Brand Management in the 21st Century – Trends and Issues

Ruth Stanat, President, SIS International Research

Overview

During the past decade, we have experienced dramatic changes in our world socially, economically, and politically. Since the early nineties, we experienced the demise of communism and the growth of globalization. We also experienced major re-engineering of large firms and the evolution from the traditional corporate structure to the virtual corporation. More dramatic has been the development of the Internet and its impact on both the workplace and the home.

With all these changes, it is clear that we are facing a new world order, a new way of running businesses, and a new way of living our personal lives. From a business perspective, the following are dramatic changes that have occurred in the past decade:

  • The pace is faster.
  • Businesses are instantly connected to their customers, suppliers, and distributors.
  • Globalization has produced a truly global marketplace.
  • There is so much information available that corporations need to continually interpret it and turn this into useful “intelligence” for their corporation.

Brand Management in the 1980s and Early 1990s

During the 1980s and up until the early 1990s, brand managers could depend on the following factors:

  • A reasonable or realistic brand or product development timeframe or cycle
  • Traditional brand management measurement methods and techniques (e.g., syndicated tracking data)
  • Traditional brand equity models
  • Traditional brand management organizational structure within the corporation

How Brand Management Has Changed in the 21st Century

Overall, the velocity of doing business today has compressed the timeframe for new product development, “time to market,” brand performance tracking, and the analysis of brand equity performance.

More importantly, our rapidly changing world has increased the need for monitoring not only the performance of the brand on a global, regional and local basis, but also the rapidly changing competitive and environmental conditions throughout the world. These factors encouraged our firm to conduct a study to identify the trends in brand management in the 21st century.

Our Approach to the Research

Our initial research involved an extensive review of the secondary literature in the field. We researched the Internet, trade publications, press releases, media, past studies, financial statements, speeches, and the websites of “best in class” brand management leaders.

During the next phase of our research, we interviewed some of the key opinion leaders and practitioners in the field of brand management, as follows:

  • Leading university professors
  • Leading authors
  • Brand management professionals from “best in class” companies
  • Senior executives from advertising firms in North America, Europe, Asia, and Latin America

The staff at SIS International Research then analyzed the interviews and secondary information, resulting in the following findings.

Trend #1: Multidimensional Models vs. Two-Dimensional Models for Brand Positioning

During the 1980s, the leading brand management firms adapted a wide range of two-dimensional models for brand positioning. While these models were sufficient for the 1980s, they were not effective after the early 1990s. Clearly, our world has become more complex and brands have to be developed faster and positioned better in rapidly changing global, regional, and local environments.

To meet this need, scholars and practitioners have developed multi-dimensional models that enable brand management to incorporate the following factors into positioning the brand:

  • To produce techniques which allow the firm to map the brand through the consumer’s eyes.
  • To define lead, strategic, and support brands.
  • To use a non-linear brand management sales approach to position the brand in select market segments.

The Brand Molecule Approach

One state-of-the-art technique is the “brand molecule” mapping approach (source: Lederer and Hill, Harvard Business Review, June 2001). This innovative approach enables brand management to paint a picture of the brand, as it is actually perceived by consumers. It also includes all brands and associations or slogans that have some influence, either positive or negative, on the purchase decision.

Essentially, creating the Brand Molecule Portfolio Map is a three-step process. Although quantitative data is reviewed and there is a certain amount of quantitative analysis, the final mapping is based on the informed decisions or judgments of the brand managers.

Step 1: Create a long list of brands and associations to include in the portfolio (e.g., consider all the brands that influence the customers’ perceptions and choice).

Step 2: Determine which is the lead brand, which are the strategic and support brands, and their relative positioning.

Step 3: Assign values to the different criteria and map the molecule.

The brand molecule approach can be used to map and position brands that are global, regional and local.

Trend #2: Incorporation of Environmental Information into the Brand Management Process

In this rapidly changing social, economic, political and consumer environment, brand leaders have learned the value of tracking environmental information on a continual basis and incorporating this information into their brand management models and positioning.

The following are examples of environmental information that is being tracked and integrated into brand management tracking systems and models:

  • Competitive product information
  • Consumer lifestyles
  • Local psychographic information
  • Local cultural trends
  • Socio-economic factors

The following are examples of sources of environmental information:

  • The media and the press
  • The sales force
  • Consumers
  • Trade associations and industry colleagues
  • Rumors
  • Local demographic information

The following are the benefits of tracking environmental information and integrating the information into the brand management process and systems:

  • The firm is able to address the changing psychology of the consumer, which is often driven by emotions and reactions to the local environment.
  • Consumers need brands that are compatible with their changing lifestyles, which are driven by their external environment.
  • Integration of environmental trends into the brand management process enables companies to take an “inside-out” perspective into their brand management process and systems.
  • Integration of environmental information enables brand leaders to determine the degree of control they have over the positioning of their brands in their three-dimensional models.

Trend #3: Expansion of Brand Management Processes and Organization to the Global, Regional, and Local Levels

With the globalization of corporations in the past decade, many brand management organizations have organized themselves on a global, regional and local basis. Many of the key opinion leaders and practitioners surveyed indicated that global brands are strategically positioned with corporate imagery that can create demand across cultures. On the other hand, local brands are generally positioned directly against competitor brands in terms of product attributes.

Most of the interviewed brand management executives indicated that Global and Regional Vice Presidents of Marketing develop the brand strategy and planning. However, there is wide variation between firms with regards to the role and authority of local brand management. Depending on the culture of the firm and the types of products, local brand management can have a significant degree of decision-making and control of budgets. Overall, our findings indicate the following trends:

  • Strategy and Planning – primarily controlled at the global and regional levels
  • Implementation – primarily controlled at the regional and local levels
  • Evaluation – performed at all levels; most tools and measures are standardized

Trend #4: Reduced Reliance on Traditional Syndicated Data for Tracking Brand Performance and the Development of Customized Tracking Systems

Our interviews with key opinion leaders and practitioners of brand management indicate that while they still may subscribe to traditional syndicated data sources (e.g., customer satisfaction, brand loyalty, brand market share, and price points, etc.), many of the leading brand management firms have either augmented these systems or developed their own customized brand management and brand equity tracking systems which enable them to determine the following:

  • Brand drivers
  • Return on investment in brand equity
  • Local, regional and global positioning
  • Value pricing
  • Line extensions

These customized brand-tracking systems often integrate quantitative tracking data with qualitative environmental and competitive information to produce an effective decision support tool for brand management. The following are some of the types of information which are integrated into these customized systems:

Quantitative Information:

  • Brand market share
  • Brand price points
  • Brand revenue

Qualitative Information:

  • Competitive information
  • Environmental information
  • Distributor information

The net result is that brand management can develop a brand equity index and brand driver analysis with more complete information. Our research also indicated that this information is often shared across the organization to other functional areas, such as finance, product development and engineering, manufacturing, marketing, legal and strategic planning.