Investing in communication - Strategic Brand Management

In 2002, the Danone group undertook a significant move. It decided to increase significantly (by over 20 per cent) the media budget of its strongest brands. Since then, their share of voice and market leadership have increased. Similarly the whole l’Oréal success story is based on two pillars: research and advertising.

Communication is the brand’s weapon. It alone can unveil what is invisible, reveal the basic differences hidden by the packaging which often looks the same among competitors, especially when this similarity is precisely the impression sought by DOBs to create confusion. It alone can sustain the attachment to the brand, by promoting intangible values, even if this loyalty is eroded by many in-store promotions.

Advertising is a result of the rise of self-service distribution and reductions in the numbers of salespeople. It is the necessary consequence of investments in R&D that have to pay off ever faster and therefore need an ever bigger public. That this has to be repeated over and over is the proof that there is a confusion in people’s minds about the legitimacy of advertising, even within marketing teams, and is why we will use numbers to back our statements.

As figure below demonstrates, there is a linear relationship between the penetration of DOBs and the extent of advertising expenditure in a market, measured in percentage of sales spent on advertising. Advertising is a barrier to entry.

However, upon examining the product categories, it becomes clear that the categories with a high investment in advertising are also those that invest in innovations and renovations, which are perfect opportunities for re-establishing the saliency of the brand in the public consciousness. It is the conjunction of these two factors (innovation and advertising) that produces added value.

Penetration of distributors’ brands and advertising intensity

Penetration of distributors’ brands and advertising intensity

The role of advertising in defending and sustaining the brand capital is shown by table below. With the exception of jam, where there is much consumption by children and the idealised reference to home-made jam favours small brands, advertising is quite efficient.

Advertising weight of trade brands’ penetration

Advertising weight of trade brands’ penetration

Once more, we may notice that the categories that invest heavily in advertising are also those that regularly innovate and strongly differentiate their products.

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