How to sustain a long term brand name for an Organization?
long lasting appeal of various brands do remind us from time and again
that although products and services are mortal and that they are governed
by a more or less life cycle which can be delayed but nevertheless avoided
various brands can sometimes escape from the clutches of time. It is
this resistance to the course of time that leads certain countries to
consider in terns of accounting that when a brand is entered as an asset
in the balance sheet, it should not be depreciated. Nevertheless, brand
can also disappear. If badly managed, any brand is doomed. This phenomenon
existed long before the economics crisis: the latter only accentuated
the factors leading to decline.
Time is but a proxy
variable, a convenient indicator of the changes that affect society
as well as markets, subjecting the brand to the risk of obsolescence
on a double front technological and cultural. With time, technological
advances become more widely available and new cheaper entrants arrive
that destabilize the balance of added value of established brands,
forcing them in to never ending cycle of constant improvement.
For instance, the sudden growth of Daewoo in the car market is due to the fact that this conglomerate had access to GM assembly lines which were already obsolete although they were just a few years old and were sold by GM at a low price. With the passing of time, consumers either become more sophisticated and expect customized offers, or become blasé and prefer a simplified and cheaper offer. Time also goes by, current clients grow older and new generation emerges which has to be won over from scratch all over again. Finally, time also wears down the signs, the words the symbols and the advertising campaigns of brands.
Is there a common feature of the seemingly ever lasting nature of some brands? For convenience, one could say that an understanding of the brand logic, A brand is not a once for all construction, but the aim of a constant effort to reconstruct the added value. The Current products had to be continuously adapted to meer changing demand while at the same time the new concepts of the future have to be invented that will sustain the growth of the brand . An analysis of the numerous brands that have survived the crises and lasted down the year may point to the key success factors of this virtuous spiral.
The Equilibrium of Added Value
to product difference, is brand bring added values to the market. This
can have a tangible basis and an intangible or immaterial basis, It
is the later that makes us go to Mc. Donalds Even if the Big Mac
is no better than a quicks Giant , or that makes us naturally
buy a pair of Levis even though the item is fairly uncomfortable . It
is the added value which justifies the difference in price to
the customer. Either you want yoghurt or you want a Danone! There is
a natural equilibrium between material and intangible added value on
the hand and prices on the other.
The problem is that
the competition does not remain inactive. The basic level of the whole
generic category improves at least as far as quality is concerned. This
erodes the perceived quality difference of the brand, but it also improves
its image, for instance, because of the progress made in terns of presentation
by the DOBs. Unfortunately, since the price differential remains the
same increased by the arrival on the market of good products which are
cheaper the equilibrium of added value is upset, resulting in a drop
in the volume of demand.
The example of Procter
and Gamble is quite revealing. In 1992 and 1993 Procter and Gamble launched
a gigantic productivity programme.
· Secondly, the firm adopted a policy called EDLP (Every Day Low Price), thus preferring a constant low price all year round to a multitude of promotional operations which only induced costs and made managing more complex.
· Thirdly , Procter under took staff reductions and closed some of its plan ( 30 plants were closed over 3 years)
All of these economics,
which amounted to several hundred million dollars, were used to reduce
retail prices spectacularly: 33% on Camay soap, 26 % on Luvs diapers,
16% on Pamper, and so on. In doing so, the brands came back in to the
core of the market, from which they had gradually been pushed out by
an increasing price difference. Kelloggs also cut its prices in
May 1996. How ever, it would be a mistake to believe that all the savings
in productivity were passed on to distribution. One does not build a
long term brand loyalty by lowering prices this is achieved by
creating and injecting added value in to brand.
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