11 New Strategic Brand Management by Philip Kotler   4th Edition
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11 New Strategic Brand Management by Philip Kotler 4th Edition


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actions that go against the
brand\u2019s interest. Thus, Philips never succeeded
in fully taking advantage of its former brand
baseline: \u2018Philips, tomorrow is already here\u2019.
In order to do so, they would have needed to
ban all advertising on batteries or electric light
bulbs that either trivialised the assertion,
contradicted it, or reduced it to mere adver-
tising hype. It would also have been possible
to communicate only about future bulb types
rather than about the best current sales.
Unfortunately, nobody in the organisation
had the power (or the desire) to impose these
kinds of constraints. When the Whirlpool
brand appeared, however, the managers from
Philips actually created the organisation they
needed for implementing a real brand policy:
as it was directly linked to general
management, the communications
department was able to ensure the optimal
circumstances for launching the Whirlpool
brand, by banning over a three-year period
any communication about a commonplace
product or even a best-selling product.
Failing to manage innovations has a very
negative impact on brand equity. Even
though salespeople go up in arms when they
are not given the responsibility of a strong
innovation, it is a mistake to assign the latter
to a weak brand, especially in multi-brand
groups. When dealing with a weak brand,
attractive pricing must indeed be offered to
distributors as an incentive to include the
latter in their reference listing. But since the
brand\u2019s consumers do not expect this inno-
vation (each brand defines its type and level
of consumer expectations), the product
turnover is insufficient. As for the non-buyers,
such a brand is not reassuring. If the inno-
vation is launched a few weeks later under a
leading brand name, distributors will refuse to
pay for the price premium due to a leader
because they purchased it at a lower price just
a while back from the same company. Thus,
even with the strong brand, the sales price
eventually has to be cut.
Breeding many strong brands, l\u2019Oréal allo-
cates its inventions to its various businesses
according to brand potency. Innovation is
thus first entrusted to prestigious brands sold
48 WHY IS BRANDING SO STRATEGIC?
in selective channels as the products\u2019 high
prices will help cancel out the high research
cost incurred. Thus, liposomes were first
commercialised by Lancôme, the new sun
filter Mexoryl SX by Vichy. Innovation is then
diffused to the other channels and eventually
to the large retailers. By then, the selective
channel brands are already likely to have
launched another differentiating novelty.
However, this process is affected by the fact
that innovation is not exclusively owned by
any one company; it quickly spreads to
competitors, which calls for immediate
reaction. 
Along the same lines, when a producer
supplies a distributor\u2019s brand with the same
product it sells under its own brand, it will
eventually erode its brand equity and, more
generally, the very respectability of the
concept of a brand. This simply means that
what customers pay more for in a brand is the
name and nothing else. When the brand is
dissociated from the product it enhances and
represents, it becomes merely superficial and
artificial, devoid of any rational legitimacy.
Ultimately, companies pay a price for this as
sales decrease and distributors seize the oppor-
tunity to declare in their advertising that
national brands alienate consumers, but that
consumers can resist by purchasing distrib-
utors\u2019 own-brands. This also justifies the slug-
gishness of public authorities regarding the
increasing amount of counterfeit products
among distributors\u2019 own-brands. Finally, such
practices foster a false collective under-
standing of what brands are, even among
opinion leaders, which contributes to the
rumour that nowadays all products are just
the same!
STRATEGIC IMPL ICAT IONS OF BRANDING 49
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How do companies grow both the brand and
business? What does it take to build a brand?
What are the necessary steps and phases? In
this chapter we address these questions with a
particular emphasis on integration of efforts.
Brand building is not done apart, it is the
result of a clear strategy and of excellence in
implementation at the product, price, place,
people and communication levels. There are
prerequisites before a brand can be built, and
they need to be understood.
Are brands for all companies?
The brand is not an end in itself. It needs to be
managed for what it is \u2013 an instrument for
company growth and profitability, a business
tool. Does branding affect all companies? Yes.
Are all companies aware of this? No. For many
industrial companies or commodity sellers,
the concept of the brand applies only to mass
markets, high-consumption products and the
fast-moving consumer goods (FMCG) sector.
This is a misconception. A brand is a name
that influences buyers and prescribers alike.
Industrial brands have their own markets: Air
Liquide sells to industry, Somfy sells its
tubular motors to window-blind installers and
fitters, Saint Gobain Gypsum and Lafarge sell
to companies and craftspeople in the
construction and public works sectors, and
the William Pitters company is famous among
retailers for the quality of its trade relation-
ships.
Nevertheless, these companies are affected
by brands in a variety of ways:
l Stock-exchange-listed groups have to
manage the widened recognition for their
products. Their corporate brand is the
vehicle for this recognition. Stock
exchanges operate on anticipation. By defi-
nition an anticipation is not rational, but
can be influenced by emotive factors. 
l Worldwide groups should be asking them-
selves whether it might not be time to
complete their transformation into
worldwide buyers and distributors in order
to consolidate their local operators under a
single name.
l Chinese or Indian groups should be asking
themselves how to get rid of the status of
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Brand and business building
52 WHY IS BRANDING SO STRATEGIC?
low cost supplies and take a larger part of
the high margin segments in developed
countries: to do so they need a global
brand.
l Producers should be asking themselves
whether the brand is a differentiating
factor in any sector threatened by
commoditisation. For this reason, it is
noteworthy that BPB chose to retain the
Placoplatre product brand \u2013 a local brand
which had become synonymous with the
product itself, and indeed a leader in its
own markets. Similarly, it is significant that
the industrial Air Liquide company asked
Mr Lindsay Owen-Jones, the CEO of
l\u2019Oréal, to sit on its board of directors.
Having worked its way through hundreds
of product names and legal trademarks for
these names, Air Liquide realised that it
had still failed to create any real value.
What it needed was to restructure its range
of high-tech products under several mega-
brands, as l\u2019Oréal had done.
l Producers of intermediary goods should be
asking themselves whether it might not be
time to sell to their clients\u2019 customers, not
through direct sales, but by instilling a
brand awareness in these customers. In this
way, Lafarge \u2013 a world leader in
construction materials \u2013 invested several
million euros on informing the general
public about the advances made possible
by its innovations, in order to create a
demand for its products among people who
would live in the flats or work in the offices
built by its clients. In relationships with
intermediaries and distributors, the brand
is an instrument of power. Another typical
example is Somfy, a world leader in motors
for window blinds and openings for home
use: this leadership has been earned
through changing its OEM business model
and refocusing the brand on the end user,
just as Intel, Lycra, Woolmark and others
have successfully