11 New Strategic Brand Management by Philip Kotler 4th Edition
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advantage) it is important to incorporate from the start the higher levels of meaning that are intended to attach to the brand in the longer term. The brand should not simply acquire them, by accumulation or sedimentation; they should be planned from the start and incorporated at birth. Incorporating this perspective from the start accelerates the process by which products become brands. This is why product launch and brand launch are not the same. This is also why brand names should never be descriptive of the product. The first reason is that what is descriptive soon becomes generic, when competitors come into the market with the same product. Second, clients will soon learn what the business is about. Names should better aim at telling an intan- gible story. Amazon speaks of newness, force and abundance (like the River Amazon), and Orange says \u2018definitely non-technical\u2019, just as Apple Computers did 25 years earlier. 56 WHY IS BRANDING SO STRATEGIC? Figure 3.1 The two models of brand building through time Intangible added values Values, mission Personality Benefits Attributes Ingredients Tangible added values Time Finally, as is illustrated by the two dotted arrows of the graph, brand management consists of a permanent coming and going between tangible and intangible values. Brands are two-legged value producing systems. This means that having an excellent product is not enough in modern compe- tition. (See for instance the Toshiba case, page 47). However, neither luxury nor image brands can afford to forget the functional real- ities of products. Are leading brands the best products or the best value? To create a brand is much more than simply marking a product or service, the necessary first step of brand differentiation. It is about owning a value. It is often held to be a paradox that the number one brands are not the best products. Was the original IBM PC the best PC available at the time? No. Is Pentium the best chip? Who knows? Are Dell computers the best computers? The paradox stems from the word \u2018best\u2019: best for whom, and at what? Let\u2019s take the analogy of a school class. Academic gradings are deter- mined according to well-understood criteria: students who do well display qualities such as excellent memory, the ability to solve problems fast, to work accurately and to present their work well. These are the values of the schoolroom; and similarly, each market has values. To become number one in any market it is necessary to understand what the market values are. Of course, one cannot succeed without a good product or service. Those who try the product must like it enough to make repeat purchases, to refer others to it; the product must build brand loyalty. In the truck tyre market, Michelin is certainly the number one: it holds 66 per cent of the original tyre market (that is, the tyres the manufacturer supplies with the truck). But in the replacement market, the so-called \u2018after- market\u2019, although Michelin is still the market leader, its share falls to 29 per cent. It looks as if Michelin is not as well oriented to the values of the buyers in this aftermarket, fleet owners and those who maintain their trucks. In the spirits market, Bacardi is world number one; is it the best spirit? One could certainly argue that it is nothing of the kind: it has no taste, and in all blind testings it fares very poorly. So why does it sell in such volume? The source of its business is not experts deliberating over its taste, but casual drinkers and partygoers. They generally want a spirit that will blend well in a cocktail, and an ideal mixer should have a very neutral taste. This is exactly what Carta Blanca delivers; it provides 90 per cent of Bacardi\u2019s sales. Branding starts from the customer, and asks, what does he or she value? Bacardi is certainly not the \u2018better\u2019, but it could be called the \u2018batter\u2019. One of its key intangible added values is its personality, epitomised by its symbol: a bat. The first Bacardi factory in Cuba was full of bats. This became the brand\u2019s symbol, adding an enduring halo of mystery to it. Another example can be found in the educational market. The Master\u2019s degree in Business Administration (MBA) is a passport to success. It was first introduced in US universities. To get their MBA, students at US universities need two years of intense work: one year to learn the fundamentals, and one year to specialise in a major field. Insead is now a respected brand in the MBA market, and Europe\u2019s best-known MBA. However its MBA course lasts less than a year. This is the power of branding: a strong brand awareness acts as a quality cue. Because it created the MBA category in Europe, Insead soon benefited from the pioneer advantage: its name effectively became the local standard, because of the lack of competition. The French management school HEC created its MBA in 1969, while Insead had started in 1957. HEC and some other late entrants made BRAND AND BUS INESS BUILDING 57 another mistake: they delivered a genuine American-type MBA. The HEC MBA, which lasted two years, was arguably of too high quality for European corporate recruiters, and too long for European students. Understanding the value curve of the target Insead became Europe\u2019s best-known MBA by understanding the value curve of European human resources directors who hire young executives. In delivering an MBA based on the US model, premium schools such as HEC showed that they did not understand the local value curve. In Europe, recruiters do not really care how much time students have spent on campus: the extra salary one gets after having spent two years at Harvard, Stanford or Northwestern instead of less than a year at Insead is very small. One thing recruiters do value, however, is an intensive immersion in a truly international programme, in which students learn to work with 10 different nationalities. This mirrors the working context for which they are being hired. European companies tend to consider that they will really teach their recruits how to do business in-house, and that a fast academic introduction lasting less than one year will suffice. Finally, companies prefer to rely on continuing education, providing a regular stream of specialised company seminars, throughout their managers\u2019 working lives. Since not all clients are alike, different brands can coexist in the same sector, because they address the value curve of different segments. This is why groups build brand portfolios. GM has a portfolio of car marques, as does the Volkswagen Group. Breaking the rule and acting fast The MBA example also illustrates another issue: to build a brand one must quickly reach the critical size to create barriers to entry (such as top-of-mind awareness). By breaking the two-year rule, Insead was able to produce twice as many graduates as a US school of the same size, and so to reach the critical size of alumni who act as its referees within companies in half the time. Recently it made a strategic move by doubling the number of graduates produced per year, thus accentu- ating its market share and increasing its productivity (the number of students per professor). It also decided to capitalise on its now well-known brand to open a branch in Asia. Many lessons should be drawn from the above examples: l The first is that all brands start by being non-brands, with zero awareness and image. However, they were based on an innovation that succeeded. Starting a brand means finding a disrupting inno- vation. l Second, creating a market is the best way to lead it. This is the well-known pioneer advantage. However, to be able to create a market, one must break free from the conventions and codes that create herdism in the marketplace. l Third, time is an essential ingredient of success.