Challenges and Opportunities Facing Brand Management: An Introduction to the Special Issue

Author(s): Allan D. Shocker, Rajendra K. Srivastava, Robert W. Ruekert

Source: Journal of Marketing Research, Vol. 31, No. 2, Special Issue on Brand Management
(May, 1994), pp. 149-158
Published by: American Marketing Association
Stable URL: http://www.jstor.org/stable/3152190
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ALLAN D.
SHOCKER,
RAJENDRA K.
SRIVASTAVA,
and ROBERT W. RUEKERT*
Challenges
and
Opportunities F ac ing
Brand
Management:
An Introduc tion to the
Spec ial
Issue
Rec ent headlines in the
popular press (e.g.,
"What's in a
Name? Less and
Less,"
"Brands on the
Run,"
"Private
Label
Nightmare,"
"Marlboro
F riday,"
"The Brand
Leader's
Dilemma") spell
out the
plight
of brand or
prod-
uc t
management
in
today's tough c ompetitive
environment.
Brand
managers
have been desc ribed as "murderers of
brand assets" bec ause suc h an
important
func tion
typic ally
has been left in the hands of
relatively young, inexperi-
enc ed
managers,
overloaded with
analytic al
skills and often
very
short-termfoc used
(Landler, Sc hiller,
and Therrien
1991).
The
c hallenges posed by
these c onditions
require
a
c hange
in mindset as well as ac tions on the
part
of brand
managers.
These
managers
are
c hallenged
not
only by
the
imperatives
of the
daily
c rises forc ed
by
c ustomer and c om-
petitive
market
ac tivities,
but also
by
a need tothink more
strategic ally
about the func tion of brand
management
itself.
The
purpose
of this introduc tion,
indeed of this
spec ial
issue,
is toexamine issues
affec ting
the state of brand man-
agement-the c hallenges
as well as the
opportunities.
In
addressing
this
objec tive,
we
adopt
a broad
perspec -
tive. The issues
affec ting
brand
management go beyond
those that c an be dealt with
by
the set of artic les c onstitut-
ing
the
spec ial
issue. A broad
perspec tive
enables us to
sketc h some direc tions for researc h. We disc uss
problems
and
opportunities posed by major
market forc es and their im-
plic ations
for
produc t management.
We
adopt
a
"systems"
view,
whic h c onsiders brand
management
as
adaptive,
re-
sponding
not
only
tothe ac tions of
c ompetitors,
final and in-
termediate
c ustomers,
and other
stakeholders,
but alsotoits
own
past
ac tions and
reputation.
We
distinguish
brand man-
agers
frombrand
management
and disc uss some
possibili-
ties for new
ways
of
organizing
the func tion.
F urthermore,
we
try
to offer some
understanding
of the "c auses of
c auses." That
is,
rather than
restric ting
ourselves, say,
todis-
*Allan D. Shoc keris the Curtis L. Carlson Professorof
Marketing,
Uni-
versity
of Minnesota.
Rajendra
K. Srivastava is the Sam
Barshop
Profes-
sorof
Marketing,
Chairof the
Marketing Department,
and Charles LeMais-
tre F ellow at the IC2 Institute of the
University
of Texas at Austin. Robert
W. Ruekert is an Assoc iate Professorof
Marketing, University
of Minne-
sota.
They
served as c oeditors for this
spec ial
issue on Brand
Management.
149
c ussion of the
impac t
of retailer or manufac turer ac tions on
buyer behavior,
we alsofoc us on
why
these market
players
behave as
they
do
by examining
the
likely impac t
of mac ro-
environmental forc es
(e.g., c hanges
in
tec hnology
and
global c ompetition)
on
industry prac tic es.
We
ac knowledge
the
rec iproc al
relations
buyers
and
suppliers
have with eac h
other in their c onstant state of
adaptation (Dic kson 1992;
Ratneshwar, Shoc ker,
and Srivastava
1993).
This
deeper
un-
derstanding
of c auses of market behavior will
only
inc rease
as brand
managers
seek
greater
market orientation
(Kohli
and Jaworski
1990;
Narver and Slater
1990).
These c on-
stitute
ways
of
"seeing differently,"
whic h we
inc reasingly
expec t
to c harac terize the
func tioning
of future brand
managers.
The remainder of this artic le is
presented
in twosec tions.
The first identifies five
major
environmental forc es affec t-
ing
market behavior and
suggests
their
implic ations
for
brand
management.
We
pay
some attention tointerrelations
among
these forc es and the
proac tive
nature of brand man-
agement
itself in
helping shape
them.
Throughout
this dis-
c ussion,
as
appropriate,
we
highlight
the
spec ial
c ontribu-
tions of the artic les selec ted for the
spec ial
issue. The final
sec tion identifies several researc h
opportunities
this
perspec -
tive affords.
ENVIRONMENTAL PRESSURES ON BRAND
MANAGEMENT
Marketers must c reate
c ompetitive advantage by
c on-
stantly adapting
toand
instigating c hange.
An innovative
produc t
or
program
loses its
c ompetitive edge
and the abil-
ity
toc ommand
pric e
and/or share
premiums
as soon as c om-
petitors
are able to
duplic ate
or c ounter its
c apabilities.
Henc e,
suc c essful marketers must dare tobe
different,
not
only
to
get ahead,
but to
stay
there.
However, adaptations
to
market
c hanges
are
likely
tobe more suc c essful if ac tions
are
guided by knowledge
of the forc es
shaping
market be-
havior and
insights
that enable the
development
of sustain-
able
c ompetitive advantages.
Brand
managers
must address the
exigenc ies
of the evolv-
ing
needs
of buyers
within a market
inc reasingly populated
by global c ompetitors
and the
opening of
territorial mar-
Journal
of Marketing
Researc h
Vol. XXXI
(May 1994),
149-158
JOURNAL OF MARKETING
RESEARCH,
MAY 1994
kets.
They
must deal with the fuzziness of
produc t-market
boundaries aided
by
inc reased
deregulation
and
c ompetitive
initiatives,
whic h has the c reation of new
produc ts/servic es
and the
lowering
of c osts as
princ ipal benefits;
an inc reas-
ing pac e
of
tec hnologic al c hange,
whic h
profits
fromits
own
past
suc c esses and is
given
new
impetus
with
globali-
zation and inc reased
c ompetition
and
represents
another fac -
tor
c ontributing
toblurred
produc t
market
boundaries;
the
growing power
and
independenc e of
the c hannels
of
distri-
bution as intermediate
c ustomers,
often made
possible by
ad-
vanc es in information
tec hnology;
and
pressure from
inves-
tors to
produc e
more
predic table growth
in
revenues, prof-
its,
and c ash flows and thus benefit fromc ost reduc tion.
These forc es affec t
buyer expec tations
and
opportunities
and
by
so
doing impac t
bac k
upon
themselves, c reating
c hange.
Brand
managers
must realize that how
c ompetently
they respond depends,
in
part,
on how
they leverage
new c a-
pabilities
and
options presented
and that their ac tions affec t
the
very
forc es towhic h
they respond.
These
major
forc es
are examined in turn.
Globalization
of Competition
and Greater
Openness of
Markets
F or an
inc reasing
number of
c ases,
the
globalization
of
the world
ec onomy
c an
present daunting c hallenges.
Tec h-
nology developed
in the United States c an be c onverted to
produc t
designs
in
Japan,
manufac tured in
Thailand,
and
distributed worldwide
by
traders in
Hong Kong.
Exc ess c a-
pac ity
in
Bangkok
influenc es
pric es
in Boston
(espec ially
in
maturing produc t c ategories).
The advent of
global
c om-
petitors, espec ially
their love for the Americ an
marketplac e
(the single largest
free market in the
world),
means that
U.S. manufac turers c annot be insular. As the
Lec lerc ,
Sc hmitt,
and Dube
(1994)
researc h
indic ates, buyers
c on-
tinue tobe fasc inated with
foreign
(and
foreign-sounding)
brands.
Country-of-origin
effec ts
may
be
part
of the brand
equity
of c ertain names.
Japanese
manufac turers have had
unrivaled suc c esses in the
motorc yc le
and c onsumer elec -
tronic s
markets,
in
part
due toassoc iations with
quality
and
reliability.
The
groc ery
business is
seeing
inc reased
c ompe-
tition fromthe north
(Loblaws
in food
produc ts
and Cott in
beverages
have bec ome
major private
label
suppliers)
as
well as from
Europe's giant
multinationals
(e.g.,
Unilever
and
Nestle).
The Dec ember 1993 issue of Consumer Re-
ports
c arries brand name
ratings
in six
produc t c ategories:
poc ket knives,
bread
makers,
SLR
c ameras, perfumes,
rac k
stereos,
and miniature televisions. In eac h
c ategory,
the
top-
rated
brand,
and over 60% of the
top
ten
brands,
were
foreign.
This attac k from
global c ompetitors
ac c ounts for
many
sleepless nights
for brand
managers.
Brands often "must
thrive
globally
tosurvive
loc ally."
As
managers
at Kodak
and
Compaq
have
disc overed,
one of the better
ways
to
hold
F uji
or
NEC, respec tively,
at
bay
is
by attac king
them
at home. Besides
tapping
an additional
market,
this
strategy
has the
advantage
that the
c ompetitor's
resourc es are
stretc hed and home-market
profits
c an no
longer
be used as
readily
to fuel
foreign
adventures. Suc h ac tions
require
brand
managers
with international
experienc e
and the free-
though they may
be at varianc e with their domestic market
behaviors.
Strategic
allianc es. In the fac e of
global c ompetition,
do-
mestic firms
may
seek allianc es with
foreign c ompetitors,
thus
c o-opting
themand
preventing
their
availability
toc om-
petitors.
Suc h allianc es have bec ome the normin the autoin-
dustry. Or, given shrinking margins
and
profits
at
home,
c ompanies may
seek
greater opportunity
in the
global
arena. Cereal Partners
Worldwide,
a
joint
venture of Gen-
eral Mills and
Nestle,
has
c aptured
substantial market share
outside North
Americ a-largely
at the
expense
of
Kellogg.
No
single
firmhas
resourc es, knowledge,
and skills tobe
the best at
everything.
To
survive, c ompanies
often have to
share c osts and
risks,
and therefore rewards.
Inc reasingly,
they
alsoare forc ed toshare
knowledge,
distribution,
and
even
c apital
via
strategic
allianc es that c an stretc h
organiza-
tional
c apabilities
and
c hange
the nature of brand
manage-
ment.
Apple
and
Sony
c ombined their
design
and manufac -
turing
skills to
produc e
the
enormously popular
Power-
book.
Sony
and Nintendohave c ombined hardware and soft-
ware
c apabilities
totake on
Sega
in the market for video
games
distributed on CD-ROMs. Nike relied on DuPont to
design
air-tubes that
provide
bounc e in the soles of Air Jor-
dan basketball shoes and manufac turers in Asia todeliver
the
produc t.
The brand
manager
must c oordinate with c oun-
terparts
outside the firmas well as traditional c ontac ts
within.
F or
many firms, strategic
allianc es with c ertain
suppliers,
distributors,
and even former
c ompetitors
are a
key
tofu-
ture
c ompetitive strength.
Unknown
produc ers
seek distribu-
tion
through well-regarded
retailers tobenefit the unknown
brand with favorable assoc iations. Other firms have c om-
bined brand names-in the formof brand allianc es-to in-
c rease c onsumer
response.
Consider the wide
variety
of
prod-
uc ts that now c ontain branded
ingredients,
suc h as Diet
Coke with NutraSweet or IBM
personal c omputers
with
Intel
c hips.
Others have used
multiple
brand names toc om-
munic ate c obranded
produc t
variants-for
example, Spe-
c ial K frozen waffles
by Eggo (both Kellogg's brands)
to
c onnote a more nutritional waffle.
Cobranding
extends toal-
lianc es between the
c omplementary
brand names of inde-
pendent produc ers,
for
example,
F ord's Citibank
MasterCard.
Collaborating
with
c ompetitors. Although
allianc es be-
tween manufac turers with
c omplementary skills,
or be-
tween manufac turers and their
suppliers
and
distributors,
is
natural and
understandable,
even direc t
c ompetitors
c an
find reasons to c ollaborate. The
strength
of
global
c hal-
lenges enc ourages
domestic
c ompetitors
toformallianc es
and c reates
pressures
for
c hanges
in antitrust
regulation
to
make the allianc e feasible. A dec ade
ago, Matsushita, JVC,
and sc ores of others
joined
forc es behind the VHS format
for VCRs tobeat out
Sony's
Betamax. U.S.-based
c ompa-
nies are
learning
as well. The
IBM-Apple-Motorola partner-
ship, forged
to
develop
the next
generation
of Power PCs
(and erode the dominanc e of Intel and
Mic rosoft),
heralds c o-
operation among
formidable
c ompetitors
and holds
implic a-
tions for
Japanese industry.
Global allianc es
may provide
a
way
of
weakening
antitrust restraints. This
requires
new
domto
engage
in ac tivities that suit loc al
c onditions,
even
150
thinking
and
possibly
a
split personality
for the brand man-
Introduc tion tothe
Spec ial
Issue
ager,
as he or she
c ooperates
in one domain while
possibly
remaining c ompetitive
in another. This
may
forc e new
organ-
izational
arrangements
on the firm.
Designing produc ts for global ac c eptanc e.
There are
myr-
iad fac tors that influenc e both c ustomer and
c ompetitor
be-
havior in
foreign
markets. German automakers are known
to
design
and
produc e tec hnic ally
advanc ed
c ars,
in
part
be-
c ause of demand
by
loc al
buyers. Japanese buyers
are at-
trac ted
by
the latest in automotive and elec tronic s tec hnolo-
gies
and view
quality
as a must. U.S.
buyers
seem
swayed
by
both
quality
and c ustomer servic e. Consumers in devel-
oping
c ountries are
partic ularly
sensitive to
pric e
and fuel
ec onomy.
Suc h differenc es have tobe taken intoac c ount in
developing
a worldwide
c ompetitive strategy
for brands.
An
emerging strategy
that seems tobe
suc c eeding
is to
"plan globally
and ac t
loc ally,"
in whic h ac tivities suc h as
produc t design
are c onduc ted at a
global level,
but market-
ing
and other transac tional ac tivities are c ustomized
loc ally.
F inally, managers
must be c areful in
c oping
with c ultural or
language
differenc es. In the
opinion
of Jac k
Welc h,
General
Elec tric
CEO, globalization
is
inc reasingly
diffic ult for U.S.
c ompanies (F ortune 1993, p. 88):
The
expansion
into
Europe
was
c omparatively easy
froma c ultural
standpoint.
As
Japan developed,
the c ul-
tural differenc es were
larger,
and U.S. businesses had
more
diffic ulty
there. As we look
ahead,
the c ultural
c hallenges
will be
larger
still in the rest of Asia-from
China toIndonesia toThailand toIndia-where more
than half the world lives. U.S.
c ompanies
will have to
adapt
tothose c ultures if
they
are tosuc c eed in the 21st
c entury.
The brand
manager may press
for flexible
produc t
de-
signs
that c ontain features
important
toall markets c ollec -
tively
or
options
that c an be added
readily
toa basic
design
to
satisfy
loc al
requirements.
The c hannel
may
bec ome
more
extensively
involved in fabric ation tosuit loc al tastes.
Or sc ale ec onomies froma
single global design may
be suf-
fic ient toreduc e
pric es
and/or inc rease
promotion
in eac h
market tooffset a lac k of features. Brand
management
will
be involved
ac tively
in
seeking out, selec ting from,
and im-
plementing
an
array
of suc h
options.
The
inc reasing openness of
markets.
Deregulation
often
leads toinc reased
c ompetition
fromoutside
traditionally
de-
fined
produc t-market
boundaries.
Although banks, S&Ls,
and c redit unions worried about
inc reasing c ompetitive
in-
tensity among themselves, they
were beset
by c ompetition
fromnonfinanc ial
c ompanies.
Credit c ard
operations
are
now run
by
retailers
(Sears'
Disc over
Card),
servic e
c ompa-
nies
(AT&T's
Universal
Card),
and manufac turers
(F ord's
MasterCard).
Eac h of these new
c ompetitors
are
leveraging
their established
relationships
with c ustomers to
penetrate
the c redit c ard market
rapidly.
Toc ontain
threats,
banks
have
gone
into
partnership
with airlines and telec ommunic a-
tion
c ompanies
tooffer c redit c ards with
"frequent
user"
miles. On a
larger
sc ale NAF TA
opened
freer trade be-
tween the c ountries of North
Americ a,
as did the Common
Market between most c ountries of
Europe.
The effec ts of
deregulation
are felt in varied
industries,
ranging
from
import/export
to
telec ommunic ations,
health
same-intensific ation of
c ompetition
and
lowering
of
pric es
and
margins.
But there is alsoa silver
lining. Dereg-
ulation alsohas freed
c ompanies
like AT&T to
pursue
new
opportunities
in related industries like c ellular c ommunic a-
tions, c omputers,
and elec tronic s. Lower
long-distanc e
c all-
ing rates,
forc ed
by
intense
c ompetition
fromMCI and
Sprint,
have been offset
partially by higher usage
rates. It is
worth
noting
that
c ompetitive
forc es often
prec ede deregu-
lation.
They
are both a c ause and an effec t. The
c hallenge
to
brand
management
is sometimes how to
adapt proac tively
toharsh new market realities before the
protec tion
afforded
by regulation
is removed.
Impac t of Tec hnologic al Change
The
pac e
and nature of
tec hnologic al c hange
is itself af-
fec ted
by
the
globalization
of markets. Globalization means
larger
markets for the
produc ts
of
tec hnology
and
greater
need toc oordinate
management
ac tivities over wider ex-
panses
of distanc e and time. Greater
opportunity
and re-
ward
brings
more
players
tothe table and affec ts the direc -
tion of researc h efforts. A more diverse set of suitors
may
even inc rease odds that
tec hnologic al breakthroughs
oc c ur.
Computer
aided
design, manufac turing, engineering,
soft-
ware
engineering,
and assoc iated
approac hes
have reduc ed
dramatic ally
the time
required
to
develop, design, test,
and
manufac ture new
produc ts
while
reduc ing
c osts and
improv-
ing quality.
These lower c osts of
tec hnology.
Information
tec hnology,
when
c oupled
with flexible
manufac turing sys-
tems
(or robotic s),
c an be used toreduc e order fullfillment
c yc les
and henc e
inventory requirements. Simply put,
tec h-
nology
c an be
leveraged
to
gain c ompetitive advantage.
Or
tec hnologic al c hange
c an be resisted
by
entrenc hed inter-
ests totheir own detriment. Other
impac ts
of
tec hnology
on
brand
management
follow.
Produc t innovation.
Tec hnologic al
innovation often
leads to new and better
ways
of
solving
old
problems.
These innovative new
produc ts may
offer
greater
func tion-
ality
at lower c osts and c an
displac e existing produc ts (e.g.,
c ompac t
disc s
replac ing c assettes;
c amc orders
replac ing
8mmmovie
c ameras),
thus
providing opportunities
for new
entrants that
may
not have been otherwise available. Inno-
vations sometime
provide
additional
opportunity
for
c omple-
mentary produc ts (e.g., simplified programming
devic es for
VCRs).
The
progression
of
tec hnologies
from
vinyl
rec ords
toc assettes toCDs has
presented opportunities
for music
publishers
to
rec yc le
older
rec ordings. Although tec hnolog-
ic al innovation is a threat toentrenc hed
players,
it some-
times c an be used
effec tively
to stave off
c ompetitors
loc ked into"me-too"
produc ts.
F or
example, though pri-
vate labels have
c aptured high
shares in staid c onsumer
pac k-
aged goods
like
paper
towels and
jams
and
jellies,
branded
goods
alsohave been able tothwart
c ompetitors by
innova-
tion in similar
c ategories
like
detergents (e.g.,
c onc entrated
partic les),
soft drinks
(e.g., aseptic pac kaging),
and razors
(e.g.,
Gillette's
Sensor) (Giles 1993).
Innovation alsoc an be-
c ome
part
of a firm's
c orporate strategy
for
sustaining
c om-
petitive advantage (e.g., 3M, DuPont,
and
Gillette).
Brand
managers
are
c hallenged
tothink
c reatively,
even in mature
or stable
produc t c ategories.
Often innovation in the
nonpro-
c are,
and
transportation.
In eac h c ase the effec t was the
151
duc t dimensions of
servic e, imagery,
distribution
(e.g.,
di-
JOURNAL OF MARKETING
RESEARCH,
MAY 1994
rec t
mail),
or c reative
pric ing (e.g., frequent flyer plans)
c an
c reate differentiation. The brand
manager
is often in a
posi-
tion of
leadership
in
identifying
suc h
opportunities.
Convergenc e of produc t-markets. Tec hnologic al
ad-
vanc es sometimes have blurred boundaries between
prod-
uc t markets. Okidata's innovative Doc kit
(winner
of the
1993 Business Week
Design Award)
c ombines func tions of
a laser
printer, c opy mac hine, optic al sc anner,
and fax ma-
c hine. This
development
was feasible bec ause all func tions
are driven
by
the same
digital tec hnology.
Multimedia c om-
puter applic ations (c ombining sound, pic tures,
and
text)
use
similar data
handling
mec hanisms as AT&T's
pic ture
phones. Airlines, hotels,
and c ar rental
agenc ies
share the
same reservation
system.
These
examples
have led to
ac qui-
sitions
(e.g.,
AT&T's
purc hase
of
NCR)
as well as allianc es
(e.g.,
between Americ an
Airlines, Marriott,
and
Hertz),
often
resulting
in situations
involving joint promotion
and
advertising
of brands. The
c hallenges
tobrand
managers
in-
c lude
(1)
how toutilize skills fromone
produc t
market in an-
other, (2) assembling
and
managing
skills of several
part-
ners
(i.e., ignoring
traditional
organizational boundaries)
in
developing
and
marketing
new
produc ts
and
servic es,
and
(3) managing joint promotions
and
ensuring
that
"partner
brand"
strategies
donot
adversely
affec t their own brands.
Regardless
of whether it is
tec hnology-driven,
the searc h
for defensible
c ompetitive advantage
alsohas extended the
boundaries of
existing produc t c ategories
or blurred exist-
ing
definitions. In some c ases
new, hybrid c ategories
have
been c reated
(e.g.,
toaster
pastries,
c ereal
bars, disposable
c ameras).
This has
permitted
a
produc t manager
toaffec t
the set of
c ompetitors
with whic h his or her new brand c om-
petes.
Cellular
telephones
have inc reased the
range
of
port-
able
phones,
and
c ompac t
disc s have introduc ed a more c on-
c ert-like sound intorec orded music and made feasible the
blending
of the
c omputer
and music
systems
intoa multime-
dia
(CD-ROM)
format. F or the brand
manager,
suc h devel-
opments
afford the
opportunity
to
tap
new
applic ations
and
markets. In other
instanc es,
new
produc ts
c ould have fit
equally
well intoone of several
c ategories, thereby provid-
ing
the brand
manager
with
important positioning
dec isions
(e.g.,
General F oods Jell-O
pudding pops represented
a
new,
more c onvenient formof
pudding
or a
c ompetitor
to
ic e c ream
bars; personal digital
assistants
represent
another
formof notebook
c omputer
or an
organizer). Many
indus-
trial
produc ers
have disc overed the added value that a
rec og-
nized brand
name,
as an
ingredient
or
c omponent,
c an add.
By establishing
a c redible brand
presenc e
in the final c on-
sumer
market, produc ers
suc h as
Intel,
with its "Intel In-
side"
c ampaign,
or
DuPont,
with its Stainmaster
brand,
are
attempting
tofurther their influenc e with manufac turers of
personal c omputers
and
c arpeting.
Time-based
c ompetition (market entry timing).
In an era
of
rapid tec hnologic al c hange ac c ompanied by
fast innova-
tion,
shorter
produc t
life
c yc les,
and
c onverging markets,
time-based
c ompetition
is
bec oming inc reasingly impor-
tant. In
1981,
Honda introduc ed 113 new or
revamped
mo-
torc yc le
models in
just
18 months
(Stewart 1992).
F rom
1986 to
1990,
Toshiba launc hed 33 different models of
lap-
topc omputers. By 1991,
it had disc ontinued more
laptop
and Prahalad
1991). Companies
with shorter
produc t
devel-
opment c yc les
c an c lose in on
potential
markets faster.
Eac h
produc t
iteration enables a
fast-c yc le c ompany
to
apply marketplac e learning (e.g.,
features and func tions that
c ustomers like or donot
want), thereby potentially improv-
ing
suc c ess of the next model. Brand
managers ac quire
greater
c ontrol.
When
c ompetitors
c an
leverage
similar
tec hnologies
todu-
plic ate produc ts
and
servic es, speed
is even more
important:
*
Harvesting
the best c ustomers-An
innovating c ompany
often has the
ability
to
c herry-pic k
c ustomers whoare
likely
to
buy
more or
willing
to
pay
more.
Then,
if there are relevant
switc hing
c osts or the
pioneering c ompany
c an make it ex-
pensive
for c ustomers to
migrate
toother
providers,
these c us-
tomers bec ome less available to
c ompetitors.
The brand man-
ager gains strategic advantage.
*
Oc c upying
the mental c orner
store-Buyers
tend torestric t
their
purc hases
toa few brands in eac h
produc t
c lass
(Hauser
and Wernerfelt 1990 doc ument the small size of most c onsid-
eration
sets).
A
pioneer
sometimes has the
advantage
of "de-
fining"
the
produc t
c lass and thus
bec oming
one of its
typic al
brands, possibly
the brand that sets the standard with whic h
others are
c ompared (Carpenter
and Nakamoto
1989).
*
Developing
a
reputation for innovation-Being
first also
helps
establish
reputations
that are
partic ularly
valuable when
ac c ess tothe latest
tec hnology
is
part
of the brand
equity
that
is of value tobusiness c ustomers. These brand
reputations
have been shown toinfluenc e
positively
the
willingness
both
to
try
and rec ommend new
produc ts earlier, resulting
in faster
diffusion
(Zandan 1992).
In a
short-c yc le environment,
a
three-month time
advantage
c an be substantial.
* Shorter order
fulfillment c yc les-GE's Quic k Response pro-
gram,
whic h uses fast information
tec hnology,
enabled its
ap-
plianc e
division toc ut an
80-day
time fromorder
rec eipt
tode-
livery by
over 75% and reduc ed
inventory requirements by
$200 million. This c reates an
important weapon
in the arsenal
of the brand
manager.
* Mass c ustomization-Information and flexible
manufac turing
tec hnologies may permit
ec onomies of
large-sc ale produc tion
tobe realized while
ac hieving
a
high degree
of c ustomization
of the final
produc t, perhaps
even tothe individual level.
Dell's "made toorder"
approac h
tailors
c omputer produc ts
toorders
rec eived, enabling
the
c ompany
to
operate
with min-
imal finished
goods inventory.
Dunhill Software c an c ustom-
ize and/or personalize
the
c omputer programs
it
publishes
to
spec ific
user
requirements.
Mass c ustomization
permits
the
brand
manager
totake
advantage
of market
segmentation
while
keeping
c ontrol of c osts.
Vanity appeals
or
produc ts
be-
c ome
relatively
more feasible.
The Inc reased Power
of
Distributors and the
Evolution
of
Channels
The new level of
c ompetition
in
many produc t
markets
has been abetted
by
dramatic
c hanges
in
produc t
distribu-
tion and the behaviors of distributors. Whereas in the
past,
produc ts
moved in a
loosely c oupled
fashion frommanufac -
turers towholesalers and retailers tothe final
c onsumer,
all
levels of distribution and
supply
now see the
importanc e
of
systemwide
c oordination to
improve operating
effic ienc ies.
The advent of the term
"relationshipmanagement" c ap-
tures this new awareness of
symbiotic interorganizational
models than most of its
c ompetitors
had introduc ed
(Hamel
152
requirements
for
delivering
c ustomer value. F or some
Introduc tion tothe
Spec ial
Issue
manufac turers,
this has led tothe
rec ognition
that distribu-
tors are c ustomers with their own
preferenc e
func tions. Con-
flic t within the
c hannel,
in the
past merely
a
nuisanc e,
is
now seen as a
potentially
fatal obstac le tothe suc c ess of the
brand.
Intensifying produc t
market
c ompetition
also has
c hanged
the
geographic sc ope
of
produc t
market bounda-
ries. As markets bec ome more
global,
the
sc ope
of distribu-
tion
systems
for most firms has broadened as well. Brand
managers
now
rec ognize
the inc redible value of
global
brands-those
rec ognized
and admired
throughout
the
world-and the diffic ult tasks assoc iated with their c reation
and maintenanc e. F or
retailers, c ompetition
that tradition-
ally
has been foc used on
c ountry-spec ific
needs is
begin-
ning
toevolve on a more
regional
and
potentially global
basis. Manufac turers and retailers alike are
seeing
the
oppor-
tunities for
growth
in
emerging
ec onomies of
Europe,
Latin
Americ a,
and Southeast Asia.
WalMart,
for
example,
has
opened operations
in
Mexic o,
and over half of
Europe's larg-
est food retailers now have
foreign operations.
Worldwide
retail distribution
systems, though
still
embryonic ,
have im-
portant potential implic ations
for the
development
of world-
wide brands.
As the
relationship
between
produc ers
and distributors
has
intensified,
the relative
power
of
distributors, espec ially
retailers,
alsohas inc reased.
Inc reasing
c onc entration in the
retailing industry
has resulted in
giants
like
WalMart,
Tar-
get,
and
Toys
'R'
Us,
whoc an and doexerc ise their c lout
in
dealing
with manufac turers. Driven also
by
the suc c ess
of new forms of
retailing,
suc h as warehouse stores and of-
fic e
produc ts depots,
and the
emergenc e
of
inc reasingly
sophistic ated
information
tec hnologies
and
logistic al sup-
port,
manufac turers have lost muc h of the c lout and c ontrol
they
onc e held over the
ways
their brands are marketed
through
the distribution
system.
The
rapid
diffusion of elec -
tronic sc anner
systems
has c ontributed tothe shift in infor-
mation
power
frommanufac turers toretailers. A dec ade
ago,
a P&G
salesperson
c ould walk intoa
groc ery
and offer
a
promotional c ampaign
that
"promised"
substantial re-
ward tothe store.
Now,
store
managers
c an
respond quic kly
by examining
the
impac t
of suc h
promotions. They
c an tell
the
salesperson
what works best-and what does not. This
has led the brand
manager
tomore c onsultation with distrib-
utors toseek
greater understanding
of their
perspec tives.
In
many c ases,
retailers are
demanding,
and
getting
ac -
c ess
to,
manufac turers'
produc ts
for their own
private
label
and store brand
purposes. By offering private
labels as off-
pric e
brands
("c ompare
us with
them"),
retailers effec -
tively
have
gone
intodirec t
c ompetition
with manufac tur-
ers. As a
c onsequenc e,
manufac turers with a lower
pric e-
quality position
have been
losing ground. Now,
several re-
tailers have
begun
tomove
upstream
in
quality through
at-
trac tively pac kaged private
label brands like President's
Choic e and Sam's
Choic e, designed
tooffer
greater
value
than the national brands. Brand
managers
thus are
being
fac ed with new c hoic es-to
c ompete
or
join (i.e., produc e
the
private
label for the
retailer).
The national brand
may
be
forc ed toc onc entrate
only
on flavors or varieties in whic h
This
power
shift
away
fromthe
produc ers
of
branded
produc ts
has led tothe well-doc umented inc rease in the use
of
marketing
ac tions direc ted at the trade rather than final
c onsumer.
Distributors,
interested in
profit
ac ross brands
and
produc t c ategories (Zenor 1994)
and
developing
their
own bonds with
c onsumers,
are
prone
to
play
manufac tur-
ers
against
one
another,
c reating
diffic ulties for sales and
brand
managers.
This has
enc ouraged
brand
managers
toob-
tain sound market researc h information tobec ome better in-
formed in
dealing
with distributors
(Russell
and Kamakura
1994).
Their
appetite
for disc ounts alsohas
grown steadily.
Retailers make substantial
profits
from
polic ies
like
slotting
allowanc es
(making
manufac turers
pay
for shelf
spac e
for
new
produc ts)
and forward
buying (stoc king up
when man-
ufac turers offer
produc ts
at disc ounted
pric es).
This has en-
c ouraged
a dramatic inc rease in the use of trade
promotions
at the
expense
of c onsumer
advertising budgets
and led to
c onc erns about
long-term
effec ts on brand
equity (Bould-
ing, Lee,
and Staelin
1994). Managers
of
large
brands c an
try
educ ation towean trade c ustomers
away
from
promo-
tions
through "everyday
low
pric e" (EDLP)
and other
strategies.
Investor Expec tations and Brand
Equity
Brand
managers may
be
subjec t
tothe whims of skittish
investors devoted to
quarterly earnings
statements.
Unprec e-
dented levels of
merger
and
ac quisition ac tivity
on Wall
Street in the late
1980s,
often
involving leveraged buyouts,
loaded
buying c ompanies
and their
managers
with
heavy
debt.
Squeezed by pressure
frominvestors and
lending
insti-
tutions,
brand
managers
have felt
pressures
to
(1) produc e
short-termc ash flows tomeet debt
c overage; (2) produc e
steady, predic table growth
in
earnings;
and
(3) justify
how
and
why they expec t
investments in
marketing strategies
to
add value tothe
c ompany.
They
have
responded
in
predic table ways
toenhanc e
short-termc ash flows.
F irst,
brand
pric es
inc reased faster
than inflation ac ross
many produc t c ategories, inc reasing
the
vulnerability
of national brands to
growth by private
la-
bels of similar
quality.
This led to "Marlboro
F riday"
(April 2, 1993),
when
Philip
Morris
dramatic ally
reduc ed
pric es
tostave off
c ompetition
from
lower-pric ed c igarettes
and set a
prec edent
for other firms
(Giles 1993). Sec ond,
as
noted,
brand
managers
have inc reased relianc e on trade and
c onsumer disc ounts while
reduc ing spending
on advertis-
ing.
Bec ause of slow
dec ay
in the short
term,
c uts in adver-
tising
have fallen
straight
tothe bottomline.
Advertising's
share of the
marketing budget
has shifted downward from
over 60% toless than one-third
(Landler, Sc hiller,
and Th-
errien
1991).
Some marketers maintain that
advertising
builds
long-termprofitability through image differentiation,
whereas
promotions
dilute brand value
by foc using
on
pric e
and disc ounts rather than a
produc t's
distinc tive features
and benefits. Others
question
the
long-term
value of adver-
tising (always
diffic ult tomeasure
prec isely)
and foc us on
the visible
ability
of
promotions
toaffec t sales.
Boulding,
Lee,
and Staelin
(1994) provide
evidenc e for the
long-term
benefits of
advertising
and sales over
promotions
in c reat-
ing produc t differentiation, possibly resolving
the
the
private
label does not c hoose to
c ompete.
153
c ontroversy.
JOURNAL OF MARKETING RESEARCH, MAY 1994
The
quest
for
steady, predic table growth
in
profits
has
led to
seeming
risk aversion on the
part
of
produc t manag-
ers. Cost
savings
have made it easier tointroduc e "new
produc ts" using existing
brand names. The result has some-
times been a foc us on inc remental
imporvements
rather
than
genuinely
new
produc ts c apable
of
outmaneuvering
existing produc ts
or
opening up
new markets. Relianc e on
brand name alone or
relatively
minor
produc t c hanges
to
differentiate an
offering simply
results in mindless exten-
sions and
c ompetitive
c lutter.
Although
it
probably
has
pre-
vented inroads
by lower-pric ed
alternatives in a few
c atego-
ries,
in others it has led toinc reased
buyer
c onfusion and re-
sistanc e. The
trade,
ever
pressed
for valuable shelf
spac e,
has
responded
with an
array
of
spec ial
fees to
disc ourage
suc h
proliferation.
And it has affec ted
adversely previously
well-defined brand
meanings
and identities
(Broniarc zyk
and Alba
1994).
General
Mills,
for
example, seemingly ig-
nored established brand assoc iations when it introduc ed
Multi-Grain Cheerios. It
originally
treated this as a new fla-
vor rather than
rec ognizing
the
inc onsistenc y
with
Cheerios'
long-term
nutritional assoc iation with oats. An-
other
produc t, Honey
Gold
Wheaties,
has
brought
assoc ia-
tions of added
sugar
toa well-established brand known as
the "Breakfast of
Champions." Although
these
produc ts
re-
main on the
market, they
have
potential
todilute the
equity
in the
original
brands
(Loken
and John
1993).
Previous researc h
dealing
with brand extensions had iden-
tified sound bases for suc c ess and found brand affec t and
the
similarity
between
original
and extension
produc t
c ate-
gories
as
important
fac tors
(Aaker
and Keller
1990;
Keller
and Aaker
1992).
Several artic les in this
spec ial
issue offer
additional
insight
toaid brand
managers. Broniarc zyk
and
Alba
(1994)
foc us on the role of
"brand-spec ific
assoc ia-
tions" as distinc t from
c ategory-spec ific
ones. Their find-
ings
indic ate that these assoc iations
ac tually may
dominate
brand affec t and
c ategory similarity.
Extensions todissimi-
lar
c ategories
that value the brand assoc iation should be
more
preferred
than those tosimilar
c ategories
that donot.
Their researc h also
provides
a rationale for
why
brands c an
extend
suc c essfully
todissimilar
produc t c ategories.
Dac in
and Smith
(1994)
disc uss two
experiments
and a c onsumer
survey
that examine the effec ts of three brand
portfolio
var-
iables on the
favorability
of and c onfidenc e shown
by
c on-
sumers'
judgments regarding
future extensions. Their re-
searc h
suggests
that brand extension suc c ess is affec ted
by
the
portfolio
of
produc ts
assoc iated with the brand and ex-
tending
into
many
different
produc t c ategories may
be ben-
efic ial for a brand so
long
as the varianc e in
quality
remains
low
throughout
the
portfolio.
Also,
the brand
manager
often c an
implement
line exten-
sions in whic h minor variants of a
single produc t
are mar-
keted under the same brand name. Researc h
reported by
Reddy, Holak,
and Bhat
(1994)
assembles an extensive
c ross-sec tional and time series database froma
variety
of
sourc es
and, using
ec onometric
analyses, empiric ally
inves-
tigates
the determinants of suc c ess for line extensions in the
c igarette industry.
The authors note the
c onsistenc y
of their
empiric al findings
with
propositions
that
previously
had
been based on
experiments
or
argued primarily
on c on-
c onc lusion of Dac in and Smith
that,
when
managed well,
ex-
tensions
help
in
building equity.
F or brand
management generally, probably
the most
posi-
tive outc ome of rec ent
merger
and
buyout ac tivity
is that c or-
porate managers
now
inc reasingly rec ognize
brands as c rit-
ic al assets. Brand
management
is a formal
c omponent
of c or-
porate strategy.
Sara
Lee,
for
example,
has made
building
brand
equity
a
major c orporate goal.
The
c ompany
has mas-
tered the art of
applying
its brand
management
skills in mar-
kets that
traditionally
have been
fragmented
or dominated
by private
labels. It
buys leading
brands and
gradually
builds brand
strengths ultimately
to"own" the
produc t
mar-
ket-for
example,
the
c ompany
has nurtured
high profile
brands like
Playtex
and Hanes in the
pac kaged apparel
mar-
ket. This
emphasis
on
building
and then
leveraging
brand
eq-
uity
for
greater profitability
has enabled Sara Lee toutilize
its c ore
c ompetenc e (brand management)
in markets far re-
moved fromits
origins
in
pac kaged
foods.
Tylenol
has
been able to
leverage
endorsements frommedic al
profession-
als to
develop
an
image
of
safety
and
"gentleness
on the
stomac h." It owns over 70% of the
ac etaminophen market,
despite
other
c hemic ally
identic al
produc ts selling
for c on-
siderably
less.
Aaker and Jac obson
(1994),
fromtheir
study
of the effec t
of
perc eived quality (a c onc ept
related tobrand
equity)
on
stoc k
pric e movement, argue
that brand
managers
should
c onvey
to Wall Street
analysts
information about the
brand's
quality image
as well as financ ial
information,
tobet-
ter
depic t long-termprospec ts
for their brands. Their
expec -
tation is that financ ial
analysts
would
rely
less on short-
termmeasures of business
performanc e
and brand
manag-
ers will be freer toundertake
strategies nec essary
for ensur-
ing
the
long-termviability
of their firms.
Anc illary
evi-
denc e c omes fromthe J.D. Power & Assoc iates satisfac tion
surveys,
whic h c ontinue tohave a
powerful impac t
on the
produc ts
and brands evaluated. When Dell
Computer
was
rated first in
buyer satisfac tion,
both its sales and stoc k
pric e
went
up. Managers
at Warner Lambert were able to
jus-
tify
an
expensive long-termc ampaign
to
target
its anti-
allergen drug, Benadryl,
toend users
(patients
rather than
physic ians),
and the result was a fivefold inc rease in sales
over four
years.
Changing
Consumer Markets
It is at the
produc t-market
level that broad environmental
forc es are transformed into
spec ific c ompetitive
threats and
opportunities
that
require
new and c reative brand
manage-
ment
responses.
Both c ustomers and
c ompetitors
learn and
adapt.
Onc e PC
buyers
learned that
IBM-c ompatible
c lones
were reliable and used the same
c omponents
as name
brands, they
refused to
pay hefty pric e premiums
for IBM
or
Compaq.
The introduc tion of Mic rosoft "Windows" im-
proved
the user-friendliness of PCs and drove
Apple
and
IBM-c ompatible c omputers
c loser
together
and made eac h
more vulnerable to
pric e c ompetition
fromthe other.
Corpo-
rate
downsizing
and
c orresponding
reduc tion in in-house
purc hasing expertise may imply
inc reased
importanc e
for in-
tangible "produc t" c omponents
suc h as the servic e and re-
lationship
dimensions. This shift
may
c ause an inc rease in
c eptual grounds. They
also
provide
further
support
for the
154
the
importanc e
of
c orporate
brands and
bring
reward to
rep-
Introduc tion tothe
Spec ial
Issue
utations that are
c ompatible.
The brand
manager
must be-
c ome ever more sensitive tothese
possibilities.
The forc es disc ussed in the
previous
sec tions manifest
themselves in market behaviors either
by produc ers
or dis-
tributors and
buyers. Buyers
seek
produc ts
and servic es bet-
ter suited to their
purposes (Huffman
and Houston
1993)
and learn and
adapt
tothe
c hanging
set of
c ompetitive prod-
uc t and
marketing programs
with whic h
they
are c onfronted
(Ratneshwar, Shoc ker,
and Srivastava
1993).
The inc reas-
ingly c ompetitive marketplac e exposes buyers
tonew infor-
mation and
produc t/servic e
alternatives that have
potential
toinfluenc e their tastes and
preferenc es. Produc ers,
in turn,
learn more about what is
being
offered
by c ompetitors
and
what
prospec tive buyers
will
purc hase
and thus also
adapt
their
offerings.
After
all,
both fac e the
imperative
of
doing
things
that are
simultaneously
feasible and desirable. Distrib-
utor
willingness
to
c arry
and
promote spec ific
brands
serves totransfer some of the
equity
tothe brand and in
turn is affec ted
by
whatever
equity
the brand
c urrently
en-
joys.
Brand
management
is
c hallenged
tounderstand the
dynamic s
of
c hanging
markets and
manage
brand
assoc iations.
The
usefulness
of
brands. The value of a brand name is as-
soc iated
c losely
with its
awareness, quality perc eption,
and
the c ustomer satisfac tion
engendered by
related
produc ts
and
offerings, among
others
(Aaker 1991).
Brands are
sym-
bols that c onsumers have learned totrust over
time,
and
they
often
signal intangible produc t qualities (Erdem1993).
This
signal
is often based on
"experienc e
attributes" suc h
as
perc eived reliability, quality,
and
safety
(Nelson 1970)
that
produc ts
and related
marketing programs
afford. Suc h
intangibles
often lead tomore defensible
advantages
for the
firmrelative to "searc h attributes"
(physic al
features and
pric es
that are
readily c omparable
ac ross brands via
inspec -
tion or information
searc h)
bec ause c onsumer
learning
time
and
experienc e opportunities
are limited. Searc h
attributes,
moreover,
often c an be
c opied readily by c ompetitors,
and
it is
only
when
they
have not been
(bec ause
of insuffic ient
time, patent protec tion, proprietary produc tion
and distribu-
tion
proc esses,
or c reative
promotion),
that
they
alsoc ontrib-
ute tobrand
equity. Broniarc zyk
and Alba
(1994) provide
empiric al support
for this
signaling interpretation
of brand
equity.
Customer satisfac tion and
"relationships"
with a brand
provide
it
protec tion
from
c ompetition-for example, Tyle-
nol was able tohold off initiatives
by
Datril and
Panadol,
in
spite
of multimillion dollar
marketing c ampaigns.
And some-
times satisfac tion offers
protec tion
fromthe
c ompany's
own
mistakes;
for
example,
c onsumer involvement with the
Coc a-Cola brand
kept
the
produc t
alive when the
c ompany
introduc ed New Coke.
Relationships put any single
ac tion
in
perspec tive,
its
importanc e
evaluated
against
the bac k-
ground
of
previous experienc es
with the brand. Conse-
quently, managers
have found that satisfied c ustomers often
have
many
desirable
c harac teristic s-they buy more,
are
willing
to
pay more,
inc ur lower sales and servic e
c osts,
and
provide
referrals. This has
spurred
brand
managers
to
foc us on c ustomer satisfac tion as a measure of
operational
The "value"
imperative. Buyers
ac ross
produc t-markets
have
always
demanded "value" but defined it
by
the behav-
iors of
c ompetitors. Tougher
ec onomic times inc rease sen-
sitivity.
With added market alternatives
available, they
are
now
demanding high produc t quality
and
good
c ustomer ser-
vic e at reasonable
pric es.
The inc rease in market share for
private
labels
suggests
c onsumers
may
be less
willing
to
pay hefty pric e-premiums
for the
"image" c omponent
of na-
tional brands. As
ac knowledged by
"Marlboro
F riday,"
suc h
pric e premiums
for the well-known brand are not with-
out limit
(Therrien, Mallory,
and Sc hiller
1993). (The
Park
and Srinivasan
[1994] approac h
to
measuring
brand
equity
provides
a
prac tic al
means for
valuing
this
image c ompo-
nent.)
F oc us on value
requires
a
paradigm
shift-from a
pric e-quality relationship
in whic h
high quality
c ould be as-
sumed tolead
high pric es
toone in whic h
c ompanies
must
produc e high-quality produc ts
and servic es at ever lower
pric es. Ac c ording
toJac k
Welc h,
GE's c hief exec utive offi-
c er,
"if
you
c an't sell a
top-quality produc t
at the world's
lowest
pric e, you're going
tobe out of the
game" (F ortune
1993, p. 86). Perhaps dramatic ,
but
inc reasingly
true!
Some distributors have
adopted
an EDLP
strategy
or
have added "value
produc ts"
totheir lines
(e.g.,
Tac oBell
and
Wendy's
have value menus
that,
toan
extent, c annibal-
ize their
regular menus).
Toa brand
manager,
suc h market
moves have
pressured
the
development
of new
produc ts
that c an be offered at attrac tive
pric e points.
This latter strat-
egy
has resulted in the "bac kwards"
development
of new
produc ts, starting
with the desired
pric e point
and
image
and then
designing
the
produc t
and
program
toac hieve it.
Shifting soc iodemographic s
and
splintering
markets. In-
c reasing
female
partic ipation
in the workforc e has led toa
premium
on the value of c onsumers' time and has
provided
opportunities
for new
produc ts (e.g., prepac kaged lunc hes).
Singles
and
one-parent
families alsoare
growing.
Suc h di-
versity among buyers
means it is no
longer
suffic ient totar-
get advertising
for
groc ery produc ts
and
pac kaged goods
to
homemakers
by daytime
television. The "female head of
household" is no
longer
the
gatekeeper
and arbiter of fam-
ily
tastes and
preferenc es.
A substantial share of
shopping
is now done
by teenagers
and
men,
who
may
establish new
brand
loyalties,
thus
rendering
traditional brands more vul-
nerable to
c ompetitive
moves. Bec ause more two-
inc ome families are
eating out,
branded c onsumer
goods
"share of stomac h" has been
dec lining gradually (Glemet
and Mira
1993),
and some restaurant c hains have found it de-
sirable to
produc e groc ery
store
(e.g.,
frozen
food)
versions
of their
produc ts.
Suc h
insights
c an
help
the brand
manager
developgrowth strategies
in related industries. F or exam-
ple, PepsiCo's expansion
intofast-food c hains
(Pizza Hut,
KF C, and Tac o
Bell)
not
only
allows the
c ompany
to
partic -
ipate
in the
c urrently growing part
of "share of
stomac h,"
but also
prec ludes c ompetitors
tothe
c ompany's
own soft
drinks in their stores.
Markets alsoare
bec oming fragmented by
the
growing
dif-
ferenc es in tastes that
ac c ompany inc reasing
c ultural and ec -
onomic
diversity. Buyer
differenc es in suc h fac tors as c on-
c ern for the
environment,
the value of
time,
and health and
nutrition also
provide sc ope
for differentiation. The rise of
c able,
with its offer of
myriad c hannels,
and the
c onsequent
155
suc c ess.
JOURNAL OF MARKETING RESEARCH,
MAY 1994
dec line of network television
represents
media
response
to
inc reasing fragmentation
of
audienc es,
but it alsomakes it
more
expensive
toreac h
potential
c ustomers.
(Interestingly,
although
the U.S. market has bec ome
inc reasingly
a market
of
nic hes, global
c ommunic ation networks
promise greater
homogeneity
in international tastes and
preferenc es. CNN,
for
example,
reac hes over 120 million viewers worldwide
on a
daily
basis. And
teenagers
in c ities from
Bangkok
to
Los
Angeles
roc k to
MTV,
whic h has a
daily
audienc e of
over 250 million and
growing.) Managers
of brands still
fac e a need to
provide
an orc hestrated
message
toc ustom-
ers, distributors,
and other
public s
in the formof "one
voic e
marketing." Although hardly
an innovative
c onc ept,
the
goal
of
integrated marketing
c ommunic ations has been
driven
by
the
inc reasing feasibility
of direc t
marketing
ac tiv-
ities, fragmented
nature of
media, emergenc e
of more
sophis-
tic ated and effic ient telec ommunic ations,
and inc reased re-
lianc e on sales
promotions
relative to
advertising.
Eac h of
these has made the
development
of a
strong
and c onsistent
brand
image
more diffic ult toac hieve.
Measuring
market
c hange.
Bec ause it is
inherently
indi-
vidual and
multidimensional,
brand
equity
c an be diffic ult
to
measure,
and even an
appropriate
measure c an
depend
on user
purpose.
A
variety
of measures have been
proposed
in the literature or offered as the
proprietary produc ts
of mar-
ket researc h and
advertising
firms
(Srivastava
and Shoc ker
1991;
Winters
1991).
Eac h has
strengths
and weaknesses
and must be evaluated in
light
of brand
management's pur-
poses.
Yet measurement and
trac king
over time and
possi-
bly
international boundaries is essential if brand
managers
are to
manage
and c ontrol brand
equity effec tively.
Changes
in measures
provide
feedbac k on the effec tiveness
of
past
ac tions taken or
signal
a need for
possible
future c on-
c erns. The multiattributed
approac h proposed by
Park and
Srinivasan
(1994)
uses a
self-explic ated
version of
c onjoint
analysis
to
provide
a
quantitative measure, expressed
in
terms of relative market share or
pric e premium.
It is one of
the few individual-level (in
c ontrast to
aggregate) ap-
proac hes proposed. By measuring
at the individual level,
the Park and Srinivasan
approac h provides insight
tobrand
equity
for eac h relevant market
segment.
The brand man-
ager gains understanding
of the relative c ontribution of
prod-
uc t attribute
perc eptions
and nonattribute
imagery
tothe
brand
equity
for different
segments
and enables valuation
of a brand's extension todifferent
produc t
lines and other
markets.
The
rapid
inc rease in market information for
managing
brands, partic ularly
fromsc anner
tec hnology
at the retail
level,
has had a
major
effec t on how brand
management
dec i-
sions are made. Suc h researc h data are more
objec tive
and
c an be c ollec ted and
proc essed
in a
timely
fashion. Often his-
toric al data for a
produc t c ategory
are
immediately
availa-
ble tothe
manager
when the need for themarises. Inc reas-
ingly,
more and better dec ision aids have been c reated toan-
alyze
suc h data. Russell and Kamakura
(1994) propose
ways
in whic h the differential
strengths
of data c ollec ted at
the household
(mic ro)
and store
(mac ro)
levels
might
be
c ombined tooffer the brand
manager
more detailed informa-
tion about brand
preferenc es
and soc ioec onomic c harac ter-
garding
the
sensitivity
of the market to
pric e promotions,
the
impac t
of a brand's
strategy
on
c ompetitors,
and the vul-
nerability
of the brand to
c ompetitive
ac tions. The work of
Chintagunta (1994)
illustrates the
growing sophistic ation
of
methods available for
leveraging
the use of sc anner data.
He
proposes
and tests an
easier-to-implement
method that
obtains brand
positions
on a
produc t
market
map
and the dis-
tribution of
preferenc es
ac ross households while
ac c ounting
for effec ts of
marketing
variables on brand c hoic e.
At the same
time, many
firms have reduc ed the size of
their internal
advertising/marketing
c ommunic ations and
marketing
researc h staffs in
response
tothe demands for in-
c reased effic ienc ies and reduc ed overhead.
Marketing
re-
searc h also
inc reasingly
has been outsourc ed to
suppliers,
with the staff func tions within the firm
being
downsized.
As the need for
integrated
c ommunic ations inc reases and in-
ternal staff
support
for this func tion is
reduc ed,
the role of
the brand
manager
in the c ritic al areas of
planning
and exe-
c ution of
marketing
c ommunic ations for the brand has broad-
ened.
Larger advertising agenc ies
and
marketing
researc h
suppliers
have
improved
their
ability
to
supply
a
strategic
foc us. Yet suc h
c hanges imply
that
greater responsibility
for
strategic
direc tion and
initiating
needed researc h will be
thrust on the brand
manager.
More c reative use of
existing
data,
suc h as that
suggested by
the Russell and Kamakura
and
Chintagunta proposals,
will
help,
but more innovative
studies
requiring primary
data c ollec tion will
possibly
suffer.
CONCLUSIONS
Needless to
say,
brand
managers appear inc reasingly
c hal-
lenged.
The world of the brand
manager
is
c omplex
and be-
c oming
more so.
Tec hnology
is at onc e a c urse and an
op-
portunity-while c reating
new
c apabilities
for the brand
manager,
it also
provides
a need for new skills and different
vision. The forc es brand
managers
fac e are not
temporary.
If
anything, they
inc rease the need for the
type
of c oor-
dinated
management
brand
management traditionally
has as
its
strength.
Brands c ontinue tohave value in a
c ompetitive
marketplac e
and
undoubtedly
will c ontinue toexist. Al-
though spec ific organizational
forms
may c hange,
brand
management
itself will
adapt
and thrive as
managers ac c ept
new
c hallenges by improving
their
c ompetitive ability
(Low and F ullerton
1994).
The
Changing
Basis
for
Brand
Management
Given dramatic
c hanges
in the
c ompetitive
nature of
prod-
uc t-markets and
tec hnology
and their
c onsequenc es
in the
evolving
role of both distributors and
fac ilitating organiza-
tions,
it is understandable that dec ision
proc esses
and
organ-
izational struc tures used tomake and
implement
brand de-
c isions also
may
need reexamination. F irms fac e diffic ult
trade-offs between the inc reased
importanc e
of c oordinat-
ing
brand
ac tivities,
both within and outside the
organiza-
tion,
and the
pressures
todec entralize dec ision
making
and
eliminate entire
layers
of
management
in the
hope
of c urtail-
ing
c osts. Low and F ullerton
(1994)
trac e the evolution of
brand
management
fromthe
origins
of the first national
brands tothe
present. They provide
an
important
historic al
perspec tive
for
many
of the issues
affec ting
brand
manage-
156
istic s of
buyers (and segments), along
with information re-
Introduc tion tothe
Spec ial
Issue
ment
today. They
note that brand
management
has
proven
quite adaptable
to
differing
firmand
marketing
environ-
ments over its existenc e. As the
moder c orporation
inc reas-
ingly inc orporates
horizontal c oordination struc tures
(Byrne
1993),
the brand
manager may
even bec ome
part
of c ross-
func tional teams.
The
original logic
for the brand
manager system
in the
multibrand firmrested on the belief that
c ompetition
inter-
nally
for resourc es would
improve
efforts on behalf of eac h
brand. But
managers
for
multiple
brands in the same
prod-
uc t
c ategory (suc h
as
Cheer, Bold,
Oxydol,
and Tide deter-
gents
for
P&G)
often
c ompeted
as
ruthlessly
with one an-
other as
they
did with
c ounterparts
from
c ompeting
firms.
The
diffic ulty
in
c oordinating marketing programs
for eac h
brand and demands for a more c oherent
approac h
to
manag-
ing
an entire
c ategory
of
produc ts
on the
part
of the trade
led firms suc h as P&G
rec ently
toc entralize dec ision mak-
ing
at the
c ategory level,
with other firms either
following
or
ac tively studying
the
possibility.
Low and F ullerton
(1994)
c omment that
c ategory management
alsoaffords the
opportunity
for more
experienc ed
exec utives to involve
themselves with the brand
management func tion, thereby
re-
duc ing
one of the weaknesses of traditional brand
manage-
ment. Zenor
(1994) argues
that a
c ategory
formof brand
management organization
seems
inherently justified by
an
improved ability
toc oordinate
pric ing
and other
marketing
efforts for a firm's different
produc ts
and brands. His re-
searc h uses a
game
theoretic model toestimate the
magni-
tude of
profit advantage
that
c ategory management affords,
given varying degrees
of c ross-brand
pric e elastic ity
in the
market. He demonstrates that the suc c ess of
c ategory
man-
agement
is enhanc ed when
c ompetitors
are
organized
simi-
larly.
Estimates of
gain
c an be
c ompared
with the c osts of
implementing
a
c ategory management
struc ture todec ide if
suc h a move is benefic ial.
Some F inal
Thoughts
This
spec ial
issue is a reflec tion of the c urrent state of re-
searc h in brand
management
and
testimony
tothe
growing
importanc e
of this area. Investment and
marketing prac titio-
ners' interest has made brands and brand
management
rele-
vant for the ac ademic
c ommunity.
Bec ause it summarizes
muc h rec ent
researc h,
this
issue,
it is
hoped,
should be of
c onsiderable interest to
prac titioners.
Several
general
c onc lu-
sions c an be drawn fromthis c ollec tion of
sc holarly
effort:
* No
single
or dominant theoretic al framework has
emerged
that
guides
researc h in this area. Contributions in this issue re-
flec t a multitude of
viewpoints
from
c ognitive
and c onsumer
psyc hology
toinformation ec onomic s. Given the
diversity
of
topic s
c overed under the umbrella of brand
management,
we
suspec t
this area of researc h will c ontinue toborrow fromsev-
eral
underlying disc iplines
for its
c onc eptual
and theoretic al
foundations. The
development
of
theory
to
guide
brand man-
agement
is
inc reasingly nec essary
and will and should be
integrative.
* In a similar
manner,
this issue reflec ts a broad
array
of meth-
odologic al approac hes-fromexperimental design
to
survey
methodology,
fromthe examination of sc anner data tothe use
of c ritic al historic al
analysis. Again, diversity
is c alled
for,
given
the nature of the problems fac ing
brand managers. In
this
issue,
we alsohave seen
proposed
newer
tec hniques
to
aid
study
of brand
management questions.
*Several areas of
importanc e
were not
explic itly
examined
by
this c ollec tion. If researc h on brand
management
is toremain
of
signific anc e
tothe
prac tic e
of
marketing,
we believe more
attention is needed in areas suc h as the
following:
-The
global management
of
brands, espec ially
with
respec t
to
whether, when, and how brand names c an be used as
sourc es of
c ompetitive advantage
in an
inc reasingly global
ec onomy;
-The
impac t
of information
tec hnology
on the brand
manage-
ment
system
and brand
manager's job-how
that
job
is
c hanging
as dec isions are dec entralized and involvement
in those dec isions is broadened both inside and outside the
organization;
-How to
leverage tec hnology
better when it is not
proprie-
tary
toa
single firm;
-Better
understanding
the c auses of
individual, segment,
and market behavior
(Barabba
and Zaltman
1991).
Promis-
ing
starts have been made
by
researc h
dealing
with
pur-
pose
and c ontext in
buyer dec ision-making,
but more is
needed tounderstand how
buyers
formthe c riteria
they
use toevaluate
produc ts
and
marketing offerings
and how
these
c hange
with different dec ision
c ontexts;
-Better
understanding
of the c irc umstanc es under whic h
brand
equity
varies and when individual- or
segment-level
measures are better. Globalization
may imply
that
buyers
are less
(more?) homogeneous
than
they may
be domesti-
c ally.
The role of
usage applic ation
on brand
equity
is
poorly understood;
-The
relationship
between the shift in
power
in distribution
c hannels and the c ontrol over brand names and the market-
ing programs
that
support
those brands. Must
private
label-
national brand status c reate a fundamental
distinc tion,
ir-
respec tive
of
quality
of the
produc t?
-The
development
and
importanc e
of
c orporate
brands and
brand
identity, espec ially
within business-to-business and
servic e c ontexts;
-The
understanding
of better
ways
to
manage joint
and c o-
branding
and other forms of
strategic allianc es, espec ially
those between erstwhile
c ompetitors;
and
-the
development
of more of a
"systems
view" of brands
and
produc ts
toinc lude how
intangibles
c reated
by
the
pric -
ing, promotional, servic e,
and distribution dec isions of the
brand
manager
c ombine with the
produc t
itself toc reate
brand
equity
and affec t
buyer
dec ision
making.
Although
these are
important questions,
we
rec ognize
they
are diffic ult to
pursue, espec ially
with
empiric al
re-
searc h
alone,
and
may require
c onsiderable theoretic al devel-
opment.
The
payoff
fromsuc h
efforts, however,
would
ap-
pear large.
Given the
c hallenges
and
opportunities affec ting
c ontemporary
brand
management,
the future for researc h in
this area is
promising.
We
hope
this issue serves as a
point
of
departure
rather than a destination and a
c atalyst
for fu-
ture c ontributions in the brand
management
area.
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