Brand or business model power?

Yellow Tail offered more than a new brand, however: in the United States, it provided a new business model based on distribution. This was the number one problem to be resolved in the United States, bearing in mind that there are three levels of distribution there, as opposed to only two in Britain. The revolution was the business model. In Britain, where Yellow Tail arrived years after Jacob’s Creek, its strategy did not work. It was Jacob’s Creek that enjoyed the pioneer effect with itsnew business model.

Easyjet and Ryanair are more than just new and reassuring brands at low prices. They offer a radically different business model, that the regular airlines are unable to copy, since it is so widely opposed to their own model. This is why British Airways failed with its subsidiary, Buzz (it was perceived as a subsidiary however independent it actually was). In contrast, British Airways exploits to the fullest the structural advantages of the ‘hub’ business model, which offers great flexibility to international travellers.

The fundamental lesson to be learnt here is that the brand is not a self-sufficient asset. By itself, it can do nothing: it is therefore conditional. It only produces its effects in interaction with the business model that supports it. This is the case for all successful new entrants: Dell, eBay, Google, Zara and so on. Take textiles as an example. Everyone emphasises the extraordinary rise of the Zara brand worldwide, providing high fashion at low prices.

To make this possible, however, it was in the mode of management that Zara really innovated. It managed to destabilise all those low-price competitors, such as Promod and Kiabi, that ran on different business models and therefore were not able to adapt. Zara is based on the fast turnover of small stocks of each item. The shortage of each garment is organised as a system of desirability promoting regular customer return to the shop. It treats the shop as a theatre stage, does no advertising, and has a remarkable system for eliciting qualitative information on the latest customer expectations.

On the other hand, unlike its competitors Zara does not manufacture its clothing in China, in which case it could expect only two deliveries per year. It needs greater flexibility, which can only be obtained through a swarm of dedicated SMEs producing goods close by. In mass consumption goods, it is notable that German-style hard discounters offer a better quality/price ratio than cheap products launched by the supermarkets in an attempt to resist them. This is due to their business model: the Germans launched on the basis of long-term agreements with reputable manufacturers, who could then invest in the production of a very restricted number of products. This therefore reduces the cost price, but the products remain of good quality.

The supermarkets for their part are resistant to anything that ties them to a single supplier in the long term; their business model is based on being able to permanently exert pressure on their sources, and change them at the first opportunity. There is a fundamental difference between buying merchandise at the lowest price, wherever it may come from, and creating an industrial and logistical system to produce a product of acceptable quality at half the price, from reliable suppliers.

It is therefore time to recognise that the great novelty of the 1990s was the appearance of radically different business models, opening the market to previously unknown and innovative actors. The brands already in place proved no barrier to their entry, since the newcomers’ business models completely overturned the range available. They provided value innovations. The brand is an active conditional: it depends on the quality of its business model. Now, to struggle in ultracompetitive circumstances, it is therefore necessary to become more strategist than marketer: that is, to integrate the brand into an original and effective business model.

The error of Virgin Cola in the United States and Europe was to believe that its brand would be enough, and to opt for roughly the same business model as Coke and Pepsi, without the resources and practices that it implies. In the field of mass-consumption goods, modern marketing is no longer B to C. Virgin believed in the consumer. However, it was the distributors that wanted none of it. The product was distributed only through Monoprix and Auchan in France, for example, and that was not sufficient to make the operation profitable. Virgin’s brand capital is not self-sufficient.

Other brands, such as Red Bull, have sought to bet on distribution channels in competition with the supermarkets in order to either loosen the stranglehold, or bypass it. The great good fortune of ready-to-wear clothing brands with their own points of sale is not accessible to many mass consumption product brands.

They nevertheless seek to use other circuits as levers of prescription, even of sales. Thus, Roquefort Papillon owes the durability of its premium image to the fact that it was launched exclusively in cheese shops at the time when the market leader, Société, was betting on mass distribution. In order to create a shampoo brand today, it is best to begin from a hairdressing label and create a complete range under licence in this name, sold in major shops: this business model was created by J Dessanges for l’Oréal. It has since been taken up by J C Biguine, J F David and others. At l’Oréal, every brand in fact has a different business model.

Strategic Brand Management Related Practice Tests

Strategic Management Practice Tests
Brand Equity In Question What Is A Brand? Differentiating Between Brandassets, Strength And Value Tracking Brand Equity Goodwill: The Convergence Of Finance And Marketing How Brands Create Value For The Customer How Brands Create Value For The Company Corporate Reputation And The Corporate Brand Strategic Implications Of Branding What Does Branding Really Mean? Permanently Nurturing The Difference Brands Act As A Genetic Programme Respect The Brand ‘contract’ The Product And The Brand Each Brand Needs A Flagship Product Advertising Products Through The Brand Prism Brands And Other Signs Of Quality Obstacles To The Implications Of Branding Brand And Business Building Are Brands For All Companies? Building A Market Leader Without Advertising Brand Building: From Product To Values, And Vice Versa Are Leading Brands The Best Products Or The Best Value? Understanding The Value Curve Of The Target Breaking The Rule And Acting Fast Comparing Brand And Business Models: Cola Drinks From Private Labels To Store Brands Evolution Of The Distributor’s Brand Are They Brands Like The Others? Why Have Distributor's Brands? The Financial Equation Of The Distributor’s Brand The Three Stages Of The Distributor’s Brand The Case Of Decathlon Factors In The Success Of Distributor's Brands Optimising The Dob Marketing Mix The Real Brand Issue For Distributors Competing Against Distributor's Brands Facing The Low-cost Revolution Should Manufacturers Produce Goods For Dob's? Brand Diversity: The Types Of Brands Luxury, Brand And Griffe Service Brands Brand And Nature: Fresh Produce Pharmaceutical Brands The Business-to-business Brand The Internet Brand Country Brands Thinking Of Towns As Brands Universities And Business Schools Are Brands Thinking Of Celebrities As Brands The New Rules Of Brand Management The Limits Of A Certain Type Of Marketing About Brand Equity The New Brand Realities We Have Entered The B To B To C Phase Brand or business model power? Building The Brand In Reverse? The Power Of Passions Beginning With The Strong 360° Experience Beginning With The Shop The Company Must Be More Human, More Open Experimenting For More Efficiency The Enlarged Scope Of Brand Management Licensing: A Strategic Lever How Co-branding Grows The Business Brand Identity And Positioning Brand Identity: A Necessary Concept Identity And Positioning Why Brands Need Identity And Positioning The Six Facets Of Brand Identity Sources Of Identity: Brand Dna Brand Essence Launching The Brand Launching A Brand And Launching A Product Are Not The Same Defining The Brand’s Platform The Process Of Brand Positioning Determining The Flagship Product Brand Campaign Or Product Campaign? Brand Language And Territory Of Communication Choosing A Name For A Strong Brand Making Creative 360° Communications Work For The Brand Building Brand Foundations Through Opinion Leaders And Communities The Challenge Of Growth In Mature Markets Growth Through Existing Customers Line Extensions: Necessity And Limits Growth Through Innovation Disrupting Markets Through Value Innovation Managing Fragmented Markets Growth Through Cross-selling Between Brands Growth Through Internationalisation Sustaining A Brand Long Term Is There A Brand Life Cycle? Nurturing A Perceived Difference Investing In Communication No One Is Free From Price Comparisons Branding Is An Art At Retail Creating Entry Barriers Defending Against Brand Counterfeiting Brand Equity Versus Customer Equity: One Needs The Other Sustaining Proximity With Influencers Should All Brands Follow Their Customers? Reinventing The Brand: Salomon Adapting To The Market: Identity And Change Bigger Or Better Brands? From Reassurance To Stimulation Consistency Is Not Mere Repetition Brand And Products: Integration And Differentiation Specialist Brands And Generalist Brands Building The Brand Through Coherence Defining The Core Identity Of The Brand Confirming The Presence Of Brand Core Facets In Each Product Identifying The Role Of Each Product Line In The Construction Of The Brand Graphically Representing The Overall System Of The Brand Checking The Coherence Worldwide The Three Layers Of A Brand: Kernel, Codes And Promises Respecting The Brand Dna Managing Two Levels Of Branding Growth Through Brand Extensions What Is New About Brand Extensions? Brand Or Line Extensions? The Limits Of The Classical Conception Of A Brand Why Are Brand Extensions Necessary? Building The Brand Through Systematic Extensions: Nivea Extending The Brand To Internationalize It Identifying Potential Extensions The Economics Of Brand Extension What Research Tells Us About Brand Extensions Avoiding The Risk Of Dilution Balancing Identity And Adaptation To The Extension Market Segments Assessing What Should Not Change: The Brand Kernel Preparing The Brand For Remote Extensions Keys To Successful Brand Extensions Is The Market Really Attractive? An Extension-based Business Model: Virgin How Execution Kills A Good Idea: Easycar Brand Architecture The Key Questions Of Brand Architecture Type And Role Of Brands The Main Types Of Brand Architecture The Flexible Umbrella Brand The Aligning Umbrella Brand (masterbrand) Choosing The Appropriate Branding Strategy New Trends In Branding Strategies Internationalising The Architecture Of The Brand Some Classic Dysfunctions What Name For New Products? Group And Corporate Brands Corporate Brands And Product Brands Multi-brand Portfolios Inherited Complex Portfolios From Single To Multiple Brands: Michelin The Benefits Of Multiple Entries Linking The Portfolio To Segmentation Global Portfolio Strategy The Case Of Industrial Brand Portfolios Linking The Brand Portfolio To The Corporate Strategy Key Rules To Manage A Multibrand Portfolio The Growing Role Of Design In Portfolio Management Does The Corporate Organization Match The Brand Portfolio? Auditing The Portfolio Strategically A Local And Global Portfolio – Nestlé Handling Name Changes And Brand Transfers Brand Transfers Are More Than A Name Change Reasons For Brand Transfers The Challenge Of Brand Transfers When One Should Not Switch Analysing Best Practices Transferring A Service Brand How Soon After An Acquisition Should Transfer Take Place? Managing Resistance To Change Factors Of Successful Brand Transfers Brand Turnaround And Rejuvenation The Decay Of Brand Equity The Factors Of Decline Distribution Factors When The Brand Becomes Generic Preventing The Brand From Ageing Rejuvenating A Brand Growing Older But Not Ageing Managing Global Brands The Latest On Globalisation Patterns Of Brand Globalisation Why Globalise? The Benefits Of A Global Image Conditions Favouring Global Brands The Excess Of Globalisation Barriers To Globalisation Coping With Local Diversity Building The Brand In Emerging Countries Naming Problems Achieving The Delicate Local–global Balance Being Perceived As Local: The New Ideal Of Global Brands? Local Brands Can Strike Back The Process Of Brand Globalisation Globalising Communications: Processes And Problems Making Local Brands Converge Financial Valuation And Accounting For Brands Accounting For Brands: The Debate What Is Financial Brand Equity? Evaluating Brand Valuation Methods Brand Valuation In Practice The Evaluation Of Complex Cases What About The Brand Values Published Annually In The Press? Strategic Brand Management Interview Questions