effective marketing mix for the product. Second, the product manager can reactmore quickly to problems in the marketplace than a committee of specialists can. Third, smaller

brands are less neglected because they have a product advocate. Fourth, product management is anexcellent training ground for young executives, for it involves them in almost every area of companyoperations.But a price is paid for these advantages. First, product management creates some conflict andfrustration. Typically, product managers are not given enough authority to carry out theirresponsibilities effectively. They have to rely on persuasion to get the cooperation of advertising,sales, manufacturing, and other departments. They are told they are "mini managers" but are oftentreated as low-level coordinators. They are burdened with a great amount of "housekeeping"paperwork. They often have to go over the heads of others to get something done.


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Second, product managers become experts in their product but rarely become experts in anyfunctions. This is unfortunate when the product depends on a specific type of expertise, such asadvertising.Third, the product management system often turns out to be costlier than anticipated.Originally, one person is appointed to manage each major product. Soon product managers areappointed to manage even minor products. Each product manager, usually overworked, pleads for

and gets an associate brand manager. Later, both overworked, they persuade management to givethem an assistant brand manager.With all these personnel, payroll costs climb. In the meantime, the company continues to increase itsfunctional specialists in copy, packaging, media, sales promotion, market surveys, statistical analysis,and so on. The company becomes saddled with a costly structure of product management people andfunctional specialists.Fourth, product managers tend to manage their brand for a short time. Either product managersmove up in a few years to another brand or product, or they transfer to another company, or theyleave product management altogether. Their short-term involvement with the product leads to shorttermmarketing planning and plays havoc with building up the product's long-term strengths.The functions of marketing management, can be broken down into fixed tasks and variable tasks, inthe manner of costs. The fixed tasks are those which remain constant for all intents and purposes,whether the company in question markets one product or twenty. These include sales policy, the

recruitment, training and administration of the sales force, its motivation, its performance and themeasurement of its effectiveness, contact with the wholesale and retail trades, order processing,credit control and cash collection, deliveries and after-sales service.The variable tasks are those which have to be carried out entirely separately for each product, and arethus duplicated as many times as the company has products. These comprise market analysis,consumer research, product planning (including pricing and packaging), sales promotion andmerchandising planning, advertising and public relations, sales forecasting, and profit planning.Daunting as the two lists of tasks may seem, in a small company they can be carried out with varyingdegrees of success by a tiny management team, or even, in appropriate circumstances, by a singleindividual. Obviously, the larger the scale of the operation, in terms of numbers of salesmen or ofproducts marketed, the more complex the management structure required. The growth of anymarketing organisation will be by the normal blend of delegation and specialisation; that is to say, thestructure will extend both vertically and horizontallyAlthough we briefly described the tasks of the "typical" product manager, they actually, of course,vary quite widely from organisation to organisation. Usually, the kinds of tasks with which productmanagers become involved are highly related to how marketing is organised.Three organisational structures for marketing have been identified: organising by product, by market,and by function.'

Product-Focused Organisations

The tasks of these elements of the hierarchy are typically the following.'The assistant product managersjob includes market and share forecasting, budgeting, coordinatingwith production, executing national promotions, and packaging. In general, the productassistant's tasks involve becoming more familiar with the category within which the product iscompeting. Associate product managers have more freedom to develop brand extensions, andsometimes even manage a small product line. The product manager, of course, has the ultimateresponsibility for the product..This structure is not limited to packaged goods companies.The product management system has several advantages. The locus of responsibility is clear becausethe person responsible for the success of the product is the product manager and no one else.Because of this clear locus of responsibility, it is also clear to whom the organisation can turn forinformation about the product. Product managers' training and experience is invaluable; they developthe ability to work with other areas of the organisation, and the persuasion and communication skills


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necessary to be an advocate for the product. In fact, companies organised by product managementare often breeding grounds for senior executives of other companies, which highly value the trainingThe product management system also has its weaknesses. The extreme focus on one product cansometimes lead to an inability to step back and ask more fundamental questions about customerneeds. It can also be a very centralised structure in which the product manager is somewhatremoved from "where the action is" in the field.

One of the changes in marketing organisation that will be discussed later is an attempt to flatten theorganisation and decentralise product management, particularly when there are significant differencesin regional tastes for a product. In addition, some people complain that product managers are toomyopic in their quest for quarterly or even shorter changes in sales and market share. One of theresults of this perspective has been the dramatic increase in the use of short-term marketing tools,such as sales promotions, for consumer packaged goods. A final risk in a product-focusedorganisation, particularly for industrial products, is that it could result in several salespeople from thesame company who represent different products calling on the same customer. This problem is mostlikely to occur when the sales force is organised by product specialties and is not necessarily a generalcharacteristic of product management organisations.Despite these weaknesses and many criticisms of traditional product management, it continues toflourish in consumer and industrial products companies.

Market-Focused Organisations

This structure defines marketing authority by market segment. Segments could be defined byindustry, channel, regions of the country or the world, or customer size. The market focusedstructure is clearly useful when there are significant differences in buyer behaviour between themarket segments that lead to differences in the marketing strategies and tactics used to appeal tothem.The big advantage of this market-based structure is clearly its focus on the customer. In thisstructure, managers can consider changes in customer tastes that may, in fact, result in eliminatingsome of the products currently being marketed. It is particularly useful when the product beingmarketed is a system that bundles a number of products made by the company. A productmanagement structure offers insufficient motivation to spend time on a system sale, which may

involve little revenue for a particular product. The market-based structure makes the job of gettingthe product managers to pull together easier. These managers often have better knowledge aboutthe company's line of products than do the product managers in a product-focused company.A drawback to this structure, however, is the potential conflict with the product management structurethat may lie beneath it. Additionally, some of the mini CEO training and experience of traditionalproduct managers is lost.

Functionally Focused Organisations

As opposed to the product-focused and market-focused organisations previously described,functionally focused organisations align themselves by marketing functions such as advertising andsales promotion. Most marketing organisations have some aspect of this structure; it is common, for

example, for sales and marketing research to be separate functions. However, in functionally focusedstructures, no single person is responsible for the day-to-day health of a product. Marketingstrategies are fully designed and implemented through the co-ordinated activities of the functionalareas.This highlights one of the drawbacks of the functionally oriented structure: Who is responsible for theproduct? Someone must take day-to-day responsibility for each product or service marketed by theorganisation. Conflicts between product marketing strategies can only be resolved by spendingsubstantial time in meetings. The management training aspect of this structure also focuses onfunctional rather than broad general management education.


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However, there are some advantages in this kind of structure. It is administratively simple: Thegroups are designed to be parallel to normal marketing activities. Functional training is better-forexample, skills in developing sales promotions will be better developed because that is a person's soleresponsibility.Five steps have been suggested to make the product management system workbetter.

- Clearly delineate the limits of the product manager's role and responsibility forthe product. (They are essentially proposers, not deciders.)- Build a strategy development and review process to provide an agreed-toframeworkfor the product manager's operations. (Too many companies allowproduct managers to get away with shallow marketing plans featuring a lot of statisticsbut little strategic rationale.)- Take into account areas of potential conflict between product managers andfunctional specialists when defining their respective roles. (Clarify which decisionsare to be made by the product manager, which by the expert, and which will beshared.)- Set up a formal process that forces to the top all conflict-of-interest situationsbetween product management and functional line management. (Both partiesshould put the issues in writing and forward them to general management for settlement.)

- Establish a system for measuring results that is consistent with the productmanager's responsibilities. (If product managers are accountable for profit, theyshould be given more control over the factors that affect their profitability.)A second alternative is to switch from a product-manager to a product-team approach. In fact, thereare three types of product-team structures in product management.- Vertical product team This consists of a product manager, associate product manager, andproduct assistant. The product manager is the leader and primarily deals with other executives togain their cooperation. The associate product manager assists in these tasks and also does somepaperwork. The product assistant does most of the paperwork and runs errands.- Triangular product team This consists of a product manager and two specialised productassistants, one who takes care of (say) marketing research and the other, marketing communications.This design is used at the Illinois Central Railroad, where various three-person teams manage differentcommodities. Also, the Hallmark Company uses a "marketing team" consisting of a market manager(the leader), a marketing manager, and a distribution manager.- Horizontal product team. This consists of a product manager and several specialists frommarketing and other functions. Thus the 3M Company divided its commercial tape division into ninebusiness-planning teams, each consisting of a team leader and representatives from sales, marketing,laboratory, engineering, accounting, and marketing research. Instead of a product manager's bearingthe entire responsibility for product planning, he or she shares it with representatives from key partsof the company. Their input is critical in the marketing-planning process, and furthermore each teammember can bring influence to bear in his or her own department. The ultimate step after ahorizontal product team is organised is to form a product division around the product.A third alternative is to eliminate product-manager positions for minor products and assign two ormore products to each remaining product manager. This is feasible especially where two or moreproducts appeal to a similar set of needs. Thus a cosmetics company does not need separate product

managers, because cosmetics serve one major need - beauty - whereas a toiletries company needsdifferent managers for headache remedies, toothpaste, soap, and shampoo, because these productsdiffer in their use and appeal.


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Changes Affecting Product Management

It is often said that the only constant is change. Product managers face many challenges in adaptingto the changes in the marketing environment that have been affecting and are going to continue to

impact decision making in the 1990s. Some of the key changes are:1. Changing demographics. Several major changes in the demographic composition ofAustralia include the aging of the population, growth of minority populations due to increasedimmigration, and increasing dual-career households. These changes and others have significantimpact on product management concerns, from the kinds of products that will be successful to theappropriate channels of distribution and communications programs necessary to reach customers.2. The data explosion. As the product managers noted, effective marketing today requiressophisticated information management. For consumer packaged goods companies, this means betterand more timely information on market shares, sales, and distribution due to the proliferation ofscanners in supermarkets. Almost all products sold through the retail system are more effectivelytracked by both the retailer and the manufacturer due to increased use of information technology.The use of laptop computers and fax machines means quicker transmission of competitor informationand sales call reports from the field. Data-base marketing-launching marketing programs from

computerised customer lists is becoming a key approach for the 1990s.3. Product life cycles are becoming shorter. A key phenomenon in technology-basedindustries and many others is that product life cycles are shortening. 2The time it takes a product category to reach maturity has been reduced by increased rates of2 William Qualls, Richard Olshavsky, and Ronald Michaels, "Shortening of the PLC-An Empirical Test,"Journal of Marketing 45 (Fall 1981), pp. 76-80.innovation among increased numbers of competitors. This puts pressure on product managers toconstantly seek ways to extend their products' life cycles by repositioning, changing features, lookingfor new uses, or developing other ways of extending the period in which profits can be generated.Because shortening product life cycles implies that profit life cycles are also becoming shorter, it ismore important than ever to be right when the product is first brought to market. This increases theimportance of market research and the interaction of new-product development teams and marketing.

4. Growing bargaining power of

the distribution channels and growing importance ofsales promotion. The major distributors of consumer packaged goods - supermarket chains and

mass merchandisers - are becoming more powerful and are demanding better terms from consumerpackaged goods companies in exchange for scarce shelf space.These distributors are primarily interested in generating more store traffic, and they are pressingmanufacturers for more trade deals. The heat is being felt by the manufacturers' sales forces, whotell the product managers that they cannot get shelf space without more trade deals. The result isthat the product manager shifts more money into sales promotion and has less funds to build his orher brand franchise.Furthermore, the distributors are demanding more multi brand and multi category promotion dealsfrom each manufacturer. The distributors want customised multi brand deals that would enable themto distinguish their offers from competitors' offers. These deals have to be worked out at higher levelsof management than the brand level. But the brand managers have to be taxed to support these

deals, sometimes by giving up about 25 percent of their budget. The ptroduct manager is being leftwith less control over his or her sales promotion funds.As sales promotion becomes more important, the manufacturers realise that they are not organised tohandle it efficiently. Originally sales promotion was handled individually by each brand manager.Some companies later appointed a sales promotion specialist to help product managers choose goodpremium and couponing schemes for consumer sales promotion.Meanwhile the company's sales force is heavily pressing for more trade promotion money. Thequestion becomes, How much should be spent on sales promotion out of the total budget and howshould this money be split between trade and consumer promotion? Unfortunately, the decisions are


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being made politically rather than rationally.5. Declining cost-effectiveness of mass advertising. Product managers are finding thatthey have less money to spend on advertising, the one tool they know best. Furthermore, massadvertising - particularly network television - is becoming less cost effective. There are fewer peoplewatching network television, and many of them are not interested in many products that areadvertised. The money can be spent more effectively by studying category and brand interest levels

market-by-market. But brand managers do not know the individual markets that well. Companies areincreasingly developing local area marketing plans through other people rather than the brandmanagers.6. Declining level of customer brand loyalty.Consumers have been exposed to so much dealing recently that a growing number are deal-pronerather than brand-prone. The consumers' evoked set of acceptable brands is increasing. As moreconsumers switch their brands each week depending on the deals, brand shares become morevolatile. A brand's weekly or monthly market share means less and becomes less useful in decidinghow much money to allocate to each brand. Higher levels of management have to decide how muchin funds each brand should get based on more long-run criteria.7. Increased parity between manufacturers and sellers. Prior to the last five years,manufacturers held the upper hand in dealing with retailers due to asymmetry in information:Manufacturers had a better idea of what was selling than retailers because of better data collection

methods. Today, improvements in information technology and partnerships between manufacturersand sellers in developing measurement systems have given both parties equal access to salesperformance. As a result, the balance of power in distribution channels is clearly shifting from themanufacturer to the retailer. This has created more manufacturer awareness, even amongmanufacturers with powerful brand names, that retailers must be treated well and that it is asimportant to be close to them as it is to the end customer.8. Increased spending on sales promotion versus advertising. This is mainlycharacteristic of consumer products. The higher rates of spending on sales promotion, particularly ontrade promotion, coupled with downward pressure on prices have lowered profit margins dramatically.This has had the unfortunate effect of making product management even more short-term oriented asthe battle for market share has become more intense.9. Pricing and value. These two terms are often confused. Companies are more interested inpricing their products at a level commensurate with customer value, that is, the economic valuecustomers place on the product. However, during the recessionary period of the early 1990s, pricingat customer value was impossible. As a result, value pricing came to mean offering greater value tothe customer than is justified by the price. Product managers, therefore, seek ways to offer increasedvalue in products while reducing prices, producing "bargains."10. Increased importance of customer service. Many marketing writers feel that customerservice will be the competitive battleground of the 1990s because parity has been achieved betweenthe features of most competitors' offerings. Thus, customer service can be seen as a dimension of theproduct where a sustainable competitive advantage can be achieved. However, most companies havea long way to go to deliver levels of service that would differentiate themselves (in a favourable way!)from competitors.11. New ways of reaching customers. Companies are seeking and using more cost-effectiveways of communicating with customers and measuring the effects of the dollars spent. The decrease

in advertising billing levels partially reflects this phenomenon. Increases in the use of directmarketing, telemarketing, cable TV, and, in the near future, interactive TV, will make the productmanager's job of selecting alternative modes of communication more complex.12. Increased global competition. Unquestionably, product managers have to be equipped todeal with world-wide competition-not only by having appropriate organisational structures asdiscussed earlier in the chapter, but also by obtaining experience and knowledge about how businessis conducted in a variety of cultural contexts.These developments are forcing companies to rethink how they should develop and manage theirproducts and brands. There are two competing solutions:


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1. Changing the job description and the role of the Product Manager.One avenue of thought is that the product manager should spend less time creating the promotionplans and become more involved in product improvement and production.Normally the product manager has little time to think about creating flankers and brand extensions,and this has forced companies to appoint new-product specialists within brand or category groups todo this work. And the product manager does not become very involved in knowing the production

and logistics steps and how to find cost improvements. Therefore it might be argued that productmanagers should have their responsibilities shifted more to product improvement andproduction/distribution efficiency concerns.2. Eliminating the Product Management system.Another avenue of thought is that a company should organise teams around major product categoriessuch as snacks, dog foods, and cereals. Each team would be headed by a category manager andwould consist of a marketing researcher, an advertising specialist, a sales promotion specialist, and asales management specialist. This would reduce the number of middle managers and result in aleaner marketing organisation.If product managers are eliminated, their counterparts in advertising agencies - namely, accountexecutives - might also be eliminated. Many consumer packaged goods companies are pressingadvertising agencies to lower their costs, especially considering the reduced effectiveness of massadvertising. These companies normally prepare their own brand marketing plans and simply want a

good creative plan and media plan from their advertising agency. They wonder why they have towork through account executives and their assistants. Some companies are telling their advertisingagencies they are going to pay less or else switch agencies, thus forcing these agencies to reconsidertheir own organising patterns and the role of the account executives.

Impact of Change on Organisational Structure

Some of the changes mentioned above have been reflected in shifts in the way marketing is (or willbe) organised at many companies.One major change in packaged goods has been the establishment of a category manager." One ofthe drawbacks of the traditional product management structure is that the product focus leads topromotions run from the perspective of the product alone. When a Product Manager runs a

promotion, the retailer may not benefit because the increase in sales for one product takes sales fromanother, leaving the retailer in the same position. Due to retailers' increased power as describedearlier, some companies that use product management have instituted the category manager toprovide an overall perspective of, for example, how a promotion for one brand of detergent will affectthe whole category. Product managers for products in a category report to the category manager,who has long-term strategic responsibilities. Companies that have adopted such an organisationalstructure include Procter & Gamble. Coca Cola Foods defines its categories by trademarks, and has atrademark manager who oversees marketing all brands with that trademark. Not all companies havebeen enamoured of the extra layer of management.A second change is the addition of account teams to deal with a company's largest customers. Theseare sometimes referred to as "trade marketing" or "trade management" groups. Because of theincreased power of large buyers such as Coles Myer and the big supermarket chains, packaged goodsmanufacturers see as much need to sell themselves as to sell individual product lines.A third change is a reaction to differing tastes in different parts of the country, As previously noted indiscussing changes in the marketing environment, one reason for different tastes is the growth ofethnic minorities. Manufacturers of food products and food service organisations, such as McDonald's,have been particularly interested in flatter marketing organisations that give more power to regionalmarketing management to adapt products to local tastes.In reaction to the more rapid product life cycles, some companies are attempting to bring marketingmore closely into the new-product development process. Japanese companies use this approachroutinely-termed a rugby approach," it advocates simultaneous marketing and research anddevelopment working through a team approach, rather than the conventional sequential new product


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which we respond to and which we rely upon in making sense of complex reality, need to beestablished over an extended period of time.A brand, then, acts as a Gestalt in that it is a concept which is more than the sum of its parts andwhich takes a long time to establish in the minds of consumers. Of course, in order to embrace acomplex set of beliefs and values and internalise them as a Gestalt the recipient (or consumer) needsto recognise that what is on offer is appropriate and attractive. In other words, the Gestalt needs to

be credible, coherent and attractive, supported and developed over time and not subject to rapidfluctuations in message, quality, positioning or overall "mood".The consumer, therefore, is prepared - given exposure to and confidence in the brand - to impart tothe brand an authority and unity, a cohesion, which functions as a Gestalt prompting recognition,confidence and easy familiarity.Not all brands, of course, gain such authority and stature in the minds of consumers. They may haveno particular features which set them apart from similar brands; or quality or positioning may vary somuch that the consumer lacks confidence in the brand or fails to comprehend what the brand standsfor. Alternatively, of course, the personality of the brand may be simply unattractive or unconvincing.To be successful, brands must be appealing and be maintained in good shape by their owners so as tocontinue to satisfy the consumer's needs. A brand is therefore a "pact" between the owner and theconsumer: it allows the consumer to shop with confidence in an increasingly complex world, and itprovides the owner with higher volumes, often higher margins and greater certainty as to future

demand.

The Development of BrandingBranding is not a new phenomenon. Indeed, it has been with us since earliest times as producershave always wanted to identify uniquely the fruits of their labours, and customers have never beenslow to appreciate that they prefer one producer's products to those of another. In the last onehundred years, however, the use of branding has developed considerably.1. Legal systems have recognised that brands and other forms of intellectual property areproperty in a very real sense. Over 160 countries have trade mark laws which allow owners of brandsto claim title in their brand names and logos through trade mark registration. Owners of brands,therefore, can enjoy title to a property which is every bit as strong as the title they enjoy to moretangible forms of property such as plant and freehold estate.

2. The concept of branding has successfully been extended from goods to services; indeed, incountries such as the United States and those of Western Europe the rate of growth in brandedservices now outstrips that in branded goods. Legal systems now recognise this and make specificprovision for the registration of service trade marks.3. As consumer choice has grown, as marketplaces have become more crowded, and as newproducts have been aimed at increasingly tightly targeted sectors, intangible factors have come toplay an increasingly important role in brand selection. Of course quality or, in the case of servicebrands, the delivery of a superior quality service, is essential to brand success, and no successfulbrand can exist without satisfying the needs of consumers. Nonetheless, additional intangibleelements are often critical in persuading the consumer to choose between alternative brandedproducts or services, all of which are broadly capable of satisfying his or her requirements. Modernbranding is therefore concerned increasingly with the intangible elements of a brand, with assemblingand maintaining in a brand a mix of attributes, both tangible and intangible, which are relevant and

appealing, and which meaningfully and appropriately distinguish one brand from another.


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Successful BrandingThe key elements in a brand are the product itself, its pricing, distribution, packaging, brand name,promotion and its overall look and presentation. It is far more than just a product - it is the particular,differentiated product of one supplier.

Creating a successful brand entails blending all these various elements together in a unique way - theproduct or service has to be of high quality and appropriate to consumer needs, the brand name mustbe appealing and in tune with the consumer's perception of the product, the packaging, promotion,pricing and all other elements must similarly meet the tests of appropriateness, appeal anddifferentiation.The last factor, differentiation, is of critical importance in today's crowded markets. It is notinconceivable that any one of a dozen manufacturers of confectionery and chocolate products could,with a certain difficulty and expense, produce a passable imitation of a Kit- Kat chocolate bar. Theywould probably have to invest in special equipment and, not enjoying Rowntree's economies of scale,they would probably also have to sacrifice margin in order to meet Rowntree's price.Nonetheless, the Kit-Kat product is not protected by patents or by any unique technology and it seemsalmost certain that competitors could quite closely match the Kit-Kat product in terms of the productitself, its price and so forth. Rowntree's rights are, of course, protected through its trade mark and

device mark registrations and at common law, and the company could also rely on more generalisedlegal protection for its intellectual property rights through "passing off" or, in certain jurisdictions,unfair competitions laws.Nonetheless, successful competition in the branded goods sector does not consist of developing closefacsimiles of existing products, though no brand owner who opens up a new product sector canexpect to remain free from competition for long.Even Kellogg's Corn Flakes, a formidably powerful brand, faces competition from other Kellogg'sbrands as well as from other breakfast cereal producers.There is an obvious need for manufacturers to compete effectively in key market sectors. When acompetitor gains market share through the establishment of a new and successful product competitorsmust try to respond in a way which is credible and appealing to the consumer. Normally, however,this process should stop short of launching a new product which is a more-or-less undifferentiatedpastiche of the original competitive product as such products are usually recognised by consumers for

what they are and have little appeal unless, for example, they sell at a substantially lower price.In practice, in "mainstream" consumer products sectors such as beers, toiletries and foods, it is rare toachieve such massive product breakthroughs as to be able substantially to differentiate the brand interms of performance ("wonder products" such as the first nylon stockings, stainless steel razor bladesor even "green" products occur only occasionally). Further, today's goods are produced so efficientlyand well that it is difficult to achieve substantial advantages in quality or pricing. The way, therefore,in which the brand can often be most effectively differentiated is not through the product itself butthrough its packaging, name, presentation or market positioning. For example, a new brand can bepresented in an entirely fresh and contemporary fashion so that, by implication, the old brand appearsdull and dated.Innovative, differentiated brands do not, however, need to be bizarre or eccentric. The degree ofdifferentiation, of shift of emphasis, may well need only be slight.

Moreover, such differentiated brands can do more than merely offer the consumer some transient newappeal and persuade him or her to switch, perhaps only temporarily. Differentiated brands can serveto outmode and wrong-foot existing brands. This process has been called "competitive depositioning"; in effect, the owner of the new brand attempts to portray his brand in a fresh andexciting way so that, by contrast, the original competitive brand or brands appear dull and outdated.


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The Importance of BrandsBrands are important to brand owners at two quite different levels. Firstly, they serve as a focus forconsumer loyalties and therefore develop as assets which ensure future demand and hence futurecash flows. They thus introduce stability into businesses, help guard against competitive

encroachment, and allow investment and planning to take place with increased confidence.The brand also serves to "capture" the promotional investment which has been placed behind it. Ithas been argued that enormously valuable world brands such as Marlboro, Pepsi and Kellogg's are stillbenefiting massively from the large investments in brand- building which their owners placed behindthem in the 1950s and 1960s when advertising media, in contrast with today, were cheap and hadnone of today's clutter. Thus the benefits of this past media expenditure still accrue to the branddecades later.The second key feature of brands is their strategic importance. The way in which brands work for theirowners has been described as a process whereby the manufacturer can "reach over the shoulder ofthe retailer direct to the consumer". If manufacturers did not possess brands they would not have theability to talk directly to consumers and would therefore be merely commodity suppliers to the middleman, the retailer.Brands provide the brand owner with the opportunity to maintain a measure of balance in the

relationship with the retailer. The brand allows its owner to prevent his or her products becomingsimply commodities bought by intermediaries according to the market forces operating at a particulartime.Besides their importance to brand owners, brands also have very real value to consumers. A brand isa pact between the brand owner and the consumer, and branding, therefore, is by no means a cynicalactivity imposed on the unsuspecting consumer against his or her will. Brands allow consumers toshop with confidence in an increasingly complex world. The brand offers the consumer a guarantee ofquality, value and product satisfaction. As long as the brand keeps its part of the bargain theconsumer will continue to support it. Conversely, should the consumer not like the brand, or should itfail to deliver what the consumer requires, or should another brand appear which better suits theconsumer's needs, the brand identity allows the consumer to avoid the brand and purchase analternative.

Maintaining Brand ValuesConsumers are not fools and have freedom to buy whatever brands they want. It almost goes withoutsaying that brand owners must keep their brands in good repair and must be assiduous as to quality,distribution, pricing and brand support, for if the brand does not keep its side of the bargain, there isno reason why the consumer should continue to support it. Brands, therefore, cannot shield brandowners from their own neglect of their brands or from inappropriate pricing, promotional policies,distribution policies or range extensions. Consider the case of a consumer wishing to buy colour film.The consumer may well have a distinct preference for the Kodak brand but if it is over-priced orunavailable, they will probably quite readily settle for another brand instead. Much of the marketingand distribution function in a company is directed at ensuring that the company's brands are nothandicapped by such factors and that they are available at an appropriate price, are properlypresented, adequately advertised and supported, and have the full range of varieties and alternatives

which the consumer might require. Given such "equality" the function of the brand is, at point-of-sale,to tip the consumer decision in favour of the company's brand.Even though consumers have the ability to purchase whatever products or brands they wish, inpractice they are remarkably loyal to familiar brands and desert them only reluctantly. The stability ofbrands over an extended period is also quite remarkable. Many of today's most famous ones such asCoca-Cola, Kodak and Shell have been with us for a hundred years or more, and a high proportion ofthe leading brands advertised in the magazines of the 1920s and 1930s are well-known to us today.


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The Brand Life-CycleAlthough the theory of a brand life cycle carries little weight, that is not to say that a product cannothave a life cycle. It most certainly can and, if unchecked, may take the brand down with it. The brandowner must always be aware of the sustainability of the brand's competitive advantage and of therelationship of the functional (product) and symbolic (intangible, image) elements of the brand'smake-up to the requirements of the marketplace.

The strategy that a brand owner chooses to adopt must depend upon the stage of development of abrand in a market. This can typically include the following:1. A proprietary period in which the brand which was first into a market can be seen to beunique and to own the market.2. A competitive stage in which competitors begin to catch up with the functional aspects of thebrand and new ways need to be found to sustain the product advantage.3. An image phase in which any unique product and functional advantages have been erodedand symbolic values have much greater importance in differentiating the brand from its competition.It is essential, therefore, for brand owners to be prepared constantly to monitor the functional andsymbolic values of their brands in the context of the changing environment in which they operate and,where necessary and appropriate, to adapt them to meet the new requirements of the market or thethreat of a competitor. Different markets demand different strategies for brands to survive andsucceed.B AD CSymbolismFunctionalityHighLowLow High

1. In quadrant A can be found brands with high functionality and high symbolism, e.g. Rolex,Mercedes, Hasselblad.2. In quadrant B are brands with high functionality but low symbolism, e.g. Post-it, Hoover,Konica.3. In C are brands with low functionality but high symbolism, e.g. Gucci, Dunhill, Tiffany.4. In D are brands with low functionality and low symbolism, .This exampledemonstrates the range of possible positionings and perceptions: the "rational" high practicality,relatively low image of Land Rover; the "irrational" high image, relatively low utility of Alfa-Romeo; thehigh functionality and image of Mercedes and, towards the opposite corner, Skoda and Lada, brandswhich are considered by many to be neither functional nor rich in positive, intangible brand values butwhich sell mainly on price.SymbolismThe important fact demonstrated by this matrix is the ability of brands to move along one or bothaxes. Fifteen years ago Japanese car brands would probably have been found in the bottom left-handcorner, but by adapting their product offering to make new technology available to consumers theyhave pulled themselves much higher on the function scale and are now in the process of climbing upthe image scale. This is the same route taken by BMW before them and which, it is intended, Rover

will follow.


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Brand ExtensionDeveloping and launching new brands is normally extremely expensive and highly risky. One strategywhich has been developed to reduce the costs and risks of new product introduction, to use moreefficiently the equity which has been built up in existing brands and, at the same time, keep existingbrands relevant and meaningful to the consumer, is brand extension. The Dunlop brand, for example,

started its life as a brand of bicycle tyre but was, over time, extended to cover tyres for road vehiclesas well as a wide range of automotive, industrial, consumer and sporting products. The Kodak brandhas been extended from its original positioning to embrace an enormous range of photographicproducts. Dunhill, originally a brand of cigarettes, has been extended to cover a wide range of luxuryproducts for both men and women. Brand extension is clearly an entirely feasible marketing strategy.The problem for brand owners is to ensure that the brand is extended in an appropriate fashion suchthat the brand equity is enhanced rather than diluted. A critical factor is the development of anapproach to brand extension which recognises the unique attribute of the brand and extends thebrand in a fashion which is sensitive to the character of the brand and plausible to the consumer.Perrier, for example, is clearly an extremely powerful brand of mineral water, and the brand possessesunique attributes of "purity" and refreshment coupled with style and sophistication. No doubt Perrierhas all the technical, financial and distribution capabilities to produce a cola or an alcohol-free beerunder the Perrier brand name and it could be argued that products of this sort fulfil the key attributesof refreshment and quality which are inherent in the Perrier brand. In practice, however, a Perrierbrand cola or alcohol-free beer may well be considered totally inappropriate by consumers and it maybe that, should the owners of the Perrier brand wish to extend it, it could be used much more readilyon personal care products, magazines, fragrances, clothing, bicycles or holiday resorts than onproducts which in many respects are adjacent to the brand's core area of activity.

Creative Branding

Much of current new-brand development seems to consist of presenting consumers with barelydifferentiated facsimiles of the brands they already know and appreciate. Poor consumer researchmust bear part of the blame as such research pushes the brand owner in the direction of the "blandbrand" because consumers, in research situations, relate any new brand proposition to what is already

familiar to them. They thus tend to score most highly those brand features which are closest to thebrands that they already know. Much of successful branding, however, is concerned with getting therefirst, with anticipating and shaping consumer needs and desires. Indeed, there is evidence to suggestthat pioneering brands are substantially more profitable than late entrants to a marketplace as it ismuch easier to seize and retain the attention and loyalty of consumers when there are no establishedcompetitors in the sector.Successful creative branding consists, therefore, of thinking ahead of consumers, of anticipating theirneeds and wants. Consumers do not maintain schedules of new products or brands they would like tosee on the market; they are generally satisfied with the brands which are currently available to them.The task of the developer of new brands is to anticipate consumers' future needs and to present theconsumers with new and attractive brands which they can embrace and make a part of theirpurchasing repertoire but which the consumers would never have anticipated a need for in advance ofthe product becoming available.


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The Benefits of Brands

The brand represents, to the consumer, a credible guarantee of quality and satisfaction at arecognised price.The use of such brands, therefore, provides the consumer with a kind of route map through whatwould otherwise be a bewildering range of alternatives. Conversely, though, brands can also providethe consumer with the ability to avoid a product if it has proved unsuitable in the past. For this reasonbrand owners must be sure to maintain quality, value and consistency in their brands.Brands also offer a range of very real benefits to manufacturers. Firstly, they provide an opportunityfor the producer to talk directly to consumers and to influence their likes and preferences. Throughadvertising and promotion, brands can be endowed with qualities and attributes that make themappealing, and once consumers seek out and specify a branded product retailers are virtually bound tostock it.

International Brands

Most of today's powerful international brands were not developed as world brands; they weredeveloped originally to serve particular national markets and first found a distinct positioning andappeal in those markets.Once established, they were then extended internationally. This process of brand globalisation hasbeen greatly facilitated in recent years by better communications, greater travel and wider use ofcertain languages, especially English. With the growth of satellite TV and other communication"overlaps", it is clear that this phenomenon will continue to grow in importance as the world getssmaller. Global brands afford their owners economies and efficiencies such as those originally offeredby national brands in the nineteenth century after the growth of the railways. They also offerinternational branded goods businesses a means of maintaining a coherence and unity in theirinternational activities.

Brand Values

Much merger and acquisition activity in the late 1980s has been concerned with capturing powerfulinternational brands. The power and importance of brands has now been clearly recognised not justbe owners but also by investors and predators.The cost of developing new brands, the risks of new product development and the rarity of stronginternational brands all contribute to this interest. More importantly, however, the robustness ofleading brands and the guarantees they provide of stability and of future cash flows ensure thatbrands are now regarded as serious and valuable assets akin in many respects to income- producingproperty assets. The value of brand assets, however, ultimately depends on the unique pact betweenbrand owners and the consumer. The brand owner must recognise and honour this pact and maintainthe appeals and values of the brand; the consumer will continue to support the brand only as long asit meets its side of the bargain or until a more appealing brand comes along.


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HOW TO BRAND NEW PRODUCTS

New brands are extremely expensive to develop and launch. Several years of continued spending onthe brand are needed before its success or failure can be ascertained. And in any case most brandsfail. Clearly, new product development is not for the faint hearted. Indeed, in recent years someobservers have predicted the total demise of all new product development, arguing that it is a mug's

game, that far and away enough brands already exist, and that no sane company would consider anyform of brand development other than brand extension.How, then, should new brands be developed and successfully launched?It should first be emphasised that the number of truly new brands developed and launched bycompanies is really quite small. Just look at the new products section of any of the major marketingmagazines; you will find that most of the so-called new products or new brands are in fact newflavours or new product variants, old brands in new packaging formats, relaunched products orexisting products launched into new markets. Only a tiny minority will be truly new brands.New brand development is, therefore a somewhat unusual and rare activity - most people inmarketing will be involved in new brand development no more than a handful of times in their workingcareers.The first lesson in new brand development is to recognise that it is a risky and costly business, thatyou know very little about it, that your colleagues probably know little more than you do.The next and probably most important lesson is to ensure that your new brand has a point ofdifference. Consumers almost certainly have no real interest whatsoever in your new brand of paint orin your new savings plan; most probably they are more-or-less satisfied with their current brand so itis essential that you establish a meaningful point of difference which sets your brand apart from thosealready on the market, stimulates interest and encourages trial. Equally importantly, however, yournew, differentiated brand must be attractive and credible.In establishing a point of difference you by no means need to develop a brand which is eccentric oroutrageous. Rather, you have to develop a point of difference which is recognisable by consumers,desirable, credible and which can be properly communicated.

Developing a Point of Difference

Recognisable points of difference are those which manifest themselves to consumers. It is no good,therefore, basing a new brand of cola on an improved product formulation which sends the R&Ddepartment into ecstasies but which in blind taste testing the consumer cannot tell from the existingproduct.Desirable points of difference are those that they need or want. Consumers want improvedperformance, better value, greater convenience, new and improved services and neat solutions toobvious problems (e.g. fluoride toothpastes to fight tooth decay, new types of fabric softeners whichare easy to use, spray starches, etc.). Of all the desirable points of difference which you can build intoyour new product the most critical is "quality". The PIMS (profit impact of market strategy) programwas initiated in the United States in 1972 by the Strategic Planning Institute to try to determine howkey dimensions of strategy affect profitability and growth. It has since collected data from some 450corporations. One of the findings was that, "in the long run, the most important single factor affecting

a business unit's performance is the quality of its products and services relative to those ofcompetitors."Credible points of difference are those which not only seem desirable and credible to consumers butwhich are actually delivered to the consumer once the product is tried.Properly communicated points of difference are those where the brand name, packaging and,ultimately, the product and its promotion all combine to present, justify and reinforce a propositionwhich is differentiated, credible and appealing.


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Identifying New Brand Opportunities

How does one identify such paragons, the new brand with an appropriate and clearly identified pointof difference? One thing which is certain is that they do not emerge by some "eureka" process. Nor dothey emerge by scanning the marketing or trade press and hoping for inspiration. Indeed, new branddevelopment based on such a process is doomed to failure as many others will have read precisely the

same material as you and will have arrived at the same new brand idea as you at precisely the sametime.A survey conducted in 1982 by consultants Booz Allen & Hamilton suggested that successful newbrands are developed through an intimate knowledge of markets and market trends, and a clear,objective, no-nonsense understanding of internal company resources and capabilities.Indeed, according to Booz Allen, the essence of a successful strategy is that it must "link the newproduct process to company objectives and provide a focus for idea/concept generation."

Reasons for Brand Failure

Many new brands fail for readily understandable reasons: the product did not work, or a majorcompetitor cut prices so vigorously that it was not worthwhile for retailers to give the new brand a

trial, or the packaging was poor. Frequently, however, it is not possible confidently to identify thereason for failure: the brand appeared to be well contrived, properly priced, well packaged and itachieved national distribution. In such circumstances the most common reason for failure is quitesimply that the brand had no point of difference; it was merely a good facsimile of existing brandswith which the consumer was already happy, and it could offer the consumer no good reason toswitch.

Branding by Retailers

One of the paradoxes of new brand and product development over the last ten years in fast-movingconsumer goods sectors such as food and drink is that many of the most original and successfulinitiatives have been taken not by manufacturers but by retailers. This development will assume

increasing importance with the concentration of retail power in a smaller number of retail groups.Retailers normally eschew the more tedious and laborious process followed in the new branddevelopment area. Typically, a buyer in one of the major retailers will identify a potential new productor brand from one of many sources: customer demands, suggestions from other members of staff,proposals from suppliers, even dissatisfaction with existing branded products.Manufacturers often argue that the retailer is somehow in a "privileged" position and that such"fastfocus"new brand development is impossible for the manufacturer. While there is a measure of truthin this, in fact the retailer is simply following the well-informed, pragmatic, no-nonsense approachwhich manufacturers would do well also to follow. It seems clear, in many instances, that retailersknow and understand their markets and market sectors and the needs and motivations of theircustomers rather better than do manufacturers.In fact, manufacturers are often quite divorced from the real needs and motivations of the consumer;the data they receive provide information but not insights.Manufacturers, then, are advised to take a much more pragmatic, no-nonsense approach to newbrand development that is often the case at present. Frequently, inexperience in the new productdevelopment area coupled with a keen realisation that the process is risky and expensive leads to agross over-complication of the process and an intense focus on examining minutiae at the expense ofunderstanding the whole. Where then, is a fast-focus approach appropriate and where is it not?


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Brand Search

One area where no compromise should be made is in the area of understanding the market and theneeds of the consumer. This, however, goes way beyond merely analysing and understanding marketstatistics. An analyst working in the tyre industry, for example, may well be able to describe in detailthe market and industry trends, and may, therefore, be able to tell you that, in his or her opinion,your concept for a new brand of low profile 10" crossply tyre is quite stupid. It is unlikely, however,that his or her detailed knowledge of the market will provide any clear specification as to what exactlyyou should be doing. Moreover, any gaps in the market that have been discerned by the analystshould be approached with extreme caution as it is likely that analysts in competing companies havesimultaneously spotted the same gap.Sources of new brand ideas are many and wide-ranging. One source, though, which seems curious

Product and Brnd Mgmt

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