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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own brands exist only in relation to the
producer brands that innovate, create and
nurture markets, reveal tendencies, and also
participate in the consumer society.
Remember that a brand can justify its exis-
tence only through the innovations it offers.
The majority of brands are born of inno-
vation, and innovation continues to be the
brand\u2019s oxygen: it has a stimulating, euphoric
effect in promoting a sense of wellbeing,
pleasure, joie de vivre and hedonism. However,
this intangible factor will have to start earning
its keep. This begins with respecting the
customer: an intangible benefit that is not
rooted in a tangible superior quality will be
weakened, and will contribute to the brand\u2019s
excess. There are plenty of cheap polo shirts,
but only one Lacoste. A Lacoste shirt lasts 10
years and, furthermore, adds distinction. This
point has to be reinforced repeatedly. This
raises the question of the visibility of brand
communication, governed by the advertising
dogma of the USP: how, and through which
media, to promote the product. Thankfully,
the internet offers many opportunities.
This new brand responsibility comprises
service, citizenship, and sustainable devel-
opment, which is transmitted through client
service via a call centre or over the internet, but
also through the services such as taking in
worn-out electrical appliances, which indicate
the brand\u2019s high degree of social responsibility.
The brand must adopt ethical principles and
demonstrate that consumption is not a
synonym for inefficient waste, pollution and
exploitation \u2013 themes to which society is
becoming increasingly sensitive. Even Nike has
had to make changes in the wake of the revela-
tions in Naomi Klein\u2019s book No Logo (1999).
The mega-brand, with its iconic status among
the young, may well have invented concept
upon concept, but its social conscience left
much to be desired, a fact that is particularly
unacceptable in a flourishing company.
It would be a mistake to believe that hard
discount will become the norm. In France,
Cristalline spring water, sold at a price three
times cheaper than Evian, does not control 100
per cent of the market, and Evian is still the
leader by value. However, it will grow, until it
reaches its threshold \u2013 and in so doing it may
lead to a re-evaluation of attitudes and
behaviour. As is always the case in our modern
societies, contradictory tendencies appear,
coexist and learn to live together \u2013 but what
they cannot do any longer is ignore each other.
An examination of the specific strategies of
companies and brands to combat hard
discount reveals the following themes, all of
which capitalise on the enduring weakness of
What link is there between Ryanair, Virgin
Express, and Asda or Aldi? They are all so-
called low-cost companies. How have the
traditional competitors responded? Through
the introduction of a new, lowest-price
product offer to its existing range. The brand
must create a stepped price range, with acces-
sible products that make it possible to exper-
iment with and to discover the brand.
Furthermore, this contradicts the discounters\u2019
arguments, since they wish to stereotype all
manufacturer brands as \u2018expensive\u2019.
In air travel, for example, Air France has
shown that the famous bait-and-switch prices
of the low-cost companies (s20 flights from
Paris to London) applied only to a few seats and
time slots. Conversely, Air France\u2019s promotion
of its lowest prices, and of reduced prices in the
case of reservation long in advance, has also
demonstrated that its price range is much
wider than the low-cost companies had
claimed. The SNCF (French national rail)
created e-TGV to reduce prices. Thanks to yield
management and process optimisation, Air
France and British Airways can also offer a
quota of seats at very low prices. These may be
obtained by booking far in advance, reserving
over the internet, and so on. In this way, the
SNCF\u2019s e-TGV puts Marseilles only a s20
journey away from Paris.
The superstores have offered products even
cheaper than the hard discounters, but under
specific brands (the No. 1 brand at Carrefour,
for example). This reduces the temptation to
look elsewhere by capitalising on the hyper-
market\u2019s traditional strength, \u2018one-stop
shopping\u2019. The difference in terminology is
revealing: \u2018low-cost\u2019 is a business model; \u2018even
cheaper product\u2019 was the result of an emer-
gency action.
For 50 years Aldi and Lidl have been
designing an efficient business model in order
to provide a quality product at the lowest
price, based on the elimination of all unnec-
essary costs, and on a new vision: long-term
agreements with suppliers, dedicated factories
with a common design, not to mention a store
concept without flourishes, with a greatly
reduced range of goods. If Aldi\u2019s fruit juice is
still the market leader in Germany, it is
because it is good: its quality/price ratio is
Conversely, the lowest price products at
Carrefour, sold under a brand that (signifi-
cantly) makes no reference to Carrefour, were
created in haste to block the client drain, and
obtained through increased pressure on
suppliers, and therefore on the quality of
constituents. Thus the fruit juice at this price
will only have perhaps the legal minimum
required amount of fruit juice. This is why
hard discount, unlike the hypermarket\u2019s
lowest price range, satisfies its clients.
At the communications level, it is necessary
to constantly recreate the perceived risk, by
revealing the invisible and the unspoken
aspects of \u2018low cost\u2019. Perceived risk is a key lever
of brand sensitivity (Kapferer and Laurent,
1995). The book written by two nutritionists
was therefore a timely arrival in 2005. It showed
that drastic price-cutting on food products was
bound to negatively affect the intrinsic quality
of the products. Thus, low-cost gingerbread
contained not a single gram of honey. Low-cost
ham contained high levels of chemicals. Low-
cost chicken is raised in the worst conditions
and barely has time to grow up (40 days), and so
on. In the air travel sector, a degree of doubt will
inevitably remain regarding the maintenance,
the quality of the equipment, and the heavy
usage of the airplanes.
The brand must react to attacks on price by
playing its trump cards: innovation and
creating desire. In order to see off the chal-
lenge of the cheapest possible industrial
chicken, the brand must offer halal chicken,
organic chicken, regional chicken, and so on.
To oppose the cheapest possible yoghurt, it
must offer one that does you good: Actimel,
Danacol, Bio-Activia. To oppose a s5 cafetière
in Carrefour, imported from China, it must
offer Nespresso, or Senseo by Philips, or Krups.
To oppose the cheapest MP3 player, it must
offer the iPod and its continual innovation
(images, nano, mini, access to iTunes, iPhone,
and the like).
Value innovations are low volume, at least
initially. Without volume there can be no
strong brand, since it is volume that creates
the financial resources for R&D, marketing,
communication and so on. It is therefore first
of all necessary to innovate on pillar products,
those products that achieve the volume and
the margin, and are essential to the distributor.
In short, faced with supermarket shelves where
space is at a premium due to the introduction
of low-cost products, and in order to retain
clients who might be tempted by the vista of
hard-discount stores, it is important to
remember that an essential reference remains
essential only when supported through inno-
vation and communication.
It is also vital to track the costs that do not
carry added value, even imitating the best
practices of the low-cost competitors. Thus Air
France is constantly reducing the time clients
must wait before