Tag: challenges

Responding to Brand Management’s Challenges (2.4.4)

This post is part of my paper ‘The Evolving Role of Creativity in Brand Management’. You can see the other posts and the table of contents here.

“Brands are made, not born. The process of their construction is complex. From a manufacturer’s point of view there is a reduced form, “stimulus-response” style simplicity to it:
(1) the manufacturer takes actions (e.g., the marketing mix) and that leads to
(2) customer mental responses towards the brand (perceptions, beliefs, attitudes, and so on). These perceptions (and the resulting willingness to pay) in turn lead to
(3) customer behavior in the product market (e.g., sales), which in turn generates
(4) financial value in general and stock market and market capitalization in particular.
This framework or value chain is a useful basic conceptualization. Still, it obscures some important complexities.” (Keller & Lehmann 2006, p.752) 

As the review of contemporary challenges for brand management tried to argue, predominant brand management practice does not reflect on environmental complexity. What most concepts, models and recipes still have in common is that they use a more or less simplistic perspective on the management of systems (Tropp 2004, p.130). They perceive brands as ‘trivial machines’. This means that by giving an order in the form of information, a system will react in a way so that certain goals will be reached. Metaphorically, managers thus become engineers, dealing with the control of a closed system, simply adjusting the given input based on feedback from the system and thus reaching their objectives.

This perspective promotes a “primacy of planning” (Tropp 2004, p.132) and puts analysis and strategy at the beginning of a linear and controllable process. Management theory, from this perspective, believes that brands can be easily manipulated by using the right levers, following a linear path that leads to guaranteed success if only the instructions are followed carefully. This perspective on brand management may be understood as “brand engineering” and is visible in such words as the German “Markentechnik” that brings with it an almost almighty claim to brand building success. 

If, however, as argued before, the multidimensional knowledge about brands is shaped by the experiences and social interactions of consumers and if this happens in an increasingly unpredictable landscape, then brand management is ill-advised to adhere to this perspective. 

With a failure rate at the introduction of new brands of between 50 and 95% (Buchholz & Wördemann 1998, p.20 qtd. in Tropp 2004, p.144) and in light of the over-boarding complexity of companies’ environments, the empirical regularity today is closer to failure (Ehrenberg 2002; Ehrenberg 2001) than success. This, in turn, raises doubts if these failures are a consequence of not obeying to the how-to’s of positioning, branding or even advertising execution or if it is the underlying paradigm of a linear and logically deductible outcome and “how-to” literature that might be flawed (Tropp 2004, p.144). 

—

Buchholz, A. & Wördemann, W., 1998. Was Siegermarken anders machen, Econ. 

Ehrenberg, A., 2001. Marketing: Romantic or Realistic? Marketing Research, 13(2), pp.40–42.

Ehrenberg, A., 2002. Marketing: Are you really a realist? strategy + business, 27(Second Quarter 2002), pp.22–25. 

Keller, K.L. & Lehmann, D.R., 2006. Brands and branding: Research findings and future priorities. Marketing Science, 25(6), p.740. 

Tropp, J., 2004. Markenmanagement: Der Brand Management Navigator. Markenführung im Kommunikationszeitalter, VS Verlag.

Challenges for Brand Management: Communication (2.4.3)

communication
This post is part of my paper ‘The Evolving Role of Creativity in Brand Management’. You can see the other posts and the table of contents here.

Historic perspectives on brand management have identified some distinct phases that each go along with certain developments and traits (Gries 2006, p.15ff; Zurstiege 2007, p.19ff; Tropp 2004, p.22ff). The beginning of modern advertising in Germany is tied to the industrialisation and the associated introduction of freedom of trade (1869) and registered and protected trademarks (1874) (Zurstiege 2007, p.24). With the social acceptance of the concept of competition started the professionalisation of advertising and – along with it – advertising research, which in turn led to the public debate of its central techniques in Vance Packards’ “The Hidden Persuaders” (Zurstiege 2007, p.24).

Gries (2006, p.15) sees products as media of the modern age and describes the process of the medialisation of products. This process started in the late 19th century, accelerated due to a strong increase of demand in the 20s and 30s and is concluded with the widespread diffusion of televisions in the 60s. Since then, according to Gries (2006, p.15) a brand works similar to a newspaper, the radio or television in that it is surrounded by a dense net of communication relationships that formed over the course of this process of medialisation.

Looking at the main functions that brands played in different eras, Tropp identified three phases that he calls “Markierungsphase” (labelling or branding phase), “Wirkungsphase” (effect or impact phase) and “Kommunikationsphase” (communication phase).

The first or branding phase started around the 5th century, when identification and distinction emerged as the first function of brands (Tropp 2004, p.23f). Social developments like the formation of the first cities or the establishment of guilds changed the specific functions of brands. However, it took until the before mentioned dawn of the industrial age, until the ‘effect phase of brands’ emerged (Tropp 2004, p.25ff). Apart from the identification function, brands’ chief function now lied in persuading potential consumers. In addition to the identification of a brand now there is the social practice of identification with a brand (Tropp 2004, p.36). Holt (2002, p.79ff) calls this the modern branding paradigm:

„Marketers made no pretense about their intentions in these branding efforts. They directed consumers as to how they should live and why their brand should be a central part of this kind of life. Advertisements shared a paternal voice that is particular to this era. By contemporary standards, these ads appear naive and didactic in their approach. This paternalism reveals that, at the time, consumer culture allowed companies to act as cultural authorities. Their advice was not only accepted but sought out.“ (Holt 2002, p.80)

Holt (2002, p.83ff) argues, that this paradigm ended up being replaced by the creative revolution of the 60s in what he denoted as an emerging post-modern branding paradigm. Branding then had to cope with social changes at a massive scale and a new anti-corporatist, yet consumerist culture that it somehow had to adapt to. It adopted and in turn relied on five central and then new techniques (for a description of the techniques that had a widespread media impact see Klein 1999): Authentic Cultural Resources, Ironic, Reflexive Brand Persona, Coattailing on Cultural Epicenters, Life World Emplacement, Stealth Branding . While these techniques were certainly new and a response to changing cultural and social environments at the time, they have again run into some severe contradictions and are losing their effect quickly (ibid.).

Holt (2002, p.68ff) and Tropp (2004, p.68ff) both argue that we can now see a different phase, that puts the relationship between a company and its consumer, or in general its role in society into focus. Driven on the one hand by the pressing scarcity of attention (Schmidt 2004, p.53ff; Tropp 2004, p.71f), by changing attitudes and expectations that citizens have of the role of companies in their communities and by the emergence of new technologies and feedback channels that made marketing tactics like CRM, but also a society ever more aware of the power of their public opinion possible. While doubts about the role, effectiveness and efficiency of advertising are a main driver of this transformation, this perspective also implies a more consumer-centric view of communication. It argues that the construction of meaning is done by consumers within the boundaries of collectively shared social symbols and ultimately demands a rejection of the pure sender-receiver model of mass communication as conceptualized in the early 20th century (Tropp 2004, p.72) and since then renounced by communication research.

The main conclusion of this current phase of branding is that companies are now more than ever competing in the field of communication and that communicative competence that goes beyond advertising is becoming a core asset of companies.

—
Gries, R., 2006. Produkte & Politik: zur Kultur- und Politikgeschichte der Produktkommunikation, Facultas Verlag.
Holt, D.B., 2002. Why do brands cause trouble? A dialectical theory of consumer culture and branding. Journal of Consumer Research, 29(1), pp.70–90.
Klein, N., 1999. No Logo: no space, no choice, no jobs ; taking aim at the brand bullies, New York, NY: Picador.
Schmidt, S.J., 2004. Die Werbung ist vom Anfang an am Ende. In S. Kemmler, J. Ballentin, & C. Gerlitz, eds. Die Depression der Werbung. : Berichte von der Couch / Berliner KommunikationsFORUM e.V. Sebastian Kemmler. BusinessVillage.
Tropp, J., 2004. Markenmanagement: Der Brand Management Navigator. Markenführung im Kommunikationszeitalter, VS Verlag.
Zurstiege, G., 2007. Werbeforschung 1st ed., Utb.

Challenges for Brand Management: Coupling (2.4.2)

Close connection - Verbundenheit
This post is part of my paper ‘The Evolving Role of Creativity in Brand Management’. You can see the other posts and the table of contents here.

Just as complexity, structural coupling is a key term of systems theory. Usually used to describe the structural relationship between cognition and communication via language and media (Tropp 2004, p.64), this concept may be used in brand management to denote the relationship between companies that produce brands and consumers and bridge the before mentioned dichotomy between producer- and consumer perspective – or image and identity (Tropp 2004, p.65). Structural coupling in that context means that while a company as a social system and a consumer as a cognitive system are to be strictly distinguished, no company is possible without consumers and vice versa (Tropp 2004, p.64).

To specify and manage this structural coupling between a company and its consumers via the brand as realm of knowledge is one of the most pressing issues of brand management and again, able to integrate mostly consumer-oriented trends and pressures. For example, there is an apparent contradiction between an increasing brand consciousness and an at the same time decreasing brand loyalty with consumers (Essinger 2001, p.66 qt. in Tropp 2004, p. 66) that also taps into the debate about consumers’ increasing unpredictability. Using data from a global, longitudinal survey that runs since 1993, Gerzema and Lebar (Young & Rubicam) have found out that since 2004 all consumer attitudes towards brands over the globe were in decline.

“Across the board, we saw significant drops in the key measures of brand value, such as consumer “top- of-mind” awareness, trust, regard, and admiration. This was true not just for a few brands, but for thousands, encompassing the entire range of consumer goods and services, from airlines and automobiles and beverages to insurance companies and hoteliers and retailers.” (Gerzema & Lebar 2009, p.2)

They argue that a brand bubble has developed for the fact that while the valuation of brands as done by financial analysts is steadily increasing, this overall value that these brands actually deliver for consumers, is provided by less and less (stronger) brand in the overall brand universe.

This contradiction does not put an end to the structural coupling of consumers and brands, but it suggests that the relationship between them has fundamentally changed. Since the 1980s, until then mostly unidirectional relationships have transformed into interactive and multi-directional relationships, as signified by developments such as relationship marketing, one-to-one-marketing, direct marketing, permission marketing, customer relationship management or the developments happening under the umbrella term of social media marketing. As research conducted under the relational paradigm (MacInnis et al. 2009; Fournier 1998) is striving to provide scientific insights into the company-brand-consumer relationship, branding has moved from what Tropp (2004, p.67) calls the effect phase to the communication phase.

—
Essinger, G., 2001. Produkt- und Markenpolitik im dynamischen Umfeld: eine Analyse aus systemtheoretischer Perspektive, Dt. Univ.-Verl.
Fournier, S., 1998. Consumers and their brands: Developing relationship theory in consumer research. Journal of consumer research, pp.343–373.
Gerzema, J. & Lebar, E., 2009. The Trouble with Brands. strategy + business, 55(Summer 2009). Available at: http://www.strategy-business.com/article/09205 [Accessed February 4, 2011].
MacInnis, D.J. et al., 2009. Handbook of brand relationships, M.E. Sharpe.
Tropp, J., 2004. Markenmanagement: Der Brand Management Navigator. Markenführung im Kommunikationszeitalter, VS Verlag.

Challenges for Brand Management: Complexity (2.4.1)

This post is part of my paper ‘The Evolving Role of Creativity in Brand Management’. You can see the other posts and the table of contents here.

While in the past three global CEO studies, conducted by IBM, coping with change was the most pressing challenge, complexity took the lead in 2010, as seen in Figure 2.

“CEOs told us they operate in a world that is substantially more volatile, uncertain and complex. Many shared the view that incremental changes are no longer sufficient in a world that is operating in fundamentally different ways.“ (IBM 2010, p.8)

IBM Complexity

Figure 2: Organisations and complexity (IBM 2010, p.15)

Complexity is the most important concept in systems theory, as it is the reason why systems form in the first place. While the term is present in different approaches to systems theory,  Luhmann’s theory of social systems popularized it, stating

“we will call an interconnected collection of elements complex when, because of imminent constraints in the elements’ connective capacity, it is no longer possible at any moment to connect every element with every other element […] Complexity in this sense means being forced to select; being forced to select means contingency; and contingency means risk.” (Luhmann 1995, p.25)

A system can never reach the same level of complexity as its environments and therefore has to counter-balance this inferiority with selection-strategies, reducing external complexities (Tropp 2004, p.57). This necessarily selective reduction of relations between elements (e.g. information) is called contingency and brings with it the necessary risk to select different possible combinations of elements. However, with every selections come different other – not selected – possibilities that would be possible as well.What sounds arbitrarily complicating in the first place, does make sense in light of the unrelated and relatively arbitrary list of trends, drivers and perspectives that are present in brand management and marketing textbooks. To illustrate the concept of complexity in this context, it can be said that branding theory does not have an appropriate selection strategy (theory) that is able to reduce the environmental complexity (challenges) to a level that would allow for sensible systematization.

Complexity is a theoretical concept that is not able to explain the myriad of trends and environmental challenges, but the fact that companies will – in the future – have to accept unprecedented complexity as a permanent trait of their environment (Rose & Zuckerman 2009, p.13) and to acknowledge that “it’s no longer possible to observe and predict enough to map out courses of action that guarantee desired outcomes” (Andjelic 2010).

This has some important implications for strategic planning and strategic thinking that will be introduced at a later point.

—

Andjelic, A., 2010. the problem of strategy. i [love] marketing. Available at: http://anaandjelic.typepad.com/i_love_marketing/2010/07/the-problem-of-strategy-1.html [Accessed January 4, 2011].

IBM, 2010. Capitalizing on Complexity. Insights from the 2010 IBM Global CEO Study. Available at: http://www-935.ibm.com/services/us/ceo/ceostudy2010/index.html.

Luhmann, N., 1995. Social systems, Stanford University Press.

Rose, J. & Zuckerman, N., 2009. Can You Reach the Masses Without Mass Media? Available at: https://www.bcgperspectives.com/content/articles/cmos_dilemma/ [Accessed February 4, 2011].

Tropp, J., 2004. Markenmanagement: Der Brand Management Navigator. Markenführung im Kommunikationszeitalter, VS Verlag.

Challenges For Brand Management: An Overview (2.4)

This post is part of my paper ‘The Evolving Role of Creativity in Brand Management’. You can see the other posts and the table of contents here.

“Although brand may be as important as ever to consumers, brand management may be more difficult than ever.” (Keller 1998, p.30)

The topic of challenges, changes in the environment or otherwise relevant external pressures on brand management is not exactly a new one, as previous research shows (Shocker et al. 1994). If a brand is seen as the structurally coupling link between an organisation and its environment, changes in this environment are and have always been of essential importance to  brand management. The following paragraphs do not aim at painting a complete picture of every trend that brand management has to deal with presently, but rather serve to give an introduction into the contemporary environment.

Keller (1998, p.31) lists 13 challenges without any inherent structure as important to brand builders:

“savvy customers, more complex brand families and portfolios, maturing markets, more sophisticated and increasing competition, difficulty in differentiating, decreasing brand loyalty in many categories, growth of own labels, increasing trade power, fragmenting media coverage, erosion of effectiveness of traditional media, emerging communication options, increasing promotional expenditures, decreasing advertising expenditures, increasing cost of product introduction and support, short-term performance orientation [and] increasing job turnover.”

Strebinger (2010) divides reasons why brand management has become much more challenging into four demand-side and supply-side drivers. On the demand side, consumers more and more demand products tailored to their special needs and preferences. Technology is bringing fundamental changes to the way people consume media (Wilbur 2008) and information overload restricts the amount of brands people are able and willing to think of. Last but not least consumers have become more critical of the behaviour of brands (Klein 1999). On the supply side, shareholders strive to maximize profits by exploiting market opportunities while focusing on cost efficiency. In addition, mergers and acquisitions challenge established brand portfolios, internationalization leads to new competitors and opportunities and new media leads to new online competitors.

Another structure (Fuchs & Unger 2007, p.2ff) suggests economic, social, legal and communicational changes. Fuchs and Unger identify increased dynamism and complexity, competitive pressure, internationalization, quality parity, the shortening of product-life-cycles and market differentiation as economic developments which all lead to competition through communication, which in combination with a dynamic media landscape leads to increased information overflow. In addition, changes in consumer values and expectations of corporate citizenship represent the most pressing socio-cultural developments.

Siegert and Brecheis (2005, p.76ff) provide more detail on the advertising and media side with their six developments that together portray the current framework advertising has to operate in. According to them, advertising has to deal with internationalization and globalization, digitalization and new information and communication technologies, individualization and experience seeking, promulgation through the mass media and the attention economy, economization and changing markets as well as changing legal frameworks.

Certainly, more challenges and trends that increase the pressure on marketing and brand management could be found. Depending on who one chooses to read, we live in a risk society (Beck 1992), a experience seeking society (Schulze 2005), an information- and media society (Siegert & Brecheis 2005), in a converging culture (Jenkins 2006) and/or in the communication age (Tropp 2004).

In this context, Kotler & Caslione (xii 2009) postulate

“[…] that turbulence, and especially heightened turbulence, with its consequent chaos, risk and uncertainty, is now the normal condition of industries, markets, and companies.”

While Feldwick (2010) doubts the emergence of a genuinely “new” consumer there is a recurring theme around the topic that brands and brand management are under pressure. As Keller called it, managerial practice in the field is becoming “more difficult than ever” (Keller 1998, p.30).

In light of the all the trends, drivers and environmental challenges, Tropp argues that there is lack of a consistent theoretical grounding to be actually give a brand manager a handle on the world he/she is operating in. Consequently, Tropp aims for a ‘lower resolution’ of observation to integrate the different empirically observable phenomena into theoretically grounded categories (Tropp 2004, p.56). These three categories are complexity, coupling and communication, all of which are central terms of systems theory.  – The challenges according to these theoretical concepts will be introduced in the next three blog posts.

—

Beck, U., 1992. Risk society: Towards a new modernity, Sage publications ltd.

Feldwick, P., 2010. The Feldwick Factor: Has digital growth changed consumer-brand relationships? Admap.

Jenkins, H., 2006. Convergence Culture: Where Old and New Media Collide illustrated edition., New York Univ Pr.

Keller, K.L., 1998. Strategic brand management: building, measuring and managing brand equity, Prentice Hall.

Klein, N., 1999. No Logo: no space, no choice, no jobs ; taking aim at the brand bullies, New York, NY: Picador.

Kotler, P. & Caslione, J.A., 2009. Chaotics: The Business of Managing and Marketing in the Age of Turbulence, Mcgraw-Hill Professional.

Schulze, G., 2005. Die Erlebnisgesellschaft: Kultursoziologie der Gegenwart, Campus Verlag.

Shocker, A.D., Srivastava, R.K. & Ruekert, R.W., 1994. Challenges and opportunities facing brand management: an introduction to the special issue. Journal of Marketing Research, 31(2), pp.149–158.

Siegert, G. & Brecheis, D., 2005. Werbung in der Medien- und Informationsgesellschaft: Eine kommunikationswissenschaftliche Einführung 1st ed., VS Verlag für Sozialwissenschaften.

Strebinger, A., 2010. Markenmanagement – Lecture at WU Wien.

Tropp, J., 2004. Markenmanagement: Der Brand Management Navigator. Markenführung im Kommunikationszeitalter, VS Verlag.

Wilbur, K.C., 2008. How the digital video recorder (DVR) changes traditional television advertising. Journal of Advertising, 37(1), pp.143–149.