The new brand management is the fruit of the adaptation of companies to their new environment.
What are its facets?
Anticipated future revenues due to the brand
Ability to create and sustain brand performance and growth Price premium and store presence pastimes at a time when television consumption is systematically decreasing, as is reading. Everywhere, in Western cities as in Asia, we like to visit shopping centres; we like to wander through arcades, malls, brand shops, factory shops. Asian tourists visiting France expect only one thing after the obligatory visits to the Eiffel Tower and the Louvre: a visit to the shops. Airports have become more than ‘air malls’: they are ‘air fashion malls’.
The French language is deceptive here:
it uses the phrase ‘faire ses courses’ where the English use the phrase ‘to go shopping’. The French has retained the dimension of speed, of counting time, which is in fact very appropriate for the kind of ‘duty’ shopping carried out in supermarkets. Modern working people have even less time than before: buying groceries and household consumables is something that must be done quickly, therefore shoppers rush through the aisles of the supermarkets and hypermarkets. Hence the well-known figures of the average time spent choosing a mineral water, a washing powder or a shampoo. This is counted in seconds:10, 12, 16, no more.
To realise the modern frenzy of shopping, it is necessary to keep in mind the expression ‘to do the shops’, in the same way that one ‘does’ a painting or a museum.
It is interesting to see that marketing shows little interest in the shopper. Marketing talks only of consumers. The two are very different, like two faces of the same coin. It is always consumers who are consulted in telephone surveys and on the internet. It is consumers who are scrutinised in focus group meetings, where everyone is collectively liberated, the comfortable chairs and canapés helping this process. The consumer writes the list of products and brands to buy.
It is the shopper who decides on the spot whether to take this or that. It is the shopper who has now become so eclectic, and who passes from a large, gleaming store to a discounter or a bazaar in the same afternoon. As a result, shopping has become exciting, surprising, full of emotions, the key being the possibility of doing business, enjoying oneself at the same time by wandering through places designed for the pleasure of – the shopper.
There is a tendency to confuse the concepts of the consumer and the shopper. In the B2B sector, they are two separate entities: the user and the purchaser. Each has different criteria and objectives, hence they also have conflicts of interest. The rise of the shopper is general: shopping is therefore no longer a race, a chore, but a way to exercise one’s talent and to gain money by spending less of it. The consumer may declare a liking and respect for Michelin, but the shopper will leave a car at a Norauto garage and pick it up with tyres from Norauto.
Today’s shopper may be also a businessman or woman. He or she enjoys brands and good business. For all the industries that have adopted the cycle of fashion as the economic engine of annually renewed client desire, the reduced-price brand outlets represent an opportunity – to sell last season’s unsold stock rather than slash the prices at discount traders or even in factory shops.
Moreover, these sales deliver a true brand message, since they take place in branded shops, where the brand can be expressed through the service and the staff in addition to the product and prices. Hence the importance of staff training, so that each contact with the shopper is an opportunity to leave a positive, durable memory trace. The brand is built through contact.
Shops, like internet sites, in fact become complete destinations for an afternoon full of what is called ‘retail-tainment’, that is, the fusion of ‘retail’ and ‘entertainment’. In mass consumption, the internet, the proliferation of shopping centres, factory shops and brand centres convey a single fact: shopping is not necessarily a chore, but a leisure activity.
People can simultaneously find pleasure, excitement, and an opportunity to go out as a group and to do business. Shopping takes on the air of a safari, where people seek deals, and good deals. Through their internet search behaviour, or in the aisles, clients now set their own price; they are not subjected to a price offering. They can decide whether to pay the higher price on the ticket, and be certain that they have found the latest thing, and in the right size, or wait for the sales, but take the risk of not finding the desired product, or finding it only in the wrong size.
Markets are fragmenting, and volumes too
Traditional marketing also stumbles on the pitfall of market fragmentation. The mass market is dead, even though we continue to speak of ‘mass-consumption products’. It is enough to look at the figures: even for a product as global as Diet Coke, in this country 8 per cent of purchasers represent 40 per cent of its volume and more than half of its profits. What product can boast a penetration rate higher than 20 per cent?
Nowadays we no longer talk about segments, but rather fragments. The segment remains a valid notion at a macroeconomic level: in the car trade, there are the segments B1, B2, M1, M2 and so on. These are divisions of the car market according to the range level. The car makers create a platform corresponding to each segment, on the basis of which they will in reality build different models, themselves divided into highly differentiated versions, each aimed at a specific fragment.
You might think this is nothing new: haven’t car makers always broken down their basic model into multiple peripheral versions (coupe, cabriolet, estate)? What is new is that there is no longer a basic model. Peugeot initiated this strategic approach and uses it for each launch. Thus the 207 is launched in seven versions, all highly specialised according to the life-style fragment they are aimed at; but there is no more talk of a basic version.
Ralph Lauren has created more than 10 subbrands or daughter brands targeted according to the time of day and week – more or less casual or elegant – and according to sex and age. Nevertheless, this does not fragment the brand, since it has a highly compact central kernel, a very clear identity, symbolised by Mr Lauren himself and created in any Ralph Lauren shop.
The signs of fragmentation are everywhere: 10 years ago, a best-selling book sold around 350,000 copies. Nowadays, even the winner of France’s prestigious Goncourt prize only sells 250,000. Fragmentation poses an acute problem for the ‘product brands’. They are typical single product specialities: Nutella, Mars, M&Ms, Orangina and Boursin are examples. That is, it is a very specific product that has a name, and this name belongs to only the one product (the inverse of this being the umbrella brand, which covers numerous products, such as Nivea or Legrand).
Numerous groups have based their strategy precisely on a portfolio of specialities, so their brands are product brands.
It was a winning strategy until now: the volumes of each brand made it possible to justify a sufficient advertising budget to give the brand visibility and to unleash sales. With the fragmentation of the market, and therefore of volumes, the brand no longer has access to the major media, for example television, which contributed to building its success.
The distributors, hypermarket and supermarket chains, become aware of this and realise that the brand is not in such good health, or is investing less in its future. In time many brands, despite being well known, no longer have an advertising budget anywhere near large enough. They concentrate their action on in-store sales promotion, a disguised special offer price, in order to support the turnover without which even their presence on the shelf is under threat. They no longer invest in their brand capital: that is, in the future.
How can companies escape from this snare created by market fragmentation? The product brand cannot do so with any great ease. To modify a speciality is to change that speciality. Is a Boursin cheese without garlic still Boursin? No. Another solution is to bring together several previously disjointed, separate specialities, each with its own identity, under a common umbrella. For example the Berchet group, owner of toy brands such as Berchet and Charton, thought of bringing them together under an umbrella name ‘SuperJouet’ and promoting that. The Bongrain group brought together many of its brands under an umbrella of ‘Weight Loss and Pleasure’.
A different tactical approach, chosen by groups that opt to maintain their presence on television at any cost, is to adopt a short format for ads (10 seconds instead of the classic 30 seconds). This maintains the frequency of the brand appearances, even with a reduced advertising budget. It is also necessary to buy the advertising at the last minute in order to optimise costs, and communicate during empty slots of the day or night, when the home is typically deserted by the ‘homemaker under 50’, and broadcasting time is therefore much less expensive.
Moreover, in this ageing country, this homemaker no longer corresponds to the core target. The limitation of the exercise is that the short slots can only provide awareness. It is difficult to build the intangible quality of the brand, the true bulwark of brands, through this creative format.
Every day a typical American has a choicebetween 7,000 hours of television. The 32 per cent of households equipped with a TiVo can not only watch their chosen television programmes ‘a la carte’, pre-recorded and available exactly when they choose, but also cut out all the commercial breaks.
As for young people, they spend hours every day on the internet. It is understandable. In 2006, Google bought MySpace for the fabulous sum of US$900 million. This site enables millions of people to introduce themselves to each other. Some months later Google bought YouTube.com for more than US$1 billion. This site is the home for the spontaneous production of video clips by millions of internet users. The goal is to provide the public with My Google TV, the first totally a la carte television service.
In short, normal advertising communications now face a real problem in reaching their targets. People channel-hop, they get up during commercial breaks, they are online or on the phone or on their PlayStation. In France and in Europe as a whole, you might think the situation has not yet gone so far – but it has. The audience monitoring figures from Mediamétrie demonstrate this: 50 per cent of media consumption is interactive.
France is at the forefront in making ADSL (broadband) generally available, even in the furthest reaches of the countryside. What is known as Web 2.0, the second internet revolution, is the true one. The first was a revolution of promises and visionaries. The technology existed; it was going to change our lives. Sadly, it was slow and the content was missing.
Hence the disappointment and the bursting of the dot.com bubble. In the meantime, young people continued to consume the internet, to create exchanges between themselves, to turn it into their preferred mode of communication. They are the ones who shape its content (via MySpace, YouTube and the rest), not to mention the ability to have the world on demand.
Everyone can see how a youth clothing brand such as Quiksilver or a sportswear brand such as Nike could form part of the advertising of tomorrow: on the internet, the brand will be highly customised thanks to the information collected on each internet user connected to MyGoogle TV, (for example, or YouSpace).
The advantage is less clear, however, for Herta delicatessen products, or for Saupiquet tuna. This is why television channels are trying to remain faithful to their etymology. What is a television channel? It is simply a link. Television is no longer the ‘mad woman in the attic’: it still has to re-demonstrate its ability to be an audience aggregator. This involves the production of successful series, of talk shows that mirror today’s society, where everybody is telling their life story to somebody, like a case study to be discussed collectively among households.
Sport is an ideal means for reuniting the exploded audience around an intense emotional ceremony. We may also see a return to soap operas: the name dates back to the 1930s, when soap brands financed programmes themselves, precisely in order to attract the audience and justify their advertising. This seems all but certain.
What is known as the convergence of Vine and Madison, a term taken from Vine Street in Los Angeles, where all the film actors’ agents are concentrated, and Madison Avenue in New York (the avenue for advertising agencies), announces that we are moving towards brand communication in a different form from the classic 30 seconds (Donaton, 2004). This is a question not of ‘product placement’, with which we are familiar (placing the brand in the story, such as Peugeot in Taxi 1, 2, 3 and 4), but of inventing a new form of brand expression.
With technology, the consumer has seized power
Technology is the consumers’ friend: this is why they have adopted it. In fact, it has modified their relationship to manufacturers, to controlled or official information, and therefore to political cant. This revolution has an impact on brand management, which must also integrate this freedom technology.
Some key figures are useful to depict the new world that brands inhabit:More mobile phones are sold worldwide than televisions.The premier digital camera brand is not Canon or Fuji but Nokia.80 per cent of Koreans have a mobile phone with a digital camera.More than 15 per cent of internet users visit blogs.Nearly 20 per cent of internet users give their opinions on internet sites dedicated to the evaluation of products and services by the clients themselves.
Three months after the appearance of a consumer comment on the bikeforum.com site from someone who was amused at having been able to open a lock with a Bic ballpoint, and the circulation through the blogosphere of an amateur film proving this could be done, the Kryptonite company, which had spent 30 years building its reputation in the United States on safety, incurred a loss of US$10 million recalling all the vulnerable locks on the market. The same was true for Apple following the creation of the site Appledirtysecret.com, revealing the shortcomings of the iPod battery. Blogs start conversations, and the traditional media pick up on them.With a click on price minister or kelkoo, you can find out where to buy cheaper.With a glance at epinions.com, you can find out what other people are thinking.
All traditional marketing was founded on the asymmetry of power in the manufacturer’s favour. Customers found it hard to become well informed, and therefore based their buying decisions on the familiarity of the brands, small distributors were grateful to the major brands for letting them deliver their goods, and competition was waged by every means except on price. This is over: the consumer has never had so much power.
This is also true of B2B clients:They are rare, and know it. They like to be seduced by a mass of brands that are often neighbours.They are informed: today everything is known. They can search online to find out what is thought about such and such a product by looking on e-pinion sites, consulting their sector community and so on. They can easily find the best vendor sites where the product is sold for less. The frontiers of the company and the brand are now porous. This is why IBM prefers to authorise certain key people in the company to create their own blogs, which open it up to the flow of questions, and at the same time make it possible to gain familiarity with what is being said.They can form blocs, and exert pressure on the company through collective internet action, their virtual community and elobbying. The impact of iPoddirty secret.com, which alerted all fans to the battery problems of the first iPod, is well known.They have acquired a communicative, participative, interactive culture. This leads to new opportunities for brands, which will cease to work as before – ‘for customers but without them’. Nowadays involvement is at stake: the more customers or prospective customers are involved, the more they nurture a genuine engagement with the brand.
The goal of any brand is to make each customer a member, part of a virtual club of which he or she is not the centre, but where the customers’ preoccupations, and their interests, are at the club’s core. It is necessary to go beyond the notion of technical, relational marketing, which is admittedly useful, but which, like any technique, bypasses the essential. The more customers feel listened to, involved, required not to purchase but to act as advisors, the more a genuine link, a genuine community will be created around and with the brand.
Web 2.0 has set the seal on client or consumer power. The internet is no longer visionary or prophetic: it is easy, practical, abounding in services and information or games. Blogs have become the truth of the market, the true consumer magazine, while the brand websites, and in particular consumer magazines on glossy paper, are the ‘official’ truth. (see also Figure below)
The era of the choice economy
Every 10 years or so, it is claimed that consumers have changed. Nothing of the sort has happened. It is the choice that has changed. It is the information that has changed, as a result of the technology made accessible to everyone. Previously, the range was restricted to a few ‘me-toos’ from similar competitors. Marketing was the art of making war while avoiding a price war.
Today consumers have the choice of an economy brand. They are confronted with considerable price differences for products, none of which are poor quality. By dint of manufacturing everything in China or Romania, the differences between branded and unbranded products are reduced. Moreover, the internet renders the offer transparent.
This is the end of one of the brand’s previous levers of power: a lack of familiarity on the part of customers with the available choice, leading them to favour the recognition factor of the brand. Blogs now give back to the markets the function they had lost: that of genuine discussion between consumers, as in the marketplaces of yore. Cold hypermarkets had killed all discussion: blogs initiate discussions and the media then diffuse them.
What, then, is left to the true brands? Two things: product innovation and the intangible factor. Consumers today look at brands as products: it is necessary to prove their advantages in order to justify the price premium. At the same time, in the era of the mass society, there is a demand for personalisation, for services, and also for social differentiation through image. At its extreme, it is a search for the superlative life through the intangible, pure image and luxury.
Another facet of the choice economy is what Alderson has called ‘the long tail model’. The editor-in-chief of Wired magazine was the first to draw attention to the fact that the internet would put paid to the hit parade. It is because physical shops existed that hit parades of songs, or books, had to be created. It is highly expensive to stock books or CDs, and it is better to stock only a few, with a high turnover. However, if music and books are downloaded, the cost of transport and stocking becomes nil.
From this point of view any song, any book, even the least well known, now has the same ease of access as a hit. The hit parade is therefore no longer necessary to the economy. Perhaps it is still necessary to society. We have seen it, indeed, with sites like Myspace or YouTube, where spontaneously created music circulates over the internet. As the slogan says, ‘the world is now on demand’: likewise with Google, everything is now accessible.
The era of the ego-economy is possible: people creating their own programming via iPod and iTunes are the demonstration of this. Hence the success of these alternatives. This is how to manage products successfully now: by multiplying the accessories. There are several thousand possible accessories for an iPod! Mini has based its advertising on ‘make it your Mini’, as has Dell.
The power of communities
Nowadays it is no longer consumers who build brands, but communities. It was New York’s gay community that made Absolut a success, whereas that of Los Angeles made a success of Bombay Sapphire. It was the community of designers and creative people who supported Apple in its lowest periods.
Today in the United States the talk is all of ‘community marketing’. Marketing plans are highly differentiated according to whether they are addressed at African-Americans, Chinese-Americans, or Americans of Hispanic or Puerto Rican origin.
What does the notion of community add to the notion of segment? Why not simply talk about the Chinese or Puerto Rican segment? A segment is a marketing abstraction designating people with the same profile or the same expectations. In contrast, a community is a living group, daily weaving new links through communication, exchange and participation. A community exists, lives, grows and has an identity. A segment is defined and measured: it agglomerates. The community expresses, and brings together.
The power of communities is admittedly not new: the cases of Absolut and Bombay Sapphire prove it. However, the internet has given a new perspective; communities are beehives of communication. The internet is their medium, as are mobile phones. The power of communities therefore ceases to be a sociological abstraction, or a recuperation technique: it becomes a true lever, if the brand knows how to put itself at the community’s disposal. For example:Telephone brands invest in services to be supplied to communities of football fans, or of a particular football team (Manchester United has several million devotees).Danone, via the ‘Danone and you’ website, puts itself genuinely at the service of mothers of young families.The aluminium extrusion brand Technal has created a new profession, that of thealuminium worker, and places itself at its service.The La Roche Posay brand stakes the centre of its communication activity on the effective involvement of the dermatological community.Quiksilver, Oxbow and Billabong strongly involve and become involved in the world of true surfers.Nike has created true niche marketing by becoming involved in the streets, with rappers or with the different tribes within each sport.
The limits of mono-distribution
Coca-Cola’s strength is its multitude of distributionchannels. Danone’s weakness is its mono-distribution; the bigger stores are overrepresented in its turnover. It is possible to follow a strategy associating the brand with a single distribution channel: this is the very basis of the l’Oréal group’s success. L’Oréal, however, has turned its brands into indispensable brands in their sector. This is no longer the case for the Wal-Marts, Carrefours, Tescos, Targets, Dias and so on. In fact the major stores are now promoting their own brands, by providing them with a shelf space greater than their market share. This reduces by the same amount the visibility of branded products. As everyone knows, if a brand is not highly visible on the shelf, it is as if it had never been distributed.
Now in traditional marketing, in addition to a superior product, it is necessary to have enlarged distribution. In mass-consumption goods, visibility on the shelf is vital. Of course, fanatical clients will come looking for a brand that is not readily visible, but the others, the majority, will not make the effort. In order to escape this bottleneck, it is necessary to know how to compensate for weakness on the shelf by means of faster turnover. This is capable of bringing an overall margin to the distributor that makes the branded product attractive. This supposes that the brand owner has a star product in its range, a leading light on the shelf, an indispensable reference. On the processed meat aisle for example, it would be Herta Knackis, or Herta pate, or Label Rouge ham from Fleury Michon.
One solution to this problem is to exit the shelf, and to move towards the client through promotion, through putting oneself forward. This is the strength of Ferrero. This discreet Piedmontese family company is a model of growth and serenity in the mass-consumption field. Its well-known European brands are Nutella, Kinder, Mon Cheri, Rocher, Tic Tac and Duplo. Kinder is a brand systematically highlighted in hypermarkets.
It is a question of moving towards the client, rather than expecting the client to come to the shelf. Thanks to its extensive range, Kinder can economically create massive aisle-end displays, or autonomous displays installed far from the core shelf. Moreover, while most mass-consumption brands are reducing investment in their sales force, encouraged to do so by mass distribution and its centralized management logic, at Ferrero they understand the importance of constantly watching over the total visibility of their products, whether they stand out on the shelf and so on.
The other solution pursued by all brands is the diversification of distribution circuits. Thus we find soft drinks on sale in bakers’ shops, on trains and so on. In the same vein, certain brands have attempted to re-enter the hard discount distribution circuit, from which they had been excluded almost by definition by the founders of the concept – the German chains Aldi and Lidl. It was still necessary to have a product that could not be substituted and to insert themselves into the need for differentiation of one of the actors. This is currently the case.
A non-substitutable product is a product for which, if it is not in-store, the client does not buy anything else in its place: this is the case for mini Babybel cheese and Kinder Surprise candies, for example. From this point of view, offering such goods on the hard discount circuit could prove interesting for the distributor, since it offers customers a genuine service but does not tread on the toes of their own products. On the other hand Lidl, number two in the market, which consequently has higher costs than Aldi, needs to find a source of profit through a few brand references, in order to remain competitive on price with the market leader Aldi in terms of essential products.