Strategic Brand Management - Hardcover

Kapferer, Jean-Noel

Hardcover

ISBN 10: 0029170451 ISBN 13: 9780029170458

Publisher: Free Press, 1994

Synopsis

Thousands of companies now recognize that brand names are their most valuable assets, but too often branding is merely a tactical decision, almost an afterthought. In this thought-provoking work, Jean-Noël Kapferer, an international authority on brand management and marketing, provides the most comprehensive model for strategic brand management to date. With hundreds of examples and case studies of brands throughout the world, Kapferer deals with the very essence and culture of branding and provides an overall philosophy for every aspect of brand management. At the heart of the book is Kapferer's concept of the brand as a pyramid with three levels: the apex is the "kernel" or core identity; the middle is the style or personality; and at the bases are the underlying themes and advertising programs. A brand, Kapferer argues, is not a product, but the product's essence, its meaning, and its direction. Strategic brand management starts with a holistic understanding of this gestalt rather than its component parts: the brand name, logo, design or packaging, and image. This gestalt must be "managed," not just in marketing, but throughout the entire company. The most successful brand managers, Kapferer explains, search for new opportunities and new markets through the explosive phenomenon of global branding. Kapferer takes the reader through a comprehensive list of benefits, dangers, and pitfalls, and also step-by-step through each of the globalization phases -- from name transitions to maintaining consistency. He describes the conditions under which global branding works best, and the appropriateness of a multi-domestic marketing mix as opposed to a global mix. He also deals with the corporate barriers to having global brands and the structural changes that corporations may have to undergo if they are to fully maximize the benefits of global branding. This hook, already a standard reference in Europe, brings branding in the U.S. into the 1990s.

About this title

About the Author

Jean-Noël Kapferer is an internationally recognized authority on brands and brand marketing. A professor of marketing strategy at the HEC Graduate School of Management in France, Kapferer holds a PH. D. from Northwestern University and is also an active consultant to various U.S. corporations. He is the author of six books and several articles on branding, advertising, and communication.

Reviews

Kapferer's innovative theories on brand equity and development expand the boundaries of marketing theory. He hypothesizes that "the primary capital of many businesses is their brands," which "identify, guarantee, structure, and stabilize supply." In a global marketplace, he notes, brands are the only truly international language, "the real capital of business." Kapferer, a French management professor, crafts elaborate theories and practical ideas regarding brand awareness, global branding, multibrands and brand territories. While his coverage of generics is paltry, his extensive analyses of branding strategies and his case studies (GE, Black & Decker, Proctor & Gamble) are extraordinary, as are his procedures on calculating the value of a brand. Kapferer's candid observations about brand extension, demarcation and management ("brand portfolios must be drastically reduced . . . brand management should not seek to be democratic") should trigger debate in management circles and academia.
Copyright 1994 Reed Business Information, Inc.

What's in a brand? After all, consumers know that Pledge by any other name would clean as brightly. Au contraire, argues French marketing expert Kapferer, brands have particular reputations in the minds of consumers that have been built up painstakingly over time and should be altered only with great care. Kapferer here considers how different companies, from consumer goods giant Procter & Gamble to heavy equipment manufacturer Caterpillar, approach product branding: the key is the consistent communication of the brand's core image and what it represents, regardless of changes in the marketplace. Though Kapferer provides useful insights into managing and valuing a brand portfolio and strategies for international marketing, the text is a little overworked, and some of the interpretations of particular brand images are fanciful. Sometimes a good cigar is just a good cigar. Recommended for business collections.
Edward Buller, "Natural History," American Museum of Natural History
Copyright 1994 Reed Business Information, Inc.

Excerpt. © Reprinted by permission. All rights reserved.

Chapter 1

What's In a Brand?
The logic of branding

Many corporations have forgotten why they have brands. A great deal of attention is devoted to the branding process per se, bringing in the participation of designers, graphic artists, and advertising agencies. This activity becomes an end in itself, receiving most of the focus of attention. In so doing, we forget that it is only a means to an end. Branding becomes the exclusive prerogative of the marketing and communications staff, thereby undervaluing the importance of other corporate functions to successful brand management.

While branding is an indispensable activity, it is only the last phase in a process that involves the corporation's resources and all of its functions, focusing them on one strategic purpose: creating a difference. Only by mobilizing all of its internal sources of added value can a company set itself apart from its competitors.

WHAT DOES BRANDING MEAN?

Branding is much more than the naming per se or the creation of an external indication that a product or service has received an organization's imprint or its mark.

A Brand Aims to Segment the Market

Brands are part of a strategy aimed at differentiating supply. Companies seek to better fulfill the expectations of specific groups of customers. They do so by consistently and repeatedly providing an ideal combination of attributes -- both tangible and intangible, practical and symbolic, visible and invisible -- under conditions that are economically viable for the company. The company wants to leave its mark on a given field, and set its imprint on a product. It is no coincidence that the word "brand" also means the actual act of burning a mark into the skin of an animal; of designating ownership in this way. When we talk of an Atari computer, it is like saying, "There's something Atari in this computer." Indeed, this is the first task in branding: defining just what the brand infuses into the product or service, and how the brand transforms it:

* What attributes are embodied in the product or service?
* What advantages does it incorporate?
* What benefits does it provide?
* What obsessions does it represent?

This underlying meaning of a brand is often forgotten or wilfully neglected. Some distributors are frequently heard to say, "For us, the brand is secondary. No need to stick something on our products." In so doing, they are reducing brands to their most superficial aspect, the label and the trademark on it.

Branding, however, is not based on what goes on, but on what goes in. The result is an augmented product or service which must be indicated in one way or another if it is to be noticed by potential buyers, and if the company is to reap the fruits of its efforts before they are copied by others.

On this point, it is highly significant that a product which has been "debranded" retains a greater value than a generic product. If it were true that a brand was something purely superficial, just like a label, then such a product would lose its value as soon as it lost its signs of brand identification. Instead, it continues to incarnate the brand: the brand's passing presence has transformed the product. This explains the value of Lacoste shirts without the Lacoste label, or Adidas shoes stripped of the Adidas name. They are worth more than counterfeit imitations, because the brand is present even when it cannot be seen. In contrast, though the brand may appear on an imitation, it is actually missing.

Brands are Built Up by Persistent Difference Over the Long Run

It is often pointed out that products bearing different brand names are identical. Some observers conclude that under these circumstances, a brand is nothing but a bluff, a device used to attempt to set a product apart in markets in which it is hard to differentiate among products.

This attitude neglects the time factor and the concept of competition. Brands become known through the products they create and bring on to the market. Whenever a brand innovates, it generates "me-too-ism." Any progress made quickly becomes a standard to which buyers become accustomed. Competing brands must then follow suit if they do not want to fall beneath market expectations. For a short time, the innovative brand will enjoy a monopoly, but it will be a fragile one unless the innovation is patented or patentable. Simply put, the role of the brand name is to protect the innovation -- it creates a "mental" patent.

Take the example of Kellogg's, who created a new cereal that was natural and rich in fiber, two highly valued aspects of modern nutrition. In the light of its success, other manufacturers produced similar products. If Kellogg's had given its cereal a generic name such as "natural fiber cereal," consumers would soon have discovered that manufacturers such as Quaker and distributors such as Marks & Spencer and Aldi also had their own natural fiber cereal. The chosen name Country Store makes the innovative product specific. Like any proper name, it designates something unique. The product name makes the innovation exclusive and protects it against imitations. This is nothing other than the just reward for innovating, making an effort, and taking risks. And yet, while this corporation innovates by introducing products like Cocopops and Smacks one day and Country Store the next, no capitalization emerges from these efforts alone. These biscuits do not make their creative inventor famous. It takes something more than specific product names to obtain such capitalization: it takes the establishment of a brand name like Kellogg's. By producing such innovations, Kellogg's develops a capital of consumer trust and an image of a playful, high-quality creator. It can then reap the benefits of innovating repeatedly. The brand is what makes it possible to capitalize on innovation, for both the buyer and the seller.

A snapshot of a given market will often show similar products. A dynamic vision, however, reveals who has innovated and pulled the competition along in the wake of its success. A brand protects the innovator, granting momentary exclusiveness and rewarding its willingness to take risks. The meaning and direction of a brand and its economic purpose is revealed in the accumulation over time of such momentary differences.

Brands cannot be reduced to a symbol on a product or a mere graphic and cosmetic exercise. A brand is the signature on a constantly renewed, creative process which yields product A today, products B and C tomorrow, and so on. Products are introduced, they live and disappear, but brands endure. The consistency of this creative action is what gives a brand its meaning, its contents, and its character. Creating a brand requires time and an identity.

A Brand is a Living Memory

The spirit of a brand can only be inferred through its products and its advertising. The content of a brand grows out of the cumulative memory of these acts, provided they are governed by a unifying idea or guideline. Kellogg's, for instance, does not attach its name to any product: Frosties, All Bran, Special K, Rice Krispies all bear the marks of a single intention, marks that display certain values, attributes, and guiding principles. These are original, creative, healthy products for our times, universal products created with great refinement. This is a brand with flair, inventiveness, and a gift for quality.

The importance of memory in comprising a brand explains why its image can vary structurally from generation to generation. People who knew Gillette fifty years ago, when it appeared on the now famous blue blade, necessarily have a different conception of the brand from young fans of the disposable Gillette. The way we are introduced to a brand creates an anchor in our memories that shapes all future perceptions. This is the problem with two-track brands like Citroën cars: the brand image of those who discovered Citroën through the 2CV is diametrically opposed to that of individuals who first encountered it in the forms of the sleek DS or the XM. Then there are drivers who still remember its Traction Avant model, introduced before the Second World War. The memory factor also helps to explain why individual preferences endure. Within a given generation, people continue to prefer the brands they liked between the ages of seven and eighteen, as much as twenty years later (Guest, 1964; Fry et al., 1973; Jacoby and Chestnut, 1978).

A Brand is a Genetic Program

A brand is both the memory and the future of its products. A genetic analogy provides a key to understanding how brands work. The brand memory that develops contains the program for all future developments, the attributes of later models, the characteristics they will have in common, and their family resemblance as well as their individual personalities. By understanding a brand's program, we can trace its legitimate territory and the area in which it can be extended, beyond the products that created it. The brand's implicit program reveals the meaning and direction of both former and future products.

A Brand Gives Products Their Meaning and Direction

The brand tells why products exist, where they come from, and where they are going. It also sets their guidelines. A brand is not a fact set in stone. It must be able to adapt to the times, to changes in buyers and in technology. Through subtle changes in what it produces, both in its products or services, and symbolically in its communication, this is how it stays up-to-date. A brand is built up from day to day; it is never set down once and for all. Of course its past must not determine its future too narrowly. But when a brand moves out in all directions, it can lose its meaning and become void of content.

The major brands have meanings that describe their content and their sense of direction. In the area of household appliances, for example, Siemens means durability, seriousness, and trust; it conjures up an image of careful, meticulous German workmanship. Hotpoint stands for practicality, carefree use, and the familiarity of a close friend who has watched the children grow up. Philips has acquired a reputation for innovating for the general public, putting technology at the service of the general population. It becomes apparent that on every market, each major brand has its own meaning. This meaning is very important, because it tells buyers what direction the brand's research, innovation, and other efforts are taking. One highlights durability, another practicality or innovation. Just as a word cannot have two meanings at once, since one is constantly dominant, no brand would attempt to embody all possible meanings. Each one follows its own path and leaves its own mark.

That similar products exist in the product lines of several brands does not invalidate those brands' existence, provided this similarity stays within limits. It is inevitable that certain models will be duplicated in the product lines of different brands. In the automobile industry, the cost constraints at the low end are such that it is difficult to manufacture a model very different from the competition. For economic reasons, however, a brand may be obliged to have an offering on this type of generally highly disputed market. By the same token, every bank must offer a basic savings account identical to that of all other banks.

These basic products represent only a limited fringe of each brand's offer. Each brand maintains a sense of direction oriented toward its individual type of products, following a specific line of development. Suppose that brand A pursues durability, B practicality, and C innovation. Each product line contains products in which the brand demonstrates its guiding value, its obsession. These products embody the brand's meaning and direction. Citroën, for instance, is best embodied in its top-range cars, Nina Rewake in its fanciful evening gowns, and Sony in its Walkman or its Camcorders. This is why communication about such products is so important to a brand: they embody what the brand is about. Peugeot and Citroën cars, for instance, may have certain identical attributes, but the brands themselves have neither the same meaning nor the same identity.

Products cannot speak for themselves: the brand is what gives them meaning and speaks for them. It creates a resonance with them that builds and reinforces brand identity. The automobile industry is a case in point. Most technical innovations by one firm rapidly spread to the other brands. ABS braking systems are now to be found on both Volvos and BMWs, even though the two manufacturers hardly have the same identity. Is that a case of brand inconsistency? Not at all: ABS represents progress that everyone had to adopt. The brand gives its own identity to innovations.

On the other hand, a brand can only be developed through longterm consistency that is both the source and the proof of its identity. Hence the same ABS (anti-blocking system) has a subtly different meaning for each manufacturer. For Volvo, a firm which preaches total safety, ABS is a necessity that serves the brand's values and obsessions. It embodies the brand's attributes. BMW, a high-performance brand, cannot discuss ABS in these terms -- it would be a betrayal of its ideology and the system of values that galvanizes the whole organization and engenders the models that have made the Munich manufacturer famous. Instead, BMW presents ABS as a way to drive even faster. In the same way, safety-conscious Volvo accounts for its participation in European touring car racing championships by its desire to test its products better so that they last even longer.

A detail is never enough to establish a brand's identity, but the way it is interpreted lends weight to a broader strategy. A detail can only leave its mark on a brand if it resonates with the brand, deepening and amplifying the brand's meaning. This is why weak brands cannot capitalize on their innovations: they cannot manage to put meaning into them and to create that resonance. Though the BX car was a commercial success, it scarcely rubbed off on Citroën's image. Only brands with a strong identity can claim to be innovators.

A Brand is a Contract

A brand becomes credible through endurance and repetition. With time, the brand's program becomes a commitment. By creating satisfaction and loyalty, the brand enters into a virtual contract binding it to the market. In exchange, the brand earns an automatically favorable opinion of any new products it introduces. This reciprocal commitment explains why brands whose products have momentarily declined do not necessarily disappear. A brand is judged over the long term: there is always a margin for failure. Brand loyalty leaves it a respite for recovery. Without this, Jaguar would have vanished long ago: no other brand could have withstood the way its cars diminished in quality during the 1970s. This is one of the benefits a brand brings to its company, in addition to the image capitalization it makes possible and the "mental patent" effect referred to earlier.

The contract a brand establishes is economic, not legal. Brands differ in this way from other signs of quality, such as quality labels and certification. Quality labels or seals attest officially and legally that a product meets a set of specific characteristics previously laid down by public authorities, producers, and consumers. These characteristics determine a superior level of quality that distinguishes the product from other similar goods. Seals are collective marks held by a certification agency which verifies production in accordance with a schedule of specifications. Certification is therefore never acquired definitively, and it can be withdrawn. In France, the "Label Rouge," a national agricultural quality seal, guarantees an objective level of superior quality. Woolmark is a special type of seal: it, too, is a collective sign, but it is managed and held by a private organization, the Australian wool producers, who are the only ones who may receive the seal. Neither a brand nor a certificate of controlled origin offers legal guarantees of an objective quality level. It is only through its existence over time that a brand progressively becomes a virtual contract.

The Internal Requirements Involved in Branding

A contract implies constraints. The brand approach assumes first of all that an organization and its various functions -- R&D, production, methods, logistics, marketing, finance -- all have a single, specific focus. The same is true of service brands. Of course, the R&D and production aspects are missing, but this simply shifts the duty to observe continuity and consistency onto the shoulders of personnel who have a key role to play in relations with customers.

The brand approach requires internal as well as external marketing. Unlike quality seal users, each brand sets its own standards. It must therefore meet them and must strive to outdo them continuously in order to satisfy the expectations of customers, who quickly become accustomed to the brand's latest progress. The brand must also make its standards generally known. This is a lonely task, aimed at differentiating the product and acquiring an aura of exclusivity. The brand alone must bear all the internal and external costs. What are these requirements and costs?

* Paying close attention to the needs and expectation of potential customers: this is the purpose of market studies.
* Incorporating technical and technological progress as soon as this can create a cost differential or performance advantage.
* Being able to provide product (or service) volume and homogeneity; this is the only way to ensure repeat purchases. It presupposes consistent quality in the offer.
* Controlling supply quality and quantity.
* Ensuring deliveries to intermediaries and distributors while respecting the deadlines, conditions, and formats they request, and doing so consistently.
* Being able to give sense and direction to a brand, and to communicate its meaning to the target public. This is what advertising budgets are for.

A strong brand becomes a symbol with the power to mobilize internally and to attract on the outside. It is the company's standard-bearer and its driving force. As such, it is greater than many attempts to establish guiding business or corporate principles. These last only while they are being developed, and are then forgotten, or may lead to fine phrases ("A Passion for Excellence!") on posters in the reception area. The brand, though, is the organization's external facade, maintaining a constant requirement and necessity to aim ever higher.

BRANDS AND OTHER SIGNS OF QUALITY

In many fields, brands coexist with other signs of quality. In the food sector, for instance, in addition to brands, there are also quality labels, certificates of conformity with standards, and controlled origin guarantees. This variety of other signs results from a twofold goal: to protect and promote products.

Certifications of origin (e.g., real Scotch whisky) are intended to protect a branch of agriculture and products whose quality is intimately linked with a specific place and know-how. The controlled origin is part of a subjective, culturally based concept of quality, rooted in the mystery and typicality bound up in a place. It segments the market by refusing the guarantee of origin to any product not made in a specific area according to traditional practices. In France, the July 2, 1990 law has established Roquefort as a controlled origin product. Even if Danish cheesemakers and Kraft could make a roquefort cheese in other regions or countries, which consumers could not distinguish from the roquefort made in the village of Roquefort according to ancestral methods, their products can no longer lay claim to the name "Roquefort."

Quality seals are promotional tools. These adhere to another, more industrial and scientific, concept of quality. According to this concept, a specific cheese involves objective know-how, using a given type of milk mixed with selected bacteria, and so forth. The quality label creates a vertical segmentation corresponding to objective levels of quality. The issue here is not typicality, but satisfying a stringent set of objective criteria.

The legal guarantee of typicality in a controlled origin marks a difference from a simple indication of source, which does not ensure any specificity based on natural or social factors -- though it may be an attempt to suggest to buyers that one exists. Many modern cheese manufacturers attempt to cloud the issue further by adopting names that sound like the names of places or towns (e.g., German Camembert have French names) in order to evoke rustic, typical images. Quality seals, on the other hand, with their legal guarantee of objective quality, attempt to establish a hard factual aspect counterbalancing brand names chosen to suggest excellence. For instance, Rothschild, with its rich title, suggests the product offers high quality, yet it is recognized as a low-quality champagne.

Whether official indications of quality will continue to exist in Europe after 1993 will be a subject of debate between northern countries (e.g., the United Kingdom and Denmark), who believe only brands should prevail, and southern countries (e.g., France, Spain, Italy), who support official collective signs in addition to brands (Feral, 1989). According to the former countries, brands alone should be allowed to segment the market and build reputations for excellence around a name, as the fruit of production, distribution, and marketing efforts. These countries tend to favor an objective concept of quality: who cares if the Greeks' favorite feta is made in Holland or in the south of France, or if Smirnoff vodka is neither Russian nor Polish? The view of the southern states is that collective signs enable small businesses to make known their quality level or typicality, even though they use no specific brands. Their products cannot speak for themselves: a quality seal or certified origin gives them a position in consumers' minds. Clearly, behind the upcoming European debate on whether brands that have forged their own reputation are to coexist with official collective signs of quality, there is a second debate between the proponents of a free-market economy and the partisans of public authority intervention to regulate the economy. From the corporate point of view, the choice of a brand approach or the use of collective signs is a matter of strategy and of the resources that can be committed. A brand sets its own standards: legally, these do not form a commitment, but in practice, the brand comes to promise a group of specific attributes and values. It therefore seeks to become a reference in itself, if not the reference (as is the case for Société Roquefort, the very symbol of roquefort). By their fundamental nature, brands differentiate, but they do not like to share these differences. Strong brands are those that distribute values and manage to segment the market through their own efforts.

On an operational level, a brand, once again, is not simply an act of advertising. It embodies a proposal incorporating the long-term specificity of the products bearing its name, an attractive price, efficient marketing, and the projection of the brand identity through advertising. It is easier for a small business to earn a quality seal for one its products, through strict efforts on quality, than it is to undertake the demanding adventure of creating a brand, which consumes such quantities of financial, human, technical, and business resources. Even without an identity, the small business's product becomes less anonymous, thanks in part to the legal indicators of quality.

To create a brand, producers must often pool their efforts, preparing and marketing the products of independent companies under a single brand. This is the case with Yoplait. Organized collectively, this brand achieves uniform production, packaging, services, prices, delivery systems, and even communication, all around the world. A brand is a total responsibility and an external commitment to customers and distributors. This commitment leads those who participate in the brand to standardize their practices. Controlled origin guarantees and quality labels are much less demanding, since all they require of users is the observance of specific criteria, generally related to the product or service. Everyone remains free to design his own marketing mix.

Collective labels for segmenting markets are a windfall for small businesses: they motivate efforts to attain quality and distribute information on products that were previously anonymous and unable to speak for themselves. A collective label creates a message that partially compensates for the absence of brand message. It creates an objective or subjective hierarchy of quality that differentiates some productions from others. In so doing, by helping many businesses that do not have the means to pursue a brand policy, it weakens strong brands, because it enables small brands to make a statement about their level of performance and meaning. This explains why corporations with major brands are ambivalent about market-segmentation through collective labels.

Because a brand transforms a product, it rejects everything that associates it with other producers. For instance, Société Roquefort paradoxically has nothing to gain from the fact that roquefort is now a controlled origin. Until now, this brand -- the first in French history, created in 1842 -- had become the best by dint of constancy, respect for tradition, and an obsession with quality. In the minds of the public and of connoisseurs, Société stands for the authenticity of a place and its know-how (i.e., typicality) as well as fine taste (i.e., quality). Suddenly, the segmentation it had created separating it from all other brands has been diminished by the creation of a collective sign of typicality: legislation has wiped away a part of the difference between the flagship brand and its competitors. Now Société will have to become for Roquefort what Chateau Margaux is for the town of Margaux.

A strong brand is one that projects its values and manages to segment the market according to its own standards. It seeks to impose these standards and to become the reference. It therefore keeps its distance from collective means of segmentation.

Some major brands find quality seals to be useful and necessary springboards. At the outset they participate in them by financing campaigns that make these seals known, in order to promote a sign of quality that will reflect favorably on some of their products. Then, as their importance in financing promotion of the collective seal grows, they choose to funnel these sums into building their own brand and differentiating it from the competition. Such a brand must go further than the seal, promising an even higher level of quality which it alone embodies.

The ambivalent relationship between brands and collective signs can be extended to the collective campaigns themselves, which seek to change the image of a sector or the product category as a whole. Sometimes an entire sector may be threatened. Accustomed to competing with one another, none of the brands may want to assume the task of defending the sector. This is the case when the market leader actually has a relatively small market share. In such cases, a collective campaign is called for, which sends a different message from those of individual brands.

In contrast, when one brand is dominant, it may want to incarnate the sector as a whole and to speak for the sector in its own name. While projecting a brand message, it does work that improves the image of the whole sector, though it reflects primarily on the brand itself.

OBSTACLES TO ADOPTING A BRAND LOGIC

Within companies, the brand approach often comes into conflict with other approaches. Unwritten and implicit, these are thought to be neutral, when in fact they create obstacles to a true brand policy.

Business accounting rules are currently unfavorable toward brands. This is because accounting is governed by a need for prudence: consequently, any outlay that is not certain to result in a future recovery is written off as an expense, rather than recorded as an asset. This applies to investments in communication, which spread the word about what makes the brand different. Because it is not possible to measure exactly what share of the annual communications budget generates returns immediately, or in one, two, or several years, the whole sum is taken as an operating expense which is subtracted from the profits for the year in which it is incurred. Yet advertising, like investments in equipment, talented employees, or R&D, contributes to the development of brand equity. Accounting methods therefore create a bias that handicaps companies with brands, because they lead to an underestimation. Take the case of company A, which invests heavily to develop its brand name. Because these investments must appear in its accounting sheets as expenses, this results in low annual profits, and its balance sheet will display only a small asset value. This comes during a crucial period for the company's growth, when it may need help from outside investors and banks. Now compare company B, which invests the same amounts in equipment and production, putting nothing into its name, image, or reputation. Because it is authorized to record these tangible investments as assets and to amortize them gradually over several years, company B can announce higher profits, and its balance sheet, displaying higher assets, will look healthier. B will have a better image in accounting terms, even though A may actually be better placed to differentiate its products.

The principle of annual accounting valuation also hinders the brand approach. Each product manager is judged on his annual results and the net contribution made by his product. This places too much focus on the short term in assessing decisions, and favors decisions that bring quickly measurable results over those that build brand equity more slowly, but more solidly for the future. In addition, product-based accounting discourages product managers from taking on an additional advertising effort that would serve essentially to bolster the brand, when the brand works as an umbrella, covering other products as well. Managers only see that this extra expenditure in the general interest will be charged to their own statement of earnings. For example, Palmolive is a brand that covers several products, including dishwashing liquid, shampoo, and shaving cream. A decision could be made to communicate only about one of these products, taken as an image standard-bearer. The investment made would then be higher than could be justified solely by the expected sales of that product, because the collective image would also be heightened by it. This extra expenditure will nonetheless be written as an expense and charged to the product in question, even though it serves collective goals and benefits all the products under the brand umbrella.

In a reaction against the short-term bias caused by accounting practices and the way that balance sheets underestimate their values, some British companies have begun to capitalize the value of their brands in their balance sheets. This has set off a fundamental debate over the legitimacy of accounting practices that emerged in the "age of commodities," when assets primarily took the form of real estate and equipment. Today, intangible assets (know-how, patents, and reputation) are what make the difference over the long run. But beyond the need for an open debate in Europe and the world on how to capitalize brands, companies must find a way to write the long-term advantages and disadvantages of short-term brand decisions. This is rendered even more necessary by the (excessively?) high turnover among brand managers themselves.

A high personnel turnover disrupts the continuity a brand needs. Yet companies today actually program the rotation of their employees through different brands! Brands are entrusted to young MBA graduates who are inexperienced, no matter how prestigious their degree may be. What they want is a promotion, which takes the form of being assigned to a different brand. Brand managers are thus forced to produce visible results in the short term. This helps to explain many changes in advertising strategy or programs and in decisions on brand extension, promotion, or discounts. They are actually caused by changes in personnel.

It is significant that brands which have maintained a continuous, consistent message are those belonging to businesses with stable brand decision-makers. This is the case for luxury brands: the presence of the same creator or founder establishes the conditions for sound, long-term management. The same is true of major distributors. Their executives tend to stay put, and often handle communication or at least make the final decisions about it. In addition to incorporating brand value into their accounts, companies are trying to alleviate the effects of excessive brand-manager rotation by creating a long-term image charter as a lens through which to view the task of maintaining brand identity. This introduces a vital touchstone and is a tool for continuity.

Business organization can also prove an obstacle to brand management. To be commercially efficient, EDP service companies, for instance, are organized into divisions, the better to handle the problems of their specific sectors or functions. GSI, a European leader in the field, has divisions for travel, transportation, economy and finance, human resources management, marketing, and so on. The problem is that it becomes difficult to make collective investments to foster the name they share, GSI. Company organization makes this difficult: each division manager is assessed on his own financial results, which he naturally seeks to optimize.

Another classic syndrome is creating a brand without a specific supporting organization that could give it form and content, and therefore consistency. This was the case with the brand France Télécom International, which was to be an umbrella brand for all of France Télécom's international activities. Unfortunately, its organization remained vertical and tightly compartmented. There wnd management. To be commercially efficient, EDP service companies, for instance, are organized into divisions, the better to handle the problems of their specific sectors or functions. GSI, a European leader in the field, has divisions for travel, transportation, economy and finance, human resources management, marketing, and so on. The problem is that it becomes difficult to make collective investments to foster the name they share, GSI. Company organization makes this difficult: each division manager is assessed on his own financial results, which he naturally seeks to optimize.

Another classic syndrome is creating a brand without a specific supporting organization that could give it form and content, and therefore consistency. This was the case with the brand France Télécom International, which was to be an umbrella brand for all of France Télécom's international activities. Unfortunately, its organization remained vertical and tightly compartmented. There was no real horizontal structure behind the brand. Potential customers found themselves passed on to other divisions or subsidiaries (e.g., Télésystèmes, France Cable Radio), each of which had its own identity.

The third syndrome involves the relationship between production and sales. The production units in the Electrolux group are specialized by product. Their focus is single-product and multi-market, as they sell this product to business units, whose focus is, in contrast, single-market and multiproduct (the products are covered by an umbrella brand). The problem is that these independent business divisions, each with its own brand, all want to take advantage of the latest innovation from the production division, to maximize their individual earnings. What is missing is a structure for managing and allocating these innovations as part of a consistent, global vision of the brand portfolio. As we saw earlier (page 14), there is no point in entrusting a strong innovation to a weak brand. In particular, this undermines the very foundation of the brand approach, i.e., differentiation.

Failing to manage innovations has a very negative impact on brand equity. By letting each business division claim the same innovation for itself simultaneously, Electrolux contributed to the collapse of its best brand, which was weakened by its sister brand in the group. The latter is an attractive brand for discount stores, positioned on its low prices. Yet it received the same technical innovations as the leader, positioned as a high-end, more expensive, brand. If a brand is to have meaning, this must be reflected in the way innovations are allocated.

In contrast, Peugeot and Citroën share many internal resources and automobile parts, to attain cost and scale economies. But this has not prevented the two manufacturers from developing two car concepts that are very different on the assembly line, as can be seen through different external components, as well as specific internal components, when these are essential to the brand's meaning. For instance, the Citroën XM "hydro-active" suspension is different from the conventional suspension on the Peugeot 605. Similarly, top-of-the-line Volvos have the same engine as the Renault 25. But Volvo has built its meaning on other aspects besides the engine, as has Renault. Having an engine in common does not handicap these brands. In contrast, as General Motors made more and more apparent all that its various brands (e.g., Pontiac, Chevrolet, Buick) had in common, it fell into decline on American markets.

Along the same lines, when a producer supplies a distributor's brand with the same product it sells under its own brand, it gradually erodes its brand equity and, more generally, the respectability of the very concept of branding. It is stating by its action that what customers pay more for in a brand is the name and nothing else. By dissociating the brand from the augmented product it identifies and represents, the brand is made into something superficial and artificial, with no legitimate reason to exist. Ultimately, companies pay the price for dissipating their brand equity, when discount distributors declare in their advertising that brands are used to exploit consumers, and that consumers can resist by buying generic products. (This was the official line of Carrefour's advertising from 1976 to 1978.) This also justifies the sluggishness of public authorities in the face of increasing trademark infringement by distributors' brands. Moreover, such practices generally foster a false understanding of what brands are, even among opinion leaders, contributing to the rumor that nowadays all products are the same.

Finally, the way that various communications services are organized does not lend itself to the requirements of a sound brand approach. Even an advertising agency that incorporates a network of services covering name creation research, packaging, graphic identity, and corporate communication, event creation or promotion, presenting itself as an integrated communications group, remains an advertising agency at heart. And advertising agencies think only in terms of campaigns, operating in a short, one-year timeframe. The brand approach is something else: it develops over a long period and requires a fully integrated approach, where all means used are contemplated together.

It is clear that a company rarely finds contacts inside such so-called communications groups who will take responsibility for developing an encompassing overview that is not based on advertising without feeling obliged to sell a campaign. Furthermore, advertising agencies are not in a position to answer strategic questions, such as what the optimal number of brands in a portfolio should be. Given that the answer influences the survival of the brands for which it does the advertising, the agency finds itself in the awkward position of being judge and jury. This is why a new profession, that of the strategic brand-management consultant, must emerge. The time has come for businesses to have access to a medium-range vision that is not confined to a single technique and that is capable of providing consistent, integrated guidelines for the development of their brand portfolios.

SERVICE BRANDING

There is no legal difference between manufacturers' brands and service brands. These are economic distinctions, but not legal ones. By restricting itself to branding per se, the law is of little help in understanding how brands and the branding process work, and their specificity in the area of products or services.

Service brands do exist, such as Europcar, Hertz, Ecco, Manpower, Cap Sogeti, Club Méditerranée, Hilton, Marriott, Sofitel, and Harvard. Each one identifies a specific set of attributes that take the shape of a definite, though intangible, service: rent-a-cars, temporary employees, data processing, leisure activities, hotel chains, or higher education. Some service sectors seem to be just entering the brand age. This evolution is fascinating to watch, as it highlights just what is involved in adopting a brand approach, and reveals the specificities of branding an intangible service.

The banking industry is a fine example. If bank customers were asked what bank brands they knew, they would probably seem dubious or confused. They know the names of banks, but not bank brands. This is significant: for the public, these names are not brands identifying a specific service. They are corporate names or insignia belonging to a given place. It is true that, until recently, bank names designated either the owner of the corporation entrusted with the customer's funds (e.g., Barclay's, Morgan, or Coutts Bank) or a specific area (e.g., Midland Bank, National Westminster), or its target clientele (e.g., City Bank or Home Owners Building Society). The emergence of a brand approach can generally be discerned from the outside by a contraction of the name. Banque Nationale de Paris becomes BNP, Banque de Paris et des Pays Bas becomes Paribas, and National Westminster becomes NatWest. Some observers take this to be a desire to make the name look simpler, according to advertising precepts favoring what is easy to remember. It is easier to recognize the name of someone who uses a short signature. But though its incidence cannot be denied, this idea limits branding to brand names per se, and to the realm of communication.

What these banks are doing fundamentally by contracting their names is to become or establish a contract. Up to that point, some of them were the local bank. Their name designated their location, with no other meaning, just as an insignia (from in signum, sign + in) refers exclusively to a specific area. Because banks were primarily perceived in terms of places or persons, these names became proper names which rigidly designated a reality limited in time and space. Brands, on the contrary, are atemporal and aterritorial (with the exception of distributor's brands). They identify a set of attributes and make a commitment to a long-term difference in the banking services themselves. In this sense we can speak of a brand contract. Though it is a noun, the brand works as an adjective and a verb, explaining how the service has been transformed, what attributes it has received, and by what values it is governed.

As they are contracted, these bank names come to represent a specific relationship instead of a person or a place. To make it visible, this relationship may take the form of specific financial instruments (or exclusive policies in the insurance field). But these visible and easy-to-imitate products are not what explain and justify the move to a brand. They are merely the external manifestation. These banks and insurance companies have understood the key to what makes them different: the relationships that develop between a customer and a banker under the auspices of the brand.

Finally, one specific aspect of service brands that contrasts with product brands is that the service is invisible. What does a bank have to show, except customers or consultants? Structurally, service brands are handicapped in creating images of themselves. This is why the brand uses slogans. It is not coincidence that slogans are voiced (vocare), representing vocatio, the brand's calling or vocation. The slogan is a commandment for internal and external relations. Through it, the brand defines its behavioral guidelines, and these guidelines give the customer the right to be dissatisfied when they are transgressed. It is not enough for a bank to vaunt its smile or its listening ear. These attributes must be assimilated by the people who offer and deliver the service. Human beings are intrinsically and unavoidably variable: this is the challenge for the brand approach in service industries.

In banking, the requirement of maximizing short-term business results is often contrary to brand logic, even though banks claim to follow this logic in every other aspect. Crédit Lyonnais sums up its specificity and its guiding principle in a now famous slogan stating why it is different: "We have the power to say yes." This demonstrates the corporation's intention to give broader powers to the personnel that have direct customer contact. More than just window dressing, the advisory function of these employees is to be supported by the capacity to take immediate action -- it is impossible to dispense good advice without decentralizing power. Is this positioning compatible with the orders given to all Crédit Lyonnais employees to "sell" as many Popular Savings Plans (PSP) as possible, when this new savings plan is available in exactly the same form at all other banks? Many customers should be advised against opening PSPs, or should at least realize they might have little to gain from doing so. A real advisory vocation is incompatible with a policy of opening PSPs for everyone, whatever their circumstances. This example proves that, notably in the banking industry, brands are still perceived as a way of speaking differently about products or services, but nothing more. Brand logic has not yet been sufficiently assimilated by the production and distribution departments.

LUXURY BRANDS

In luxury markets, there is some confusion surrounding the relationship between the concept of luxury brands, which the French call "griffes," or literally "claws." The term griffe is sometimes used to describe a luxury brand if the brand is applied to several products (Botton and Cegarra, 1990). Others claim that brands can become griffes (Rastoin, 1981). In reality, brands and griffes must be distinguished, in the ground they cover and the way they work. This leads to the realization that Dior, for example, is a griffe for one part of its production and a brand for another. In fact, a griffe can become a brand, but not the other way around.

Here again, the law does not differentiate between griffes and brands. In legal terms, a griffe is the fixed image of a signature, set down to be used as a brand. Yet the very word griffe says much more. Its other meaning, "claw," suggests instinct and violence: it is something unpredictable, that leaps out and leaves its mark. In this sense, the griffe is the mark of an inspired and instinctive creator. Last but not least, griffe has the same root as "graphic," and it refers back to the hand. Its reference model is handmade work and craftsmanship. The specific domain of the griffe is clearly the world of creation. It refers to the world of art, it employs handmade production, and it is obsessed with creating works of unsurpassable perfection which is visible to the eye. The word "works" is crucial: the ideal behind a griffe is a unique work of art which can never be reproduced. This explains what it fears most: copies. Brands, in contrast, are afraid of fakes. Now it becomes clear why Dunhill, Dupont, Ferrari, and Porsche are not griffes in this sense, but luxury brands. These products emerge not from the workshop but from the factory, and their focus is not a unique work, but the series (even when limited). Their production is based not on instinct but on streamlined production. Of course there is something ingenious behind both Ferrari and Dior. But Dior is a creative genius, while Enzo Ferrari is a fantastic engineer.

Workshops can become industrialized and move into series, then mass production. But the opposite has never happened: factories do not aspire to become workshops. This is why a griffe can become a brand, adopting a democratic approach through the quantity and consistency ensured by mechanization. Yves Saint Laurent is a griffe when he signs his haute couture dresses; his name becomes a brand when applied to lipstick, ready-to-wear clothing, or perfume. In contrast, luxury brands like Breitling, Dunhill, Dupont, or Ferrari are never, properly speaking, griffes. The fact that they cover a great many products has nothing to do with the issue: it is a process called brand extension. Behind each of these prestigious brands lie the structural parameters of any brand: research, method, and stability. A griffe is a matter of inspiration, intuition, and the unpredictable.

Copyright © 1992 by Les Editions d'Organisation

Edition details

• Publisher: Free Press
• Publication date: 1994
• Language: English
• ISBN 10: 0029170451
• ISBN 13: 9780029170458
• Binding: Hardcover
• Number of pages: 341