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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routes, and not only be triggered by customer loyalty.
1
Introduction:
Building the brand when the
clients are empowered
2 THE NEW STRATEGIC BRAND MANAGEMENT
In our materialistic societies, people want to give meaning to their consumption. Only brands
that add value to the product and tell a story about its buyers, or situate their consumption in a
ladder of immaterial values, can provide this meaning. Hence the cult of luxury brands.
Pro logo?
Today, every organisation wants to have a brand. Beyond the natural brand world of producers
and distributors of fast-moving consumer goods, whose brands are competing head to head,
branding has become a strategic issue in all sectors: high tech, low tech, commodities, utilities,
components, services, business-to-business (B2B), pharmaceutical laboratories, non-govern-
mental organisations (NGOs) and non-profit organisations all see a use for branding.
Amazingly, all types of organisations or even persons now want to be managed like brands:
David Beckham, the English soccer star, is an example. Los Angeles Galaxy paid US$250 million
to acquire this soccer hero. It expects to recoup this sum through the profits from licensed
products using the name, face or signature of David Beckham, which are sold throughout the
world. Everything David Beckham does is aimed at reinforcing his image and identity, and thus
making sales and profits for the \u2018Beckham brand\u2019.
Recently, the mayor of Paris decided to define the city as a destination brand and to manage
this brand for profit. Many other towns had already done this. Countries also think of them-
selves in brand terms (Kotler et al, 2002). They are right to do so. Whether they want it or not,
they act de facto as a brand, a summary of unique values and benefits. India had a choice
between allowing uncontrolled news and information to act (perhaps negatively) on world
public opinion, or choosing to try to manage its image by promoting a common set of strategic
values (its brand meaning), which might be differentiated by market. Countries compete in a
number of markets, just as a conventional brand competes for profitable clients: in the private
economic and financial investments market, various raw materials and agricultural markets, the
tourism market, the immigration market and so on.
It takes more than branding to build a brand
Companies and organisations from all kinds of sectors ask whether or not a brand could consol-
idate their business or increase its profitability, and what they should do to create a brand, or
become a corporate brand. What steps should be followed, with what investments and using
what skills? What are realistic objectives and expectations? Having based their success on
mastering production or logistics, they may feel they lack the methods and know-how to
implement a brand creation plan. They also feel it is not simply a matter of communication.
Although communication is necessary to create a brand, it is far from being sufficient. Certainly
a brand encapsulates in its name and its visual symbol all the goodwill created by the positive
experiences of clients or prospects with the organisation, its products, its channels, its stores, its
communication and its people. However, this means that it is necessary to manage these points
of contact (from product or service to channel management, to advertising, to Internet site, to
word of mouth, the organisation\u2019s ethics, and so on) in an integrated and focused way. This is the
core skill needed. This is why, in this fourth edition of Strategic Brand Management, while we look
in depth at branding decisions as such, we also insist on the \u2018non-branding\u2019 facets of creating a
brand. Paradoxically, it takes more than branding to build a brand.
Today clients are empowered as never before. It is the end for average brands. Only those that
maximise satisfaction will survive, whether they offer extremely low prices, or rewarding expe-
rience or service or performance. It is the end of hollow brands, without identity. The trader is
also more powerful than many of the brands it distributes: all brands that do not master their
channel are now in a B to B to C situation, and must never forget it.
Building both business and brand
Hit parades of the financial value of brands (brand equity) are regularly published in business,
financial and economics magazines. Whatever doubts one may have on their validity (see
Chapter 18), they do at least stress the essentially financial intentions behind building a brand.
Companies do not build brands to have authors write books on them, or to make the streets
livelier thanks to billboard advertising. They do it to grow the business still more profitably. One
does not make money by selling products, but brands: that is to say a unique set of values, both
tangible and intangible. Even low-cost operators need to compete on trust.
Our feeling is that, little by little, branding has been constructed as a separate field. There is a
risk however of the branding community falling in love with its own image: looking at the
considerable number of books published on brands, and at the list of most recent brand equity
values, one could think that brands are the one and only issue of importance. Indeed branding
professionals may become infatuated and forget the sources of brand equity: production, serv-
icing, staffing, distributing, innovating, pricing and advertising, all of which help to create value
associations and effects which become embedded in clients\u2019 long-term memory.
Looking at one of the stars of this hit parade, Dell, whose brand is valued so highly, one
question arises: is Dell\u2019s success due to its brand or to its business model? It could be argued that
it was not the Dell brand but Dell activities in a broader sense that allowed the company to
announce more price cuts in 2006, putting Hewlett-Packard in a difficult position between two
\u2018boa constrictors\u2019, Dell and IBM.
The brand is not all: it captures the fame but it is made possible by the business model. It is
time to recreate a balance in accounting for success and failures. It is the end of fairy tales; let\u2019s
introduce the time of fair accounts.
Throughout this new edition of Strategic Brand Management, we relate the brand to the
business, for both are intimately intertwined. We regularly demonstrate how branding decisions
are determined by the business model and cannot be understood without this perspective. In fact
in a growing number of advanced companies, top managers\u2019 salaries are based on three critical
criteria: sales, profitability and brand equity. They are determined in part by how fast these
managers are building the strategic competitive asset called a brand. The goal of strategy is to
build a sustainable advantage over competition, and brands are one of the very few ways of
achieving this. The business model is another. This is why tracking brands, product or corporate,
is so important.
Looking at brands as strategic assets
The 1980s marked a turning point in the conception of brands. Management came to realise that
the principal asset of a company was in fact its brand names. Several articles in both the
American and European press dealt with the discovery of \u2018brand equity\u2019, or the financial value of
the brand. In fact, the emergence of brands in activities which previously had resisted or were
INTRODUCTION 3
foreign to such concepts (industry, banking, the service sector, etc) vouched for the new impor-
tance of brands. This is confirmed by the importance that so many distributors place on the
promotion of their own brands.
For decades the value of a company was measured in terms of its buildings and land, and then
its tangible assets (plant and equipment). It is only recently that we have realised that its real
value lies outside, in the minds of potential customers. In July 1990, the man who bought the