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Mrs.SAMEERA NABI
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ANAND VIKRAM SINGH
ENROL .NO.
1236
Marketing
Since Marketing, perhaps more than any of the other three functions, is vitally concerned with the outside world and its effects upon the company's total marketing operation, such as government action, social change, new techniques, international market trends and changes, as well as the more immediately relevant market intelligence, there should be a greater flow of information emanating from Marketing than from any other function. This internal relationship is an extremely delicate one. Marketing plans will only be actioned effectively if others carry them out with commitment. Whenever Marketing is newly incorporated into an existing structure, entrenched positions and understandable jealousies will inevitably make life difficult for the Product Manager. This subject is intended to give the reader background and knowledge essential to be a successful product manager. What, then, are the differences between a focus on the product manager and a more general marketing management perspective? One key difference is that marketing managers in charge of a division or strategic business unit have more concerns about managing "portfolios" of products and about the long-term strategic direction of their business groups. Because product managers in our sense are in charge of a single product or closely related product line, they are not concerned on a day-to-day basis about the health of the general business area in which they operate. The narrow product or brand focus at the expense of the product category as a whole has given rise to a new position at many packaged goods companies, the category manager. A second key contrast is that the nature of decision making is quite different. Divisional marketing managers typically make strategic decisions about which products to add or drop and manage to meet an overall divisional financial objective. While product managers are intimately involved with developing marketing objectives and strategies for their products, their key decisions are tactical and revolve around the marketing mix: how much to spend on advertising, how to react to a competitor's coupon promotion, which channels of distribution are appropriate, and similar questions. .Finally, product managers and marketing managers face different time horizons. Product managers focus on meeting annual (or other short-term) targets. This does not imply that they are myopic; however, they face substantial pressure to attain short-run market share, volume, or profit targets. Marketing managers are also concerned with short-run targets, but they more often take a longer perspective of where the business is going. Thus, this subject focuses on the product manager's tasks of marketing planning, developing product strategy, and implementing that strategy through various marketing tools. The intended audience includes those individuals who manage individual products.
Is there an increasing need for a marketing backup for Key Accounts sales executives.
6. Can there be justification for separate marketing service people to back Product Managers, with statistical data. 7. Is the total turnover for any one brand or product category so vast that the sheer size requires it to be broken down into manageable portions. 8. Should the Product Manager have product development responsibilities or should he be left to look after his/her own existing products lest they be neglected? 9. How technical is the product or market? 10. To what extent is export a separate function? 11. Has the company newly embraced marketing, and to what extent is formal marketing planning practised? 12. Is one restricted to a finite distribution chain but with hundreds of products? 13. How large is the company overall? Is it vast requiring a large number of responsible marketing executives? 14. How competitive is the market? Is it highly competitive, like video, or is it very specialist, such as water purification? 15. What are the relevant profit centres within the company? Each Product or Brand Manager must have a budget and access to detailed costings, and be a profit centre. 16. To what extent is top management able and willing to delegate decision making? All these considerations inevitably lead to a plethora of structures, each of which can be perfectly sensible for individual companies. There is a constant need to review responsibilities in light of the ever-changing patterns of markets and the speed at which product development and innovation occurs. An ever-present organisational danger in such a fluid situation is the overlapping of responsibilities.
Scope of Responsibility.
Much of the preceding descriptions of the product manager's job and the types of marketing organisational structures that impact on the role of product managers was general. As is always the case, there are exceptions to the rules. Even within a specific organisation type, the product manager's job varies between industries and between products.
Authority
Product Management is a middle management position and therefore must report to higher authority as well as be responsible for others. But whilst this is so, the Product Manager must act as responsibly as if he alone were responsible for his/her product. It is the reason why Product Managers are called Managers. They must manage people and events for the benefit of the whole company, not simply for one product or product group, even though all their endeavours revolve around one product group. As previously noted, there is no typical job description or even job title for a PM. In general, PMs coordinate sales, manufacturing (if applicable), and research and development (R&D). But the extent to which a PM focuses on one area or another varies depending on the time of year, the industry segments, and the stage of the product life cycle. Interestingly, the PM's position can be characterised as having broad responsibility and limited authority! The Product Manager, (sometimes called the Brand Manager) should ideally be a judicious blend of the theorist and the practitioner, and certainly very much an all-rounder. The Product Manager under the system is ideally placed to estimate for top management the optimum balance between sales growth and profit growth for his/her own particular product. He/she studies the market and the product, he/she forecasts the sales and recommends the price, which together make up the product's revenue; he/she plans and coordinates the advertising and sales promotional programmes which make up the bulk of the product's expenditure.
In short, he/she can be made responsible to his/her superiors for the overall health and profitability of his/her product over a sustained period of time. In the execution of this responsibility there is no aspect of the product's activity which is not his/her concern. Any criticism which management may reasonably level at the product-if the product or the advertising are not good enough, if sales are below forecast, or expenses above budget, if problems are not being tackled systematically, or opportunities exploited-in any of these circumstances, and many others, management will in the first instance hold the product manager accountable. The PM has a diverse role. Responsibilities, emphasis on marketing mix variables, and skills utilised differ across products even within individual companies. The two most important industry variables separating responsibilities are the stage in the product life cycle and the degree of technological innovation. Effective marketing requires information support and people skills. Most PM s admit that they do not have enough time and resources to be sufficiently thorough in their analyses. They feel that more sophisticated analysis tools would give them more confidence in recommending proposals to upper management, especially with respect to pricing. In addition, the PMs' role as co-ordinator often brings them into situations in which they have no direct authority over the staff involved. Good personal relations are therefore crucial for a PM to secure co-operation from the staff. Not surprisingly, product marketing can be a political job. Politicking is a headache in both large and small companies. On the one hand, enterprising people at all levels often manage to bypass bureaucratic layers to find champions among higher management levels to back a project. On the other hand, fear of politics can limit plan and program options for product managers. This problem is most obvious in high-tech companies where many projects compete for management attention and budgetary resources. Finally, the role and image of marketing differs across industries. In consumer product companies, marketing is the traditional "hub of the wheel." PMs in this segment follow the traditional marketing model most closely-writing a marketing plan and planning and implementing the four Ps (price, promotion, place, and product). In high-tech companies, the PM is an important intermediary between engineering and customers. PMs play the dual role of translating customer needs into technology requirements and smoothing out the rough edges of a raw product from R&D. In service industry segments, the PM is chiefly concerned with distribution and channel management. For services, distribution is an integral part of the product itself.
- Preparing an annual marketing plan and sales forecast - Working with advertising and merchandising agencies to develop copy, programs, and campaigns - stimulating interest in and support of the product among the sales force and distributors - Gathering continuous intelligence on the product's performance, customer and dealer attitudes, and new problems and opportunities - Initiating product improvements to meet changing market needs These basic functions are common to both consumer - and industrial - product managers. Yet there are some differences in their jobs and emphases. Consumer-product managers typically manage fewer products than industrial-product managers. They spend more time on advertising and sales promotion. They spend more time working with others in the company and various agencies and little time with customers. They are often younger and better educated. Industrial-product managers, by contrast, think more about the technical aspects of their product and possible design improvements. They spend more time with laboratory and engineering personnel. They work more closely with the sales force and key buyers. They pay less attention to advertising, sales promotion, and promotional pricing. They emphasise rational product factors over emotional ones.
2. PRODUCT PLANNING
There is no substitute for a good product, and a good product is a relative rather than an absolute term. A good product in 1995 may have become an adequate product by 1996 and a poor product by 1997 as competitors improve their own products. Nor can the continuous process of product improvement be left to the inspiration of technical researchers. The Product Manager, acting as the advocate for the consumer, must give purpose and direction to product development work. The brand name, the price and, where applicable, the packaging are also vital aspects of this assignment.
3. ADVERTISING
This is a major assignment in itself, especially in the field of repeat-purchase products where it may be the life-blood of the business and where it can consume up to half the product manager s time. Advertising is the main weapon in the product's armoury, and with its aid the product managers can communicate to the consumer, at third hand, some tiny part of the enthusiasm and conviction he/she himself feels about the product. The major decisions include fixing the advertising appropriation, the choice of media, the nature of the sales message itself, and the evaluation when it is an over. All this involves working closely and continuously with the advertising agency.
marketing concept is the idea that profit is not really all that important. It is never put as baldly as that. "You have got to spend money to make money", said the early missionaries. "Invest in marketing the way you invest in plant." However valid this may be from the point of view of overall company philosophy, when it comes right down to the management of a single company brand, each chief marketing executive has to ask himself which of his/her product people qualifies for the next rung up the ladder: Objective criteria like product share, sales, and profits are not the only yardsticks for measuring the Product Manager's success. Fate or the Marketing Director can deal a bad hand. A product manager who can keep cool in the face of adversity, and do a good job with a poor brand, can and frequently does attract more favourable notice than the dunce who sits on top of a successful goldmine and contributes nothing to its success. In pursuance of his/her twin goals of growth and profitability, the Product Manager's job breaks down into a planning element and a coordinating element. Responsibility without power, is the unhappy lot of the Product Manager, since the actual execution of the tasks he/she plans is almost invariably in the hands of a separate specialist unit over which he/she has no direct authority. This means that the Product Manager can only perform as well as he/she can persuade others to perform on behalf of his/her brand the product and production technicians, the sales force, the advertising agency, and all the other departments which have a contributory function to perform. This in turn means that the top flight product manager should possess a remarkable combination of attributes, in terms of: (a) his/her knowledge and skills as a marketing craftsman; (b) his/her general/personal management ability. As far as his/her marketing expertise is concerned, this is largely a matter of training. When potential Product Managers are recruited by a manufacturing company, it is this ability to analyse and to predicate logically from the analysis which is used to separate the possible candidates from the non-starters. Intelligence and logic aside, the quality which distinguishes the able from the merely bright in product management, as in all other spheres, is the capacity and the will to work really hard, and preferably fast, over a sustained period of time. Perhaps the truism has a special importance in product management, since in few other fields is a relatively youthful executive brought into such regular contact with top management. The Product Manager is properly called upon to represent the interests of his/her product at top level meetings of all sorts, not always excepting board meetings, and the justification for his/her presence must be that he/she has devoted more study and effort to that product than anyone else in the company. When up against his/her seniors, he/she will always find it difficult to carry his/her point. If he/she has not done his/her homework scrupulously, and cannot command respect . for his/her knowledge, he/she will certainly command none for his/her experience. Diplomacy, too, is more than usually a virtue in product management, especially in the early stages, before the young product manager has won his/her spurs. The Sales Manager, with 30 years' service, or the battle-seasoned Account Supervisor at the advertising agency, do not take kindly to so called "bright young people" telling them how to do their jobs. Nor does it help that the veterans have a shrewd suspicion, based on past experience, that the young whipper-snapper will within 2 years go shooting up through the organisation like a rocket. This initial suspicion from the experienced specialists takes a variety of forms, some more insidious than others. When the youthful Assistant Product Manager takes a rough of a poster down to the Sales Manager (to obtain the necessary sales department approval) and that worthy silently picks it up by one comer and drops it in the waste-paper basket, there is no serious problem. Each knows precisely where he/she stands. It frequently happens, however, that there is no overt rejection process. The specialist manager in question, with a cautious eye on the future, is friendly and even ingratiating. Unfortunately, the advertising agency is especially open to the temptation to serve up a judicious mixture of flattery and lavish lunches to the point where the unwary product manager becomes somewhat inflated with a sense of his/her own importance. Apart from making him/her a less lovely person to know, this can
impair his/her performance and his/her future growth by blunting the sensibilities which should be amongst his/her most important assets. Intelligence, logic, diligence, diplomacy, and sensitivity. Two other qualities are required, perhaps above all the others. The first is tenacity-part self-confidence, part courage, and part sheer bloody-mindedness. The kind of tenacity which causes a man to stay with a task when he/she is bored with it, or stick to his/her guns when he/she has not understood the counter-arguments, even in the face of hostile and influential public opinion. This is also the kind of tenacity which will get him/her into trouble every now and then-no one wants a salesperson who has never got thrown out of a shop for trying too hard. The second quality-and heads are bared in product management circles at the mention of the word-is objectiveness, or (in the larger dictionaries only) objectivity. To be objective is a consuming passion with the good Product Manager The vital importance of being objective is, of course, closely related to the passion for facts already mentioned. In combination, the two allied characteristics can be maddening, but with them goes an instant readiness to back down, without embarrassment or hesitation, in the face of superior logic or new facts. This is a quality to be prized in any commercial operation.
Marketing Organisation
The product management organisation introduces several advantages. First, the product manager develops a cost-effective marketing mix for the product. Second, the product manager can react more quickly to problems in the marketplace than a committee of specialists can. Third, smaller brands are less neglected because they have a product advocate. Fourth, product management is an excellent training ground for young executives, for it involves them in almost every area of company operations. But a price is paid for these advantages. First, product management creates some conflict and frustration. Typically, product managers are not given enough authority to carry out their responsibilities effectively. They have to rely on persuasion to get the cooperation of advertising, sales, manufacturing, and other departments. They are told they are "mini managers" but are often treated as low-level coordinators. They are burdened with a great amount of "housekeeping" paperwork. They often have to go over the heads of others to get something done.
Second, product managers become experts in their product but rarely become experts in any functions. This is unfortunate when the product depends on a specific type of expertise, such as advertising. Third, the product management system often turns out to be costlier than anticipated. Originally, one person is appointed to manage each major product. Soon product managers are appointed to manage even minor products. Each product manager, usually overworked, pleads for and gets an associate brand manager. Later, both overworked, they persuade management to give them an assistant brand manager. With all these personnel, payroll costs climb. In the meantime, the company continues to increase its functional specialists in copy, packaging, media, sales promotion, market surveys, statistical analysis, and so on. The company becomes saddled with a costly structure of product management people and functional specialists. Fourth, product managers tend to manage their brand for a short time. Either product managers move up in a few years to another brand or product, or they transfer to another company, or they leave product management altogether. Their short-term involvement with the product leads to shortterm marketing planning and plays havoc with building up the product's long-term strengths. The functions of marketing management, can be broken down into fixed tasks and variable tasks, in the manner of costs. The fixed tasks are those which remain constant for all intents and purposes, whether the company in question markets one product or twenty. These include sales policy, the recruitment, training and administration of the sales force, its motivation, its performance and the measurement of its effectiveness, contact with the wholesale and retail trades, order processing, credit control and cash collection, deliveries and after-sales service. The variable tasks are those which have to be carried out entirely separately for each product, and are thus duplicated as many times as the company has products. These comprise market analysis, consumer research, product planning (including pricing and packaging), sales promotion and merchandising planning, advertising and public relations, sales forecasting, and profit planning. Daunting as the two lists of tasks may seem, in a small company they can be carried out with varying degrees of success by a tiny management team, or even, in appropriate circumstances, by a single individual. Obviously, the larger the scale of the operation, in terms of numbers of salesmen or of products marketed, the more complex the management structure required. The growth of any marketing organisation will be by the normal blend of delegation and specialisation; that is to say, the structure will extend both vertically and horizontally Although we briefly described the tasks of the "typical" product manager, they actually, of course, vary quite widely from organisation to organisation. Usually, the kinds of tasks with which product managers become involved are highly related to how marketing is organised. Three organisational structures for marketing have been identified: organising by product, by market, and by function.'
Product-Focused Organisations
The tasks of these elements of the hierarchy are typically the following.' The assistant product managers job includes market and share forecasting, budgeting, coordinating with production, executing national promotions, and packaging. In general, the product assistant's tasks involve becoming more familiar with the category within which the product is competing. Associate product managers have more freedom to develop brand extensions, and sometimes even manage a small product line. The product manager, of course, has the ultimate responsibility for the product.. This structure is not limited to packaged goods companies. The product management system has several advantages. The locus of responsibility is clear because the person responsible for the success of the product is the product manager and no one else. Because of this clear locus of responsibility, it is also clear to whom the organisation can turn for information about the product. Product managers' training and experience is invaluable; they develop the ability to work with other areas of the organisation, and the persuasion and communication skills
necessary to be an advocate for the product. In fact, companies organised by product management are often breeding grounds for senior executives of other companies, which highly value the training The product management system also has its weaknesses. The extreme focus on one product can sometimes lead to an inability to step back and ask more fundamental questions about customer needs. It can also be a very centralised structure in which the product manager is somewhat removed from "where the action is" in the field. One of the changes in marketing organisation that will be discussed later is an attempt to flatten the organisation and decentralise product management, particularly when there are significant differences in regional tastes for a product. In addition, some people complain that product managers are too myopic in their quest for quarterly or even shorter changes in sales and market share. One of the results of this perspective has been the dramatic increase in the use of short-term marketing tools, such as sales promotions, for consumer packaged goods. A final risk in a product-focused organisation, particularly for industrial products, is that it could result in several salespeople from the same company who represent different products calling on the same customer. This problem is most likely to occur when the sales force is organised by product specialties and is not necessarily a general characteristic of product management organisations. Despite these weaknesses and many criticisms of traditional product management, it continues to flourish in consumer and industrial products companies.
Market-Focused Organisations
This structure defines marketing authority by market segment. Segments could be defined by industry, channel, regions of the country or the world, or customer size. The market focused structure is clearly useful when there are significant differences in buyer behaviour between the market segments that lead to differences in the marketing strategies and tactics used to appeal to them. The big advantage of this market-based structure is clearly its focus on the customer. In this structure, managers can consider changes in customer tastes that may, in fact, result in eliminating some of the products currently being marketed. It is particularly useful when the product being marketed is a system that bundles a number of products made by the company. A product management structure offers insufficient motivation to spend time on a system sale, which may involve little revenue for a particular product. The market-based structure makes the job of getting the product managers to pull together easier. These managers often have better knowledge about the company's line of products than do the product managers in a product-focused company. A drawback to this structure, however, is the potential conflict with the product management structure that may lie beneath it. Additionally, some of the mini CEO training and experience of traditional product managers is lost.
However, there are some advantages in this kind of structure. It is administratively simple: The groups are designed to be parallel to normal marketing activities. Functional training is better-for example, skills in developing sales promotions will be better developed because that is a person's sole responsibility. Five steps have been suggested to make the product management system work better. - Clearly delineate the limits of the product manager's role and responsibility for the product. (They are essentially proposers, not deciders.) - Build a strategy development and review process to provide an agreed-toframework for the product manager's operations. (Too many companies allow product managers to get away with shallow marketing plans featuring a lot of statistics but little strategic rationale.) - Take into account areas of potential conflict between product managers and functional specialists when defining their respective roles. (Clarify which decisions are to be made by the product manager, which by the expert, and which will be shared.) - Set up a formal process that forces to the top all conflict-of-interest situations between product management and functional line management. (Both parties should put the issues in writing and forward them to general management for settlement.) - Establish a system for measuring results that is consistent with the product manager's responsibilities. (If product managers are accountable for profit, they should be given more control over the factors that affect their profitability.) A second alternative is to switch from a product-manager to a product-team approach. In fact, there are three types of product-team structures in product management. - Vertical product team This consists of a product manager, associate product manager, and product assistant. The product manager is the leader and primarily deals with other executives to gain their cooperation. The associate product manager assists in these tasks and also does some paperwork. The product assistant does most of the paperwork and runs errands. - Triangular product team This consists of a product manager and two specialised product assistants, one who takes care of (say) marketing research and the other, marketing communications. This design is used at the Illinois Central Railroad, where various three-person teams manage different commodities. Also, the Hallmark Company uses a "marketing team" consisting of a market manager (the leader), a marketing manager, and a distribution manager. - Horizontal product team. This consists of a product manager and several specialists from marketing and other functions. Thus the 3M Company divided its commercial tape division into nine business-planning teams, each consisting of a team leader and representatives from sales, marketing, laboratory, engineering, accounting, and marketing research. Instead of a product manager's bearing the entire responsibility for product planning, he or she shares it with representatives from key parts of the company. Their input is critical in the marketing-planning process, and furthermore each team member can bring influence to bear in his or her own department. The ultimate step after a horizontal product team is organised is to form a product division around the product. A third alternative is to eliminate product-manager positions for minor products and assign two or more products to each remaining product manager. This is feasible especially where two or more products appeal to a similar set of needs. Thus a cosmetics company does not need separate product managers, because cosmetics serve one major need - beauty - whereas a toiletries company needs different managers for headache remedies, toothpaste, soap, and shampoo, because these products differ in their use and appeal.
being made politically rather than rationally. 5. Declining cost-effectiveness of mass advertising. Product managers are finding that they have less money to spend on advertising, the one tool they know best. Furthermore, mass advertising - particularly network television - is becoming less cost effective. There are fewer people watching network television, and many of them are not interested in many products that are advertised. The money can be spent more effectively by studying category and brand interest levels market-by-market. But brand managers do not know the individual markets that well. Companies are increasingly developing local area marketing plans through other people rather than the brand managers. 6. Declining level of customer brand loyalty. Consumers have been exposed to so much dealing recently that a growing number are deal-prone rather than brand-prone. The consumers' evoked set of acceptable brands is increasing. As more consumers switch their brands each week depending on the deals, brand shares become more volatile. A brand's weekly or monthly market share means less and becomes less useful in deciding how much money to allocate to each brand. Higher levels of management have to decide how much in funds each brand should get based on more long-run criteria. 7. Increased parity between manufacturers and sellers. Prior to the last five years, manufacturers held the upper hand in dealing with retailers due to asymmetry in information: Manufacturers had a better idea of what was selling than retailers because of better data collection methods. Today, improvements in information technology and partnerships between manufacturers and sellers in developing measurement systems have given both parties equal access to sales performance. As a result, the balance of power in distribution channels is clearly shifting from the manufacturer to the retailer. This has created more manufacturer awareness, even among manufacturers with powerful brand names, that retailers must be treated well and that it is as important to be close to them as it is to the end customer. 8. Increased spending on sales promotion versus advertising. This is mainly characteristic of consumer products. The higher rates of spending on sales promotion, particularly on trade promotion, coupled with downward pressure on prices have lowered profit margins dramatically. This has had the unfortunate effect of making product management even more short-term oriented as the battle for market share has become more intense. 9. Pricing and value. These two terms are often confused. Companies are more interested in pricing their products at a level commensurate with customer value, that is, the economic value customers place on the product. However, during the recessionary period of the early 1990s, pricing at customer value was impossible. As a result, value pricing came to mean offering greater value to the customer than is justified by the price. Product managers, therefore, seek ways to offer increased value in products while reducing prices, producing "bargains." 10. Increased importance of customer service. Many marketing writers feel that customer service will be the competitive battleground of the 1990s because parity has been achieved between the features of most competitors' offerings. Thus, customer service can be seen as a dimension of the product where a sustainable competitive advantage can be achieved. However, most companies have a long way to go to deliver levels of service that would differentiate themselves (in a favourable way!) from competitors. 11. New ways of reaching customers. Companies are seeking and using more cost-effective ways of communicating with customers and measuring the effects of the dollars spent. The decrease in advertising billing levels partially reflects this phenomenon. Increases in the use of direct marketing, telemarketing, cable TV, and, in the near future, interactive TV, will make the product manager's job of selecting alternative modes of communication more complex. 12. Increased global competition. Unquestionably, product managers have to be equipped to deal with world-wide competition-not only by having appropriate organisational structures as discussed earlier in the chapter, but also by obtaining experience and knowledge about how business is conducted in a variety of cultural contexts. These developments are forcing companies to rethink how they should develop and manage their products and brands. There are two competing solutions:
1. Changing the job description and the role of the Product Manager. One avenue of thought is that the product manager should spend less time creating the promotion plans and become more involved in product improvement and production. Normally the product manager has little time to think about creating flankers and brand extensions, and this has forced companies to appoint new-product specialists within brand or category groups to do this work. And the product manager does not become very involved in knowing the production and logistics steps and how to find cost improvements. Therefore it might be argued that product managers should have their responsibilities shifted more to product improvement and production/distribution efficiency concerns. 2. Eliminating the Product Management system. Another avenue of thought is that a company should organise teams around major product categories such as snacks, dog foods, and cereals. Each team would be headed by a category manager and would consist of a marketing researcher, an advertising specialist, a sales promotion specialist, and a sales management specialist. This would reduce the number of middle managers and result in a leaner marketing organisation. If product managers are eliminated, their counterparts in advertising agencies - namely, account executives - might also be eliminated. Many consumer packaged goods companies are pressing advertising agencies to lower their costs, especially considering the reduced effectiveness of mass advertising. These companies normally prepare their own brand marketing plans and simply want a good creative plan and media plan from their advertising agency. They wonder why they have to work through account executives and their assistants. Some companies are telling their advertising agencies they are going to pay less or else switch agencies, thus forcing these agencies to reconsider their own organising patterns and the role of the account executives.
development process featuring a hand-off from R&D to marketing. This is commonly happening not only in high-tech companies such as Hewlett-Packard, but also in companies like Procter & Gamble that established a position called product supply manager. Because of all the changes in both the marketing and economic environments, many organisations are struggling to find an appropriate organisational form of marketing. Other companies are looking for an organisational form that better integrates all communications within the firm, including advertising, promotion, public relations, and other forms of marketing communications.
Modern Branding
Modern branding, however, really dates from after the Second World War. The Economist observed that six times more wealth has been created in the world since the end of the Second World War than in the entire period of recorded history up to the war. Our generation has seen, therefore, a massive explosion in wealth and prosperity, and consumers in developed countries have disposable incomes at a level undreamed of only a few generations earlier. The explosion of choice facing the consumer has resulted in more and more investment being placed in brand and product development by manufacturers in order to capture the attention and loyalty of the consumer. Manufacturers have, for example, increasingly developed brands which are carefully targeted at specific, often very narrow consumer sectors, although, as we have noted, producers of branded products are often inexorably attracted to the branded products of their competitors and imitate as much as innovate when developing new products. A brand is the product of a particular supplier which is differentiated by its name and presentation. Thus any manufacturer can produce a cola drink but only the Coca Cola company can produce Coke. There seems little doubt that hundreds, even thousands of suppliers around the world could produce a high quality cola syrup and put in place the bottling systems and distribution infrastructure required to bring a cola drink to market. No doubt Coca-Cola, a world leader in cola drinks, has its own special product formulation as well as particular organisational and managerial skills. Nonetheless, the major differentiating feature possessed by Coca-Cola, and the only feature which a determined and well resourced competitor would be unable convincingly to replicate, is the brand itself. A brand then is a complex thing. Not only is it the actual product, but it is also the unique property of a specific owner and has been developed over time so as to embrace a set of values and attributes (both tangible and intangible) which meaningfully and appropriately differentiate products which are otherwise very similar. The term "Gestalt" has been used to help explain the complex nature of brands. It means literally "form" or "shape" and the concept behind the Gestalt is that nothing is simply the sum of its individual parts. Thus any attempt to analyse the whole by breaking it down into its molecular components is certain to fail. In psychology the term has been adopted to explain the process of perception: of how we understand and give form to the messages that we receive through our senses. Psychologists have suggested that much of learning - of absorbing, ordering and understanding data consists of forming Gestalt's, of creating patterns of understanding such that fragmentary data can be formed into a fuller, richer whole. It has also been suggested that even the most simple Gestalt's
which we respond to and which we rely upon in making sense of complex reality, need to be established over an extended period of time. A brand, then, acts as a Gestalt in that it is a concept which is more than the sum of its parts and which takes a long time to establish in the minds of consumers. Of course, in order to embrace a complex set of beliefs and values and internalise them as a Gestalt the recipient (or consumer) needs to recognise that what is on offer is appropriate and attractive. In other words, the Gestalt needs to be credible, coherent and attractive, supported and developed over time and not subject to rapid fluctuations in message, quality, positioning or overall "mood". The consumer, therefore, is prepared - given exposure to and confidence in the brand - to impart to the brand an authority and unity, a cohesion, which functions as a Gestalt prompting recognition, confidence and easy familiarity. Not all brands, of course, gain such authority and stature in the minds of consumers. They may have no particular features which set them apart from similar brands; or quality or positioning may vary so much that the consumer lacks confidence in the brand or fails to comprehend what the brand stands for. Alternatively, of course, the personality of the brand may be simply unattractive or unconvincing. To be successful, brands must be appealing and be maintained in good shape by their owners so as to continue to satisfy the consumer's needs. A brand is therefore a "pact" between the owner and the consumer: it allows the consumer to shop with confidence in an increasingly complex world, and it provides the owner with higher volumes, often higher margins and greater certainty as to future demand.
Successful Branding
The key elements in a brand are the product itself, its pricing, distribution, packaging, brand name, promotion and its overall look and presentation. It is far more than just a product - it is the particular, differentiated product of one supplier. Creating a successful brand entails blending all these various elements together in a unique way - the product or service has to be of high quality and appropriate to consumer needs, the brand name must be appealing and in tune with the consumer's perception of the product, the packaging, promotion, pricing and all other elements must similarly meet the tests of appropriateness, appeal and differentiation. The last factor, differentiation, is of critical importance in today's crowded markets. It is not inconceivable that any one of a dozen manufacturers of confectionery and chocolate products could, with a certain difficulty and expense, produce a passable imitation of a Kit- Kat chocolate bar. They would probably have to invest in special equipment and, not enjoying Rowntree's economies of scale, they would probably also have to sacrifice margin in order to meet Rowntree's price. Nonetheless, the Kit-Kat product is not protected by patents or by any unique technology and it seems almost certain that competitors could quite closely match the Kit-Kat product in terms of the product itself, its price and so forth. Rowntree's rights are, of course, protected through its trade mark and device mark registrations and at common law, and the company could also rely on more generalised legal protection for its intellectual property rights through "passing off" or, in certain jurisdictions, unfair competitions laws. Nonetheless, successful competition in the branded goods sector does not consist of developing close facsimiles of existing products, though no brand owner who opens up a new product sector can expect to remain free from competition for long. Even Kellogg's Corn Flakes, a formidably powerful brand, faces competition from other Kellogg's brands as well as from other breakfast cereal producers. There is an obvious need for manufacturers to compete effectively in key market sectors. When a competitor gains market share through the establishment of a new and successful product competitors must try to respond in a way which is credible and appealing to the consumer. Normally, however, this process should stop short of launching a new product which is a more-or-less undifferentiated pastiche of the original competitive product as such products are usually recognised by consumers for what they are and have little appeal unless, for example, they sell at a substantially lower price. In practice, in "mainstream" consumer products sectors such as beers, toiletries and foods, it is rare to achieve such massive product breakthroughs as to be able substantially to differentiate the brand in terms of performance ("wonder products" such as the first nylon stockings, stainless steel razor blades or even "green" products occur only occasionally). Further, today's goods are produced so efficiently and well that it is difficult to achieve substantial advantages in quality or pricing. The way, therefore, in which the brand can often be most effectively differentiated is not through the product itself but through its packaging, name, presentation or market positioning. For example, a new brand can be presented in an entirely fresh and contemporary fashion so that, by implication, the old brand appears dull and dated. Innovative, differentiated brands do not, however, need to be bizarre or eccentric. The degree of differentiation, of shift of emphasis, may well need only be slight. Moreover, such differentiated brands can do more than merely offer the consumer some transient new appeal and persuade him or her to switch, perhaps only temporarily. Differentiated brands can serve to outmode and wrong-foot existing brands. This process has been called "competitive de positioning"; in effect, the owner of the new brand attempts to portray his brand in a fresh and exciting way so that, by contrast, the original competitive brand or brands appear dull and outdated.
Brand Extension
Developing and launching new brands is normally extremely expensive and highly risky. One strategy which has been developed to reduce the costs and risks of new product introduction, to use more efficiently the equity which has been built up in existing brands and, at the same time, keep existing brands relevant and meaningful to the consumer, is brand extension. The Dunlop brand, for example, started its life as a brand of bicycle tyre but was, over time, extended to cover tyres for road vehicles as well as a wide range of automotive, industrial, consumer and sporting products. The Kodak brand has been extended from its original positioning to embrace an enormous range of photographic products. Dunhill, originally a brand of cigarettes, has been extended to cover a wide range of luxury products for both men and women. Brand extension is clearly an entirely feasible marketing strategy. The problem for brand owners is to ensure that the brand is extended in an appropriate fashion such that the brand equity is enhanced rather than diluted. A critical factor is the development of an approach to brand extension which recognises the unique attribute of the brand and extends the brand in a fashion which is sensitive to the character of the brand and plausible to the consumer. Perrier, for example, is clearly an extremely powerful brand of mineral water, and the brand possesses unique attributes of "purity" and refreshment coupled with style and sophistication. No doubt Perrier has all the technical, financial and distribution capabilities to produce a cola or an alcohol-free beer under the Perrier brand name and it could be argued that products of this sort fulfil the key attributes of refreshment and quality which are inherent in the Perrier brand. In practice, however, a Perrier brand cola or alcohol-free beer may well be considered totally inappropriate by consumers and it may be that, should the owners of the Perrier brand wish to extend it, it could be used much more readily on personal care products, magazines, fragrances, clothing, bicycles or holiday resorts than on products which in many respects are adjacent to the brand's core area of activity.
Creative Branding
Much of current new-brand development seems to consist of presenting consumers with barely differentiated facsimiles of the brands they already know and appreciate. Poor consumer research must bear part of the blame as such research pushes the brand owner in the direction of the "bland brand" because consumers, in research situations, relate any new brand proposition to what is already familiar to them. They thus tend to score most highly those brand features which are closest to the brands that they already know. Much of successful branding, however, is concerned with getting there first, with anticipating and shaping consumer needs and desires. Indeed, there is evidence to suggest that pioneering brands are substantially more profitable than late entrants to a marketplace as it is much easier to seize and retain the attention and loyalty of consumers when there are no established competitors in the sector. Successful creative branding consists, therefore, of thinking ahead of consumers, of anticipating their needs and wants. Consumers do not maintain schedules of new products or brands they would like to see on the market; they are generally satisfied with the brands which are currently available to them. The task of the developer of new brands is to anticipate consumers' future needs and to present the consumers with new and attractive brands which they can embrace and make a part of their purchasing repertoire but which the consumers would never have anticipated a need for in advance of the product becoming available.
International Brands
Most of today's powerful international brands were not developed as world brands; they were developed originally to serve particular national markets and first found a distinct positioning and appeal in those markets. Once established, they were then extended internationally. This process of brand globalisation has been greatly facilitated in recent years by better communications, greater travel and wider use of certain languages, especially English. With the growth of satellite TV and other communication "overlaps", it is clear that this phenomenon will continue to grow in importance as the world gets smaller. Global brands afford their owners economies and efficiencies such as those originally offered by national brands in the nineteenth century after the growth of the railways. They also offer international branded goods businesses a means of maintaining a coherence and unity in their international activities.
Brand Values
Much merger and acquisition activity in the late 1980s has been concerned with capturing powerful international brands. The power and importance of brands has now been clearly recognised not just be owners but also by investors and predators. The cost of developing new brands, the risks of new product development and the rarity of strong international brands all contribute to this interest. More importantly, however, the robustness of leading brands and the guarantees they provide of stability and of future cash flows ensure that brands are now regarded as serious and valuable assets akin in many respects to income- producing property assets. The value of brand assets, however, ultimately depends on the unique pact between brand owners and the consumer. The brand owner must recognise and honour this pact and maintain the appeals and values of the brand; the consumer will continue to support the brand only as long as it meets its side of the bargain or until a more appealing brand comes along.
Branding by Retailers
One of the paradoxes of new brand and product development over the last ten years in fast-moving consumer goods sectors such as food and drink is that many of the most original and successful initiatives have been taken not by manufacturers but by retailers. This development will assume increasing importance with the concentration of retail power in a smaller number of retail groups. Retailers normally eschew the more tedious and laborious process followed in the new brand development area. Typically, a buyer in one of the major retailers will identify a potential new product or brand from one of many sources: customer demands, suggestions from other members of staff, proposals from suppliers, even dissatisfaction with existing branded products. Manufacturers often argue that the retailer is somehow in a "privileged" position and that such "fastfocus" new brand development is impossible for the manufacturer. While there is a measure of truth in this, in fact the retailer is simply following the well-informed, pragmatic, no-nonsense approach which manufacturers would do well also to follow. It seems clear, in many instances, that retailers know and understand their markets and market sectors and the needs and motivations of their customers rather better than do manufacturers. In fact, manufacturers are often quite divorced from the real needs and motivations of the consumer; the data they receive provide information but not insights. Manufacturers, then, are advised to take a much more pragmatic, no-nonsense approach to new brand development that is often the case at present. Frequently, inexperience in the new product development area coupled with a keen realisation that the process is risky and expensive leads to a gross over-complication of the process and an intense focus on examining minutiae at the expense of understanding the whole. Where then, is a fast-focus approach appropriate and where is it not?
Brand Search
One area where no compromise should be made is in the area of understanding the market and the needs of the consumer. This, however, goes way beyond merely analysing and understanding market statistics. An analyst working in the tyre industry, for example, may well be able to describe in detail the market and industry trends, and may, therefore, be able to tell you that, in his or her opinion, your concept for a new brand of low profile 10" crossply tyre is quite stupid. It is unlikely, however, that his or her detailed knowledge of the market will provide any clear specification as to what exactly you should be doing. Moreover, any gaps in the market that have been discerned by the analyst should be approached with extreme caution as it is likely that analysts in competing companies have simultaneously spotted the same gap. Sources of new brand ideas are many and wide-ranging. One source, though, which seems curiously little used is the simple process of seeing what other people are doing in similar markets around the world. Of course, very many products popular in overseas markets will not comfortably make the transition into other markets. Dr. Pepper, for example, a highly successful soft drink in America for which consumers acquire a taste at a young age, has been unsuccessful overseas. This failure has been attributed in large measure to its idiosyncratic taste which seems not to appeal unless you are weaned to it. The British product Marmite and the Australian Vegemite are enormously appealing in their home markets but are often considered little short of disgusting in export markets. In spite of such products which are unlikely to make the transition into other markets, opportunities for product transfer abound.
Furthermore, if there is any intention that, once successful, the brand will be marketed internationally then it is essential to establish a strong, appropriate and internationally protectable brand name at the outset. If the brand owner should neglect to do so it is virtually certain that the new brand name will prove either unsuitable or unavailable in key international markets when the brand owner decides to market the brand abroad. The brand owner will be forced, therefore, to adopt a series of local brand names for the same product and will soon have on his hands not an international brand but a medley of local, similar brands each with its own brand name, packaging, positioning, advertising and separate brand personality.
BRANDING SERVICES
Mars is one of the world's most successful companies in the areas of brand development and brand management. Its brands are powerful, international, appealing to customers, of high quality and they also offer exceptional value for money. Mars manages its brands with great skill and this is manifest in the areas of new brand development, product manufacture, distribution, and even at point-of-sale.