Chapter 7 : brand QUALITY/VALUE

The Balancing Process of Branding

In 1993, around the branded world, pricing earthquakes struck in such far flung marketing territories as Marlboro (USA), top department store brands (Japan), and brands newly exposed to competition from generic products (especially in grocery products in the UK and parts of Europe). Greedy brands were seen to be suffering setbacks; marketing organisations were shaken up.

The quality/value balance represented by a brand and its pricing policy needs to be carefully Chartered. Considerable subtleties are involved. What may seem to be a tactical pricing decision will often turn out to have cumulative repercussions. Two of the long-term reasons for branding - adding value and strategic advantage - are often talked of as organisational goals without any thought for the occasions when they become directly incompatible.

Branding's determining forms of marketing investment, like advertising, often pay their way by adding value rather than gaining new users. It can be far more effective to campaign on increasing loyalty of existing consumers and their willingness to pay a price premium than to increase sales volume by getting the brand to penetrate new consumers.

The real benefit of branding is often less in creating volume than in supporting the price that the purchaser is ready to pay. It may wrongly be taken for granted that the reason for marketing activities - advertising, for example - is to increase sales volume, which is a relic of the early and expansionist years of this century. In fact marketing is largely a process of adding values, both rational and emotional. The author is indebted to a referee who added a comment at this point: "I have lost count of the number of erroneous marketing decisions I have encountered due to the failure of many modellers of advertising effectiveness/awareness to fully appreciate this issue". Simon Broadbent, "Diversity in categories, brands and strategies", Journal of Brand Management vol 2.1, 1994.

However, year on year, if you keep on banking an extra premium from your loyal consumers, your cumulative exploits make you vulnerable to competitive attack. At some stage, either the increasing value of your market or the pricing amounts by which you can be undercut make you irresistible prey for new competition. Consumer price insensitivity often does not obey the response curves which standard econometrics models assume.

What lessons are there for Brand Charterers from 1993? Are there any lasting consequences? We are not privy to the following companies' detailed financial records, but the year's events do seem to indicate revealing patterns which relate pricing decisions to branding discontent.

Marlboro's price peak - 1993

For over 40 years, Marlboro's branded communications have campaigned on an essence which has been the making of the world's and America's favourite cigarette. It is difficult to imagine how any other communications imagery can directly challenge Marlboro Country.

For several years prior to 1993, Marlboro had led price rises in the USA among premium brands significantly above the industry's extra costs. In the process, an increasing price gap opened up for generic (ie virtually unadvertised) brands to exploit at a price sensitive end of market consumption. By 1993 generics, in volume terms, had risen from being a marginal force a few years previously to the leading dynamic of the marketplace (jumping from 28% to 36% volume share in just nine months). This meant that the generics sector was selling one and a half times more cigarettes than Marlboro itself and in terms of total consumer spend was coming close to that which Marlboro enjoyed (bolstered by its price premium of 50% or more over generics).

Technically, Marlboro's market share was just about holding its own. On a short-term view its most recent price rise may have profited the brand's performance in that year. But Marlboro was by now on the edge of a price premium precipice. The stage was set for what newspapers around the world would soon be reporting in excited tones like this extract from London's Sunday Times:

"On April 2, 1993, Philip Morris, the world's largest consumer-products group, took the biggest gamble of its life. It slashed the price in America of its top-selling cigarette, Marlboro, by 20% - 40 cents a pack."

Unlike other brand pricing earthquakes of 1993, Marlboro's was started on its own strategic terms and judged as correct by many in the pure world of competitive strategy. It was designed to cut generics down to size. The profit squeeze would hurt Philip Morris much less that its main US rival Reynolds. Because Reynolds had inherited a relatively frail financial structure from the days of junk bond management buyouts, it has been conjectured that Philip Morris's frequent price rises may have deliberately lulled Reynolds into a false sense of security of profits that premium pricing could muster. The strategic sting was then dramatically to introduce a deep price cut when it would hurt most.

Most things have turned out the way Philip Morris planned. The generics boom has been halted. Marlboro's leadership (in 1995) looks like being fully restored. But what Marlboro's owners could not have anticipated was the global news coverage associated with the spectre of - what accountants calculate as - the world's most valuable brand having to take a price cut. Accountancy-driven algorithms of brand valuation, were only popularised as recently as the late 1980s. As amplified in

Chapter 12, their frame of reference, as mathematical algorithms, is influenced by financial regulations and not by marketing foresight.The Financial Times observed:

At a time when corporate performance in many industries depends increasingly on attributes such as reputation and service, there is a genuine need for more precise methods to measure the value of intangibles. But the issues have so far been as much obscured as clarified by efforts to put a price on brands. These methods involve, at best, highly subjective judgements and amount, at worst, to a mechanistic checklist exercise. They offer very few verifiable insights into how and why that performance was achieved, and hence, whether it can be maintained. But in the real world, that is what really counts. Financial Times, 13 April 1993

In the year following the price cut, Philip Morris's stock lost about 20% of its value compared with a 5% gain by the Dow Jones market index. What has now become known as "Marlboro Friday" was taken as a signal for writing down many of the world's major branded companies. 'Life and death stories on brands' seemed to become an ongoing agenda among various influential financial columnists. As a final legacy, even as Marlboro was regaining strength in late 1994, Philip Morris's CEO (in charge of 1993) appears to have taken early retirement.

The lessons from Marlboro are symbolic, but not as generalisable as those from other pricing earthquakes of 1993. They show how widely big brands have become targets for global news coverage. Before accountants talked so publicly of valuing brands, and Marlboro's fame as the world's most valuable property right, Philip Morris' local strategic manoeuvre might have been flawless. Instead, the symbolism of "Marlboro Friday" has opened commentators' minds to the issue : where is brand leadership going right, and wrong?

UK packaged goods price peak - 1993

In the UK, mainstream grocery chains led by Sainsbury's and Tesco's (which each retail over one tenth of the nation's grocery products) have been building up their own brands for almost a decade. In the old days, when neighbouring supermarkets fought battles out on high streets, competing on the price of own labels was the primary concern. Then as a lot of consumer shopping moved to superstores at out of town sites, own label brands started playing a much more prominent role in confirming the quality of the lifestyle you buy into by making your (weekly) shopping trip to your favourite (brand of) supermarket. Many manufacturer brands were lulled into a false sense of pricing security at this time. They had continuously maintained their category leading brands at price differentials which appeared reasonable, typically 20%, when lined against supermarkets' own increasingly upmarket labels.

Partly in response to this sustained shift upmarket by retailer and manufacturer, foreign discount grocery formats began to target the UK (such as Germany's price-fighter Aldi and American-styled "Warehouse" clubs for consumers). Consequently, in 1993 the major supermarket chains suddenly changed course making a show that they were prepared to merchandise products down to generic price-saving levels, in addition to their (by now) premium own labels.

Britain's equivalent to Marlboro Friday arrived on November 3 1993. On "Sainsbury Wednesday", the supermarket group cut the prices of 300 lines, and David Sainsbury, chairman, predicted that branded product prices would "have to come down very significantly to compete". The Sunday Times, 3 April 1994

The pricing shock for some UK branded manufacturers was that they were pricing themselves at over double the price of the generic product. Some still do not seem to be able to reconcile how so much extra overhead has ended up in their branded cost chain. Was anyone in these companies keeping an eye on how much the cost of marketing and supplying their brands had become relative to the lowest cost supplier?

Our first pricing axiom for Charterers is that it is never safe to take your eye off the pricing ball. And the second is that this becomes a doubly vital priority once individual customer channels control a significant proportion of your market, say 10% or more.

At time of writing - two years on from Marlboro Friday - it looks as if Marlboro in the USA escaped with a blip on the Richter scale, compared with what may yet be happening to Coca-Cola in the UK in some supermarket channels for its product. And yet if Coca-Cola had a pricing fault it seems to have been more one of perceived arrogance than failure to add value. Recent advertising, eg "Always Coca-Cola" and globally directed visibility, have been as good as ever. Up to 1993, the added value of the whole soft drinks category in the UK had been consistently raised by Coca-Cola. How did the company fail to explain the logic of its policy to leading UK supermarkets? They profited from high added value in all soft drinks from the strong leadership which the Coca-Cola brand delivered. Now Britain is being swamped by a multitude of lower priced Cotts. These include own label lookalikes (eg Sainsbury's Classic which has taken the lion's share of colas through this channel); and "guest brand formats" (eg the three way production of Cott, signed as Virgin Cola, premiering as the cola of Tesco supermarkets). For more details on strategic interpretations of these manoeuvres, see Chapter 12 on Cott's intent to export retail programs from Canada and the United States to the added value chains of packaged goods globally and locally.

Our third pricing axiom is that Brand Charterers should never forget that added value strategy is not only about competition but whom to partner, and how partners may share your expectations from the added value chain.

The second part of this chapter will take a closer look at three basic drives which need to be balanced harmoniously for brand processes to keep on winning. These are:

·Top Value

·Top Quality

·World Class focus

Additionally, we will review why transactions labelled as "brand milking" need to be organised with care, unless it is intended that the brand process should keep on losing value.

Top Value

Through the 1980s, one of your authors was involved in managing and reporting over two hundred experiments involving brand launches, relaunches and extensions. Each experiment involved collecting a customised dataset for forecasting the brand's business potential. Our part of the bargain to clients was the competence to forecast their brand's business potential with a modal accuracy of +/-12%, provided they specified market access parameters, defined in terms of:

· awareness (% of consumers who would know their brand)

· distribution (% of consumers who would find the brand where they wanted to shop)

· market crowdedness, eg how many brands made up 80% of the market and how many brands were actively rotated in a typical consumer repertoire.

These two hundred experiments were personally managed in over fifteen countries and around 50 product or service categories. This was part of a larger corporate experience databank which through the 1980s comprised about 2000 in-market experiments, spanning 40 countries and several hundred market categories.

Our modelling approach involved simulating communications, purchasing and usage experiences of consumers. Simulation modules were structured to be comparable across experiments but were not based on normative measurements. This enabled us to take full account of the fact that brand leaders aim to break norms especially in extending or relaunching their franchises. However, as our experience bank of in-market experiments grew, it was naturally interesting to search them for benchmarks of consumer response. We detected a 25%-50% rule on pricing which is shown in Table 1.

Table 1 - Pricing : consumer response benchmarks ·Brand leaders can "perceptually justify" price premiums of up to 25% against other directly competing brands ·Brand leaders with a discernible product plus can "perceptually justify" price premiums of up to 50% against what are otherwise directly competing brands ·Higher premiums are "perceptually justifiable" only where the consumer's need served is actually a "different competitive marketplace"

There are some subtly interesting qualifications to note before applying these guidelines in practice. Before coming to these, two clarifications of terms are worth making:

·We view these as ballpark figures (ie within a few per cent). If your own personal operating heuristic is 30% or 20%, instead of 25%, that's fine. We are talking the same language.

·These guidelines seemed to be general consumer response patterns:

- over time (or at least the 1980s)

- across countries/markets, from developing ones to over-developed ones (reporting areas included India, Thailand, Indonesia, Japan, USA, Europe)

- over different periods of economic health and social mood, ie feel-good boom-times to depressing recessionary times

Subtle Qualifications on Pricing Perspectives

1) There may be many different "value" markets for the same branded product. Typically, these are defined by consumer need and its specific situation

For example, there are at least three different markets for soft drinks :

·Multi-packs to take home from the shopping trolley market (a competitive one in which our rule would apply)

·On-street consumption out of pack ( where we would expect a higher pricing base to apply than multi-packs - and also to suspend the rule at locations where there is little competition or the immediacy of thirst is great)

·Restaurant/bar consumption, where we would not advance any rule because the added value of the service environment dwarfs any value judgement of product value.

France, as home to one of the world's thriving markets for mineral waters, provides an interesting example of how price bases between the three soft drinks markets vary immensely. For decades, the price multiplier between the take home market and the "restaurant" market has been observable as almost any number from five in a cafe to ten or more in a restaurant. But it was only in the 1980s that French mineral water companies realised they could also open up the on-street market with a multiplier of about three to five through merchandising new small (0.3 to 0.5 litre) bottles competing directly against canned sodas. Indeed, to this day, in France's local parades of small food stores, which double-up for residents' take-home shopping and tourists' impulse purchasing, you can see two strangely different consumer behaviours going on in the same outlet. Some consumers are paying more for a smaller bottle of mineral water - though admittedly often out of a chilled cabinet - than others are paying for a bottle three times the size.

2) Brands may position products in very different quality/value submarkets by social occasion of use

For example, there are different segments of the take home ice cream markets whose prices bear no relationship to each other. A super-premium ice cream brand like Haagen-Dazs is not competing for the same end usage as an everyday block of ice cream for all the family. If in doubt ask consumers. Substitutable selections for Haagen-Dazs may be patisserie cakes, or other desserts fit for an adult dinner party.The ice cream block may be competing against jelly or tinned fruit for little Johnny.

3) If the top-priced market is a haute-couture fashion one, then all generalised pricing guidelines are cancelled

In the highest of fashion markets, snobby behaviour takes over with a vengeance. People are prepared to pay any price, indeed may want to pay any price, if this means they feel visibly superior to all but a self-elected elite. You may debate whether this is ordinary branding territory or whether it is more appropriate to have a different word for this. Kapferer explains the French do, in their notion of marketing the "griffe":

Table 2 : Beyond mass marketing - the world of the "griffe" In luxury markets, the French distinguish a special term of relationship, the so-called "griffes" or literally "claws". In reality, brands and griffes should be distinguished for the different grounds they cover. The very word says much more. Its meaning as a 'claw' suggests instinct and violence; something unpredictable, that leaps out and leaves its mark. In this sense, the griffe is the mark of an inspired and instinctive creator. The griffe also has the same root as 'graphic', and it refers back to the hand. Its reference model is handmade work and craftsmanship. Strategic Brand Management, Jean-Noel Kapferer

4) Balance of what may be "perceptually justifiable" makes pricing a fine art.

On one hand, it can be very risky for a brand to stretch its price premium to the upper limit of what is perceptually justifiable. Our evidence is that brand price elasticity seldom takes on the linear form which economic modelling assumes. Many brands have a critical pricing point up to which consumer response remains robust, but after which it falls over a precipice.

On the other hand, the brand leader which claims no price premium at all will often be underachieving in sales volume - let alone sales value, and profit. This happens because new or intermittent purchasers use price as a selection cue to the quality image of the brand. It also happens because loyal users like the reassurance that their brand is superior which a pricing premium, used in moderation, can give.

Towards a robust strategy for competing on value

A price that is "perceptually justifiable" in current competitive markets is only one aspect of branding a robust value strategy. Critical points to add to the picture of price decision-making include:

·Taking too high a price premium may encourage a new branded entrant to enter the market

·Taking too low a price premium may not enable you to invest in the future.

One newly urgent meaning of World Class competition is that being locally the lowest cost competitor may not now be enough. Are you low cost vis a vis scenarios of global competition, including new ones involving companies outside your traditional competitive set that may become intent on introducing discontinuities to the added value chain across a sphere of business? This is what Cott Corp is intent on doing in colas. Generic priced products can also suddenly emerge because of the branded supermarket's own need for competitive response to foreign retail entrants offering discount formats.

The Brand Charterer must be well informed on all scenarios involving attempts to revolutionise the added value chain. Some of the most important clues will emerge first from the other side of the world. Organisations will need to hone their networking antennae to collect this intelligence. Among serious attempts to destabilise branded added value chains, you should note two different types of outcome which condition what branding action must be taken. Distinguishing between revolutionaries who will make a long-term mark on the sphere of business, and those who will not.

Foreseeing fundamental discontinuities to added value chains

If you assess that the revolutionary will win, you must review your own core competences. Business survival may require you to reengineer value across the whole of the branded business. A partial response - eg cost cutting measures however painful - is unlikely to be enough. Like repeatedly fleeing an enemy in war, this can be the start of a vicious circle of self-destruction of your value contributing capabilities. For a live example, view the new competence configurations of brands like President's Choice and companies like Cott Corp in chapter 12, and then debate what the revolutionary consequences will be, for which traditionally branded manufacturers.

Managing the fallout from revolutionary failures

Some generic priced products will have a fairly short-life. Britain's leading branded supermarket chains would not be able to survive themselves - in the formats which their brands represent - if the public unanimously chose to shop generic. But this does not mean that brand leading manufacturers can afford complacency because:

·Some brand processes have managed to get 250% out of line with sustainable low cost, and many more are above our 50% benchmark for a sustainable value-based offer

·Even where brand manufacturers are operating processes of unbeatable quality and value, the visibility of generic price differentials of 250% can tar all brands with the same brush. In different ways, this makes end-consumers, retail customers, and opinion leaders like journalists take another look at who may be over-exploiting what in the added value chain.

·One likely scenario is that many retailers will continue over the long-term to make a show of generics in some categories, just as they make a show of premium own labelling value in other categories. To some extent, all brand manufacturers are now in battle with each other to convince retailers that their categories are genuinely ones where brands add the most value for all (ie retailers, consumers, and themselves). Branding grounds for this justification include continuous scope for innovation in a product category, or valuable closeness to the end-consumer in ways that only an unique brand essence can offer.

Top Quality

Quality and value are correlated perceptions. Unless your aim is to turn a market permanently into a commodity one, there will be a pricing point below which your brand starts to reduce its perceived value. Too a low a price cue conflicts perceptually with the credibility of the brand's claim to be a better or differentiated standard from other offers in the marketplace. A brand leader which cuts its reference price is liable to be perceived by consumers as reducing the quality of its ingredients or service even if it isn't. We have assisted several number 2 ranked brands - who have had advance notice that a leader is going to war on price - to counterposition with a stand on quality and take over market leadership.

Consumers, as humans, aspire to continuously better things. Some of the implications of this:

·If a core brand (ie one which you are not milking or otherwise disposing of) does need to cut its costs, it is usually advisable to do this in ways that are least visible to its most loyal fans. Working out how to do this is much easier if the Brand Charter is already in place, before you address the cost-cutting challenge.

·Global marketing may bring pressures to smarten up the added value of your brands (and cull those which do not afford the opportunity for this focus). Yet, in those local economies around the world, which are not keeping up as fast as your company globally wants to raise value, you are unlikely to win friends by introducing high added value lines too quickly alongside the brand's traditional offers. A strong global brand lets local consumers feel that they are making local improvements to a global institution. Conversely, a brand which presents itself as having better global things to offer, but ones which are going beyond local consumers' means, is exhibiting its own local weakness.

·A coherent global brand cannot afford to vary price across countries whilst presenting itself as precisely the same in all other respects . It can help a lot if the identity system of the brand architecture has established an international coding system which is credible in communicating a variety of quality and value offers. Alternatively, it can help to present a brand in an array of different product categories - including some where all products are relatively low ticket items. By this means, a premium branded fashion can still make itself available to every locality but sometimes in different product manifestations.

Quality perceptions and the global whisky brand When IDV was first taken over by Grand Metropolitan, I got permission to try to promote J & B within the group. I spent half an afternoon telling hundreds of executives from Watney's, Trumans, Mecca and Peter Dominic what a magnificent whisky it was. My persuasion worked and J & B promptly appeared in optics all over Britain. But then foreigners, used to the idea of J & B as a luxury premium brand, discovered it was just a commodity Scotch in its native Britain and the discovery was beginning to hurt sales in the rest of the world. So, a few years later I had the embarrassing job of telling my in-house customers that they would have to discourage buyers by upping the price and transforming it into the same premium brand as it was everywhere else in the world. People outside the drinks business may not appreciate what a serious mistake it was because I'd jeopardised J & B's image, and that's the only asset any drinks brand has - apart from its intrinsic quality - and even a whisky as good as J & B can be hurt if it becomes associated with cheapness. ... The story has a happy ending. J & B is still not a big seller here (in Britain), though an awful lot of people are prepared to pay a premium price for it, but it's the second biggest selling Scotch in the world, and its sales outside the United States have gone up eight times in the last 15 years to more than four million cases. And that's not bad for a Scotch which was virtually unknown until the 1950s, and which depended on the US for 90 per cent of its sales until the 1960s." George Bull - extract from "My Biggest Mistake", Independent on Sunday, 25 February 1990

Moving on from perceived quality to realisation of quality, there are some trends in World Class competition which need active tracking by managers and iterative foresight by directors:

·Increasingly, companies claim to be focusing their competences, and orienting new product development towards products and services which are strong enough to capture world markets. Some of this is hype, but it suggests world standard in some product categories will be lifted above what would make do when companies were organised to deliver local standard produce. The opportunities for leaders and the risks for laggards from this trend need to be foreseen. Brands as processes do need to be increasingly tied in to a focused and realistic assessment of a company's combination of core competences.

·World class quality is not derived by a director's wave of a magic wand. It will need more teamworking, more carefully integrated R&D, and dedicated stamina of all involved over longer incubation periods. Branded markets are going to be horribly visible places for exposing companies who turn out to be incapable of organising the pre-marketing brand processes now implied by development of world class products and services.

World Class

Six years ago we wrote the following.

The world's best products often depend on highly personalised commitment. Local products of excellence will always be prized, but in an era where the meanings of local and national boundaries will soon need to be questioned more honestly, World Class brands should have the confidence and the integrity to symbolise the best produce, services and experiences that transnational cooperatives have to offer. Good marketing involves facilitating offers that are as customised as technology and human endeavour can manage, while maintaining an economic balance which satisfies the customer and the company. Branding provides the power to identify a cause which unites people over time - with an appeal that acts as a centre of gravity - so that customers can benefit from economies of scale while enjoying a feeling of individual attention. Chris Macrae, World Class Brands

It is this world class philosophy which advances the brand's social role as ambassador of free world trade and competition. And motivates staff in a service company to "reach out for the stars". But we now have a new interpretation for those involved in scoping the essence of individual brands.

We believe that anchor points of top level brands will increasingly move away from products to a consumer bond of trust that - whatever the brand offers as products - it will deliver particular balances of quality and value which the brand's reputation has come to signify. This means that top level branding will be more corporate. The reassurance of quality/value capabilities will come from consumers sharing a feeling of particular combinations of competence served by specific companies. If the architecture of retailer brands already manifests this, why cannot manufacturers' brands? If the architecture of service brands already manifests this, why not manufacturers' brands? If the architecture of fashion brands does this, why not manufacturers' brands? Ultimately, as we argue through Chapters 11 to 14, the economic models for branding World Class Quality and Value must involve more communications resource weighted towards organisation-wide banner brand processes and less towards product sub-brands than was practised by the classic fast moving consumer goods manufacturers of the twentieth century. It is a shame if the quality of the structure of a company's communications channels does not live up to the quality of its products.

Understanding of the nuances of quality and value must pervade all perspectives of brand and business process if a company is:

·to compete to the maximum effectiveness of which it is capable

·to be consistently successful in cooperating with maximum long-term effectiveness with partners in the added value chain of the sphere of business.

Milking Brands

We should now be well positioned to conclude this chapter with a brainstorming exercise on "milking" a brand. By this we mean consciously or inadvertently taking profit out of a brand in a way which either damages brand equity (medium-term competitive standing in its markets) irreparably, or will cost more to restore the brand than has been gained from the milking episode. Here are some of the ways that brands get milked:

1) Allowing short-term sales tactics to run the marketing mix. Many companies have

- for a generation of marketers - fostered brand management cultures where people have been rewarded for actions like price cuts whose only purpose was to hurry up sales for a particular time period - "meeting the targets planned". This can easily become a vicious circle, with more and more pricing manoeuvres required to push sales along. For example, in the early eighties most American manufacturer brands spent the majority of their marketing mix on quality enhancing activities. By the late eighties, most of these mixes were spent on price promotions. From the consumer viewpoint, branded products of this sort increasingly become commodities - they end up with no differentiating qualities other than the price they sell at.

Wherever organisations are directed in this way, it comes as no surprise that brands get sick. One of the most damning indictments of short-termism in late twentieth century branding is embodied by the humble coupon which promises the targeted consumer money off for trying a brand. It is known that in many US product categories, the physical cost of sending out coupons exceeds the amount of money consumers redeem. In other words, consumers are ultimately paying for the brand's couponing as well as its increasing lack of quality differentiation.

You are bound to get interesting answers if you ask a brand manager : why are you couponing? One typical answer is : to penetrate new users for the brand. In the circumstances cited above, this suggests a brand with a strange mechanism for rewarding consumer loyalty. Probably, the most honest answer is because retailers like it. Catch 22 is that retail chains like this because they can see that coupons - over the long run - weaken manufacturer brands and strengthen own labels.

We are not claiming that coupons should never be used. But the dangers and temptations to deploy tactical weapons like these have become so great that it may be time to take a symbolic initiative. For example, requiring that the CEO signed off every couponing campaign would cut down this form of customer disloyalty marketing. In fact, in the summer of 1993, Procter & Gamble may have pioneered the way with a process which takes the seriousness of this kind of issue to heart.

Procter & Gamble has revamped its US marketing strategy, introducing a policy of "everyday value pricing". This involves cutting down on short-term deep-discount promotional deals, which periodically slash the cost of products to the retailer, and replacing them with a system of more consistent lower prices. However, the change has stirred up opposition among less efficient retailers, who have relied on deep-discount promotions for a substantial part of their profits. Typically, P&G is cutting the price of Tide and Cheer liquid detergents by as much as 15% with lesser reductions on some other brands. The Financial Times, 15 July 1993

2) Ironically, 1993 has shown that a form of milking may also be manifest by the reverse phenomenon of a strongly marketed brand mix ( eg Marlboro) but one which over time gets too greedy with the price premiums it accumulates. We have seen that a brand can get too greedy for its own good from the perspective of any or all of the people in its customer chain. In particular it may:

· go a price rise too far for its end-consumers

· be judged by retail customers as not sharing out enough of the added value it is winning

· invite in a new form of competitive brand process

3) Whether, a brand leader's price is in balance (or out of kilter), it is being milked whenever its organisation does not invest sufficiently in the brand's essence and inter-related competence building. This may include various kinds of evolutionary qualities such as innovation, customer service, renewing the vitality of the brand image.

4) Milking also occurs, by default, if the brand team fails to manage the brand's essence caringly. This can happen when previously loyal consumers are left behind by a sudden relaunch of essence which is insensitive to helping them interpret the relevance of the brand's new values (or, indeed, has become a totally different brand in all but name). When new people come to a brand team, especially at top levels of management, there can be a temptation to do something different like attacking a competitor's position. Whether this is done through superficial understanding of the brand (eg because the whole business team has changed and no Brand Charter handed over) or because of some sort of personal arrogance, consumer research has consistently demonstrated that this is a tragic waste of time and money.

Similarly, brand essence can be milked if it is stretched to represent new products in an uncaring way (see Chapter 1)

5) A brand is also being milked if nobody is responsible for foreseeing how to take advantage of future change. There are many ways in which the implications of World Class competitive quality and value now need to be tracked. These include:

·the relatively simple, eg tangible assessments such as : are we keeping in touch with World Class cost and quality of production?

·the fairly complex, eg will the scope of the brand's essence be broad enough to have critical mass in a world where competitors may be directing higher level banner/corporate brands, and media economies/effectiveness of the brand mix are changing fast

·the strategic scenario, eg what fundamental discontinuities to the added value chain are foreseeable? How do we take advantage of this, with which partners, and against which competitors?

When should a brand be milked?

Provided no harm will be done to a company's reputation, there are times when brand milking is appropriate. These include:

·Prior to killing off a brand or selling it (if the purchaser does not understand milking)

·Brands with tactical (as opposed to leadership) objectives. (Eg see leagues of branding in chapter 11)

Summary

A lot of pricing and quality decisions on brands have been made merely from tactical perspectives of junior brand managers, where they really needed corporate recognition as fundamental strategic components of the brand process. Training on the dangers of brand milking should be a pre-requisite for all who make or influence marketing decisions.

Strong brand leaders act as consumer reference points. They define quality and value standards. To be faithful to these, subtle decisions on balancing price and quality need to be taken from a consistently informed viewpoint. Price of the branded offer can be too low or too high. Competitive value and quality are :

1) correlated

2) perceptual as well as real in product terms

3) always include service elements as well as product elements

4) subject, within the same product category, to different consumer frames of reference such as the urgency of the need and the local competitiveness of channels reaching a specific need.

World Class Quality and Value are introducing new dynamics into marketing and business processes. These may effect entire strategic configurations - between competitors and partners - of the added value chain, across a sphere of business. Somebody with high level responsibility in the company will increasingly need to foresee and take a view on communications scenarios which must be turned to corporate advantage. These include:

·evolution of the quality and value capabilities invested in the company's brand architecture (Chapter 11)

·competitive, partner and organisational strategies (Chapter 12, 13)

Feedback from those managers closest to local customers and consumers will be an important part of the process of developing an informed top-level view of core brand processes. A new World Class realism may be needed in market-leading organisations. If branding is to be a core competence in competing for the future, the company's marketing savoir faire - regarding competitive quality and value - will need to be sovereign in the way its leaders think, act, and direct the company's service culture (Chapter 14) 

Chapter 8 - brand FLOW/TEAM NETWORKING

If a company wants to learn the most from the branding process, employees need to embrace teamworking.

A revolution in brand organisation Integration is the opposite of functionalism that has all too often stood in the way of serving consumers superbly. It was effective when high growth, unsophisticated consumer demands, and weak distribution channels meant that each function could make real progress by itself toward improved customer satisfaction and greater profitability. On its own, manufacturing could cut costs and boost quality; marketing could develop better ads; and sales could improve call patterns and enhance customer presentations. In most industries, however, the opportunities to make progress against such narrowly defined criteria have about run their course. Michael George et al "Reinventing the marketing organization", McKinsey Quarterly, December 1994

Beyond teamworking, it is also appropriate to foresee ways in which team networking can be facilitated so that employees from different offices or companies can work as partners in developing added value chains of business at global and local levels. How for example will partners of General Magic - including the likes of Apple, AT&T, Motorola, Philips and several Japanese companies - need to organise their network of employee relationships if inter-corporate vision and team leadership are to work to accelerate the delivery of customer delights? (For General Magic, added value focusing is about the future sphere of business involving new programming and hardware for personalised multimedia)

In order to be capable of learning and relearning everything about brand organisation, companies must realise from the outset that there is nothing wrong with accessing different learning frameworks. This applies for an overall process perspective of the business and for different conceptualisations of a specific process such as brand organisation. You get both "buy-in" and more expertise by synthesising different expert perspectives, provided the synthesis actually takes place and leaves all involved with harmonious feelings and clarified actions. This is how communications processes become more than the sum of their parts. This is how experts functions are organised to contribute to competent added value processes - those where leadership worth is represented as continuously being more than the sum of individual components. (Many of which will only be sustainable - in spite of any technological appearances to the contrary - if the architectural dynamics of employees' human motivations are purposeful and harmonious)

In this chapter on brand flow and team networking, the structure we have adopted is as follows:

·Issues to Respect and Foresee

·Initial guidelines on how to evolve a company's masterframework for learning brand organisation

·Structural Keys Embedded in Brand Chartering and similar tools for company learning

·Masterclass learning of brand organisation for winning at "glocal" marketing

Issues to Respect and Foresee

It is impossible to underestimate the depth and breadth of change management that can be needed to changeover from a classic departmentalised structure of brand management to the new teamworking process form of brand organisation. This statement is collaborated by companies in the midst of directing this change in Chapters 11-15.

At this stage we will briefly sketch the sorts of issues involved. Once people foresee the nature of the challenges which confront today's company:

·urgent practice of change is facilitated by envisaging the specific advantages which brand new organisations need to create and leverage

·exploring what characteristics of learning tool for brand organisation are most important for your specifically evolving circumstances is a critical factor for success of the mission. We aim to clarify the extent to which purposeful and focused teamworking dynamics of internal brand marketing can be translated into the heart and the soul of the brand organisation

In 1995 it was quite normal to read of this marketing state of affairs.

At the last industry conference, of the senior marketers attending and responsible for the brands, only one in ten believed that their dedicated distributors could feed back their desired set of brand values. And less than two in ten claimed that an internal staff audience (comprising eg product planners, designers and engineers involved in formulating new products) would be able to feed back their desired set of brand values spontaneously. Tim Greenhill quoted from his article on the future of the brand, ADMAP March 1995

The particular industry referred to was automotives, but it could of been almost any we know. Try this acid test now. Pick up the first book you can find on new product development process. How clearly does it convey to you that every new product development process should be tailored to reflect the essence of the brand it is due to fit? What sort of future shock are 1990s manufacturing companies in for who:

·on the one hand claim that brands as their channels to consumers are their biggest investments?

·on the other hand have no internally acknowledged brand-specific new product development process? ( A brand-specific npd process can be much more than the product category specific npd process which most companies organise)

In our experience, a similar lack of focus in "internal brand marketing knowhow" often abounds through a wide variety of departments - from raw materials sourcing to specific adaptations of market research - which might be expected to add special values to particular brands.

Historically, the situation has not been a lot better in service industries. We remind you of quotations from BBC interviewees which appeared in our introductory Forethoughts (Table 3 - "Leading the organisation beyond brand management"). Example - the following insight from an American Express marketer:

The main theme of our recent reorganisation was focus. We've set up key dimensions in our marketing team, eg one is customer loyalty, another is new customer marketing. We want our marketing process to operate along the line of key customer processes rather than specific functions. The customer used to start at point A and move through several departments. In other words, the customer moves through horizontally whereas we were organised vertically. We have had to relearn marketing. We are not yet there a hundred per cent, but it's been a real revolution for us thinking about how you walk through with the customer in every process. Extract from American Express interviewee BBC for Business video "Branding - The Marketing Advantage"

We remind you also that 1994 was the year when Unilever, quoting its Chairmen in italics, had our biggest marketing setback. This process weakness - dubbed "A Soap Opera from Unilever" by The Economist - was explained as being due to interdepartmental misunderstandings such as that of a slip somewhere between R&D and marketing.

As the added value chains of many businesses go worldwide, we should foresee that competitors in some of the largest twentieth century industries will embark on World War 3. This time the infantry - and casualties - will be brands instead of nations. But it will also be people whose jobs depend on organisations earning the right to brand. In this mother of all branded wars, competitors will exploit any suggestion of a rival's product defect even where these are perceptual in terms of:

- the all-but trifling fault of Persil/Omo Power mark 2 (which the UK Consumer Association felt was still abnormal in its fabric rotting potential though significantly less of a rotter than launch mark 1)

- the product whose imperfection will only be experienced one in several billion times like the Intel chip which had to be withdrawn after an expert lobby on the Internet revealed this issue

- the perfect new product but one which does not match the brands' loyal users emotional expectations in the light of their brand's history

You may make a list of other things that you want to foresee in brand new organisation. For example, world winning new products will often involve longer R&D processes than companies have previously had experience of managing. Who is going to ensure the branded continuity? Remember that in a classical brand management company, a ten year R&D process could be in marketing contact with five eras of brand manager as they rotate two-year tours of duty in the management of the company's hundreds of different brands and separately targeted market segments.

In our view, the belief system "integrated brand marketing begins internally" has got to be made a priority in effecting the changeover to new forms of brand organisation. Strongly led companies will describe old marketing's follies pointing out analogies from other companies' disasters. They will make it clear to their employees that this is no person's fault, but that of an old organisation form "which no longer suits the company we need to be". The quotation is a phrase Procter & Gamble's CEO of the mid 1980s used when the company first started to embrace the business team belief system. Surprisingly few competitors took notice of this at the time.

Here are some suggestions you might consider when first embarking on brand new organisation.

·Prepare ahead. Scout externally for various practical perspectives on matters such as: - Opening tactics : eg whom to use as opinion leaders in evolving the new brand organisation? - What cultural or other corporate beliefs will need to be turned upside down in recognition of the revolutionary process involved? Was the full extent of these needs-for-change foreseen or does this just have to be learnt by doing? ("Scouting" may involve benchmarking some companies who are ahead in brand organisation transformation. We suggest doing this with non-competitors and ideally those with whom you can reciprocate through some other valuable process/knowhow coaching) ·How will performance measures and incentives need to be changed to have a proactive influence on learning to be world class as a brand organisation? ·Think through "ultimate responsibility" scenarios. Eg on a corporate marketing setback scenario - when action must be fast and totally aligned to preserve goodwill's "kingpiece" corporate reputation - who do you want to lead what? How will process training be used to ensure that no gap exists between theory and practice of responsibilities at team and individual levels? ·Consider transitionary roles in the forms of managers of specific marketing/customer processes. These can help marketing people to re-learn first - this is vital if they are subsequently to act as expert coaches in networking internal marketing learning across the brand organisation. ·Architects at the top of the company must separate out changeover practices which may be threatening to people's jobs to those which are growth opportunities. If cutting jobs is inevitable, this not only needs to be handled with all the care and attention that the company has used in parallel circumstances, but it should be separated in time and process from: ·fostering teamworking beliefs ·introducing a learning tool for brand organisation The successful introduction of these two processes requires building the maximum of motivation and openness among employees. Beyond anything your company has ever seen before.

Marketing people should be given the first chance to join the brand process revolution. The ironical after-effect of a generation of short-termism in corporate management, which probably peaked with "Barbarians at the Gate" of companies like RJ Reynolds, is that many marketers may need to be given the empowerment opportunity of re-learning what the craft of marketing foresight is about. Before marketing processes can be coached across an organisation-wide network, we need to coach the coaches. Writing in the mid 1990s we would suggest that you do not look up to anyone as a brand process guru who is not prepared to admit that he or she is re-learning too.

"There is a systemic failure in marketing culture and companies' organisations says market research consultant David Cowan. Too often, he claims, marketers' pseudo-explanations which satisfy our curiosity but actually explain very little if anything at all - crowd out real analysis. Marketers tend to see problems in terms of strengths and weaknesses of individuals. They tend not to give enough weight to the corporate structures and processes that create and mould peoples' behaviours and attitudes. Sentiments like "if only our agency was more creative", "if only our researchers had better insight", "if only the client thought more strategically" are mere platitudes masquerading as explanations: by definition, they are always true. The real challenge is to understand the underlying conditions that stifle or encourage the human qualities we want. Why, for instance, do companies consistently fail to see the threats and opportunities that are thrown up by emerging technologies and new products?" Alan Mitchell, Marketing Week, 21 April 1995

Initial guidelines on how to evolve a company's masterframework for learning brand organisation

If company learning is to begin to take place in process mode, different departments and expert functions should be encouraged to bring their different frames of reference to the teamworking table. Departments do need to explain these opening frames before these can be edited to differentiate what's truly functional expertise and what needs to be interconnected process-style competence.

Whether or not other departments need to be transformed out of separate existence and into networking form, we believe that marketing should be encouraged to lead by example. It should transform itself out of being a department and across the organisational network in the confidence that it will need to act as a vital school of added value thinking.

The higher level motivation for marketing disciples should be that the company needs an intangible-led communications process to leverage it's most valuable dynamic assets in the form of brands interconnected to core competences interconnected to any other learning resources of the organisation associated with leadership ( eg customer service culture, deadlines prioritised by foresight schools of the future etc). The strong marketers of today and tomorrow - ie those who recognise that the chance to recreate an internal marketing culture aligned to medium-term leadership foresight - will jump at this promotional opportunity.

If consensus between the company's CEO, senior marketers and interdepartmental opinion leaders suggests that you already have a strong "master-learning" tool for brand organisation, we suggest you give it a light editing by comparing it with this Brand Chartering handbook and incorporating any newly valuable ideas that occur through making this deliberation.

If your consensus is that the company needs to develop a master-learning tool for brand organisation, we suggest that one or more teams should be set up to compare the Brand Chartering framework in this handbook with another learning framework chosen from brand marketing, customer service, strategy, learning organisation or other perspective on focused accumulation of intangible advantages. If, for example, a strategy-oriented comparison was to be made, we would recommend "Competing for the Future from Hamel and Prahalad". If, for example, a comparison was to be made with up-to-date "brand change" agendas requested by practitioners and researched by academics then we would recommend the latest available knowhow forum originating from the BBC video "Branding - The Marketing Advantage". (The video is continuously being supplemented by follow-up notes amongst Internet group discussions and other knowledge exchange materials whose learning paths stem from the source stimulation of the BBC.)

Typical practitioner-directed scoping of top 8 "brand change" Agendas -> UK Business Schools 1995
brand ARCHITECTURE	·Brand partnership strategy : new rules for externalising and internalising; ·exploiting reputation, top level values etc of banner brands; culling or refocusing brand equity in an "overbranded" company
brand ORGANISING	·Use of Chartering or equivalent scripts for teamworking; integration of strategy frames for leveraging brand and other intangibles (eg competences); CEO lead-responsibility for brand organisation
brand EQUITY	·How to prioritise marketing advantages invested in brand system; how to align measurement and performance time frames; how to rehearse scenarios of discontinuity threats to brand equity
GLOBAL branding	·Balancing HQ and local roles and information leads; how beat locally targeted brands; how model of external and internal priorities differs from local era branding
WORLD CLASS culture	·World number 1 culture - how to sustain and how not to lose; stakeholder priorities as global citizen; specific clarification of right to lead (eg visionary capabilities); manoeuvring corporate environment - eg abolishing over-accounting
"GLOCAL" added value WARFARE	·Market-partnership networks configured to glocally overthrow classic added value chains; principles of "holonic" organisations (beyond process reengineering)
SEEDED marketing CHANNELS	·New brand targeting of opinion leaders before mass marketing consumers; global and local transfer tactics of haute couture goodwill;co-developing new channels
SERVICE SMART integration	·Consumer relationships smarts : eg lifetime focus, two-way feedback loops; employees delight (through super-motivation mechanisms)
Source: adapted from BBC for Business Video Professorial Exchange, MEG 95 - Management Centre, University of Bradford

The agendas tabulated above are made in "junction-style" to help clarify both the focus and the interconnections between these critical brand change agendas. In this way academic researchers can synergetically co-partner each other through electronic media such at the Internet. And practitioners can gain from a dynamic curriculum which intentionally stresses:

·breadth ie interconnections across brand change agendas

·depth ie full exploration of the agenda within its terms of reference.

We reiterate advice from the Forethoughts chapter that the generic form of Brand Chartering presented in this book also requires a degree of general editing to maximise its relevance as a master-learning tool for in-situ use of your brand organisation. By in-situ use, we have in mind factors such as:

·how departmentalised your current organisational structure is

·who leverages added value the most, and from what expert perspective or leadership competence

·brand architecture specific issues (see chapter 11)

Additionally, it is worthwhile asking the simple but sometimes revealing question : what "user-friendly" factors make learning frameworks look different either in form or substance? Examples are:

·Devised for an educational purpose with a particular user format ( eg book, word-of-mouth, computerised "windows" involve users in different kinds of educational flows)

·Devised for practitioners and the common reference set of knowhow which they already communicate from

·Starts from a particular lead perspective driven by eg strategist, service-focused expert

·Degree of designed-in flexibility - where a learning system needs to be highly flexible for brand organisation itself to evolve through an era of rapid change, to a more rigid system where certain conventional-structured rules are built-in because these are assumed to be constant (best practice) beliefs

·Vocabulary - is this in itself slanted? Eg targeting, segmenting, Unique Selling Propositions as self-proclaimed "strengths" tend to restrict debate and are anchored to a particular era of marketing assumptions. Mass marketing of the twentieth century has already passed through two great eras of brand organisational being : broadly 1) pre-tv and local, 2) tv and multinational. These are not the future of the brand organisation in the multimedia and glocal world which is now forming in competitors near you. If a tool is to encourage learning and teamworking, vocabulary and internal "learning" media must be recognised as more than an incidental part of people's thinking processes.

In the process of comparing a pair of learning tools for their brand organisational capabilities, you might also want to consider issues like:

·Does structure enable sufficient breadth and depth to edit everything into the team's living script of the brand?

·How do component terms of the structure appear to influence people's thinking. Eg the way terms are clustered often causes people to envisage particular interconnections of the brand process more easily than others which may be even more critically inter-related

·What terms are ultimately common to both learning systems? Which of the unique ones do you need to add? How do you tidy up conceptual vocabulary to be accessible to all teamworkers? What examples/training are needed to induce what level of comprehension of how to use the system? How do you balance ease of use needs of teamworkers with prioritised in-depth qualities which the brand's living script needs? What output qualities of the process matter to you : focus, consensus, comprehensiveness, creativeness, urgency of motivation to action?

Structural keys embedded in Brand Chartering and similar tools for company learning

Key 1) We believe that the form of a learning tool can benefit from incorporating a "window and junction" structure

Increasingly teamworking learning systems will be computerised. This suggests that a window-menu structure is vital to allow correspondents to explore the breadth and depth of the brand. Computerised media should allow them to zoom in and out of the windows. By emphasising that the windows should also be thought of as the primary process junctions of brand organisation, people can quickly assimilate the idea that any one junction of thinking could and should lead to the interactive implications of another.

Key 2) We believe that each window - apart from those in Key 3 - should stand out for one big topic of enquiry as well as a detailed procedure for holding the specific enquiry. In this way it is possible to use the learning tool both for breadth and depth of debates.

For example of breadth of debates, overview learning can be gained by debating where branding mistakes originated (eg the blackspotting technique discussed in the Forethoughts). Conversely, brand process success stories can be analysed and debated at an overview level. Learning can be facilitated by asking individuals to do these sorts of exercises separately before swapping notes. Organisational learning across brands and over time can be gained by spotting patterns of mistakes that recur (and then finding out why) or looking to transfer one brand's junction success to other analogous brands.

For depth of debates, workshops for convening a debate on the topic can be scripted. In Chartering's case, illustrations of these are provided in ThinkPiece 2. The author, co-workers and others also find the junction format convenient for indexing purposes - eg what business schools are pioneering which research agendas related to Chartering's junctions.

Key 3) One or more "Others" windows are necessary. This enables people to interconnect your "master-learning" tool with frames of reference in other peoples' minds whether these are specific to brand organisation or in their view inter-related from some other expert perspective. Additionally, with any particular brand process, there are always likely to be a small number of special issues that no general purpose scripting tool can cover. In any learning tool, it's important to leave the "what else?" mechanism of inquiry open.

Key 4) By requiring that people converge on a one-page output for a brand's script at any point of time, you know the common reference point from which all teamworkers start from in interpreting the brand. This can also be used as a mechanism for getting the involvement of all departments because they know that they must participate both in bidding up and buying into the signed off priorities that are communally expressed as the brand organisation's current living script.

Key 5) By following a semi-structured layout to all of it's Charters, a company can make it easy for employees to learn about as many brands as they need, as well as actions expected from them in support of the brand. For example, an impactful layout appropriate for conveying the dynamic qualities of strong brand leadership is as follows:

·the top of the page itemises the brand's essential components in a relatively constant way. These also include the brand's linkages and priorities within the company's total brand architecture

·the bottom of the page lists the brand's "do now" deadlines for accelerating future added value

·the middle can be used to list outstanding questionmarks : eg feedback projects currently under way to illuminate deeper understanding of the brand or to review the impact of a current competitor's initiative. It can also be used to record change trends etc that are fundamental to the brand but where deliberative as opposed to immediate action is required.

Key 6) we believe a similar set of keys are appropriate for Chartering any of the company's other core investments in intangible sources of advantage - eg core competences (discussed in Chapter 12 and Thinkpiece XXX). Moreover, we believe that every "core intangible" is also an "information highroad" for company learning. CEOs and other people at the top of a company need to take the lead in showing business teams how to work these new "information highroads" in the context of company learning, over and above the traditional ways in which particular intangibles have been viewed functionally by departments of the company. We will amplify the meaning of this sixth key in the next section.

·Masterclass learning of brand organisation for winning at "glocal" marketing

There is an easy part and a difficult part to relearning brand organisation, and this has to start with the CEO and top people in the company before it can cascade down to business teams.

In our work with major multinationals, we cannot remember having met any senior executive who has not subscribed to a strong marketing belief system. For an example of such a system of thinking, Table 1 reproduces extracts from one developed by Cranfield School of Management's Centre for Advanced Research in Marketing.

Developing a strong market orientation 1 Start at the top. Strong leadership and commitment to customer focus at the top of an organisation is indispensable. 2 Involve everyone in the organisation in the marketing philosophy. The message has to cascade down so that everyone knows that serving the customer is ultimate raison d'etre. 3 Be prepared for structural change. Lasting step changes in customer service levels cannot be achieved wherever an organisation is structured along lines that benefit the company not the customer. Proactivity is needed to foresee how changes in the external environment are leveraged by leading the way with internal processes. 4 Use new structure to feed upwards into customer-facing strategy. The information on which strategic planning is based should come from customer-facing units. 5 Review marketing tactics, particularly the alignment of the 4P's with customer strategy. Keep looking at the 4P's (Products, Price, Promotion, Place) from the customers' point of view remembering to look ahead so that customers see you as the leader even as their perceptions are influenced by global and local trends in media and added value frames of reference. 6 Accept that change is a way of life. Involve all employees in "editing the future" and learning activities, eg competitive information detection, which produce an informed consensus and purposeful focus. 7 Understand the difference between quality systems and quality products or services. Make sure that people understand that systems exist to serve the needs of the customer. Recognise that every product has a perceptual context because all acts of consumption involve human emotions. 8 Focus on the customer, not the competition. Both matter, but leadership essence comes from focus on the first 9 Look at end-to-end processes, not piecemeal processes. The customer should experience seamless service 10 Keep the end user in sight. Immediate customers matter but losing sight of the end user is a symptom which can quickly lead to terminal illness 11 Develop and empower people down the organisation; particularly those who have customer contact. Ultimately customers experience brands as services whose power to consistently delight depends on the organisation's people12 Understand the relationship between customer focus and profit. Monitor a suitable combination of measurements for a well chosen selection of time horizons and tailored to appraise the specific purpose of the marketing approach and gauge levels of successful achievement

The above agenda is quite an intricate one - especially for a student of marketing or teamworkers for whom marketing is an "away" discipline to be interconnected with their own "home" functional expertise. However, for people at the top of marketing companies, a lifetime's experience makes this kind of frame of reference very intuitive indeed. So what is their own most difficult barrier to re-learning brand organisation?

Like the rest of us, senior management's barriers to learning brand new organisation do vary, but the following over-simplified illustration nonetheless typifies the biggest change barrier for people at the top of multinational consumer goods companies.

Until quite recently the CEO of a company with traditional brand management systems was led to view key control responsibilities along these lines:

(say) 20 core operating countries - control by liaising with 20 strong country managers

(say) 1000 products - control by clustering into (say) 10 product streams with their managers

(say) 100 brands - leave to junior brand managers to report in to various levels of management, depending on market size, but not to the CEO

Then an inconvenient realisation grew throughout the 1980s. Leading brands were no longer just consumer propositions but the company's primary communications channels. Moreover, it was posited that these brands had become the company's most valuable assets because they were the first reference points in consumers' minds in crowded markets being joined by a glut of equally able competitors (including many whose business was becoming more international than conventional marketing segmentations had recognised).

Imagine being a CEO in this situation. If you take all of the above seriously, you are likely to start a major re-organisation so that the customer management of your main brand equities is reassigned to more senior people. This requires a lot of effort and dotted lines coordination between managers of country, product and brand become quite complex.

While people get to grips with this, some mistakes are quite likely to happen, but in your view a stronger organisation makes all of this worth doing.

You have just asked everyone in the company's headquarters and local offices worldwide to learn this new complex matrix of responsibilities, and then somebody has the nerve to come along and say "hum - that's only a small part of the job that needs to be done to relearn brand organisation". Imagine the pain of it all.

Well, as neither author nor co-workers are CEOs of such a company, we cannot do that. As carriers of the "hum" message we can however tell you what happens next. Quite often we get shot at - but that's a way of life for a messenger - and we do try to empathise with the shock we have brought. On other occasions, we get asked for a view of what to do next. So here goes.

Everything henceforth stems from recognising that the brand process is not just about consumer proposition or your communications channels to external customers. Some

of the brands you select must be much more. These high level brands must be what everybody in the company organises around to input:

·all their added value talents,

·daily service perspiration,

·and other kinds of communal learning.

As a direct result, top level banner brands can then be leveraged as reflections of corporate core competences, your leadership visions and everything else that your corporate reputation stands for. This can include planning who you will partner as well as who you will compete against. This also involves what societies your company as a global neighbour most impacts environmentally and economically.

Seen from this viewpoint, top level brand scripts must be, at least lightly, edited by the CEO. Even if you have never projected the company as a consumer brand, your reputation is out there globally and locally, in a way that one severe organisational crisis could destroy more tangibly than a meteorite falling on your corporate HQ. That's a fundamental corporate moral of living in our era of global village media and corresponding competitive communications.

Real brand organisation learning will need the dedication and curiosity of everyone in the company. But the following preparations need to be made by the CEO or those who share with him/her an organisation-wide remit.

Pilot an internal communications system until the CEO has at least top level editorial control over the whole brand architecture. Do this by first finding a format which works for 1) your corporate reputation and 2) a few of your most important brands. Put special teams on this to script the details but in a way that the CEO can quickly read and "edit the future" for:

·opportunity and risk to corporate goodwill

·alignment of direction with that of inter-related investments such as the company's core competences

We believe that the system you will need will be similar to Brand Chartering at least to the extent that it integrates the six keys mentioned earlier and embodies the process philosophy of integratedly editing the future into a topline script.

If developing such a system sounds like involving the CEO in a lot of extra work merely to avoid excess risk, then think of it another way. Now you have your brand organisational learning tool in place, the CEO can prioritise "do now" goals for teamworkers who everywhere impact the brand. For the first time the CEO and the company share an internal media in which strategic intent and implementation coalesce; organisational evolution to leverage change and the proactive detection of external information that leaders need is integrated in one and the same process. And you will discover many other integrated strengths that come from a communal direct line of communication from top to bottom of the company focused on its most dynamically valuable asset - the brand.

Ultimately, "Brand Chartering" - as an organisation-wide learning tool - works to ensure leadership, control and communal feedback all in one up-to-date exchange of employee knowhow.

Furthermore whilst this chapter has been concerned to show how business teams can learn to brand all intangible (learning) assets as more than their parts, opportunities to integrate tangible assets into the corporate foresight are also worth seizing. For example the following advice is included as part of a case study in the video course materials for Globalisation by Kenichi Ohmae.

World Class Operations In this context, the approach to facility location is a response to the projection of future conditions, not current competitive issues and resource prices. It is made by a CEO focusing on marketing, product and operational issues, not by a manufacturing executive concentrating on direct labor rates. The decision is based on the capabilities that conditions in the new location could help the company to build not on the conditions themselves. The goal of this strategic approach to facility location is to build a network of capabilities, rather than just a network of facilities. This network is specifically designed to support the company's business and market strategies on a continuing basis. It is structured as much for what it can "teach" the firm as to take advantage of external location resources. It is dynamic and maintained as an ongoing element in a company's strategic plan.World Class Operations - Building competitive advantage though a global network of capabilities, Andrew Bartmess and Keith Cerny, California Management Review

Summary

Brand Flow/Team Networking is currently one of the most exciting aspects of the practice of Brand Chartering. There are two big "Buts".

But 1: Team Networking does not happen in a sustainable way unless organisation is newly structured to facilitate it. Ditto for winning at brand organisation. It makes sense to harness both of these initiatives at one and the same time together with anything else the CEO wants to put on the architectural agenda of becoming a learning company. We have discussed the importance of preparing learning tools:

· on brand organisation

· on other knowhow (intangible) "dynamic" assets which need to accumulated and leveraged over time

These then need to be integrated into the working practice of everybody in the organisation top-down, bottom-up and side to side. Key principles for implementing this have been summarised. The CEO must take the lead in developing an "edit the future culture" and we have suggested an approach. Something like this is urgent because the main window of opportunity for brand organisations to define "glocal" added value chains will not extend far into the new millennium. We advise CEO's to adopt Nike's slogan now : "just do it".

But 2 : We still have a lot of work to do within the covers of this book on Brand Chartering. We need to dig deeper into ideas on how to bring internal communications architecture to the company ( eg Chapters 11 to 15) as well as external marketing communications prowess ( eg Chapters 1 to 7, 9). We need to refresh creativity as well as pride in leadership, and this needs to be instilled into every employee who serves a brand. We also need to train people to catalogue potential changes to conventional wisdoms of old brand management. Where is there most danger of well-intended operating guidelines becoming destructive inertias in the context of the brand learning company? A good starting place is to champion every way in which top level brands do much more "connecting up" than targeting. It should be anticipated that this will turn some executional rules of the brand's marketing brief upside down, as we will see in the next chapter. 

Chapter 9 : brand UMBRELLA CONNECTIONS

Every manager wants to meet performance goals set by the company (s)he works for. Moreover, every manager wants to be seen by peers, bosses and subordinates to be doing the right thing. But, do those who organise the roles and responsibilities of brand managers take account of these basic human motivations? Who helps whom when it is time to implement new practices across the whole organisational process of branding? We will keep on asking these questions in the remainder of this book.

The threat of overbranding By overbranding I mean that until a few years ago, particularly if you were an fmcg company - foods, toiletries things like that - the way to develop markets was within country and within product category. So you had a different brand in each country and product category and that was the level at which brands were operated. But now business competition is going truly international; most brands have become so fragmented that they really do not have any share of voice in the global public's minds; so the result is that having hundreds and hundreds of separate brand channels actually puts the company at disadvantage. The real key is the legacy and history of how brands have been managed in the 1970s and 1980s. Many companies are now saddled in the 1990s with huge portfolios of small minority brands which do not justify themselves and are not supportable economically in the current communications environment nor on any future competitive scenarios. Extracts from BBC for Business video "Branding - The Marketing Advantage"

In the previous chapter we suggested that winning brand organisations will pioneer internal teamworking cultures so that brand processes flow reassuringly as smart service relationships with consumers and customers. The revolutionary topic of this chapter is at once more simple and more complex. Most of the literature and inherited conventional wisdom from the era of classic brand management used a vocabulary of marketing that was all about targeting at and propositioning to consumers. A proper frame for thinking about powerful umbrella branding turns many conventional rules of thumb outside in. Out goes the selling proposition, in comes sustainable marketing of a leader's purpose. Instead of being conditioned to respond like targets, a different world of consumer interpretations evolves with perceptions of all the valuable "connections" which a smart brand relationship cultivates.

Strong umbrella brands need to embody top level values like delightful service process, world-leading competence and trust guaranteed by the corporate reputation. This poses extraordinary challenges for those companies which need to changeover from a history of investing in product-based brand equity to higher level equity platforms for brand organisation.

Structurally this chapter begins with a short history of what mental baggage marketing people no longer need to carry. Then we start to catalogue how umbrella brand campaigns help consumers to make connections with smart relationships of a longer, deeper and broader sort than a locally presented product brand.

Beyond positioning Unfortunately, we now have to recognise an episode in marketing history where many marketing and advertising people have set to sea - like the owl and the pussy cat of Edward Lear - in a beautiful pea green boat. One which is now sailing into history and must therefore be quickly jettisoned by those who want to enjoy the future of brand organisation. Most of the terms of reference for brand positioning trace back to the seventies when Americans Trout and Ries (T&R) popularised a theory of positioning consumers' minds that was anchored almost exclusively in the brand's first power base of 'value'. Their schooling emphasised that effective product positionings required a different brand for every product. Moreover, T&R castigated the mere thought of umbrella branding across product or national territories (of consumers' minds) as a corporate sickness. In effect, T&R positioned positioning to delight managers of the short-term. I first started researching umbrella brands seriously ten years ago. The Japanese office of a leading fmcg multinational had not been making any headway with product brands and was prepared to tear up T&R's approach to positioning. In Japanese markets, product sub-brands were the lowest form of brand with Japanese consumers wanting to know what quality of corporate guarantee was on the line whenever they chose a product. In positioning umbrella brands in consumers minds', we started to discover that in addition to the product positionings of T&R, it was necessary to invest in an inventory of identities (enabling consumers to recall, wear and recognise the umbrella brand in as many ways as possible - see Chapter 2) and an integrating brand essence (which works as an emotional platform, service vision or corporate guarantee connecting up a wide range of products - see chapter 1). In the nineties, one of the biggest problems facing international consumer goods companies is the ownership of too many fragmented product brands whose marketing budgets just do not have minimum critical mass. You might have thought that the positioning school of T&R would already be defunct. Yet recently, while working for the same multinational but a different national office, their advertising agency's local account executive made a cautionary presentation on the dangers of line extending drawing totally on the T&R syllabus. Moreover, I have become accustomed to the sad fact that the T&R gospel of the more brands the better has often suited marketing clients (eg the more brand managers the better) and their agencies (because umbrella branding can expose how poorly many agencies cater for the vital branding need of integrated communications - eg identities created by packaging design and advertising should always be a unifying source of a brand's impact).Chris Macrae, personal diary entry, 1994

From an umbrella frame of reference, which all brand organisations now need to keep thinking about, we suggest retaining what you wish from the classic T&R school of positioning as a framework for sub-branding. Product sub-brands will always have impact in those contexts where the name of the game is to position consumer minds within product categories or segments thereof. But each of these is by definition a highly fragmented channel of communication whose scale as a marketing platform is no longer a brand strategy in itself except possibly in very big product categories. And consumers who become used to umbrella brands are smart enough to perceive their values play at higher levels. Consequently, many consumers have leaped ahead of marketers in looking down on brand values conceived only in product positioning terms.

Brand Architecture works by linking up high and low levels of branding. High level brands play by new rules as banners reflecting corporate leadership. If you need a slogan to popularise this, try out that of Haim Oren of Israeli ad agency Kesher-Barel : "there is Positioning if you want product sub-brands, and there is now Compositioning for Company brands - integrated messages for organisations whose intent is to lead added value across a sphere of business."

Brand Architectural knowhow requires new explorations of marketing thinking in two ways which we need to learn as rapidly as possible:

·what new rules of the game do umbrella brands play by to communicate connecting messages? - a topic for the remainder of this chapter

·where does brand architecture lead to organisationally and strategically? - a topic which we address from Chapter 11 onwards

Cataloguing the new rules of umbrella branding

We suggest compiling a catalogue of game rules beginning with what can be seen to be newly working in umbrella form. We then add in some practitioner guidelines which have been issued to contrast good umbrella branding practice with one-product brand rules of thumb. We conclude with some questions - including offbeat ones - which illustrate why we recommend brainstorming the increasing variety of advantages which umbrella branders are inventing.

Table 1 provides an example of a brand organisation which has recently discovered its own way of working umbrella branding. We, as consumers, know that we have recently seen Nivea extend itself successfully from primarily the reference point as the good ordinary skin cream to almost anything Nivea wants to be in skin care and neighbouring categories. We know that the essence of trust in Nivea still feels the same as it always has. Umbrella branding cataloguers can debate all the key moves that Nivea has organised round, some of which you might wish to edit by taking Table 1 as a starting point. Table 2 provides a similar analysis, but for a highly contrasting situation : the reengineering of Gillette's Brand Architecture. ( We should note here - as throughout our illustrative strategic analyses in this book - the table has been compiled by people who have not worked on the nominated brand. As reasonably informed interpreters of umbrella brand language, these brand critiques feel right as far as they go but we are not in the business of giving away a company's state secrets).

BRAND	STRATEGIC TRANSITION	EXECUTION KEYS
NIVEAinternational	•Transition from long-established image of Nivea Cream's trusted value for money and understated but uniquely identifiable royal blue pack to cosmetic and treatment ranges including many high added value applications of female moisturisers/skin care products	STARTING POSITION Nivea, circa 1990, has extraordinarily loyal consumer franchise founded on cream's properties as: soothing/caring reference point for skin care (mother of all creams before high fashion/science products targeted this area) trusted (simple value choice) impactful ownership of royal blue livery BUT underexploited occasions of Nivea usage due to founding product's modestly presented simplicity and singular form TYPICAL ACTIONS Each high added value fashion line appears in own advertising commercial; usually several of these run concurrently; rotations of campaigns also aim to match seasonal needs (eg sun care). Very successful in translating the following message : if Nivea has for so long been depended on for its expertise in producing the reference point product in ordinary creams, then it should now be only natural to look to Nivea as the first source for high added value variants of skin care products ·Sub-branded ranges have evolved Eg Nivea "Visage" ·Adverts are usually executed as an essay in blue ·Sub-branded technologies are word-of-mouthed in women's magazines
KEY MOVES Leveraging extension potential of extraordinarily powerful brand equity due to the following combination: ·unique identity system (eg royal blue and white livery ) - very impactful differentiating brand as simple, pure ·unique essence due to heritage values of reference product as trustworthy, simple, valued, consistent, caring through generations, the global standard ·developing awareness trigger in consumers' minds as the consistent leader of skin care's "mental bridge" between products chosen for cosmetic values and those chosen for treatment values Integrated global branding as number 1 consumer authority. Transitioned through being consumers' standard reference point in basic skin care to being the first in mind when consumers wish to try specific (and high added value) skin care treatmentsBuying out global partner (Smith & Nephew) before full appreciation of brand equity's leadership position was widely recognised by city analysts

BRAND	STRATEGIC TRANSITION	EXECUTION KEYS
GILLETTEUS & Europe	•Transition from fragmented, local and low added value "best-selling" product brands to international company lifestyle brand "GILLETTE" •GILLETTE company brand to be used as the master brand in a double-branding leadership strategy planned in the following way: - GILLETTE to have meaning relevant to being number 1 across all target markets (categories and countries); flagship product sub-brands to be aspirational leaders of categories crafted to give 2 newsworthy means of added value linkage: •continuing "news" campaigns of company brand and product sub-brand could enhance each other•additional "news" coming from campaign rotation of sub-brands while retaining Gillette as core	STARTING POSITION Gillette, mid 1980s, has history of largest volume shares in global markets but fragmented and low added value positions.There were no linkages across markets other than "subtracting value" through communications as cheap, blue and plastic TYPICAL ACTIONS •Cancelled system of local advertising budgets allocated to campaigns on best selling local product brands. (This had developed over time into fragmented and value-but-not quality positions) •Execution of New Umbrella Format: Interweaved company umbrella lifestyle message "best a man can get" with features on leadership benefits of one or more flagship product sub-brands NB - campaigns positioned as international leadership platforms; GILLETTE (world's number 1); flagship product sub-brands( Sensor, Gel, Series) featured unique high added value sub-positionings transferring values to Gillette's best selling (but now non-advertised) lines as well as reinforcing Gillette's image as an innovator
KEY MOVES "Double-Branding" - company umbrella branding (lifestyle) and aspirational product sub-brands add value to each other ·umbrella branding's essence envisions a world leader of its sphere of consumption - "best a man can get" has simple but various meanings to purchasers and consumers ·product sub-brands presented as newsworthy with leading features in their category"Linkages" - between the levels of brands connecting up the Gillette portfolio ·company brand and product sub-brands positioned to lead each other ·company brand is kept as the connecting centrepiece while campaigns for product sub-brands are rotated ·actual best-selling Gillette products feed off the news/fashion created by Gillette and its flagship sub-brands in spite of being absent from advertising"Identity System" - exploits an internationalised design language ·the umbrella brand and flagship sub-brands are pivotal awareness triggers but not the best-selling products ·other elements of Gillette's identity system recycle Gillette's history of communications/design properties - eg blue is now the spotlight colour under which Gillette's close-of-ad logo is highlightedIn core business categories (eg disposable razors), Gillette effectively presents consumers with a full range of value positions while encouraging consumers to think of trading up to the flagship sub-brand as the only one featured in advertising

Copy Department Guidelines

From a small straw poll of copy departments - at manufacturers and advertising agents -conducted in 1994, fully analysed guidelines for umbrella branding appeared lacking. There were some general impressions:

·It is thought that it is often difficult for a tv spot to feature more than one core product (or category) at a time. One solution is to integrate, eg press advertising, which is thought better for carrying range messages. Another solution is to execute two or more product tv advertising campaigns in the brand's name concurrently (sometimes as spots sharing the same commercial break)

·There is considerable debate as to best practice when extending a brand which has hitherto primarily been associated with one product. Partly, this may relate to the large number of attempts which have been made without properly re-examining what the brand's future essence should mean. In terms of copy instructions, some companies insist that if a well known brand is to be extended, the new product must appear early in the tv ad on the grounds that consumers will not be attending/expecting a new product at the end of an ad for a brand whose existing product is well known. However, not all mood campaign formats can begin with the new product in the opening seconds : an alternative solution is to feature press ads or PR designed to introduce the product news and inviting consumers to watch out for more on the tv.

Guidelines such as these illustrate that to be effective umbrella brand advertising needs to be orchestrated in context specific ways. Detailed learning is needed to make the most of integrated presentation of variables such as : form of media, number of concurrent campaigns, products featured. But the curious umbrella brand organisation widens the debate even further.

Brainstorming offbeat questions on umbrella brand organisation

In the last couple of years, we have met a lot of marketing directors where conversations have turned to "Oh - I did not know other people were also asking themselves that kind of question". Communicating with umbrella brands is still a new art for most of us, and we do recommend brainstorming some of the "management of execution" issues with other practitioners from non-competitive product fields. Examples of brainstorming questions which are listed below. Questions do need to be raised and debated before an organisation can make the most intelligent use of umbrella brands.

·Are the products which you sell the most of ( or profit the most from ) the same as those which are your best image-making flagships? If not, what implications does this have for which products you budget for in allocating resources to advertising of sub-brands? Moreover, how should you rotate advertising campaigns of sub-brands to represent leadership across your total sphere of business? Should calendar or other theming of consumer diaries take precedence over product specific messages?

·Will parts of the company's umbrella brand architecture be reinforced by flagship products which the organisation cannot make itself but should licence out? Are there other partnership strategies you should form to encourage companies to work within the added value chain of your umbrella branding instead of competing against it?

·Are you making the most of "double-branding" linkages (eg Gillette-Sensor) where two or more levels of brand hierarchy both gain from being connected up to each other? At a global level, is it possible to imagine a consumer-facing organisation competing for the future without at least one quasi-corporate brand directed from the top of the organisation's brand architecture?

·If you are getting less and less bang for your promotional bucks : where is the source of the problem:

- creativity of execution

- format of execution

- media used

- brand architecture (eg too many brands)

-some combination of these

·Can you still afford the philosophy that it is OK if some of your brands are competing against each other?

·If you were to start all over, first with one brand as a company banner what would that be? Then what other high level brands would you maintain? How do the brands' values work to represent your core competences and core businesses?

· Your competitors are playing by some new umbrella branding rules, but what are the implications of this for you? Do you know any longer where your next competitor may come from : eg some new brand partnership, or a traditional competitor but with a newly evolving brand architecture?

Summary

Brand organisations now have a lot to be curious about in terms of "connecting up" umbrella branding. In terms of external media investments, connecting up involves:

·knowing what higher level values work best for umbrella brands

·integrating forms and timing of media used

·maintaining a brand architecture where increasingly linkages need to be made between brands where:

-tactical impacts may still be conveyed by positioning sub-brands

-but increasingly the primary foci of your brand equity needs to be changed to higher level banner brands which represent brand organisations to consumer and customer

These are important questions to bring out in the open. Answers should be iteratively rather than definitively sought. Ultimately, they need to be diagnosed as part of the wider framework issues of branding process - introduced in terms of teamworking in Chapter 8 and developed more fully in architectural terms in Chapters 11 to 14.

You may also find that some of Brand Chartering's earlier chapters, eg Essence and Identity, take on renewed importance now that we have started to explore the leadership meanings of umbrella brand organisation.