The Challenges to Brands

In order to develop the right sort of brand added values, marketers need to be aware of some of the factors, which can affect their future some of these are –

The shift from Strategy to Tactics

With the increasing pressure to generate ever-improving profitability, it is often considered a luxury for managers to develop long-term strategic plans. This is further exacerbated by short-term goal setting, which is frequently designed primarily for the convenience of the financial community.

A consequence of this is that organizations adopt a ‘crisis management’ attitude. This shortsightedness is dangerous, since successful brands have evolved through long-term commitment to brand support. Furthermore, it illustrates a rather naive managerial style which is incapable of responding appropriately to crises.

The Shift from Advertising to Promotions

As a consequence of the increasing pressure on brand managers to (achieve short-term goals, there is a temptation to cut back on advertising support, since it is viewed as a long-term brand- building investment, in favor of promotions which generate much quicker short-term results. This can be problematic, as is best summarized by Broad bent’s analogy – If a pilot cuts his plane’s engines, believing it could cruise adequately without them (as indeed it would, for a while), one would question his sanity. When the plane subsequently goes into freefall and the engines are switched on, and then off again several seconds later because they were not making that much difference, he would be regarded as a suicidal maniac. Broad bent’s analogy exemplifies the accepted view that advertising builds up a stock’ of brand goodwill in consumers’ minds. This takes time, however. If advertising is subsequently stopped, there may be only a small reduction in sales for several months while the stock of goodwill is depleting, but then there will be a rapid fall in sales. Furthermore, large spend is needed to raise a fallen brand back its original position.

With such high advertising costs encountered in the launch of new brands, many brand marketers are questioning whether they have fully exploited the potential of their old brands before embarking on risky new brand development. There is increasing caution out new brand development. This can be appreciated from an analysis Tesco did of their top 100 lines. Only twelve of these were, launched in the past ten years. Only eighteen were launched in the only twenty years. Horlicks, which was launched in 1883, is a good example of old brand development. It was originally promoted as a warming food drink to help elderly people to sleep. In the 1970s a marked reduction in sales was noted due to demographic changes, warmer homes and later eating. Rather than withdrawing the brand and following an expensive strategy of launching a new brand, horlicks was successfully repositioned in the late 1970s to a much broader target market as the natural way to relax. Some of the many examples of successful old brand development are Equitable Life, with their focus on Personal Pensions, and Lucozade, repositioned from being a health tonic for the sick to a refreshing energizer.

On-line Shopping

Current research predicts that at least 20 per cent of all trade transactions will be on-line by 2006. On-line shopping is different from traditional mail order because

• Brands are available all the time and from all over the world;
• Information and interactions are in real-time;
• Consumers can choose between brands which meet their criteria, as a result of selecting information which is in a much more convenient format for them, rather than the standard catalogue format.

This poses threats to brands, since some components of added value, such as the agent or the retail outlet, which originally added value by matching consumers with suppliers, may well be eliminated. The brand’s values will be exposed more explicitly. However, brand will still have a key role, regardless of how much on-line shopping will grow. In any kind of remote purchasing they can offer customer a guarantee of quality and service and will act as a powerful way of facilitating choice in a world of ever-increasing data.