The Future of Branding

Published by: Datamonitor

Published: May. 10, 2006 - 48 Pages

Table of Contents

DATAMONITOR VIEW

CATALYST

SUMMARY

METHODOLOGY

OVERVIEW ANALYSIS

Branding is becoming increasingly important

There are five key challenges of fundamental importance to all

Building brand symbolism and trust

Managing corporate brand

Managing brand in intermediated markets

Managing brand during mergers and acquisition

The challenge of declining returns

Success will depend upon a number of factors

Consumer-facing brands must reflect people's lifestyles and aspirations

Corporate brands must deliver on their promise to act responsibly

Brands in intermediated markets must appeal to both intermediaries and end customers

Active brand management is essential to successful mergers and acquisition

Adapting promotional activities is key to ensuring optimum ROI

CONSUMER BRANDS MUST REFLECT PEOPLE'S LIFESTYLES AND ASPIRATIONS

Catalyst

Summary

Brands have important symbolic meanings that can be used to build brand equity

There is a difference between product and brand associations

The symbolic associations of brands mean that they play an important role in shaping self-concept

Social identification and image are important brand symbols

When brands fulfill symbolic functions marketers can build profitability more effectively via premium pricing

Consumers are becoming increasingly skeptical of brand symbolism conjured via emotional branding ploys

Symbolic meanings combined with a clear focus on functional benefits create a compelling brand proposition

Engendering trust should be a primary focus of branding efforts

Brand trust relates to expectations of the brand's reliability and intentions

Four different types of trust exist

Trusted brands form personal connections with consumers and are more likely to be given a second chance

Trust is most important for brands in markets with little differentiation

Future brand strategies must alleviate growing consumer skepticism

Consumers are becoming more fearful, skeptical and distrusting

Trust perceptions vary by industry and category

Where consumers perceive risk or trust is low they develop trust-orientated strategies accordingly

Marketers can leverage the attributes and communication cues that consumers perceive as trustworthy

CORPORATE BRANDS MUST DELIVER ON THEIR PROMISE TO ACT RESPONSIBLY

Catalyst

Summary

Corporate branding is ideal in commoditized markets

Branding has been of little importance to utilities compared to other sectors

Rather than customer empathy, utilities brands originally had regional company focus

There is a trend to corporate branding in UK energy suppliers, after a period of intense M&A activity

In supplying a commodity, brand differentiation is difficult

Enhancing the commodity with a good corporate profile is the most appropriate branding strategy

Commodity companies cannot hide wholesale activities from their corporate profile

Companies have environmental and social responsibilities

Tariff increases and profits on wholesale activities attract bad press

Commodity companies have the responsibility of ensuring continuity of supply

Exploiting natural resources may help the bottom line, but it won't help the brand

Investment in the corporate brand has to focus internally as well as externally

The company has to act in the manner it promoted through its corporate profile brand

To act in this manner, internal stakeholders have to be aligned with the brand profile

All subsidiaries of the company and distant operations should operate under the same principles

Leading commodity companies are investing internally when developing a corporate profile brand

The corporate profile can be easily damaged by activities that do not fit with it

Short-term damage to a corporate profile is difficult to repair

A profile brand cannot be replaced in the same manner as a family sub-brand

Bad PR through poor internal activities is the easiest way to damage a profile brand

BRANDS MUST APPEAL TO BOTH INTERMEDIARIES AND END CUSTOMERS

Catalyst

Summary

The Financial Services market illustrates the challenge of brand in a complex market

Brand must have no bearing on sales through intermediaries in financial services

Product providers continue to market their brand to customers and intermediaries

Brand is important to a high proportion of the target clients of intermediaries

Clients prefer well-known brands and are more likely to trust providers with strong brands

Brand is important to a proportion of the target clients of intermediaries

Intermediaries are largely unaffected by brand promotion

Providers should focus branding efforts on both end customers and intermediaries

Advertising focused on IFAs is almost as effective as advertising focused on customers

Sponsorship and social projects are an important aspect of improving brand perception

Intermediaries are skeptical of brand promotion without substance

Providers with a strong brand are seen as reputable and product-focused

Weaker brands are those which have a poor product and service offering

Strong brands rely on a combination of values appealing to intermediaries and their clients

Even in intermediated markets, soft values can be important to brand perception

Raising visibility among clients through a clear branding strategy is key to maximizing effectiveness

ACTIVE BRAND MANAGEMENT IS ESSENTIAL TO MERGERS AND ACQUISITIONS

Catalyst

Summary

Companies must manage their brands to maximise their chances of success

A company's brand can be a powerful tool

Merger and acquisition activity has been rife in recent years, which can cause brand problems

Brand management is therefore essential

For many companies, the policy of 'accumulate and assimilate' has worked well

The four largest express players have followed similar strategies

Two main areas to tackle to minimize disruption: external and internal environments

Timing and composition of brand transition strategy varies

However, there are some common general steps that integrators take to maximize a successful transition

DHL/Airborne case shows that detailed planning is key

Acquisition of Airborne Express was a good strategic move for DHL

Detailed plan drawn up and implemented for all elements affecting brand

Advertising key in communicating to customers and employees

Presentations to stakeholders were also key

But there have still been problems with the transition

UPS/Overnite case offers further pointers to best practice

Overall, integrators have been successful in managing their brand during M&A activity

DHL re-branding shows that communication is key

Action required by Deutsche Post due to multiple brands

Five elements to integrating separate business units into one brand, with communication being key

New color scheme helped quickly establish the new brand

DHL brand management process has continued and evolved

While brand management can yield problems, there are five steps to maximize the benefits

Serious problems are created by not managing the brand

Definite benefits can be yielded through brand management

There are five steps to help decrease the chances of damaging the brand

BRAND MANAGERS MUST OPTIMIZE ROI IN A MARKET WITH DECLINING RETURNS

Catalyst

Summary

Pharmaceutical branding has traditionally led to considerable returns

Intense advertising activity has led to pharmaceutical brand recognition, rapid uptake and blockbuster sales

Brand awareness is a key tool for protecting against new competition

Unique selling points can be key to brand success

ROI has been declining as new advertising regulations and media have been created

Increased use of alternative media has reduced the value of traditional pharmaceutical marketing campaigns

Physician detailing has become less effective

The new PhRMA guiding principles for DTC advertising have led to significant changes in marketing

Several companies took the new DTC guidelines a step further

Cost constraints will further reduce ROI

The lack of direct-to-consumer advertising in Europe has led to patients preferring face-to-face contact

Physicians are a more suitable target for branding in Europe

Generic substitution is mandatory in many European countries, leading to a limited ROI on marketing

The future of pharmaceutical branding is uncertain

Drug safety scares have led to negative associations with some household pharmaceutical brands

In the future brand will have less influence over prescription choice than in the community

Companies will have to adjust their measurement of marketing effectiveness

APPENDIX

Definitions

Brand

Further reading

Ask the analyst

List of Tables

Table 1: The percentage of consumers who consider various financial, automotive, utilities and packaged goods variables to be trustworthy, 2004

List of Figures

Figure 1: Consumer value brands that reflect their attitudes and values on life

Figure 2: Preference for customization is influenced by the growing importance of identity building consumption

Figure 3: Brand must combine symbolic and functional positioning to create perceived differentiation

Figure 4: Trust can build brand loyalty and equity which provides a wide range of marketing benefits

Figure 5: Both consumer and industry opinion perceive that prior experience and endorsement from professional bodies are the most influential factors in (re)gaining consumer trust

Figure 6: UK utility retail and corporate brands

Figure 7: Brand affects clients more than intermediaries, and is most likely to influence financially uncertain clients

Figure 8: Advertising is the most effective method of strengthening brand perception

Figure 9: Financial advisers say provider offerings and performance are key brand values

Figure 10: Distinctive Integrator Colours Minimizes Brand Confusion

Figure 11: DHL's advertising for the Airborne acquisition

Figure 12: DHL Brand Integration

Figure 13: DHL's "Yellow Offensive"

Figure 14: Viagra accounted for almost a third of total PDE5 inhibitor sales in 2005

Figure 15: The 'purple pill' - AstraZeneca's branding for Prilosec and Nexium has been key to the franchise's success

Figure 16: Patients in Europe prefer to receive drug and disease information through face-to-face contact rather than via the media or brochures

Figure 17: An average of 91% of promotional spend in the EU is for physician detailing while in the US this accounts for 52

Abstract

Branding is becoming ever more important as companies face an increasingly global and competitive marketplace. But what should companies be focusing on when managing this key intangible asset? This report provides in-depth analysis of the key challenges of branding and how companies can respond effectively.

• Covers the key challenges facing brand strategists, with case studies of how particular industries have been affected.
• Each case study's conclusions are applicable to all industries looking for best practice ideas.
• Industries covered include consumer markets, utilities, financial services, logistics and healthcare.

There are two important insights into managing brand through mergers and acquisitions successfully. Firstly, serious problems can be created by not actively managing the brand through such developments, which can cause brand equity to suffer. Secondly, ongoing communication to all parts of the value chain is essential.

For intermediaries, the quality and range of products is far more important than brand when assessing providers. Nevertheless, providers should look to appeal to both intermediaries and end customers, by looking to offer a high level of service and wide product portfolio, as well as build up a reputation for trust, leadership and social values.

• Understand the main challenges of branding and how your company can respond.
• Learn from the experiences that other industries have gone through to improve your branding strategy.

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