Marketing Branding - Brand Strategy - Are You Experienced (Mercer Management Journal) - 2000

With perspectives from

Number 12

2000

The New Brand Strategy: Are You Experienced?

Once, a brand was simply a mark stamped on aproduct to identify its maker. Its fortunes depended on product quality and advertising. Today, with theexplosion of the Internet and the flood of new optionsfor customers, the basis for brand strength hasdramatically shifted: Creating a compelling customerexperience is increasingly what makes or breaks abrand. Such a challenge involves the entireorganization, including senior managers. It requiresfresh approaches and quantitative tools that canidentify the brand-building investments with thegreatest financial returns. At its most successful, thisnew approach blurs the lines between commerce and community, with customers literally brandingthemselves—a true mark of experience.

Management Consulting

Mercer Management Journal

4

Mercer Management JournalThe New Brand Strategy:Are You Experienced?

7 To our readers

9 A “mindshare” manifestoCommon misconceptions squander the power of the modern brandBy Eric Almquist and Kenneth J. Roberts

Powerful brands can help firms leave rivals in the dust. But brandbuilding today must encompass a more complex set of activities andtarget a broader audience than in the past.

11 What is a brand?

13 “Common Wedgwood”

19 Surviving in a world of 200 salsa brands

21 Ready for the next move?Understanding a brand’s potential requires a new set of metricsBy Andy Pierce and Suzanne Hogan

A dispassionate analysis of a brand can uncover opportunities for acompany to expand into new profit zones. It also can reveal signs thatthe brand is becoming irrelevant to changing customer priorities.

28 Deconstructing brand equity

32 Executive perspective: Laurie Lang

Number 12

2000

RETHINKINGBrand Strategy

ASSESSINGA Brand’s Health

Cover: Wedgwood pottery was one of the first modern branded products;a Harley-Davidson tattoo embodies the branded experience.

5

35 What ever happened to Burma-Shave? Pattern thinkers can outsmart brand rivals in a changingmarketplaceBy John Kania and Adrian J. Slywotzky

A static brand can quickly become irrelevant. But brand innovationalso has its risks. Patterns that have played out in other industries canhelp managers anticipate when and how a brand must change.

37 A brand patterns catalogue

46 Brand patterns in action

49 How Conoco broke the convenience store mold Building brand equity through many “moments of truth”By Kathryn H. Feakins and Michael Zea

Brands are enhanced or eroded during countless interactions betweencustomer and company. The challenge is to design a customerexperience in harmony with the brand, then allocate investmentto the areas of greatest potential return.

52 Assessing brand investments

54 Branding and M&As

61 Making every employee a brand manager Aligning human capital strategy with brand strategy By Carla Heaton and Rick Guzzo

Employees are a critical yet underemphasized element in deliveringthe positive customer experience necessary to build a strong brand. Astrategic approach to human capital will enable employees to deliverto their fullest potential.

68 Brand building on the Internet

79 Executive SummariesAbstracts of the main articles of this issue in English, French, German,Spanish, Portuguese, and Chinese.

ANTICIPATINGBrandOpportunities

DESIGNINGthe BrandedExperience

DELIVERINGon the BrandPromise

As one of the world’s premier corporate strategy firms, MercerManagement Consulting helps leading enterprises achieve sustainedshareholder value growth through the development and implementa-tion of innovative business designs. Mercer’s proprietary businessdesign techniques, combined with its specialized industry knowledgeand global reach, enable companies to anticipate changes in customerpriorities and the competitive environment, and then design theirbusinesses to seize opportunities created by those changes.

Mercer Management Journal is published by Mercer ManagementConsulting for its clients and friends. The contents are copyright© 2000 by Mercer Management Consulting.

Strategic Choice Analysis® is a proprietary trademark of MercerManagement Consulting that has been registered with the U.S. Patentand Trademark Office. ChoiceboardSM is a service mark of MercerManagement Consulting.

Cover photographs by Skinner Auctioneers, Bolton, MA (Wedgwoodvase), and Dennis Manarchy, Chicago, IL (Harley tattoo). Portrait ofJosiah Wedgwood courtesy of the Trustees of the Wedgwood Museum,Barlaston, Stoke-on-Trent, England.

All rights reserved. Excerpts can be reprinted with attributionto Mercer Management Consulting. Articles can be found on ourWeb site: www.mercermc.com.

For information on reprinting entire articles and all other correspon-dence, please contact the editor at:

Mercer Management Journal33 Hayden AvenueLexington, Massachusetts [email protected]

Mercer Management JournalEditorial Board

Matthew A. Clark, chairman

Eric AlmquistJames W. DownDavid J. MorrisonPatrick A. PollinoKenneth J. RobertsAdrian J. Slywotzky

Editor

Paul Hemp

Associate Editor

John Campbell

Designer

Trina Teele

Mercer Management Journal 7

To our readers,On many dimensions, the task of keeping a business healthyand profits growing is getting harder each year. New competi-tors—many of them Internet start-ups or new rivals from whatwere once entirely different industries—appear constantly. Adeluge of product and service offerings is flooding the globalmarketplace, making it more challenging to get your ownproducts or services noticed.

At the same time, you need to spend more time paying attentionto Wall Street. You want securities analysts to know exactly howyour business design is superior, so that they’ll reward you with amore attractive multiple. But analysts are just as bombarded ascustomers. How can you break through?

To make matters worse, some of your best people regularly walkout the door to new opportunities. Finding new talent is tough,too. Everyone from your traditional competitors to dot-comstart-ups seems to be battling for the same people.

Finally, even in this age of apparent deregulation, governmentand public interest groups seem to be watching your business asclosely as ever. Your freedom to operate as you choose is con-stantly called into question.

These challenges are well known. What may come as a surpriseis that brand strategy—or rather, a new approach to brand strat-egy—is a key tool in addressing each one of them.

This new approach—which addresses brand building in thecontext of a company’s entire business design—is set out in thisissue of Mercer Management Journal. From the first article, whichsummarizes our view on brand strategy, to the last, whichdescribes the important role that human capital strategy plays inbrand building, the issue argues that a fully integrated approachis the only way to create a powerful brand. As such, the issue isbest read in its entirety.

Our thinking on corporate strategy is constantly evolving, andour brand strategy builds on earlier work. A recent Mercer book,

To our readers8

Profit Patterns, and the previous issue of Mercer ManagementJournal examine how managers can draw on a library of strategicpatterns to anticipate changes in customer priorities and thebusiness environment. One article in this issue looks at nearlytwenty “brand patterns” that can help you make educated guessesabout your brand’s relevance to tomorrow’s customers. (For moreinformation on brand and profit patterns, visit our Web sitewww.profitpatterns.com.)

We are uniquely positioned to help clients build and maintainpowerful brands. Our proprietary marketing science tools haveallowed us to undertake some of the most rigorous and quantita-tive analyses of brands currently possible. And our strategicapproach to brand building ensures that it is not a sterile activitycarried out in the isolation of the marketing department, butrather is a rich and multi-layered endeavor that permeates allaspects of a company’s business design. We have applied thatapproach to some of the most significant brands in the world.

We can—and often do—draw on the expertise and capabilitiesof our sister firm, Lippincott & Margulies, one of the world’spremier corporate image and identity consultants. Its brandspecialists have made significant contributions to this issue of theJournal. And when brand issues intersect with issues of humancapital, we turn to another sister firm, William M. Mercer, aleader in human capital strategy, whose research helps informthis issue’s final article.

The ability of a company to protect its profit stream from beingdiverted to competitors is a function of what we call “strategiccontrol.” The brand has long represented the most broadly avail-able source of strategic control. But just as business strategy hasbecome more challenging, so too has brand strategy. We hopethis issue of the Journal will generate new ideas that will helpyou make your brand a driver of sustained profit and shareholdervalue growth.

Sincerely yours,

James W. DownVice Chairman


Powerful brands can help

firms leave rivals in the

dust. But brand building

today must encompass

a more complex set

of activities and target

a broader audience than

in the past.

As if 200 salsa brands and 7,500 mutual funds weren’tbad enough.

Throughout the industrialized world, there is a growing glutof products and services—including, in the United States alone,a staggering number of mutual funds and varieties of what wasonce a niche-market hot sauce. That glut has been exacerbatedby the Internet, where countless new companies are doing busi-ness in entirely new ways. Meanwhile, traditional industries aremelding into one another, blurring categories and creating wholenew sets of competitors. In this maelstrom, it isn’t surprising thatcompanies find it difficult to differentiate themselves, not onlyto customers but also to investors and prospective employees.

A winning brand strategy—one that is integrated into acompany’s overall business strategy—can make a huge differencein overcoming these challenges. Obviously, a powerful brandcan cut through the noisy clutter of the marketplace, heighteningawareness of a product or service and shifting demand inits favor.

But a strong brand can do more than simply help companiesstand out from the crowd; it can help them break away entirely.Increasingly, we see the winning company in an industrytransforming its early lead into a juggernaut of brand-driven“mindshare momentum” that leaves runners-up in the dust(see Exhibit 1).

That same brand—if managed well in the context of a customer-and profit-focused business design—can then help a companyprotect its lead and enjoy sustained, superior financial perform-ance. Mercer Management Consulting’s research into the driversof long-term shareholder value growth points to the importanceof achieving strategic control, the ability to keep profits from

A “mindshare” manifestoCommon misconceptions squander the power of the modern brand

By Eric Almquist

and Kenneth J. Roberts


1-Rethinking.qxd 3/6/00 9:26 PM Page 9

A “mindshare” manifesto

migrating to competitors or (through lower prices) to customersthemselves. A strong brand—which can forge a durable psycho-logical bond between a company and its customers, investors,and employees—is the most effective form of strategic controlavailable to a wide array of businesses.

The brand has never been so crucial to a company’s success. So itis a tragedy that, at most companies, brand strategy is ignored or,at best, governed by a number of serious misconceptions.

A brief history of brandingThe phenomenon of branding has roots running deep intoeconomic history. Stone Age toolmakers undoubtedly had trade-mark styles that signaled potentially greater success in the hunt.Particularly accomplished Viking shipbuilders may have hadvaluable brands of vessels. Certainly silversmiths over the cen-turies, including Paul Revere, the American colonial patriot,included marks on their wares to indicate both the purity of themetal and the craftsmanship embodied in the product.

Indeed, branding—the use of symbols to concisely convey infor-mation about a product or service—can be seen as a quintessen-tial human activity. It is also a fundamental building block ofcommerce: Without information about a producer’s or a seller’sreputation, trade would grind to a halt. (The seller ratings on theeBay Internet auction site represent just one conspicuous con-temporary example.) The real power of brands, however, datesto the time when this indicator of reputation was transferredfrom the individual to a larger business enterprise. The shiftmagnified brands’ impact, extended their geographic reach, andresulted in wealth creation for numerous employees.

Josiah Wedgwood is often cited as the father of the modernbrand. Beginning in the 1760s, Wedgwood placed his name onhis pottery and china to indicate their source—his state-of-the-art factories—and therefore their quality. But the Wedgwood

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RETHINKINGBrand

Strategy

Exhibit 1 Amazon.comquickly built a brand thatcatapulted it far ahead ofits closest rival.

1 Barnesandnoble.com, spun off in May 1999, has underperformed Barnes & Noble and Amazon.comSource: WSJ.com.

+6,000%

+4,000%

+2,000%

+0%

Amazon.com

Barnes & Noble1

1998 1999 2000

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name came to stand for something more. Nearly two hundredyears before the advent of mass media, and without using con-ventional advertising, Wedgwood used royal endorsements andother marketing devices to create an aura around the name of hiscompany that gave the brand a value far beyond the attributesof the product itself. His business design of mass production anddistribution enabled him to capture the value created by hiscalculated association of his product with a rich and famouslifestyle and his exploitation of customers’ social aspirations.

In many ways, branding has stepped away from Wedgwood’sprecepts during the latter part of this century. With the develop-ment of new media, particularly television, and the huge post-World War II boom in consumption and birthrates, a mass mar-ket was born. Rising demand and standards of living created anera where market share was king: The player with the leadingshare would have the lowest cost and the highest profitability.

Advertising agencies successfully exploited this situation by cre-ating mass campaigns, primarily for consumer products, thatbuilt and shifted share. Anyone older than 40 still remembers thejingles of classic brand advertising from the 1950s and 1960s:“You’ll wonder where the yellow went when you brush yourteeth with Pepsodent,” in the United States; “Bovril puts beefinto you,” in Great Britain; “Dubo, Dubon, Dubonnet” (“It looksgood, it tastes good, it’s Dubonnet”) in France. Over time, theseads became more sophisticated, appealing to the consumer’sintelligence and sense of humor. Today, the Super Bowl in theUnited States draws its enormous audience in part from



What is a brand? The English word “brand” is derived from “burn-ing,” a reference, in the word’s business sense,to the embers once used to burn the mark of theowner onto livestock, casks, timber, metal, orother goods. By the 19th Century, accordingto the Oxford English Dictionary, the word hadtaken on the figurative connotation of acommercial trademark—“the ale was of asuperior brand.”

Later, in the mid-20th Century, the word grewto encompass the image that a product connotesin the minds of potential consumers or, evenmore abstractly, the popular conception of someperson or thing. The OED somewhat sardonicallycites a news report from 1959: “In the jargon of

the P.R. trade, there is as yet no ‘brand image’for the Prime Minister of Japan.”

We define brand as the sum of all the informa-tion about a product, a service, or a companythat is communicated by a name or related iden-tifiers, such as logos or other visual cues. Thebrand is not the name itself; a corporate namethat does not communicate anything of sub-stance is not a brand. The attributes of a brandexist in the eye of the beholder and reflect anaccumulation of both the communications thatthe person has received concerning the product,service, or company and the experiences that heor she has had with it.



The mass-market,

advertising-agency model,

still influential in brand

management, is fast

becoming obsolete.

American football fans and in part from people who want to seethe latest ad campaigns for such mega-brands as Nike,Budweiser, and BMW.

While the advertising-agency model has dominated brand man-agement and remains the way that many business executivesthink about brands today, it is rapidly becoming obsolete. Duringthe last twenty years, the advantages of market share have dimin-ished, evident in the number of market share winners who arevalue growth losers. The mass market has evolved toward greaterdiversity in customer needs, blunting the relevance of the mega-campaign in many industries. The mass media are being replacedby an array of communications channels that can target increas-ingly narrow customer segments.

Furthermore, the service-based economy has stretched the tradi-tional time frame during which brand-building efforts must takeplace: What once spanned the period between a customer’sawareness and purchase of a product, now extends throughout anextended relationship with the company that comprises numer-ous interactions.

Brands are changing in other ways, too. The traditional role ofbrand as a proxy for quality has diminished, at least in the devel-oped world, where the risk of getting an unreliable product froman unknown supplier has decreased. One manifestation of thisshift is the narrowing of the gap between branded and “privatelabel” quality, which has strengthened the intermediary brand ofthe retailer at the expense of the traditional product brand.

And the longstanding truism that an enduring brand is a strongone has been undermined by the volatility of today’s businessenvironment, which can quickly render a winning brand irrele-vant. Branding remains crucially important, yet it increasinglyfinds its power (once again) through a tighter integration withbusiness design.

Precepts for the last century As with any broad shift in the basis of competitive advantage, ittakes a while before everyone is playing by the new rules. Thesetransitional periods offer exceptional opportunity for players whounderstand those rules and play the new game first. Overcomingfive widespread misconceptions can help executives to win in thebrand-building game.

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RETHINKINGBrand

Strategy


Misconception #1: Brands are built mainly through advertising.In today’s increasingly service-oriented economy, something hasreplaced advertising as the key to brand building: the customerexperience. This represents the sum of a customer’s numerousinteractions with a company, each of which is a “moment oftruth” that can, to varying degrees, enhance or erode the brand.And a positive customer experience, so crucial to the health ofbrands in service industries, also plays an increasingly importantrole in product businesses. The purchase of a product, whichused to be the final interaction between company and customer,now is often only the beginning of an ongoing relationship thatincludes after-market service or the creation of customer “solu-tions” that incorporate but overshadow the physical product.



“Common Wedgwood”: A most uncommon brand

When Josiah Wedgwoodwas born in 1730, thepotters in his nativeStaffordshire, as elsewherein England, sold virtually alltheir wares locally. By thetime he died in 1795,Wedgwood products weresold, coveted, and dis-cussed throughout theworld. How didWedgwood build what isoften cited as the firstmodern business brand?*

The supremacy of the Wedgwood brand did notderive primarily from Wedgwood’s noted innova-tions in technology or factory organization, orthe quality of his products, or the distinctive visu-al system he created, including the characteristic“Wedgwood blue.” His inventions were quicklycopied, and other firms could, with some work,match his quality and color. And whileWedgwood imprinted his name on every pieceof jasper-, basalt-, and chinaware, other artisansused trademarks as well.

Wedgwood’s brand strategy relied above all onfashionable appeal. “Fashion is infinitely superiorto merit in many respects,” he wrote in a letterto his partner, Thomas Bentley, “and it is plainfrom a thousand instances that if you have afavourite child you wish the public to fondle &take notice of, you have only to make choiceof proper sponsors.”

From the start, Wedgwood courted the sponsor-ship of the monarchy, the nobility, foreignambassadors, architects, painters—the arbitersof fashion. Their lead was followed by otherclasses who bought “common ware”—inkpots,tableware, and the like. Foreshadowing today’scommon practice of celebrity endorsements,Wedgwood accepted expensive and difficultcommissions, such as a table service of1,282 pieces for Catherine the Great of Russia,in order to gain the favor of the fashionable.Then, to maintain the continuous attention ofthe middle classes, he gave ceramic expressionto current controversies and the latest popularfigures. All of these products were elaboratelydisplayed in Wedgwood showrooms and puffedin the press, stimulating demand for commonware, the most lucrative product lines.

Wedgwood’s firm thus steadily accreted an eco-nomic value that we now call “brand equity”—the ability to command higher prices overcomparable goods, or a greater share overcomparably priced products. Indeed, Wedgwoodregularly sold his goods at double the averageprice. And the Wedgwood brand came to definethe category among the growing numbers ofmiddle- and upper-class consumers worldwide.

*This article draws from “Josiah Wedgwood: Eighteenth-CenturySalesman,” by Neil McKendrick, Economic History Review, SecondSeries, Vol. XII, No. 3, April 1960.

Josiah Wedgwood bySir Joshua Reynolds



Designing a branded

customer experience

requires far more than

traditional market research.

With the customer experience often paramount in brand build-ing efforts, many great brands are being built these days withlittle or no advertising at all. Long before it ever ran an ad,America Online created a positive online experience that gener-ated both publicity and word-of-mouth buzz, then bolsteredthese with a massive direct-mail campaign that gave people achance to actually try out the service. Pret a Manger, a chain ofsandwich shops, has become a cultural icon in Britain (“What isyour favourite Pret a Manger sandwich?” is a standard questionin the interview feature of a London newspaper) by providing,among other things, an abundance of cash registers to deal withthe lunch-hour rush. Harley-Davidson has built one of the mostdistinctive and powerful brands by fostering an experience—through such things as Harley owner groups and rallies—thatgoes beyond the attributes of the motorcycle itself.

Designing a winning branded customer experience continues toinvolve some of the traditional market research used in the oldadvertising-agency model of branding, but it goes far beyondthis. Using sophisticated marketing science tools, brand builderscan determine the most valuable customer segments, identifytheir priorities, and then determine which moments of truth arekey to addressing those priorities (see article, page 49).

Misconception #2: Brands are used primarily to influence customers.Although most brand strategies are developed, quite naturally,with the customer front and center, they will fail to generate sus-tained growth in profitability and shareholder value unless theytarget not only customers but also investors and current andprospective employees.

In an era when publicly traded companies are under ceaselesspressure to justify their performance, corporate brand-buildingefforts must be aimed at the investors and securities analystswho, with their purchases and recommendations, determine afirm’s stock price. General Electric has been savvy in managingits brand on Wall Street—for example, by training analysts onhow to evaluate a new business—giving GE the ability to easilyraise financial capital.

And in the tight job market that exists in many countries today,companies must also use their brand to attract, retain, and moti-vate top “human capital.” Cisco Systems has built a brand thatattracts the cream of technology workers. Significantly, it hasdone this not so much through advertising as by creating a posi-

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RETHINKINGBrand

Strategy


tive recruiting experience—it does more than half of its hiringexclusively on the Internet—that reinforces its brand image as aleading-edge technology company.

The three primary stakeholders—customers, investors, andtalent—vary in importance to different companies at differenttimes. For example, start-ups trying to raise capital initially maycare most about investors, and should tailor their brand messageaccordingly. Still, according to a Mercer study of 40 leadingbrands, companies that successfully align the communication oftheir brand promise to all three audiences realize the greatestshareholder value growth (see Exhibit 2).

There is a fourth constituency that, although it plays no directrole in driving profitability or value growth, is crucial to acompany’s health. This is the group of regulators, media, andpublic interest organizations that can affect a company’s real orde facto “license to operate.” A company that ignores this audi-ence in positioning its brand risks a hostile response when itseeks their support. Microsoft’s image of corporate arrogance, forinstance, has made it a relatively unsympathetic defendant in theU.S. government’s antitrust suit. The nuclear power industry isan example of an entire economic sector that effectively lost itslicense to operate, in part by underestimating the power of thiskey brand audience.



Exhibit 2 Brandconsistency andshareholder value growth

Brand Consistency Composite2

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Rat

io1

Chrysler

Apple

SGI

Ameritech

Allstate

Bell Atlantic

Tenneco

AMD

BellSouth

UTC

Seagate

GTE

Nucor

AT&T

Boeing

Motorola

Nokia

Cummins

Harley-Davidson IBM

First Union

TCI Citibank

AOL

Caterpillar

AMEXMerrill Lynch

Yahoo!

GE

HP

Microsoft

Intel

1Company three-year return divided by the industry three-year return (12/98 data).2Average rating on likelihood to buy, work for company, invest in stocks. Source: 1998 Mercer survey of forty brands in five industries.

Westinghouse

Capital One

HighLow

5

4

3

2

1

0

-1


A “mindshare” manifesto16

RETHINKINGBrand

Strategy

Misconception #3: The key to successful brand management involvesunderstanding the effectiveness of the brand in today’s marketplace.While achieving such an understanding is a worthwhile aim,on its own it risks creating a dangerously complacent view of abrand’s health. More important is being able to anticipate abrand’s relevance to the most valuable customers of tomorrow.That’s because, although brands once had life spans measured indecades and often grew in power over time, in today’s businessenvironment a brand can become irrelevant surprisingly quickly.Once-great brands such as Cadillac and Zenith lost much oftheir power because they became irrelevant to a new generationof consumers. Will brands such as Nike and Starbucks be next?

One way to look over the horizon and glimpse future brand pit-falls and opportunities is through the discipline of pattern recog-nition. Analyzing a library of brand patterns that have played outin the past can suggest how and when a brand should evolve.This can give a company a jump on competitors who fail to see abrand pattern shift until it is too late to act (see article, page 35).

Misconception #4: Brands are symbolic and emotive and therefore aremanaged primarily through “creativity” rather than analysis. Whilebrands appeal to the heart as well as to the head, they can bequantified and analyzed with much the same economic rigor asother business assets. One means of doing this involves adetailed assessment of something we call “brand equity.”

Brands convey numerous meanings and associations that aredifferent in the minds of different audiences. In a flash, thebrand “IBM” might communicate such images as “high quality,”“high priced,” “latest technology,” “largest company,” “reliable,”or “stodgy,” depending on the market segment. The sum of theseassociations is called “brand image.”

Only certain parts of this overall image, however, actuallyincrease or reduce demand for IBM and its products. The onesthat do are brand equity elements, the subset of brand imagethat, all else being equal, positively or negatively shifts demandfor IBM among customers, investors, and the talent market.Positive equity elements allow a company to charge higher pricesor win more sales at the same price than a competitor with asimilar product and a weaker brand (see Exhibit 3).

Brand equity is most easily measured in the case of consumerpackaged goods. Nonetheless, companies as diverse as Eurostar,

Winning brands target not

only customers but also

investors and current and

prospective employees.




American Express, Air Canada, and America Online have quan-tified the abilities of their brands—and particular attributes ofthose brands—to shift market share and profit margin towardtheir products and services.

A detailed understanding of what causes customers in differentmarket segments to choose or reject a particular product or serv-ice can guide a company in its brand-building investments. Forexample, if one positive brand equity element of an airline is“business-class comfort,” the company may choose to furtherenhance that element by improving seat configuration; if a nega-tive equity element is “unfriendly service,” it may choose toimprove its training and management of front-line employees.Each of these equity elements can be further deconstructedto target investments even more precisely.

Misconception #5: Brands are the responsibility of the marketingdepartment. Just as advertising has been eclipsed as the keybrand-building tool, so has advertising’s main purpose: generat-ing awareness and positive feelings about a company, product, orservice. Although this is still an important aim of brand building,something else is even more important: delivering on the brandpromise. Because brands derive their power from the value thatthey symbolically represent, there must be real value in thebranded products or services. Otherwise, a brand will simplycreate false promises—a surefire way to erode its strength.

It has long been true that a product must deliver on the brandpromise. PalmPilot became a powerful brand not only because ofstrong marketing but because the personal organizer was a“killer” product that delivered to the customer the promised per-formance. But in an increasingly service-intensive economy,employees, not just the product, determine a company’s success

Exhibit 3 Brand equityquantification anddeconstruction

Price

Quantity (share)

Demand curve shift resulting from greaterbrand equity (all else being equal)

Brand equity shifts demand forBrand A over Brand B

Positive brand equity elementsfor Brand A over B

Brand equity elements areresponsible for the demand shift

“Owns” thecustomer problem

Proactively solvesproblems

Returns calls same day

Responsive service reps

Varies by customer experience

Brand equity sub-elementsof customer advocacy

Each equity element has specificsub-components

Varies by customer segment

Customer advocacy

Trust

Upscale identity

Sound company

Quality productsBrand A

Brand B

Brandequity

Illustrative



in delivering on the brand promise. Giving employees the toolsand leeway to satisfy the customer across the entire customerexperience can tremendously protect or enhance a brand’sstrength (see article, page 61).

For example, American Express’s service-oriented brand isembodied in the top-notch service that customers receive in theirinteractions with employees. This has allowed American Expressto survive the onslaught of literally hundreds of thousands ofcompeting credit card offerings over the past two decades.

Delivering on the brand’s promises requires the involvementof virtually every employee in all areas of the organization, eventhose who have no direct customer contact. Inaccurate monthlyaccount statements from banks, prepared by back-office workers,can diminish the brand equity of an institution whose brand isbased on the notion of trust. A company’s brand can even be tar-nished by the performance of workers outside the company—employees of a company’s sales channels, for example.

To be effective, brand-building activities need to be integratedinto a company’s overall business strategy. The brand is directlylinked to the company’s value proposition—the type of productand service it offers—and the type of customers it plans to tar-get. The brand will have an impact on activities ranging from thedevelopment of new products to the design of customer serviceoperations to the creation of a Web site.

Overseeing how a brand affects—and is affected by—nearlyevery aspect of a firm’s business clearly extends beyond the jobdescription of the typical vice president for marketing. The issueneeds to have a place on the desks of the most senior managers,including the CEO.

The new brandingOvercoming the aforementioned misconceptions calls for a newapproach to brand strategy, one that in many cases recognizesand embraces the counterpoints to those misconceptions.Managers using the new approach should:

• Target four constituencies—customers, investors, employees(prospective and current), and those who affect a company’sability to do business—in their brand-building efforts

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RETHINKINGBrand

Strategy

Brands can be quantified

and analyzed with much

the same rigor as other

business assets.


19Mercer Management Journal


A growing glut of product and service offerings isflooding the global marketplace, making it evermore challenging to get customers to notice,and buy, a company’s products or services. Astrong brand can create a clear signal that over-rides the static.

The examples of the glut are everywhere. Some25,000 new consumer product SKUs (stock-keep-ing units) were introduced in the United States in1998, compared with 4,400 in 1980, accordingto a recent study by the Federal Reserve Bank ofDallas. For evidence, just wander down the aislesof your local supermarket. Colgate, which soldtwo types of toothpaste in the early 1970s, todayoffers 17. There are now more than 200 brandsof salsa, once a niche gourmet product in mostof the U.S. (There’s even the “Green MountainGringo” brand from Vermont.)

The credit card industry, which offered a handfulof cards in the 1960s and 1970s, has become avalue proposition machine, churning out tens ofthousands of distinct card offers daily. The num-ber of mutual funds available to investors in U.S.markets rose from 160 in 1960 to 560 in 1980 tomore than 7,500 today. And the proliferationisn’t limited to packaged goods and financialservices. It’s occurring in automobiles, telecom-munications equipment, magazines, amusementparks, fast food—even, according to Adult VideoNews, in X-rated films, where new releases havegone from fewer than 2,000 just 10 years ago tomore than 10,000 last year.

On the face of it, these examples look like ahealthy expansion of supply, and presumablydemand, in a robust economy. But things lookless rosy when we examine another trend—stableor slowing population growth rates in the UnitedStates and other nations of the developed world.In recent years, for example, the U.S. populationhas been growing at just under 1 percent, a ratethat in a decade or so likely will fall to about0.5 percent, the Census Bureau says.

France and Japan are experiencing nearly zeropopulation growth. Russia’s population has beenin decline since 1990, and Italy’s will begin todecline next year. China, the country with per-haps the most potential for economic growth,nonetheless has a nearly flat growth rate of

0.8 percent. And in the many developing coun-tries with faster-growing populations, consumersstill have a hard time affording the basic necessi-ties of life, much less a vast array of new prod-ucts and services.

Put these two trends together and you get asobering statistic, something we might call “valuepropositions per capita.” Although no economicagency tracks the VP/C ratio, it is undoubtedlyrising at a significant rate every year in the indus-trialized world. As just one conspicuous example,the number of U.S. mutual funds per millionpeople rose from two in 1980 to nearly 30 today.

What implications does this ratio—with itsexploding numerator and stable or shrinkingdenominator—hold for managers? For one thing,securing and holding onto customer “mindshare”for any particular company’s products and servic-es will be increasingly hard to achieve. It shouldnot be surprising that total advertising spendingin the U.S. rose to $78 billion in 1998 from aninflation-adjusted $5 billion in 1977, a reflectionof companies’ efforts to buy their way intopeople’s brains.

Grabbing customer “timeshare” will alsobecome increasingly difficult, as consumptionitself becomes more time-consuming in a worldof shrinking spare time. The availability of moreproducts and services, each with a growingnumber of complicated features, means thatmore time must be spent actually evaluating,selecting, and using them. That is occurringas many Americans work longer hours and,in their declining spare time, watch more televi-sion, play more video games, or spend more timeon the Web. The time for buying and using newproducts will continue to shrink. And if theInternet will help people shop more efficiently, italso will extend the clutter of choices availableto them.

A powerful brand can help managers to thrivein this cluttered world, one in which a stablenumber of consumers have nearly infinite choicesin their economic lives—but time and attentionthat are distinctly finite.

—Eric Almquist

Surviving in a world of 200 salsa brands



• Systematically try to anticipate their brand’s future relevancewith tomorrow’s most valuable customers

• Use sophisticated marketing science tools that can help themmake sound brand-building investments based on where—and how—brands shift customer demand

• Create a customer experience that reinforces the brand acrossthe multiple moments of truth that can make or break abrand

• Ensure that their entire business, and particularly customer-facing employees, delivers on the promise implicit in thebrand

With some luck, executives who follow these new precepts willbuild brands as powerful and enduring as the one that JosiahWedgwood created more than two centuries ago.

Eric Almquist is a vice president and a director of MercerManagement Consulting and head of the firm’s customer value team;he is based in Boston. Kenneth J. Roberts is chairman of Lippincott &Margulies, a Mercer sister firm specializing in corporate image andidentity, and a Mercer director; he is based in New York.

20

RETHINKINGBrand

Strategy



A dispassionate analysis

of a brand can uncover

opportunities for a

company to expand into

new profit zones. It also

can reveal signs that the

brand is becoming

irrelevant to changing

customer priorities.

American Express contemplates a bold partnership with Visathat would eliminate a major source of customer dissatisfac-

tion by dramatically increasing the number of establishmentsaccepting the Amex card. Will it erode the profit-generatingprestige of the American Express brand?

TotalFina hopes to achieve the necessary scale to compete in theconsolidating petroleum industry through its acquisition of long-time rival Elf Aquitaine. What name should be chosen for themerged enterprise, and how should it relate to the brands of thenumerous operating companies?

Kmart creates a stand-alone Internet site, BlueLight.com,in response to the threat posed by new online retailing rivals.Is it correct in concluding—in contrast to discount retailingcompetitor, Wal-Mart—that its existing brand wouldn’ttranslate well to the Internet or might limit its options in theonline environment?

Each of these moves clearly raises high-level strategic issues forthe companies involved. But in a world where brand strategy canno longer be separated from business strategy, key brand issuesmust also be addressed. To do this, a company needs a deepunderstanding of its current brand status. Without this knowl-edge, managers can neither anticipate the impact a businessmove will have on their brand nor gauge the brand’s potential todrive a business move. A formal brand assessment thus becomesa crucial prerequisite to most major strategic initiatives.

Business moves are not the only reason to stop and take stock.Early signs of change in customer priorities or the competitiveenvironment also call for a self-evaluation. Indeed, smart brandbuilders are constantly reassessing their brand, identifying areasof strength and weakness, asking themselves whether their brand

Ready for the next move? Understanding a brand’s potential requires a new set of metrics

By Andy Pierce

and Suzanne HoganASSESSINGA Brands Health

2-Assessing.qxd 3/6/00 9:26 PM Page 21

Ready for the next move?

In business-to-business set-

tings, where brand has

often played a subordinate

role, a single competitive

move can make a brand

suddenly relevant.

strategy needs to be adjusted or overhauled. Do the brand’sstrengths provide the company with the license to extend itsbusiness to new profit zones? Do the weaknesses indicate thatthe brand may soon become irrelevant?

That self-assessment process has become increasingly complex.The shift toward a service- and Internet-based economy hasupended the time-honored rules of brand building, makingtraditional yardsticks, if not obsolete, inadequate. The changingrules of branding call for new approaches to evaluating abrand’s status.

Does brand matter?Before a company undertakes a comprehensive self-assessmentof its brand—not to mention major brand-related investments—it makes sense to determine the importance of brand in theindustry. In a relatively few cases, brand plays virtually no role inshifting demand. For example, in a new industry or product cate-gory, the product rather than the brand will be the dominantconnection to the customer. Or in certain business-to-businesssituations, the personal relationships that salespeople developwith their accounts may make the brand less relevant.

In most categories, however, the brand does make a significantdifference, increasing to varying degrees the likelihood of a cus-tomer choosing one product or service over another. For exam-ple, strip away everything besides brand—for example, differ-ences in price, schedules, in-flight amenities, and on-timeperformance—and customers are four times more likely tochoose the Asian airline with the strongest brand than the airlinewith the weakest (see Exhibit 1). The first question for manyexecutives thus becomes how much does brand matter in theirindustry, and are they devoting an appropriate level of time andresources to brand building?

Even in situations where brands have less impact, things canquickly change. In a new product category, where brands initiallymay not be important, managers need to anticipate when andhow they can seize the opportunity to create a powerful brandout of a strong product—as, for example, Palm Computing didwith its PalmPilot personal digital assistant. In business-to-busi-ness settings, where brand has often played a subordinate role, asingle competitive move can make brand suddenly and powerful-ly relevant. Intel’s “Intel Inside” campaign leapfrogged the com-pany’s immediate customer—personal computer manufacturers—and targeted the end consumer. By creating recognition and

22

ASSESSINGA Brand’s

Health


value around the microprocessor inside the PC—a prominentexample of so-called ingredient branding—the chipmaker madeitself an indispensable supplier to manufacturers.

Given this power of a brand to strengthen a company’s “strategiccontrol”—its ability to lock in customer relationships and protectprofits from being diverted to competitors—smart business-to-business companies are always looking for signs of the latent oremerging importance of brand. For example, if brand isn’timportant to immediate customers, could it be important to endconsumers? Do opportunities exist to create a branded “servicewrap” around a commodity that would enhance consumers’ useof the product? While the brand may not immediately support aprice premium or directly influence a customer’s choice, it canlead a customer to consider a product or service—a valuable firststep even when buying decisions are ultimately based on personalrelationships.

Of course, in gauging the importance of branding to their com-pany, managers must also keep in mind that customers are onlyone of a brand’s potential audiences (see previous article). Apowerful brand also influences investors and helps attract, retain,and motivate talented employees. These two constituencies, asmuch as customers, help drive a company’s profit and sharehold-er value growth.

The brand report cardAssuming that a strong brand can make a difference for acompany, managers need a strategy to capitalize on that poten-tial. That begins with an understanding of the current statusof their brand.

Marketing science tools are indispensable in helping to under-stand which elements of a company’s brand actually drive



Exhibit 1 A strong brandcan make a dramaticdifference in the likelihoodof a customer choosingone product or service overanother (all else beingequal)

Bra

nd

Sh

are

Mu

ltip

le(r

atio

of

stro

nges

t to

wea

kest

bra

nd) 8

7

6

5

4

3

2

1

0Broadbandentertain-

ment

Asianmobilephones

Bankcreditcards

IT servicesNew Yorkhotels

Asianairlines

Onlinebrokerages

Sub-primeconsumerlending

2.192.64

4.19

3.56

4.46

2.19

7.03

3.18

Market

Source: Mercer Strategic Choice Analysis® studies, 1995-1999.


Ready for the next move?

customer choice and shift demand for products and services. Butcompanies can get started with a self-assessment. We have foundthat the dispassionate use of a simple diagnostic (see Exhibit 2)can provide a broad overview of a brand’s health, identify poten-tial problem areas that would benefit from deeper analysis, andsuggest ways to make the brand more robust today and in thefuture. As you read, use the diagnostic to assess yourfirm’s brands.

How well thought out is my brand architecture? Many companieswith a portfolio of brands have given little thought to how theyrelate to one another or to the corporate brand. When theydiagram that portfolio, they find that it not only has little ration-ale, creating confusion among customers, distributors, andinvestors, but also that it may be undermining their strategicgoals. Thus, a company’s first task is to determine theappropriate brand architecture.

There are three basic types of brand architecture—master brand,holding company, and asymmetrical (see Exhibit 3). In the mas-ter-brand model, a single brand is dominant throughout anentire corporation. The economic benefits are clear: Every mar-keting dollar benefits each one of the divisions or operating com-panies, which themselves provide multiple exposures of thebrand in the marketplace. IBM had aggressively pursued amaster-brand strategy until it acquired Lotus in 1995. Becausethe software maker had a strong product brand that was flourish-ing under a different business model, culture, and operating style

24


Health

Exhibit 2 A brand self-assessment can identifyareas where a company’sbrand needs to bestrengthened

Cla

rity

of b

rand

arc

hite

ctur

e

Com

petit

ive

pric

e pr

emiu

m

Shar

e of

wal

let

(vs.

com

petit

ors)

Perc

eive

d im

age

diff

eren

tiatio

n(v

s. c

ompe

titor

s)

Bran

d re

leva

nce

for

futu

re-

defin

ing

cust

omer

s

Mar

ketin

g ef

fect

iven

ess

inde

x(s

pend

/sha

re)

Rela

tive

awar

enes

s ra

tio (t

arge

tpr

ospe

cts/

all p

rosp

ects

)

Cus

tom

er e

xper

ienc

e in

vest

men

t(a

d sp

end/

cust

omer

exp

erie

nce

spen

d)

Form

al b

rand

man

agem

ent p

roce

sses

Empl

oyee

buy

-in t

obr

and

prom

ise

Bran

d lo

yalty

(won

cust

omer

s/lo

st c

usto

mer

s)

Clear

Cloudy

High

Low

High

Low

High

Low

High

Low

Low

High

High

Low

High

Low

Central-ized

Decen-tralized

High

Low

High

Low

PotentialProblems:

BrandArchitecture

BrandPositioning

BrandEquity

BrandInvestment

Brand PromiseAlignment

High

Bra

nd

Str

eng

th

–

+


from IBM, Lotus was allowed to retain its name. Over time,however, IBM recognized that the stability and financial cloutof its own brand enhances the Lotus brand and reverted to amodified master-brand architecture, connecting Lotus to theparent through a simple endorsement—thus, “Lotus, an IBMcompany.”

At the other end of the spectrum is the holding-company model,in which none of a company’s businesses share the corporatename. This model provides a company with brand flexibility,enabling it to target diverse audiences. For example, the varietyof brands offered by automaker General Motors or the luxurygoods firm LVMH allows those companies to build loyal cus-tomer relationships with different customer segments. The hold-ing-company model also gives a company greater flexibility inbuying and selling other companies: Acquisitions can be madewith the promise that the acquired company will be able tooperate independently, while divestitures generally won’t result innegative repercussions for the corporate brand. But with thisflexibility comes the cost of supporting more than one brand.A company must be able to analyze the economics of its brandportfolio to ensure that the incremental brand management costsare outweighed by the benefits of having an array of brands.

The asymmetrical model generally emerges from a historic base.A company starts with a strong master brand but, as it outgrowsits core business, it finds that this restricts its efforts to expandinto new customer segments or market areas. For example, asDisney began to grow beyond its core business of wholesome,family-oriented movies and theme parks into potentially moreprofitable areas, it found itself limited by its definition of theDisney brand. Consequently, it created and invested in sub-brands, such as Touchstone, Miramax, and Buena Vista, that



Exhibit 3 Differentsituations call fordifferent brandarchitecture models.

Efficiency Flexibility

Asymmetrical

The corporation and oneoperating unit or brand sharethe same name.

ExamplesCoca-ColaDisneyFordGilletteTime Warner

The corporation and mostoperating units and brandsshare the same name.

Master Brand

ExamplesAmerican ExpressAT&TIBM (Lotus)Samsung GroupSony

Holding Company

The corporation, operatingunits, and brands do notshare the same name.

ExamplesGeneral MillsGeneral MotorsPhilip MorrisProcter & GambleUnilever


Ready for the next move?26


Health

Understanding which

attributes of a brand

actually cause people to

choose it over competing

brands allows a firm to

make informed strategy

moves.

produced under separate identities a wide variety of films andvideos for a broad audience. The asymmetrical model also mayserve as a way to deal with the rapid changes wrought by evolv-ing customer priorities and the Internet. As companies increas-ingly are forced to redesign their businesses every few years, theymay find that their master brand isn’t malleable enough to with-stand quick and easy repositioning. Keeping pace with thechanges may require the creation of sub-brands.

Different business situations call for different brand architecturemodels. But managers can’t determine whether theirs is appro-priate until they have mapped it out. An architecture thatincludes a profusion of unrelated brands will need to be justifiedeconomically, given the efficiencies of the master-brand model.

How strong is my brand equity? There are numerous tools used bycompanies and advertising agencies to estimate the economicvalue of corporate brands. They range from calculations of abrand’s balance sheet value to assessments based on image-related research. While well designed, few of these quantify whatwe call brand equity: the value to customers (or employees orinvestors) of the attributes embedded in a brand name, reflectedin the choices they make in a competitive marketplace.

The distinction is important. By failing to take into considera-tion the value of the brand from the constituency’s point of view,most brand valuation methods give executives little guidance onhow to more effectively manage their brands. By contrast, under-standing which attributes of a brand cause people to choose itover competing brands—or, conversely, to choose a competitor’sbrand instead—allows a company to make informed brand strat-egy moves. For example, what should be emphasized or down-played in the brand promise to customers? Where should invest-ments be made in the delivery of that brand promise? Whatopportunities exist to extend the brand into new customer seg-ments or product categories? Where are the opportunities toattack competitor’s brands?

Particularly powerful equity assets—for example, “trust” for GE,“innovation” for 3M, “family entertainment” for Disney—cancarry a company into new opportunities with little risk of brandequity dilution. Relatively weak brand assets may foreclose suchopportunities for brand extension. Knowledge of a brand’s equityhas become particularly important as the rise of the Internet hascreated tremendous opportunities and pitfalls for companies try-ing to extend their brand into this new space.




Winning brands are those

that are highly relevant to

today’s—and tomorrow’s—

customers.

Strategic Choice Analysis® (see article on the next page) enablesmanagers of major brands to assess in detail the critical compo-nents of their brand’s equity. But they can get a start through a“back-of-the-envelope” perspective derived from more easilyaccessible data—for example, the brand’s relative price premiumor “share of wallet” compared with competitors.

How effectively is my brand positioned? An organization that can-not articulate its corporate brand positioning, or brand promise,hasn’t found its soul. And if it hasn’t found its soul, its audiencescertainly won’t make the emotional connection necessary for abrand to have an impact. Thus, the first step for some companiesis to create a detailed positioning statement for their brand orbrands. Then, with a clear understanding of the positioning, theycan assess whether it is effective, using updated definitions ofsome traditional benchmarks.

For years, basic marketing principles have asserted that a brandmust be differentiated in the eyes of customers. But that is onlypart of the story: A differentiated brand that doesn’t also affect acustomer’s choice of a product or a service may help a companyto become well-known or well-liked, but it won’t drive profit orshareholder value growth. A brand also must be relevant to whatthe customer wants. That, however, begs an important question:“Which customers?”

Clearly, one group must be a firm’s most profitable customers.Becoming the brand of choice with customers who cost more toserve than they contribute in revenue is a hollow victory for thebrand strategist.

But perhaps the major flaw in traditional brand positioning yard-sticks is their shortsighted focus on the present. While it is reas-suring for managers to ascertain that their brand is relevanttoday, much more important is how relevant it will be to whatcustomers want in the future. One resource that can help inpositioning a brand for the future is an understanding of brandpatterns, described in the following article.

Another is the identification of “future-defining customers.”These are typically not a company’s biggest or most profitablecustomers. Instead, they are a subset of those customers who actdifferently from others, who make what seem like odd demands.The challenge lies in distinguishing between those in this groupwho foreshadow the future—and those who simply have unique

continued on page 30


Deconstructing brand equity28


Health

The power that comes from understanding, ata deep and detailed level, how a brand actuallyshifts demand among different customer seg-ments can’t be overestimated. Such an under-standing, reached through quantitative analysis,helps executives confidently plan and execute abrand strategy that will drive profit and share-holder value growth.

The key to achieving this understanding lies inthe quantification of a brand’s “equity” throughthe isolation of its equity elements. Brand equityis the total value of all attributes implicit in abrand that convince a customer to purchase aparticular product or service over competingofferings, all else being equal. (It also influenceswhere employees choose to work and whereinvestors choose to put their money.)

Unlike brand image, which includes all of abrand’s positive and negative associations, brandequity represents only those attributes that affectactual customer choices. The equity can have apositive or negative value, depending on whetherit makes a customer more or less likely to buy.And, because it represents the value of a brand inthe eyes of the customer, it will vary dependingon the customer segment.

The different attributes of a brand that influencecustomer choice are known as equity elements,and they will vary from brand to brand. Onemeans of identifying them and assessing their rel-ative value is a marketing science tool, StrategicChoice Analysis (SCA)®. The informationthat flows from this analysis is rich and detailed,providing a basis for marketplace actions (seeExhibit 1):

Level 1:Valuation

Determine the relativevalue of productconfiguration andbrand equity

Level 2:Equity Elements

Determine brandequity elements, thedrivers of brand value

Level 3:Subgroup Impacts

Determine impact onprofit of improvingimage at item level

1 Product configuration preferences (features, price, channel, etc.) can be similarly decomposed and assessed toidentify product-specific improvement opportunities.

Illustrative

Aggressive inFixing

Problems

Commitmentto Customers Arrogant For Smart

PeopleSlow toInnovate

ExcellentQuality

Upscale UserIdentity

CustomerOrientation

TrustworthyProducts

Band EquityValue

ProductConfiguration

Value1

20% 40% 30% 10%

Company Competitor 1 Competitor 2 Competitor 3

Estimated Shareof Choice

+ + – + – +

Deconstructing brand equity

Rigorous analysis provides a platform for action

Exhibit 1 Brand equity analysis quantifies the drivers of customer demand for each competitor and eachcustomer segment.




• At the first level—valuation—the relative val-ues of product or service configuration andbrand equity are measured, by customer seg-ment, for the company and its competitors.This analysis provides a high-level, segment-by-segment view of competitive opportunitiesand threats directly tied to brand strategy.

• At the second level—equity element identifica-tion—brand equity is disaggregated to revealits key drivers. This analysis reveals points ofpossible leverage for increasing brand equity,as well as brand elements that currently haveunrealized potential or that represent negativevalue.

• At the third level—subgroup impacts—thediagnosis becomes even more detailed, reveal-ing how individual elements of brand imagedrive each equity element. This analysis pro-vides the information needed for companies totake action.

Unlike other common methods for estimatingbrand value, such as standard market researchsurveys or balance-sheet analyses of goodwill, anSCA-based approach directly ties brand image tocustomer behavior, helping companies to attractand retain the loyalty of the most attractive cus-tomer segments.

Once managers understand brand equity and itsdrivers (both positive and negative), they can useit to take action (see Exhibit 2):

• A company should above all exploit its coreequity elements, those that drive positive equi-ty in a given segment.

• It should fix its negative equity elements, thosethat undermine its brand strength and repre-sent lost share.

• It should attack its competitors’ positive equityelements, in an attempt to neutralize competi-tors’ brand advantage.

• It should leverage its competitors’ negativeequity elements, taking full advantage of theseweaknesses.

This data-driven approach to brand managementcan unlock insight and innovation in a way neverbefore possible. It will shed light on previouslyunrecognized opportunities and help managersmake smart decisions concerning marketing andcustomer experience investments, new productdevelopment, geographic expansion, and mergerand acquisition strategy. The end result will besignificant growth in profits and shareholdervalue.

—Eric Almquist

PositiveEquity

Elements

NegativeEquity

Elements

Company Competitor A

“Exploit” “Attack”

“Fix” “Leverage”

By CustomerSegment

By Competitor

Exhibit 2 The analysis will suggest an array of possible moves.




Health

“Future-defining”

customers can help

determine if a brand will

continue to be relevant.

current needs. The sales force will be best positioned to recog-nize these future-defining customers: They will be the oneswhose unusual needs are being met by new, edge-of-the-radar-screen competitors.

Clearly, these customers cannot be pinpointed with certainty;though they may be younger than average, representing the nextgeneration of customers, it is their behavior rather than their agethat defines them. But the process of trying to identify themforces managers to think about their brand’s future relevance.The ultimate goal is to determine whether the current brand hasthe necessary equity to address the emerging priorities of thesecustomers, while not alienating today’s customers.

In the online brokerage business, for example, well-establishedbrands such as Fidelity, Schwab, and Merrill Lynch are threat-ened by new entrants such as E*trade and Ameritrade, whichhave a younger image than their established rivals. The incum-bent companies must determine whether their brands can berepositioned so that they will be relevant to both today’s andtomorrow’s prime customers, or whether it will be cheaper andless risky to create a new brand or a sub-brand for their onlinebusinesses. In one of the most interesting examples to date,Schwab launched a separate online business under the nameE-Schwab, only to conclude after several years that combiningits offline and online businesses under the Schwab brand wouldbe more effective.

Am I making the right investments in my brand? Traditionally,investing in a brand meant spending money on advertising. Butover time, brand strategists have realized the limitations of anadvertising-only strategy. For one thing, determining the returnon an advertising investment with any rigor has proved an elu-sive goal. More ominously, spending on advertising alone maysquander the greatest opportunities to strengthen a brand.

Because brand value is created or destroyed in each interactiona customer has with a company, managing these multiple“moments of truth” can have a decisive impact on a brand’s value.For example, in retail banking, a frustrating interaction with abank teller can erase, in one encounter, any positive feelingattributable to the brand. Investing to improve the branchexperience can produce a much higher return on a brand-build-ing investment than incremental product advertising.

continued from page 27




Each interaction a

customer has with a

company can create or

destroy brand value.

Clearly, knowing when, where, and how customers interact witha company and what will affect their perceptions of the brand arecritical to making wise brand-building investments. The goodnews is that, unlike with advertising, the relative brand impact ofdifferent moments of truth can be measured, allowing managersto determine which brand-building investments will yield thegreatest return (see the discussion of “structural equation models”on page 52). This will help guide decision making on whether toinvest in, say, training for customer-facing employees or trainingfor call-center employees.

In addition, the effectiveness of brand-building investments canbe assessed by comparing a company’s performance against com-petitors on some conventional measures: “marketing effectivenessratio” (marketing spend/market share) and “relative awarenessratio” (awareness among target prospects/awareness among allprospects). More enlightening still may be a comparison ofinvestments in advertising and investments in brand-buildingprograms that directly affect the customer experience. The dis-proportionate spending on advertising, with its uncertain returns,will surprise many managers.

Is my entire business aligned with my brand promise? Brands needto be built and managed from the top down. All too often, how-ever, corporate strategy is developed in the chief executive’s officeand brand strategy is developed in another part of the firm. Thismutual isolation often results in business decisions—for example,those involving cost-saving measures or the introduction of newproducts—that either destroy brand equity or don’t capitalize onthe opportunities presented by a brand.

A formal brand management process—with a “brand czar” whohas CEO backing to stop business initiatives because of theirimpact on the brand—can protect long-term brand equity. Thebrand management function can also institutionalize assess-ments, such as the one described in this article, through the cre-ation of an ongoing brand health monitoring system. And it canestablish guidelines for managing the brand that go beyond tra-ditional identity guidelines to include rules on how, when, andwhere to use brands in the development of new products andservices or in moves to new types of business. Companies withthe most successful brands—for example, Disney, AmericanExpress, and IBM—typically have this type of formal brandoversight (see interview next page).



Executive perspective32


Health

Disney is one of the world’s best-knownbrands. How do you manage such an asset? Fundamentally, what we try to do is maintain acourse for what the brand is—and what thebrand should be in the future. In the decentral-ized company that we are, we try to ensure thatthe divisions have that kind of shared under-standing, in terms of product development, interms of marketing and promotions, certainlyin terms of business extensions or expansions.We want to be sure that whatever we do, ouractivities are consistent with the brand. Early on,there was little control over the level and qualityof brand exposure, especially that of the Disneycharacters like Mickey Mouse or Donald Duck.As a result, it often looked like we were sellingout the core assets of the company.

For example? People would make licensing decisions, market-ing decisions that were driven solely for financialgain, with very little sense of what was rightfor the brand. And that’s where the rub comes in,where you just have to bite the bullet sometimesand say, “We can’t do that.” Over the history ofmy time with the company, we have lookedat potential acquisitions, for example, wherethere were certainly business reasons to do it,but which would not have been appropriatefor the Disney brand.

How does a brand manager exercise suchpower? [Chairman and chief executive officer] MichaelEisner made it clear from the get-go that thebrand was very important. However much thecore objective is shareholder value, and howeverinterested he was in growing the company, hewas not going to do it at the expense of sellingout what is one of the core attributes of thecompany. In addition, besides those individualdecisions, he has talked publicly about the impor-tance of the brand. People working in the com-pany take notice of that, and it makes a differ-ence. If senior management, and specifically theCEO, is not behind brand-building efforts, youmight as well forget about it.

What do you mean when you talk about theDisney brand?The definition has evolved as brand managementhas evolved in this company. It really started withprotecting an asset called Mickey Mouse. Andthen you realize that, in order to project a consis-tent image, it isn’t just about ensuring consistentusage of Mickey and the other characters inlicensed products. It is really about all of yourproducts and your retail presence, about whatyou look like in the theme parks and how yourmovies are perceived. If you are within the Disneyfamily of brands, that really requires you to liveup to a consumer expectation for the brands.And it has to be delivered right across the prod-uct mix. Finally, every customer exposure to thebrand, every interface with the brand, has to be abrand-building experience. It’s totally integrated.Like many companies, I think we had an under-

Executive perspective

“Brand is really about the customer relationship”Laurie Lang was until recently the senior vice presidentresponsible for brand management at Walt Disney Company,a position she held for nearly a decade. Disney, a diversifiedentertainment company based in Burbank, California, hadrevenue of $23.4 billion in the year ended September 30,1999; the company has 117,000 employees. Ms. Lang, whonow oversees the company’s philanthropic initiatives, spokewith Mercer Management Journal about brand building andmanagement.




standing on an academic level of the importanceof the brand, because people are bright enoughto know that the brand influences customers andWall Street. But there wasn’t a real appreciationthat the brand is really about the customerrelationship.

How does a global company like Disneymaintain that consistency around the world? We found that the further away you are from thecore, not surprisingly, the less understandingthere is of the brand. So you have to focuson creating that understanding, and this involvesmore than a cursory: “Here’s a brand usage man-ual. Read it. Follow it.” At the same time, you dohave to take into consideration market and localdifferences because, remember, it’s about theconsumer. You have to see it from a consumerperspective. And I do believe that there aredifferences between people in the U.S. and Japanand France. There has to be an understanding ofhow far you can bend the brand before it breaks.

Looking beyond Disney, what are someexamples of firms with successful brands? Well, there are the classic brands like Coke andMarlboro and Kellogg’s Corn Flakes, brands thathave stood the test of time and continue to havestrong consumer relevance. I might add Microsoftas another brand that, while not as long-lived,has certainly become a brand leader, just as it isthe business category leader. Then there aresome powerful newer brands that have yet toprove themselves over time. Some that cometo mind are Virgin Atlantic, Yahoo!, andNickelodeon.

In highlighting these as successful brands,what criteria are you using? Well, for one thing, there’s a cohesive and sharedidentity and imagery from a consumer perspec-tive. There may be some semantic differences inhow customers describe the brands. But overall,they have a strong understanding and image ofwhat these brands are. And this image is consis-tent across a broad population. Second, thatimagery and that identity is not only known butalso believable; it’s consistent with the productdelivery. People don’t just buy the product orservice; they buy into it. Finally, wherever cus-tomers are in their lifecycle, the brand still makessense to them. Even if I decide not to eat CornFlakes anymore because of nutritional reasons or

some other reason, they’re still in my mentalbasket of goods. I consider it more than othercereals because I immediately identify it whenI’m walking down the cereal aisle.

So how does this apply to, say, Virgin?Well, the consistency begins with RichardBranson and his personality: kind of out there,risk-taking, adventurous. And then it’s playedout through their advertising and it’s providedthrough their service—for example, the airline’swillingness to break rules and change someof the paradigms that exist within the airlinebusiness. It’s interesting, because Virgin’s twoareas of business—the music business and air-lines—do seem to work together. They are bothanchored in a similar kind of sensibility of whatthey’re about and what they offer in terms of aconsumer experience. Both the sales clerk in themusic megastore and the flight attendant onthe plane project this sensibility.

Do these same principles apply to theInternet? Most of them, certainly. For example, dot-comcompanies starting out in the past coupleof years were able to be edgy and cool and outthere, because that’s who the user base was. Ithink that’s changing and these companies arebeing forced to become more mainstream. Andas you become more mainstream, and your audi-ence is more mainstream, you have to be relevantto them as well. Again, it’s about the consumer.

Is it becoming easier or harder to build astrong brand?It’s becoming much more difficult. The market-place is so complex and competitive. Every timewe turn around there’s a new company. There isso much clutter. And the media environment is socomplex. It used to be that you could establishyour identity through a limited number of means:your product itself and its placement within theretail environment, and then your media out-lets—TV, radio, and print. Now there are far morechoices. Just look at the revolution created by theInternet, with users hit by many, many moremessages, many, many more names, and many,many more product choices. It’s mind-boggling.




Health

But the powers of a “brand czar” to protect a brand promise haslimits. Also critical are customer-facing employees, the “brandambassadors” of an organization. A brand self-assessment needsto gauge how well employees understand the brand promise andhow willing and able they are to deliver on it at key moments oftruth. Their success in doing so will be reflected in measure-ments of customer loyalty—for example, the ratio of new cus-tomers to lost customers. That’s because a customer whose expe-rience with a company is consistent with what was implicitlypromised by the company’s brand will return again and again.

A springboard to the futureA brand self-assessment helps to identify areas of strength andweakness in a company’s current brand strategy. This provides abaseline of information with which to make smart decisionsabout the next business moves.

American Express’s fabled understanding and appreciation of itsbrand equity has informed its planned partnership with Visa,which the two companies are rolling out cautiously in a fewEuropean countries. TotalFina, itself with a name that reflects arecent merger, determined that the equity in the Fina and Elfbrands merits keeping them at the corporate level and chose toname the combined enterprise TotalFina Elf. Kmart’sBlueLight.com—a reference to the retailer’s in-store-only specialoffers—plans to expand beyond the sale of Kmart products tooffer customers continual bargains and such services as freeInternet access.

While an analysis of a company’s present brand status is arequirement for planning future moves, it may not be sufficient.With customer priorities and the competitive environmentchanging so rapidly, companies must try to anticipate wheretomorrow’s brand opportunities will be. This type of analysis,described in the next article, draws on a library of brand patternsthat catalogs different ways in which brands can evolve. It usesthe past to help make sense of what often seems to be a chaoticpresent and elusive future.

Andy Pierce is a vice president of Mercer Management Consultingbased in Boston. Suzanne Hogan is a vice president of Lippincott &Margulies based in New York.

continued from 31



A static brand can quickly

become irrelevant. But

brand innovation also has

its risks. Patterns that have

played out in other

industries can help

managers anticipate

when and how a brand

must change.

Leo Burnett, founder of the agency that bears his name andTime magazine’s “Advertising Titan of the 20th Century,” built

his reputation as the champion of the “long, enduring idea.” Foradvertising executives of the Burnett school, nurturing brandimages such as the Marlboro man, the Pillsbury Doughboy, andthe Michelin Man was essential to building the brands. Once abrand achieves strong relevance and awareness, it serves to createlongstanding barriers to entry even when newer competitors’products are superior or much cheaper. Marlboro, for example,has successfully staved off numerous market share attacks fromcomparably tasting generic cigarettes priced at half of Marlboro’sprice. For countless brand managers, then, consistency over timehas been the hallmark of a well-managed brand.

Yet while consistency still has value, a static brand can becomedangerously irrelevant in the face of shifting customer prioritiesand changes in the competitive landscape. Burma-Shave, anadvertising icon famous for its rhyming roadside signs, disap-peared as a major brand in the 1960s with the spread of the U.S.interstate highway system, where advertising signs are prohibit-ed. But Burma-Shave’s demise also reflected the shift in brandbuilding away from advertising jingles and toward the customerexperience—for example, the ritual aspect of shaving so success-fully exploited by Gillette. Other once-powerful brands such asOldsmobile, Maxwell House, and United Airlines all suffered asharp decline because they stood still while their customers weremoving to different wants and needs.

A brand positioned around “Fly the friendly skies of United,” forinstance, worked well in the 1970s and 1980s when safety—embodied in the idea of “friendly skies”—had a high value for airtravelers. But the message had become obsolete by the early1990s, as travelers cared far more about service at the gates, bet-ter meals, and more room on the plane. Partly as a result of its

What ever happened to Burma-Shave?Pattern thinkers can outsmart brand rivals in a changing marketplace

By John Kania

and Adrian J. Slywotzky

ANTICIPATINGBrand Opportunities

What ever happened to Burma-Shave?

The dilemma: When

to abandon consistency

in favor of reinventing

the brand?

weakening brand, United’s revenues, profits, and market valuesuffered. While the airline industry as a whole experienced18 percent annual growth in market value from 1990 to 1998,United Airlines attained just 3 percent growth. Respondingbelatedly to shifting customer priorities, United has for the pastseveral years focused capital and brand-building investments onconsumer concerns such as flight schedules and seat room.Repositioning the brand for greater relevance has not been easy,however. “United Rising,” the ad campaign that replaced“Friendly Skies,” has already been replaced by one with sloganssuch as “United for a better journey.”

Although letting a brand go stale is a constant danger, brandinnovation also has its risks. In 1985, Coca-Cola’s taste testsindicated that most consumers (and particularly young people)thought Pepsi tasted better than Coke. To attract younger con-sumers, Coca-Cola chose to change its venerable secret recipe tomake the product taste better than Pepsi, and attached the newtaste to a new brand image: New Coke. The outcry against thenew product quickly taught Coca-Cola that most of its cus-tomers, even many younger drinkers, didn’t care about the actualtaste of Coke so much as about the emotional heritage of thisclassic brand. While New Coke exists today in a few regionalmarkets, it has been renamed Coke II and plays a minimal rolein Coke’s continued brand success.

So brand builders are faced with a dilemma: In a world wherebusiness models are being reevaluated and reinvented continually,when is it time to throw consistency to the winds and reinventthe brand?

Past Mercer research* has demonstrated that pattern recogni-tion—a discipline useful in such disparate fields as seismology,medicine, and chess—can help business leaders identify and cap-ture new opportunities faster than the competition. Currentresearch suggests that pattern thinking can also help to anticipatehow and when a brand must evolve.

Profit Patterns discusses thirty patterns of strategic change. Oneof these patterns is “product to brand,” in which customers,confronted with too many options and seeing too littledifferentiation, rely on brand as a proxy for quality, causing valueto flow to branded players. Beneath this broad pattern, we have

36

ANTICIPATINGBrand

Opportunities

*See Profit Patterns: 30 Ways to Anticipate and Profit from Strategic Forces ReshapingYour Business (Times Business/Random House, 1999); Mercer Management Journal,Number 11, 1999.



These eighteen patterns,arrayed by type and byincidence, describe howmarket shifts affect brandstrategy. Additional pat-terns and variants will becatalogued as theyemerge. For elaborationand examples of thesebrand patterns, visit www.profitpatterns.com.

Mega Patterns

Functional to EmotionalCustomers elevate the intan-gible benefits over productfunctionality.

Concentration to Proliferation Ascustomers demand greater productchoice at multiple price points,companies move from a singlebrand to multiple brands.

Mass to Relationship Customers’desire for tailored offerings leads togreater dialogue between companyand customer, with more attentionpaid to the many points of cus-tomer contact.

Upward Spiral Companies with themost consistent, clear messages tocustomers, employees, andinvestors realize higher shareholdervalue.

Brand Equity Patterns

De Facto Brand The first entrant ina new category benefits from tyingthe brand intrinsically to the cate-gory’s main benefit.

Desert to Candy Shop As the num-ber of choices in a category prolif-erate, customers jump to the hotbrand of the moment.

Relevance to Irrelevance Customerpriorities change, which reduces

the relevance of establishedbrand messages.

Brand Apathy to Thirst As cus-tomers become more discriminat-ing among competing products,they place a higher value on certainbrands as a guarantee of processquality.

Rare Birds to Lemmings In cate-gories with rapid change, first-mover brand positionings spawnsignificant imitation.

Delayed Trigger Business designsuccess stays ahead of brand devel-opment.

Brand Investment Patterns

Choice to Simplicity Customersdesire simplicity in selecting andpurchasing products, and the brandbecomes defined by how consis-tently it delivers convenience.

Scarcity to Ubiquity As a companyexpands its offerings across multi-ple products or channels, thebrand becomes overexposed,and equity erodes.

Branded Experience As customersexpect involvement with a product

or service, the brand begins tostand for an ongoing experience,not just a product or transaction.

Brand Target Patterns

Declining Core Brand equityremains strong, but among a small-er and smaller population.

Mainstream to Luxury As somecustomers migrate upmarket fromcore offerings, a brand is reposi-tioned to capture these higher-value customer segments.

Chasm Crossing As a company’starget consumer moves from theearly adopter to a mass audience,the brand equity evolves or isstymied.

Investor Star Courting the investorcommunity helps establish thebrand as well as raise capital.

Employee Star In businesses wherecustomer interaction with employ-ees is frequent or critical, a focuson employee understanding of thebrand promise strengthens cus-tomer loyalty.

—John Kania and Andy Pierce

Emerging

Upward Spiral

Delayed TriggerBranded

Experience Employee Star

Massto Relationships

Concentrationto Proliferation

Functionalto Emotional

Rare Birdsto Lemmings

Brand Apathyto Thirst

Relevanceto Irrelevance

Desert toCandy Shop

De Facto Brand

Scarcityto Ubiquity

Choiceto Simplicity

Investor Star

ChasmCrossing

Mainstreamto Luxury

Declining CoreTraditional

Mega Patterns Brand EquityPatterns

Brand InvestmentPatterns

Brand TargetPatterns

Inci

den

ce

Brand patterns: a catalogue of the ways brands evolve


Levi Strauss was late to

recognize what customer

heterogeneity meant for its

core brand.

recently catalogued nearly twenty specific brand patterns thathave caused value to migrate from one set of players to another(see box, previous page), and identified leading indicators ofwhen a particular pattern might emerge. Exploring three of thesepatterns in depth offers lessons for managers who must walk thefine line between dangerous irrelevance and ruinous innovation.

Concentration to Proliferation: VF sews up the jeans marketSuccessful brands are expensive to build. A typical consumermass-market brand in the United States requires tens of millionsof dollars to achieve moderate brand awareness among a targetedcustomer base. Because of these challenging economics, it oftenmakes sense for a company to concentrate its resources behindone brand.

Sometimes, though, concentrating resources on a single brandis far less effective than supporting multiple brands. Among theleading indicators that signal an environment conducive to theConcentration to Proliferation pattern are a maturing industry,growing customer heterogeneity, and increasing customersophistication.

Even when those signals are clear, it can be difficult for a compa-ny to act on this pattern, particularly when it’s the custodian of aleading brand. A case in point is the U.S. casual jeans market,where VF Corporation has stolen a march on Levi Strauss.

From the 1870s, when Levi Strauss created the first blue jeans,through the late 1980s, relatively little changed in this market.Going into the 1990s, Levi’s dominated, with almost one-thirdof jeans sales, and reinforced its position and brand equity with amajor advertising campaign behind 501 Blues. Having noticedthe expanding girth of its baby boomer customers, the companyresisted diluting the Levi’s brand and instead successfully intro-duced Dockers casual dress pants.

Several trends were converging, however, to upset the stabilityof the market and erode the value of the Levi’s brand. The U.S.population became more racially heterogeneous during the1980s, as minority populations grew twice as fast as the overallpopulation. In addition, the population of mercurial teenagersgrew almost three times as fast as the U.S. average, and teenswere also spending relatively more of their families’discretionary income.

38

ANTICIPATINGBrand

Opportunities

Many apparel retailers, Levi’s direct customers, recognized theimportance of these shifts and responded accordingly. The Gapcreated several new retail concepts, from high-end BananaRepublic to discount Old Navy. As retail options expanded,teenagers did more of their shopping at the newer specialtyshops, which didn’t carry traditional brands.

These leading indicators of change were also apparent to Levi’smain competitor, VF Corporation, based in Greensboro, N.C.VF anticipated the need to multiply its brands (see Exhibit 1).While Levi’s had modestly expanded its portfolio with thelaunch of the Dockers brand, VF in the early 1990s used its vin-tage brand, Wrangler, to spawn Wrangler Hero, Wrangler forWomen, and Wrangler Western. A few years later, VF creatednew brands such as Riders, Riveted, Pipes, and Dungarees, tar-geted at narrow niches of the teen market. The latest brand,Raylz jeans, appeals to boys under age 14 who like extremesports. This aggressive strategy resulted in VF’s share of the jeansmarket rising from 18% in 1990 to nearly 26% in 1998, primarilyat the expense of Levi’s, and strong market value growth from$1.5 billion in 1990 to $3.7 billion at the end of 1999.

By staying with a concentrated brand throughout most of the1990s, Levi’s missed a chance to tap into the irreverence for thepast displayed by young consumers. Teenagers were clearly sig-naling that Levi’s single brand was, by definition, irrelevant tothem. As late as 1998, amidst declining market shares and profitmargins, Levi’s made another effort to maintain the concentratedbrand approach with a major ad campaign that declared, “Theworld has changed much since 1873. But little has changedabout Levi’s jeans.”

By 1999, Levi’s finally recognized the lethal pattern at work andbegan to multiply its brands, creating Silver Tabs (affordable),Tabs (high end), and Red Line (elite). Imitating VF’s strategy,



Exhibit 1 VF steals amarch on Levi Strauss

Vintage 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

VF

LeviStrauss

Levi’s Slates Vintage,Tabs, Silver

Tabs, Red Line,Dockers K-1,

DockersPremium

RaylzDungareesPipesRivetedRiders

Wrangler Hero,Wrangler for Women

Wrangler WesternLee,

Wrangler

Dockers


When the target set of

customers changes, a

company must reposition

its brand.

Levi’s has also been sub-branding traditional lines such asDockers Premium and Dockers K-1. Although Levi’s has real-ized its mistakes and is attempting to connect with younger,more diverse consumers, the firm remains shackled by businessand image problems and has yet to return to profitable growth.Fortune magazine estimated that Levi’s market value had shrunkfrom $14 billion in 1996, when the company executed a lever-aged buyout, to a first quarter 1999 value of $8 billion.

Chasm Crossing: Motorola misses the callEffective brands match their market position and communica-tions with the targeted customers’ priorities. But sometimes acompany has to shift to a different set of customers, and then itmust reposition the brand.

The Chasm Crossing pattern describes a shift that many newproducts and brands experience. The name alludes to GeoffreyA. Moore’s Crossing the Chasm, a book describing the challengesthat high-tech firms face when they broaden their customer basefrom early adopters to a mass audience. Mass-market consumerscare little for technology itself, but rather for how effectively aproduct suits their everyday needs.

This challenge resonates outside the high-tech world as well, asthe pace of new product introductions has accelerated acrossmost industries. When moving from a few early adopters to amass market, a product must become easier to use, and the bene-fits associated with the brand typically must shift to being onesthat are simpler and more broadly applicable.

In the cellular phone industry, two players had the same oppor-tunity to anticipate and respond to this pattern. Motorola missedthe crossing, while an off-the-radar-screen competitor, Nokia,

40

ANTICIPATINGBrand

Opportunities

Exhibit 2 Emergenceof the mass market forcellular phone

Early adopters:value technology

Source: PC Week, Cellular Business, Wireless Week, Network World.

U.S

. Mo

bile

Ph

on

e U

sers

(M

illio

ns)

Mass-market consumers:value convenience, fashion,popularity

70

60

50

40

30

20

10

01985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

68.0

47.7

36.0

24.2

16.014.0

5.31.20.34

crossed the chasm with aplomb and built a strong brand positionthat Motorola has yet to crack.

In the late 1980s, Motorola led the world in the design and pro-duction of analog cellular phones and infrastructure. While cellphones had been sold for decades, the customer set remained rel-atively narrow—senior executives and salespeople who traveled alot. Then, between 1988 and 1991, cell phone penetrationincreased fivefold, causing industry journals to herald the comingof mass-market services. Penetration rose another fivefoldbetween 1991 and 1995, and with 10% of the population by thenusing cell phones, it was clear that a mass market had formed(see Exhibit 2).

That would have been the perfect time for Motorola to help itsbrand position evolve from being the technological and salesleader in cellular phones to one more attuned to the priorities ofa broader set of customers. Motorola made several strategic mis-takes, including the failure to recognize that the expandingworldwide infrastructure for digital transmission—which offeredbetter functionality and range than analog—needed digital hand-sets. But its brand strategy also was flawed: Motorola decided tostay with its technology-driven brand image, when most of thenew customers cared less about technology than about style andreliable coverage.

A 1996 ad from Motorola missed this point. With the headline,“Daddy fought in the war,” the ad portrayed Motorola’s richtechnology heritage in wireless radio—a fact of little relevance to



Exhibit 3 Technologicalvs. easy—a contrast inad themes


personal, non-business users. In 1999, Motorola still focused ontechnologies and features of little interest to a typical teenager orU.S. “soccer Mom.” The brand remains rooted on the earlyadopters’ side of the chasm.

Nokia, by contrast, staked out a relaxed, hip brand position earlyon, tagging its ads with the theme, “Nokia, Connecting People,”and emphasizing the product’s ease of use (see Exhibit 3). Thecompany backed up this position with the development of itsproduct, which included creating a huge palette of available col-ors and a built-in phone directory, calendar, and games. ForAsian markets, Nokia developed a more compact phone withcurved, ergonomic design, a longer operating time, Asian lan-guages interface, and special ringing melodies. Similar innova-tions strengthened the brand in marketing campaigns targetedto Hispanics and African-Americans.

While Motorola was busy developing and touting the latesttechnology, through the overused traditional branding mediumof advertising, Nokia was securing movie tie-ins, sponsoringsports events, and carving out a position in the fashion worldby hiring supermodel Nikki Taylor as a spokesperson and adver-tising in upscale trend magazines. Nokia invested heavily inadvertising, going from $2 million in media spending in 1996to $28 million by 1998. Motorola’s mass-market presence,meanwhile, had withered as media spending dropped from$20 million in 1996 to $13 million in 1998 (see Exhibit 4).

By 1998, Nokia’s mastery of the Chasm Crossing pattern hadpaid off: A decade after entering the mobile phone market,Nokia had secured a market-leading 30 percent share, whileMotorola’s share had fallen to 23 percent. Market value hadshifted as well. From 1989 to 1998, Nokia saw its market valuegrow from $1 billion to $73 billion, while Motorola’s market

42

ANTICIPATINGBrand

Opportunities

Exhibit 4 Mediaspending on cellularcommunications

Source: Leading National Advertisers.

Motorola

Nokia

Spen

din

g in

$ M

illio

ns

1994 1995 1996 1997 19980

5

10

15

20

25

30

When customers get

passionate, they’re willing

to pay a premium for the

brand that fuels their

passion.

value, which had been six times that of Nokia in 1989, was bare-ly half Nokia’s by 1998.

Branded Experience: Harley goes to H.O.G. heavenWhen did coffee cease to become coffee? When Starbucksbrought European flair to the traditional, utilitarian coffee shop.Whereas traditional brands such as Maxwell House played upthe product itself—“Good to the last drop”—the Seattle firm haspositioned its brand around the experience to which the productis central. This pattern typically unfolds when people make a“statement” by consuming the product, or when users enjoy orclosely identify with the experience created by the product. Tocapitalize on this pattern, a company must invest in, promote,and associate itself with areas that go well beyond the actualproduct. The payoff can be new ways to capture value, as prof-itable sales extend to new products and services.

Nike in athletic shoes (“Just Do It”), Home Depot in homeimprovement (“Low Prices are Just the Beginning”), and Saturnin autos (“A different kind of company. A different kind of car.”)have excelled in creating the branded experience. However, notall brands can capitalize on this pattern. Customers mustdemonstrate (or at least be capable of ) a high degree of passionabout the experience in question. Nike could exploit a brandedexperience because its initial target customers—serious ath-letes—were passionate about their sports. Parkay margarinewould be hard-pressed to do the same, because few people feelpassionate about eating toast.

In motorcycles, Harley-Davidson provides an intriguing exampleof how a flagging brand was revived by creating an intensebranded experience. In the late 1970s, Harley-Davidson fell onhard times. Due to sharply increased foreign competition, lapsesin product quality, poor relationships with its dealers, and miscal-culations in new products, Harley faced bankruptcy. Unit salesdropped from a high of 54,000 bikes in 1980 to 23,000 in 1983,and the company’s share of the U.S. heavyweight motorcyclemarket fell from over 17% to 12.5%.

Confronting this bleak situation, a handful of Harley executiveswho led a management buyout in 1981 set about to reinvent thecompany. Along with reconstructing Harley’s obsolete manufac-turing and management systems, a crucial part of their reinven-tion involved the Harley brand. As they traveled around thecountry talking with customers and dealers, it became clear to




Harley motorcycles

remain central to the Harley

brand, but the Harley

experience transcends the

product itself.

the management group that the Harley brand represented morethan just a product—it represented American romance and pres-tige. Consequently, over the past decade, the company has shift-ed its resources from focusing primarily on motorcycles to thebroader experience of riding the roads. Consider this passagefrom the 1997 annual report, aptly titled: “Have you experiencedHarley-Davidson?”:

“For every rider there are magical moments . . . ourmotorcycles exude freedom and adventure. They arethe center of a Harley lifestyle that offers riders aswell as non-riders a multitude of different ways toexperience the passion of Harley-Davidson.”

A central investment has been Harley’s sponsorship of theHarley Owners Group, or H.O.G. As the largest motorcycleclub in the world, H.O.G. organizes rallies and events that pro-mote the Harley experience to potential new customers andstrengthen the relationship between members, dealers, andHarley-Davidson employees. By 1999, H.O.G. had more than300,000 worldwide members, 900 dealer-sponsored chapters,and 70 worldwide rallies.

Harley complements H.O.G. with other non-product invest-ments such as Harley-Davidson Cafés in New York and LasVegas, the Harley-Davidson charitable foundation, motorcycleracing sponsorships, and cultivation of its “anti-Web site” thatencourages visitors to get offline and onto their Harleys. Thefirm understood the importance of its dealerships in creating theright sales experience and maintaining customers’ intimateconnection to the brand. Harley spends significant time andresources promoting dealer adherence to standards of consistencywhile still allowing dealers to create their own rebelliousidentity—the essence of the Harley brand.

Harley’s attention to branding the experience has allowed thecompany to expand the ways in which it can capture valuebeyond motorcycle sales. Harley now profitably merchandises afull line of clothing, is expanding its parts and accessories busi-ness, and offers a Harley-Davidson chrome Visa card.

Of course, the motorcycle remains central to the Harley brand,but the experience transcends the product itself. Harleymotorcycles, in most direct performance comparisons, are notsuperior to those of competitors. Yet after its near brush with

44

ANTICIPATINGBrand

Opportunities

bankruptcy in the 1980s, Harley-Davidson by 1996 enjoyed aprofit and market-value share of the industry well in excess of itsunit and revenue share; and its market value continues to grow(see Exhibits 5 and 6). In 1999, Harley outpaced Honda to takethe lead in U.S. motorcycle sales. The company accomplished allthis with virtually no advertising except the occasional owner’sHarley-Davidson tattoo.

The strategic shortcutLevi Strauss, Motorola, and Maxwell House didn’t see the earlywarning signs of change in their businesses until it was almosttoo late to respond. VF, Nokia, and Harley, by contrast, seemedto “get it,” to spot the brand patterns reshaping their industriesand capitalize on them early. In turn, investors have rewardedthem with a disproportionate share of industry value.



Exhibit 5 1996global shares of topsix motorcyclemanufacturers

Units Revenue Operating Profit Market Value

0%

20%

40%

60%

80%

100%9.6MM $14.1BB $1.2BB $16.9BB

Perc

ent

of

Tota

lBMWKawasakiSuzuki

Yamaha

Honda

HarleyDavidson1% 11% 18% 21%

Source: Annual reports; analyst reports; Harley-Davidson; 1996 MIC Retail Sales Report.

Exhibit 6 Harley-Davidson’s stockcompared with S&P500

Source: WSJ.com.

+2,000%

+1,000%

+1,000%

+500%

+0%

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

Harley

S&P 500

What ever happened to Burma-Shave?46

ANTICIPATINGBrand

Opportunities

Where are the next brand patterns about tounfold? What follows provides a glimpse of threeindustries in which we expect to see significantshifts in how brands are built—shifts that can bedescribed by patterns that have already playedout in other industries. Each example is followedby questions to help managers determinewhether the pattern might play out in theirindustries.

Bottled water: Functional to Emotional

No product is more utilitarian than water. Todate, purveyors of water have based their brandcampaigns on functional attributes such as purityand mineral content.

That may change soon. The two major marketersin beverages, Coca-Cola and Pepsi, have onlydabbled in water, concerned that lower-marginsales of water might cannibalize their profitablesoft drink businesses. Recently, however, Cokehas acknowledged that the bottled water marketis a growth opportunity in which the companymust participate. And Coke, a master of emo-tional themes, will undoubtedly use an emotionalsell in water. The Web site for Coke’s fledglingbottled water brand, Dasani, offers little on thefunctional attributes of the product, and insteadexpands on the brand’s theme of “LifeSimplified.”

How important are emotional factors vs. productfeature factors in your customer’s purchase decision?

With which brands in your industry does thecustomer have the greatest emotional connection?

If there are no emotionally driven brand positions inyour industry, what opportunities exist to create one?

Electric power: Mass to Relationships

Electric utilities have long stood for one thing tomost customers: reliable power provision. As theindustry deregulates, utilities will have to reinventtheir brands to mean different things to differentcustomer segments.

For example, residential energy plans will evolvebased on the lifecycle of each customer: Theoffering might change as a young couple ages,raises children who later move away, and thenretires. Some households will demand “green”energy from renewable sources; others will want

low-cost budget plans. Utilities thus will need totailor their brands to small segments of cus-tomers. Such mass customization, and the poten-tial for individualized relationships, already existsin industries such as cellular phones.

How much of your branding investment should go toindividual vs. mass markets?

How does segmenting your brand messagesto customers impact your brand’s overall equity?

How do you track brand connection at an individualor segment level vs. a mass level?

Internet and electronic commerce:Delayed Trigger

Most early successful Internet businesses such asAmazon.com built relevance with their core audi-ences first, then built broad-based awarenessthrough advertising later. This mirrors a patternthat has also played out in the bricks and mortarworld, where companies such as Wal-Mart andStarbucks similarly delayed the trigger on increas-ing brand awareness until loyalty was well estab-lished with core customers.

Many dot-com businesses currently are doing thereverse, advertising before they have establishedrelevance with core customers and spendingunprecedented amounts to build new brands.More than half the venture financing for manydot-com start-ups is going into brand develop-ment. E*trade, for example, spent close to$300 million on advertising in 1999.

This approach is both strategically and economi-cally unsustainable. While some dot-com brandswill build enough scale and revenue to supportongoing brand-building efforts, many others willburn through cash without having establishedcustomer relevance and will be unsuccessful atraising subsequent funding. After a shake-out,expect this pattern to again become the norm forInternet brand building.

Is your dot-com offering highly relevant with anyparticular set of customers?

What business and brand-building elements of yourdot-com business will keep customers returning?

Given the current “land grab” mentality, how manysustained dot-com brand investment efforts can yourcompany effectively support?

—John Kania

Brand patterns in action

As these cases illustrate, in today’s dynamic markets, new oppor-tunities unfold quickly and upstart competitors can appear fromnowhere. Managers need a strategic shortcut to make sense ofthe overwhelming amount of data they’re receiving about theirbrand and their business. Pattern thinking is a structured processthat helps managers glean meaning from beneath the surfacechaos, in part by learning to recognize the leading indicators ofemerging new brand patterns.

This requires a different mindset from traditional brand manage-ment, one that moves beyond a focus on advertising and market-ing to master other brand-relevant areas such as customer serviceand channel management. The process of brand positioning—currently an activity that uses snapshot analysis to position abrand in today’s environment—must become more forward look-ing. Managers must ask how relevant their brand position will bethree years from now, as the priorities of their target customerschange—or the target customers themselves change.Anticipating which brand patterns are likely to unfold givesmanagers a critical head start in crafting the next winning movesfor their brand.

John Kania is a vice president and Adrian J. Slywotzky is a vicepresident and director of Mercer Management Consulting; both arebased in Boston. Slywotzky is also the author of Value Migration,and a co-author of The Profit Zone and Profit Patterns.




Brands are enhanced or

eroded during countless

interactions between

customer and company.

The challenge is to design a

customer experience in

harmony with the brand,

then allocate investment

to the areas of greatest

potential return.

As the oil industry consolidated in the mid-1990s, Houston-based Conoco faced a major brand challenge. One of the

world’s leading energy companies and a prominent petroleumretailer in U.S. markets, Conoco saw an opportunity to accelerateprofit growth through the convenience store format. But in orderto build a powerful convenience store brand, the company knewthat it would have to break away from the generic “mart”approaches adopted by other major petroleum retailers. It alsowould need to differentiate itself from new offerings, such asupscale coffee bars, that were encroaching on the edges of theconvenience store market.

In this competitive field, creating a new convenience storebrand from scratch was a risky proposition. It would involve amixture of creative insight and a deep knowledge of customers.And it would require a broader definition of brand than was typ-ically used in the industry. Given these challenges, how wouldConoco go about building a new brand that would enhance itsbottom line?

Experience requiredFor commodity products such as gasoline, brand building tradi-tionally has focused on advertising and promotion. In today’sservice-intensive economy, however, a company’s ongoing rela-tionship with its customers can be more important. This totalcustomer experience, which often extends beyond the purchaseof a product or service, is composed of multiple “moments oftruth.” Each of these interactions to varying degrees helps buildor destroy a brand’s “equity”—that is, the sum of positive andnegative elements that drive actual customer behavior, such aspaying more for a service, remaining loyal to a product, or tryinga related product with the same brand.

How Conoco broke the convenience store mold

Building brand equity through many “moments of truth”

By Kathryn H. Feakins

and Michael Zea

DESIGNINGthe Branded Experience

4-Designing.qxd 3/6/00 9:28 PM Page 49


Brand-defining moments for customers may cluster at criticalpoints in a company’s evolution. Mergers can create confusionamong employees and customers about the new brand promise,as well as a deterioration of the customer experience (see article,page 54). And in a world where the half-lives of business designsare growing ever shorter, managers must regularly reassess whichcustomers to target and what to offer them. This analysis, too,may lead to changes in a customer’s experience and, hence, his orher perception of the brand.

Because each customer moment of truth is so important in thebuilding or destruction of a brand, advertising becomes only onebrand-building tool and may, in fact, not be used at all. Indeed,launching a new image campaign without synchronizing the cus-tomer experience to the new brand promise risks eroding thevalue of the brand (see Exhibit 1).

Conoco’s bold move In deciding to create a branded convenience store experience,Conoco had recognized that there was an opportunity to drivegasoline pump sales by other means than competing on gasolinequality or price. Drawing on its European retailing backgroundwith the Jet gasoline brand and its insight into emerging con-sumer trends, the company saw that this might be accomplishedthrough the creation of a new kind of convenience store. Conocounderstood, however, that for a new brand to flourish, the com-pany would need to design a complete customer experience thatsupported the brand. This process begins by anticipating theevolving requirements of customers.

50


Exhibit 1 In gasoline andconvenience retailing,launching a new brandimage campaign, intandem with changing thesite operations to supportthe brand, is far moreeffective than doing eitherone in isolation.

0.89

0.85

Before 3 yearslater

New brand imageonly

Effe

ctiv

enes

s

0.87

0.93

Before 3 yearslater

Improved operationsonly

0.95

1.16

Before 3 yearslater

New brand image andimproved operations

Note: Profit margin effectiveness for an average retail site, with 1.0 being the industry averageSource: Mercer Management Consulting benchmarking of over forty competitors and markets.


Conoco identified the key

customer segment as

convenience store

“connoisseurs,” who are

demanding but loyal.

Identify target customers. The first step is identifying the mostvaluable customer segments, which often are three to four timesmore profitable than the average customer. In many cases, cus-tomers in this segment will be dissatisfied with current offeringsand will be open to trying a new (or repositioned) brand thatbetter suits their needs.

Conoco’s research identified eight possible customer segmentsfor a new offering, with the key segment being convenience store“connoisseurs.” While this group represented just 18 percent ofall convenience store customers, it represented 24 percent ofgasoline sales and 33 percent of convenience store purchases.Market research showed that these customers viewed the con-venience store as a destination in its own right, and stopped inan average of 14 times a month. Eleven of those visits did notinclude a gasoline purchase, but rather entailed stopping for adrink or to pick up something the customer had forgotten at thesupermarket. And while these customers were not necessarilyaffluent, they liked to be recognized as regular customers andthus were loyal to certain stores and willing to pay a premium.

Understand their priorities. Once the target customers have beenidentified, the brand builder must develop a deep understandingof their priorities as well as their underlying economics. Thegreatest opportunity for a new brand lies where those prioritiesintersect with the company’s highest-value products and services.

Of all the customer segments that Conoco identified, the con-noisseurs were the most demanding. But Conoco’s researchindicated there was nothing that would satisfy their needs thatwould displease another segment. Their priorities included safeand efficient shopping, a familiar feeling from one store toanother, an inviting environment, and respectful, friendly service.Further cementing Conoco’s decision to create a new brand,connoisseurs didn’t think oil companies have much credibility inthe market, or that regular convenience stores necessarily sellgood gas. Clearly, the opportunity existed for Conoco to create apremium brand if it could create an experience that satisfiedthese priorities.

Determine which interactions matter. Along with understandingthe priorities of the target customer, it’s important to learn whichof their interactions with the company will have the greatesteffect on buying behavior and brand enhancement. A rigorousanalysis of what drives customer behavior will help winnow the





right investments from the wrong ones in order to funnel capitalto achieve the highest possible returns.

For example, consider the different ways in which customersexperience a bank. They may write checks through a Web site,seek mortgage counseling at a branch, or try to get problemsresolved on the phone. But all experiences may not be equallyimportant to the customer—well-trained telephone representa-tives may matter far more to customers than a jazzy Web sitedoes—and the firm’s investments should be directed accordingly.Several quantitative tools can be employed to determine whichmoments of truth matter most to customers; one particularlyeffective tool is the structural equation model (see box below).

In focus groups and consumer panels, Conoco heard customersarticulate certain product and service characteristics that woulddrive their buying behavior in a new convenience store. Many ofthose characteristics focused on neo-traditional values; forinstance, customers wanted modern amenities such as an ATM,but service delivered “the way it used to be,” with a courteousand helpful demeanor. The challenge was to translate theseresearch results into a compelling design, which, because of profittargets, could cost only 10 percent more than the existingConoco convenience stores.

52


Which elements of the customer’s experiencehave the greatest effect on brand strength? Howdoes the return on an investment in one cus-tomer interaction stack up against other invest-ments?

These questions can be answered with the helpof structural equation models, or SEMs, quantita-tive research tools that allow a company tounderstand the potential investment returns ofdifferent initiatives aimed at improving the cus-tomer experience. Conventional regression analy-sis measures the effect of multiple factors on asingle dependent variable. SEMs, by contrast,capture the relative impact of the multiple factorsthat simultaneously affect the numerous interre-lated elements of the customer experience. SEMsare run using simple, user-friendly PC softwarethat allows users to conduct “what if” analyses.For example, they can provide detailed informa-

tion about the relative return of investing inshortening a customer’s wait time on the phoneversus improving some other part of the com-plaint resolution process.

One computer company, for instance, had beendevoting substantial resources to ensuring thatthe computer arrived on the customer’s doorstepon the day promised, even if that meant that onecomponent, such as the printer, might have toarrive later. Using SEMs, the company learnedthat customers would tolerate receiving the com-puter a day or two late, but they most wantedthe package delivered complete and with everypiece functioning. The brand was being tarnishedbefore customers even used the product, andSEMs provided the evidence with which to recon-figure the delivery process in a way that wouldenhance the brand.

Assessing brand investments


Design from the ground up. Armed with a deep understanding ofcustomer priorities and which moments of truth are most impor-tant in affecting buying behavior, the brand builder is ready todesign the various elements of the customer experience so that itreinforces the brand promise and generates a healthy return oninvestment. Conoco devoted significant resources to creating anexperience that would delight its target audience, conveniencestore connoisseurs. Instead of advertising, it concentrated itsmarketing on local distribution of coupons, with the objective ofconvincing consumers to try its new store once and see first-hand how unusual and appealing the experience is. The designelements all reinforce the brand.

• Drive by. The name of the store on the sign out front isperhaps the most conspicuous branded element to thepasserby, an element that plays an important role in getting acustomer to stop in for the first time—and the 101st. Conocohad determined that the new concept it was pioneeringshould be branded with neither a typical petroleum companyname (including its own) nor a generic convenience store-sounding name. It sought a name that broke with industryconvention, yet was functional and not limiting. In tests, onename fragment customers liked was “break,” which struck apositive chord and made them think of good coffee. The



To help drive gasolinesales, Conoco chose tocreate a separate brand,breakplace, rather than ageneric convenience store“mart.” continued on page 56


Branding and M&As54


The handling of brand-related issues can make orbreak a deal. Why? Because brand moves sendmessages, intended and unintended, to the com-panies’ stakeholders. Wrong or inconsistentmoves—or, more typically, no moves at all—canconfuse customers, discourage employees, andsignal a lack of will and forethought to investors.Furthermore, the failure to sort out the combinedcompany’s brand portfolio can saddle the firmwith an unnecessarily high marketing cost struc-ture that delivers no demonstrable benefit.

Unless a company is acquiring or merging solelyto increase capacity or to gain access to a newtechnology, management will have to deal withbrand issues. For example, if a company is mak-ing an acquisition to:

• Fill out the product line, should the newofferings carry the existing brand or adifferent one?

• Expand its geographic footprint, what are therelative merits of the marketing economiesachieved through brand consolidation vs. thestrength of each brand’s local franchise?

• Augment its value proposition with newcapabilities, do the strengths of either of thepredecessor brands support the new position-ing or is a new brand required?

• Cut costs through consolidation, should one ofthe existing company names prevail or shoulda neutral name be chosen?

Mercer research has found that mergers andacquisitions in general have been getting smarter,driven increasingly by strategic reasons—such asthe diversification of products, geography, andcapabilities—rather than simple consolidation andcost-cutting. But even with the shift in focus,nearly half of all mergers are unsuccessful inshareholder value terms (see exhibit).

One of the reasons for this failure, the researchfound, is the lack of pre-deal planning aboutpost-deal management. This includes issuesinvolving brand, which creates one of the firstpost-merger impressions that customers, employ-

ees, and investors have of the combinedcompany.

Brand issues arise at three critical stages of theM&A process: screening, pre-announcement, andintegration. In our experience, addressing theright issues at the appropriate time increases thechances for a successful transaction.

Screening. Brand issues can play important rolesin the screening of potential acquisition candi-dates or merger partners. For each candidateunder consideration, managers must comparetheir brand(s) with those of their target, assessingsuch things as each brand’s equity elements andits relevance to “future-defining” customers (seepages 26-27). Then, looking across all potentialtargets, managers can ask: Which combinationswould best achieve the company’s strategicobjectives? Of these, which offer the post-combi-nation brand moves with the greatest potential?To realize that potential, should one or the otherbrand predominate? Should a new brand be cre-ated?

Branding and M&As

The risks in “getting the deal done” By Suzanne Hogan and Ken Hodge

70%60%50%40%30%20%10%0%

1980s1990s

100%

80%

60%

40%

20%

0%Consolidation Related Strategic

Diversification/Industry

Redefinition

UnrelatedDiversification

StockUnderperformedIndustry*

StockOutperformedIndustry*

* Acquirer’s 36-month post-deal return relative to industry averageSource: S&P’s Computstat, Mergers and Acquisitions magazine, andpublic data

Consolidation Related StrategicDiversification/

IndustryRedefinition

UnrelatedDiversification

In the 1990s, deals were likelier than in the past tobe driven by strategy . . .

. . . but strategic intent does not correlate with success




Thinking through these issues, particularly whensupported with quantitative analysis, is invaluablein ranking candidates. Furthermore, it provides adispassionate, fact-based framework for thepotentially emotional discussion of brand inexploratory meetings with merger partners.

Pre-announcement. Stakeholders’ first impres-sions of a potential merger or acquisition arehard to change. Within moments of anannouncement, investors will bid the share pricesup or down, the most talented employees maydust off their resumes, and competitors will startcalling on both companies’ best customers. It istherefore imperative to think through the brandimplications of the merger and develop a con-vincing brand strategy.

In this phase, management must definitivelyanswer several crucial questions. The most con-spicuous one involves the name of the combinedentity. Different approaches offer different poten-tial benefits. Creating a new name—such asCendant, which arose from the merger of HFSand CUC International—can signal both a clearbreak from the past and the seamless integrationof the two companies. Using a combined name—such as DaimlerChrysler or ExxonMobil—canleverage two brands that are powerful in differ-ent industries, geographic areas, or customer seg-ments. Retaining the name of one of the compa-nies—for example Honeywell, after its mergerwith Allied Signal—can extend the strong equityof that brand to the other company and signal adirection for the new entity. Retaining bothnames—for example, IBM and Lotus, after theLotus acquisition—can allow two strong brandsrepresenting very different cultures to flourishindependently.

Apart from the corporate name, managementmust decide which product and division brands itwill retire, which it will retain, and what invest-ments it will make in each one. Retaining existingbrands, while often having some initial appeal,particularly to the executives of a company beingacquired, can be surprisingly costly. A largehealthcare company acquired some 25 regionalfirms and retained each of the acquired brands inits local market. Although the company estimatedthat the total marketing costs for those divisionswas several million dollars, on close analysis itlearned that the amount was actually more than$100 million. The marketing efficiencies that canbe realized through a single, nationwide brandare why United Healthcare and Humana, for

example, have adopted a single-brand strategyafter acquiring several regional healthcarecompanies.

Many times, tough decisions on naming or onbrand consolidation are deferred or avoided infavor of “getting the deal done.” This can resultin cumbersome compound corporate names suchas those that have proliferated in professionalservices. Worse, it can send mixed signals to themarketplace. Brand decisions, along with facilityclosings and layoffs, are the most visible decisionsin the early stages of a business combination. Justas cost-cutting decisions are clear statements ofeconomic intent, brand decisions offer a windowon strategic intent. When that window is cloudy,stakeholders typically react quickly and negatively.

Integration. After the transaction is announced,management must quickly and flawlessly commu-nicate to each stakeholder group the rationale forthe brand strategy that has been developed dur-ing the pre-announcement period. This is particu-larly important where one or more brands maybe eliminated, which will cause concern amongemployees and customers whose emotional tieto a company was based in part on the now-absent brand.

But an explanation is not enough, particularly foremployees. Programs and processes must beimplemented to ensure that employees from bothcompanies become effective “brand ambassa-dors” for the new brand promise. For example,incentives must be reviewed and revised in lightof the new business and brand strategies.

And the brand strategy of the new business mustbe constantly monitored, with clear metricsestablished to assess the progress against brandobjectives: Are equity elements changing asintended? Are brand investments bearing fruit?

Given the need for companies to constantly rein-vent themselves in a world of rapidly changingcustomer priorities, the accelerating pace ofmergers and acquisitions across the industrialworld is likely to continue. The ability to identifymerger or acquisition targets, negotiate agree-ments, and integrate combining companies willbecome an even more important managementskill. A fundamental aspect of this skill will beunderstanding the key role brand plays at eachof these stages.


How Conoco broke the convenience store mold56


word “place” also rated high, because consumers liked tothink of having a regular destination. Putting the twotogether created “breakplace,”® a name that resonated withthe connoisseurs and stood out in a category dominated by“mart,” “quick,” “speedy,” and “stop.”

• Pull up. The external store looks nothing like the ubiquitousbox style associated with other convenience stores. A green,oval logo suggests a friendly restaurant, as does the store’sbrick, vaulted entryway, and green awnings—appropriate forsignaling what’s intended to be a destination.

• Over the threshold. Upon walking in, customers are immedi-ately engaged with pleasant sights, smells, and textures, suchas the coffee grinder at the front door, “retro” pictures on thewalls, warm wood fixtures, and corrugated metal drink cool-ers. To promote a feeling of safety, an expanse of glass win-dows lets customers see in and out of the store. A relatedinnovation is the development of a retractable curved, bullet-proof glass partition around the checkout counter, whichprovides security for cashiers during the night shift andslides into the wall during the day, allowing more personalcustomer contact.

The green, oval logo andthe vaulted entrywaysuggest a friendlydesignation.

continued from 53


• Navigation. Sub-brands in the same oval format signal thestores’ specialty areas—“coffeebreak” (a coffee bar with14 selections), “thirstbreak” (drink coolers), and “freshbreak”(displays of baked goods, fresh fruit and salads, and a delicounter). An adjacent but separate grocery area has a vaultedceiling, bright lighting, and even warehouse-style bulkmerchandise.

At a total of 3,300 square feet, breakplace is twice the size ofthe typical Conoco convenience store. But there are limits towhat breakplace offers. “We initially thought we’d give themlots of products and choices,” said Bill Gover, Conoco’s gen-eral manager of branded marketing in North America. “Butwe found that customers didn’t want it to be overloaded withextra things, such as a dry cleaner.”

• Service. The breakplace brand position demands very highexecution standards. Restrooms and floors are keptmeticulously clean. Bread is baked fresh on the premises atmany breakplace stores; sandwiches are made to order, adeparture from the prepackaged food in most conveniencestores. Old coffee is thrown out and new coffee brewed everythirty minutes, to guarantee a fresh cup. From an operationalstandpoint, these procedures cost more money, but doing



The mix of textures, fromwood to corrugated metal,give a warm, retro feel tothe stores. Sub-brandssuch as “freshbreak” signalspecialty areas.



them meets the priorities of the convenience storeconnoisseur.

Intensive training ensures that employees deliver on thebrand promise in every interaction with customers. Conocoset up a training facility, the Center for Excellence inMarketing, at its home office in Houston. Conoco’s break-place managers must complete training at this facility, whichincludes an actual breakplace store for role-playing. Conocoalso requires that each manager in the branded marketingorganization spend time in the field, working behind thecounter of a breakplace store to understand how storeemployees do their jobs.

Test, execute, and assess. Conoco minimized its investment risksby learning from a prototype store in Chattanooga, Tennessee,which opened in January 1997. The company has since rolledout 45 more stores. Dubbed in the press “Starbucks meets ware-house shopping,” breakplace has set a new standard in the con-venience store industry.

Financial results have been impressive. While the breakplace ini-tiative still contributes only a fraction of Conoco’s total revenue,both convenience store and gasoline sales have grown rapidly atbreakplace stores. In Denver, where breakplace has built a criticalmass of stores, the independent rating firm MPSI in 1998ranked breakplace as number one in effectiveness compared toother gasoline convenience store brands.

Service, pleaseDesigning a customer experience in harmony with the brand iscritical in a world where intangible services constitute a growingshare of economic value, and where firms are rewarded for mak-ing the right brand investment decisions—those that have thegreatest influence on customer behavior and thus drive return onassets and net income. Many manufacturing firms, for example,are finding new profitable positions beyond the factory gate—mastering the “downstream” environment of after-sales, value-added activities and services. Exploiting these emerging down-stream opportunities requires that a manufacturer understand thecustomer’s priorities across those activities and then design aservice experience that enhances the manufacturer’s brand.

Repositioning or extending an existing brand may be somewhattrickier than a situation such as Conoco’s, where one starts from

58


Designing a customer

experience in harmony with

the brand is critical in a

service-intensive economy.


scratch. But the principles and the basic process remain thesame. Powerful tools exist to understand and help shape the cus-tomer’s many moments of truth. Rigorous analysis can allocateinvestment to the areas of greatest potential return. And whetherrepositioning a brand or starting from scratch, employee interac-tions with customers can make or break the quality of the cus-tomer’s experience. In a crowded marketplace, designing anddelivering a compelling experience to the right customers is thesurest method of differentiating the brand in a way that gener-ates high returns and can’t easily be imitated by competitors.

Kathryn H. Feakins is a vice president of Lippincott & Marguliesbased in New York. Michael Zea is a vice president of MercerManagement Consulting based in Washington, D.C.





Employees are a critical yet

underemphasized element

in delivering the positive

customer experience neces-

sary to build a strong

brand. A strategic approach

to human capital will

enable employees to deliver

to their fullest potential.

Many companies fail to deliver on the promise that theirbrand, implicitly or explicitly, makes to customers.

Automakers promise a whole new experience in car ownership,but perpetuate the same old sales pressure and haggling at thedealership. Banks promise one-stop shopping, then require mul-tiple conversations and handoffs for different products. Airlinestout their kid-gloves treatment for business travelers, then putthem through the overbooking and lost-baggage circles of hell,with the “customer service representative” either powerless orotherwise engaged. Computer software makers promise to raiseoffice productivity, then understaff their technical support teams.

This brand “bait and switch”—the raising of customerexpectations that are then dashed—seriously erodes the powerof a brand over even short time periods. It certainly does moreharm than simply delivering an unsatisfactory experience withouthaving promised something better. Internet firms, in particular,are learning the dangers of delivering to customers an onlineexperience that falls far short of the one they expect (see article,page 68).

A brand promise can be unmasked as a hollow boast at almostany point during a customer’s experience with a company, prod-uct, or service. Each interaction represents a “moment of truth”that can enhance or erode the brand, heighten or underminecustomer loyalty, and affect business results for better or worse.

End-to-end customer management recognizes that when thecustomer needs a solution, he or she cares about the result, notthe messy process of getting there. Consumers and businesscustomers alike expect fast service, convenience, appropriatecross-selling, and solutions to their problems. And they wantconsistent treatment across all the sales channels throughwhich they interact.

Making every employee a brand managerAligning human capital strategy with brand strategy

By Carla Heaton

and Rick Guzzo


Making every employee a brand manager62

DELIVERINGon the Brand

Promise

Exhibit 1 Analysis ofcustomer “moments oftruth” in retail bankingshows how humaninteraction magnifies,both positively andnegatively, a customer’sfeelings about a brand

Delivering a seamless experience that pleases customers, howev-er, is becoming increasingly difficult. Customer satisfaction hasbeen declining in many industries for the past decade, in partbecause the bar is rising—customers have higher serviceexpectations, expanded options, more cross-industry benchmarks,and lower switching costs. At the same time, execution chal-lenges are intensifying, due to product and channel proliferation,cost pressures, heightened M&A activity, and talent scarcity inmost sectors.

Companies that succeed in this challenging environment candistinguish themselves and reap significant rewards. Becauseconsistent delivery of the brand promise tends to be costly andtime-consuming for competitors to replicate, it reinforces theability of a brand to serve as a potent source of strategic control.

The hidden jewelsBringing a well-designed customer experience to life requiresaligning every point of customer contact with the brand promise,from the storefronts to the call centers to the Web site, from thefirst contact to ongoing service interactions. The most importantfactor in creating a successful customer experience, however, is acompany’s workforce. The moments of truth involving humaninteraction often have the greatest impact on how a customerfeels about the brand (see Exhibit 1). So it is crucial forcompanies to ensure that their employees continually reinforcethe brand.

Ability toimprove

customerperception

of brand

Ability toweaken

customerperception

of brand

ProblemResolution

ReceiveStatement

or Bill

OpenAccount

ViewAdvertisement Place

AutomatedTransaction

RoutineCustomer

ServiceVisitWebSite

Involves Direct Human Contact

Source: Mercer research

A major U.S. insurance company came to this realization in theearly 1990s. The company wanted to stem attrition of auto andhomeowners insurance customers to competing brands, and italso hoped to cross-sell life insurance. Customer researchrevealed that by far the most critical driver of retention, and ulti-mately brand equity, was how customers were treated in theclaims process, in which customers interact with several employ-ees, notably their agent. That experience represents a “day ofreckoning” for a product that a customer has long been payingfor—but is only now tangibly benefiting from. Consequently, thequality of the experience has a dramatic impact on customerretention, on word-of-mouth communication about the brand,and on the insurer’s ability to cross-sell (see Exhibit 2).

Delivery on the brand’s promise may even involve employeesoutside of the organization. The brand of Furniture.com, anonline furniture retailer, is highly dependent on the experience acustomer has in selecting, ordering, and receiving merchandise.Indeed, the company’s brand hinges on the premise—andpromise—that the ease of buying a sofa without leaving theliving room will outweigh the value of testing the softness of thecushions at a showroom. The only face-to-face interaction that aFurniture.com customer has during the buying process, however,is with one of the independent truckers on contract to deliverand assemble its products. If that driver is rude, scratches walls,or has difficulty setting up the sofa, the company’s brandwill suffer.

Providing superior, consistent service across the many momentsof truth represents a major challenge. Yet despite the importanceof delivering a customer experience that supports the brand,most companies don’t understand what enables and what hinders



Bad claimsexperience

Source: Mercer research.

Good claimsexperience

Good claimsexperience

+Outstanding agent

5%

48%

60%

Cro

ss-s

ell P

ote

nti

al(S

hare

of

cust

omer

s w

ho w

ould

cons

ider

buy

ing

life

insu

ranc

e)

Exhibit 2 A U.S.property/casualtyinsurer found thatdelivering a goodclaims experience ledby an outstandingagent created a sizableadvantage in cross-selling life insurance

Consistent delivery of the

brand promise is difficult

for competitors to replicate,

reinforcing the brand as a

source of strategic control.

Making every employee a brand manager

employee effectiveness at the key moments of truth. As a result,employees often cannot deliver to their fullest potential.

Senior executives can’t simply mandate that employees supportthe brand promise. It takes a deep understanding of whatemployees value, how they experience the brand, and how theycontribute to delivering the customer experience in order to con-vert them to a new approach. Most executives acknowledge theeconomic rationale of improving employee effectiveness and therationale for improving customer loyalty. What’s not well recog-nized is that the two are linked. Employee commitment andcapability have a significant, quantifiable impact on the customerexperience, which in turn has a major impact on brand equityand shareholder value.

Barriers to delivery When human interactions undermine a company’s brand prom-ise, the problem often is not bad intentions or lack of interestamong employees. Rather, employees on the front line tend tomisunderstand the priorities implied by the promise or don’thave the wherewithal—the training, tools, time, or latitude—todeliver. They often face severe gaps between what customersexpect and what they are able to do for customers. In our experi-ence, among the most prevalent organizational barriers to deliv-ering on the brand promise are:

• Inadequate staffing and training. Clearly, employees who arepoorly trained or whose numbers are insufficient to do a jobproperly will deliver an inferior experience. This is particu-larly true if they are in a key customer-facing position. Sucha situation can occur as part of a downsizing move, whencost-cutting tends to be done across the board. Wholesalestaff cuts can destroy brand equity if they underminecustomer service or other important aspects of the customerrelationship.

Staffing and training issues have become more pressing asthe ongoing shift to a digital economy, where customersengage in transactions over the Internet, is changing the skillset required of many front-line employees. Where once theywere order-takers, increasingly employees add value by beingeffective advisors, or even advocates, for the customer. Toperform this role, they must thoroughly understand how tomobilize other parts of the organization to deliver a unifiedexperience to the customer.

64


Promise

• Inefficient business processes. Unresponsive back-office staff,departments that operate in silos, or computer systems thatdon’t mesh well tend to generate time-consuming, morale-sapping “workarounds.” Call centers at many firms, forexample, require that customers fax a change of addressto another department, because the call centers don’t havethe technology that allows customers to make the changeon the phone.

A related problem is when employees lack the authority tosolve the customer’s problems themselves. For all the buzzabout flatter hierarchies, top-down bureaucracy remainsentrenched at many organizations. Only a minority of com-panies give front-line workers appropriate leeway to exercisetheir own judgment in serving customers.

• Lack of information. Without detailed information on indi-vidual customers, accessible in real time, employees areshackled. If a customer calls with a problem, the phone rep-resentative can’t respond quickly. The single phone call, pos-sibly the only human interaction the customer has with thefirm over the course of a year, represents a source of irritationfor the customer, who must wait for a solution to his or herproblem. It also represents a missed opportunity for the cus-tomer service representative to move from solving the prob-lem to making the customer aware of other services.

• Misaligned incentives. Company cultures and reward systemsmay emphasize sales over service, or servicing as manycustomers as possible rather than solving a customer’sproblem. Many dot-com companies have taken this tackbecause their growth is outpacing their capacity to providedecent service. Another problem is poor responsiveness byback-office staff, who often have different incentives fromfront-line employees.

• Poor communications. This applies both within the companyand between employees and customers; in fact, the two areoften linked. Management sends mixed signals about thebrand promise or never articulates the standards designed toreinforce the promise. So employees feel isolated, confused,and improvise as best they can—in turn jeopardizing theirability to deliver on the promise.



Employees often face

huge gaps between what

customers expect and what

the organization empowers

them to do for customers.


An effective human capital frameworkSome of the leading brand builders have found ways to removethese barriers to delivery. They recognize that aligning humancapital practices and investments to improve the customerexperience leads to a stronger brand, more enduring customerrelationships, higher profits, and a platform for growth(see Exhibit 3).

A fact-based, scientific process is a powerful way to measure theimpact on brand equity of different customer and employeeinvestments, and then allocate finite resources to areas that willgenerate the greatest return on investment. This process shouldfirst reveal which moments of truth matter most to customers—which have the greatest impact on brand equity, and where thecompany currently falls short. It then highlights where the gapsare on the employee side, and which investments will provide thegreatest leverage. With employees, the important investments gobeyond monetary compensation. Pay may be enough to get peo-ple in the door, but it’s not enough to keep them, let alone tocreate true “brand ambassadors.”

Companies seeking to align their human capital practices andinvestments with the brand must address six interrelated areasthat together determine the kind of customer experience employ-ees deliver (see Exhibit 4):

• People—the experience and competencies of employees, andspecific policies aimed at selecting or developing them

• Processes—how the work gets done

66


Promise

Exhibit 3 Delivering thebranded customerexperience Customer

BusinessOutcomes

CustomerExperience

BrandPromise

Employee

Where to invest to motivateand enable employees to deliver

the promised customerexperience?

Where to invest to improve thecustomer experience?

Momentsof Truth

Spend

Loyalty

Referrals

• Structure—how management assigns roles andresponsibilities

• Information and knowledge—the availability and timelinessof critical business information

• Decision-making—how decisions get made that affect thecustomer

• Rewards—the motivation of people through pay and otherincentives

This model grew out of more than 300 studies that examinedhow performance is affected when a company changes itsmanagement of one or more of the six areas. The model operatesimplicitly in all businesses, often without any coherent guidingstrategy or metrics. It becomes a powerful tool when useddeliberately to develop and align the human capital strategywith the brand.

Making changes in one or two of the areas can create operationalimprovements and marginal increases in productivity. The mosteffective strategies, however, employ all six simultaneously on anintegrated rather than piecemeal basis. An integrated humancapital strategy, linking each area to a common and coherentpurpose, can create enormous value for the brand among cus-tomers and employees alike. This creates a virtuous cycle of



Exhibit 4 Human capitalshould be aligned with thebrand in six areas

Rewards• Monetary/

non-monetary• The work itself• Long/short-term• Career

progression

HumanCapital

Strategy

People• Capabilities• Experience• Training and education• Demographics

Processes• Work flows• Sequencing of activities• Division of labor• Unit (inter) dependencies

Structure• Roles and

responsibilities• Job design• Reporting

relationships andrequirements

• Goal specification• Performance

managementInformation and Knowledge• Communication mechanisms

and flows• Information exchange• Intellectual capital use/creation• Information systems

Decision-making• Vision/strategy• Decision-making

accountability• Speed and quality

of decision-making

• Participation• Decentralization


For most traditional offline companies, the next18 months will determine whether they can builda strong Internet brand. One issue facing themwill be whether to take their current brand onlineor to create a new or modified brand for theInternet. Whichever route is chosen, however,two things are clear. The current blitz of advertis-ing by dot-com companies is an inadequatemodel for those who hope to create an enduringbrand in cyberspace. And as senior managersseek to create a branded presence on theInternet, they may need to think beyond thebrand itself to the kind of branded business theywill be building.

Brand strategy will remain a powerful means ofcreating value in the next economy. Already, theInternet represents the most crowded and con-fusing marketplace the world has known. As theyalways have, brands will serve as symbolicshortcuts, helping customers make sense of acrowded market, while sustaining profits forvendors. In fact, with customers’ choices risingwhile their time and attention remain constantat best, the brand will likely play an even moreprominent role.

A window of opportunity still exists for offline“incumbent” companies to create strong onlinebrands. Although a recent Mercer ManagementConsulting survey on the subject of Internetbrand building indicates that offline companieshaven’t been successful in transferring theirbrands to the online world, the survey also sug-gests that powerful and familiar offline brandscould enjoy some advantages on the Web (seeExhibit 1). But in the “land grab” world of theInternet, in which the early mover can quicklybuild a significant lead, the window of opportuni-ty closes quickly (see Exhibit 2).

An incumbent’s dilemma

As they endeavor to build strong brands online,incumbent companies face an apparent dilemma:Should they use their existing brand, markingthemselves as a relic of the “old” economy, orshould they launch a new brand, jettisoningvaluable brand equity that took years to build?The dilemma is not as stark or simple as that, ofcourse, and that’s what makes the decision aboutonline branding particularly difficult. To help withthis decision, managers need to undertake anassessment of their brands in a number of areas:

Brand building on the Internet68


Promise

Brand building on the Internet

Retool your brand for the Web—or rethink your business? By Eric Almquist and Andy Pierce

Un

aid

ed A

war

enes

s

80%

70%

60%

50%

40%

30%

20%

10%

0%Books Brokerage

ServicesToys Travel

= Offline Company

1 Fisher Price, Mattel, Disney, etc.2 American, United, Delta, etc.Source: Mercer Internet Consumer Brand Survey.

E*tr

ade

Schw

ab

Am

eritr

ade

DLI

Dire

ct

Barn

es &

Nob

le

Bord

ers

Cha

pter

s

Am

azon

Toys

R U

s

eToy

s

Am

azon

KBT

oys

Trad

ition

al T

oy C

o.s1

Trav

eloc

ity

Pric

elin

e

Prev

iew

Tra

vel

Expe

dia

Indi

vidu

al A

irlin

es2

I use a searchengine such asYahoo!, Lycos,

or Alta Vista

42%

I use a portal,click on the

category (e.g.,books) and linkto the site from

there

5%

I go straight tothe companyWeb site byentering itsaddress

53%

Exhibit 1 In several key categories, only a few offlinecompanies have succeeded in establishing strong top-of-mind awareness online. . .

. . .but users’ willingness to go directly to companysites suggests that well-known offline brands couldenjoy some advantages on the Web.

• Current brand equity. Managers need todetermine whether their firm’s brand equity isstrong enough and has the proper attributesto support an online business. In many cases,the drivers of brand equity with offline cus-tomers may not immediately translate to anonline business. For example, Tower Records’powerful brand is defined largely by the retailexperience it creates in its stores: the informedstaff, the hip displays, the piped music, the fel-low customers who are themselves part of thescene. The challenge is to take the attributesof that offline experience and recreate themfor online customers who currently valuebrowsing ease, hassle-free ordering, andspeedy delivery.

• Types of products or services. Incumbentbrands—with their familiarity and trackrecord—are more likely to prevail with prod-ucts and services where the stakes are high forthe customer. Like catalog retailers and travelagents, online businesses typically require cus-tomers to put their money down some time inadvance of getting what they paid for.Customers take on faith not only the qualityof the product, but the speed and reliabilityof the delivery and the ease of follow-up

transactions such as returns or servicing. Thismeans that big-ticket items—cars as opposedto CDs—may benefit from a well-knownincumbent brand. Someone booking anupscale family holiday is more likely to use atrusted brand like American Express than anuntested TravelBargains.com.

• Channel conflict. For many incumbents, takingan existing brand online puts them in the posi-tion of competing with their existing saleschannels. Managers need to assess the riskof alienating these traditional partners and theopportunities for cooperation in the newonline venture. For example, when Ethan Allenfurniture decided to sell furniture directly viathe Internet, it had to contend with the inde-pendent licensees who own and manage themajority of the company’s bricks-and-mortarstores. Ethan Allen agreed to share a portionof the revenue from online sales with thestores in exchange for their accepting returnsand providing routine customer service. It alsopasses on to local stores online requests fromcustomers for personalized interior designadvice, creating opportunities for additional in-store sales.

Such an assessment may lead a company to stickwith its current brand as it moves online.Certainly incumbent brands—with their existingbrand equity and customer base—bring someadvantages to cyberspace. Indeed, despite theprice transparency of the Internet, researchersat MIT’s Sloan School of Management are findingthat many consumers would purchase from atrusted, branded online retailer even if its pricewere higher than that of a no-brand alternative.(A draft of their paper can be found athttp://ecommerce.mit.edu/papers/ude/.)

But the assessment may also point toward thecreation of a new online brand. Although build-ing a brand from scratch is no easy task, in thefast-changing world of the Internet this may insome cases be more economical than trying toreposition an offline brand. Bank One concludedit needed to create a new brand, Wingspan.com,to be relevant to online customers. In creatingBrandwise.com, appliance maker Whirlpoolreached a similar conclusion primarily for anotherreason: It didn’t want to alienate its existing net-work of dealers.

Other alternatives for incumbents include part-nering with an existing online brand, as retailerWal-Mart is doing with AOL, or creating a modi-



…Books

or

or

or

…Music

…Home Electronics

Source: Mercer Internet Consumer Preferences Survey.

“Overall, which do you feel would be the best source for…?”

1995

Year thatAmazon

entered themarket

1998

1999

Amazon Better

Companies About Equal

17% 49%

81%28%

38% 91%

Exhibit 2 In each category it has entered,Amazon.com has quickly secured significant customer“mindshare.”

Brand building on the Internet70


Promise

fied online brand, as brokerage house Schwabdid with E-Schwab before determining that itshybrid “clicks-and-mortar” business designrequired a single brand. Another “modified”brand is Kmart’s BlueLight.com, which capitalizeson one of the discount retailer’s most popularprograms—“blue light special” sales that are onlyannounced in stores—while giving the site licenseto move beyond simply selling Kmart productsonline.

The online experience

Incumbents building a brand online will findthemselves subject to the same rules andmisconceptions about brand that apply in thephysical world. The barrage of advertising thatdot-com firms have unleashed in the last sixmonths is a case in point. Although advertisingcan help to create awareness, it is less effective atbuilding the brand equity that helps to attractand retain customers. Many of these multi-milliondollar bets are huge misallocations of resources,yielding eyeballs not enthusiasts, sightseers notsupporters.

Skepticism about the quality of customer visits toa site is reflected in the fact that, while manyonline companies are spending big in traditional

media, relatively few companies, whether playersin the last economy or the next, have shownmuch interest in advertising online (see Exhibit 3).

Besides being ineffective, advertising spendingcrowds out other, potentially powerful brand-building investments aimed at enhancing thecustomer experience. Building and sustaining acompelling customer experience is particularlychallenging online. Although a company mayhave more direct control over a customer’s onlinethan offline experience, the Internet and its cur-rent technological complexity offer more oppor-tunities to destroy brand equity than to create it.Customers go to the Internet to save timethrough a hassle-free experience, so any bump inthe road—slow response times, poor navigation,inaccurate information, unresponsive customerservice, difficulty in returning items—can seriouslyweaken the brand. This is particularly true wherea massive advertising campaign has raised cus-tomer expectations that are then undermined bythe experience.

The serious consequences of failing to deliveron the brand promise is why successful Internetbrand builders, such as AOL, Yahoo! andAmazon.com, have followed what we call the“delayed trigger” brand pattern (see page 46).Before building broad-based awareness throughadvertising, these companies have designed anexperience that is relevant and attractive to theircore customers and worked out most of thebugs. Their success is proof that brand differenti-ation on the Internet will come not from convey-ing the coolest advertising message but fromdesigning and delivering the most compellingcustomer experience.

Rise of the aggregators

As incumbents wrestle with Internet brand build-ing issues, they mustn’t forget that moving onlinealso is likely to have business design implications.Many if not all companies will be affected by thenew class of powerful “aggregator” brands,which offer at a single site a variety of brandedproducts and services from different sources. Inmarkets where these brands exist, they representa potent challenge even to strong incumbentbrands seeking entrance to the online environ-ment. Where they are absent, they represent anopportunity for powerful brands to leverage theiroffline equity to seize the online advantage.Although many Internet customers still go directlyto their favorite Web sites, Internet aggregators

8

6

4

2

0

-2

-4

-6

-8

-10

Ad

vert

isin

g S

pen

din

g (

$Bill

ion

s)

Sources: Mercer analysis; Competitive Media Research; InternetAdvertising Bureau; Advertising Age; Forrester Research

1998 1999E 2000P

$1.9

$1.3

$0.6

$2.8

$3.5

($0.7)

$5.4

$7.4

($2.0)

Advertising Revenue for Internet Companies

“Balance of Trade”

Advertising Spending by Internet Companies

Exhibit 3 Internet companies’ enthusiasm foradvertising as a brand-building tool has not beenreciprocated, reflecting concerns about users drawnto Web sites by advertising alone.

are bound to emerge as an increasingly powerfulbusiness model.

In one sense, aggregators perform the samefunction as brands do: By reducing search costsand time, they serve as a shortcut to decisionmaking. That makes them, like brands, highlyvaluable to consumers. A recent Mercer surveyon the subject of Internet consumer preferencesfound that, while just 49 percent of users valuethe Internet because it saves them money,82 percent value the decision-making informationit provides and 75 percent value its time-savingbenefits. Aggregators are in the unique role ofoffering both.

The Internet aggregators are evolving much asbricks-and-mortar retailers did, building greatbrands of their own by bringing together a wideselection of branded merchandise to satisfyparticular customer needs. Out of a landscapeof small, locally owned stores in the late nine-teenth century, aggregators emerged first as mail-order catalogs and general department stores,then in the form of suburban malls. More recent-ly, there have been “category killers,” such asToys R Us and Home Depot, offering under oneroof a broad array of products in a particular cat-egory; these have been followed by “powercenters,” suburban clusters of stand-alonecategory killer stores.

Aggregator brands are evolving in a similar fash-ion online. The first generation includes portalssuch as AOL, which after building a strong brandin the mid-1990s began pursuing an aggregatorstrategy, providing a variety of content from dif-ferent sources. Recently, a slew of category killers,including Point.com (cellular phones) andDrugstore.com (health and beauty products), hasappeared online. And one early category killer,Amazon.com, is expanding beyond its categoryof books to become a portfolio of categorykillers, the virtual equivalent of a suburban“power center.”

In determining how a business will be affected bythe branded aggregator phenomenon, managersshould first determine whether they have anopportunity to build one themselves. Does some-one else already have the momentum that pre-cludes new entrants? If not, does their company’sbrand have the necessary equity to support anaggregator business? Does it have a broadenough product and service line, or will it needto partner with other firms? If everything else is

in place, are there sufficient resources to build anonline aggregator brand?

If creating a branded online aggregator doesn’tseem possible, a company should determine howit could use its brand to take advantage of some-one else’s aggregator. For example, in the mutualfund industry, a small fund family such as Januslacks the scale to challenge Fidelity or CharlesSchwab in a battle for customer awareness. ButJanus’s reputation for investment performancemay make it an attractive addition to an onlinemutual fund aggregator, countering aggregators’pressure to select funds based on the lowestdelivered price.

Conversely, in industries where no notable per-formance differentiation exists, only price willserve to win a place on the aggregator’s roster.The brand might help to secure “shelf space,”but not to sustain profitability. Again, think of theoffline retail world: The strongly branded homeelectronics companies (JVC, Panasonic, Sony,Zenith) enjoy relatively low profitability comparedto the far better economics of category killerretailers (Best Buy and Circuit City in the U.S.,Dixons in the U.K.).

New challenges

The online aggregator isn’t the only Internetphenomenon that will have an impact on a com-pany’s brand. The ChoiceboardSM model—whichallows the customer to design his own product orservice by choosing from a dynamic menu ofattributes, components, prices, and deliveryoptions—presents another opportunity for anincumbent to carve out a powerful brandedposition on the Internet.*

New types of “Shopbots” may soon roam theWeb seeking products not only with particularfeatures or with the lowest prices but also of thehighest quality; these new tools—mixing theattributes of Alta Vista and Consumer Reports—could seriously undermine the power of manyonline brands. With these and other develop-ments constantly remaking the online environ-ment, the brand builder’s imperative of regularlyassessing the relevance of and opportunities for abrand will be even more crucial on the Internet.

*See “The Age of the Choiceboard,” Adrian J. Slywotzky, HarvardBusiness Review, January-February 2000, pp. 40-41.




engaged, committed employees who deliver what customerswant, leading to higher customer satisfaction, spending, andimproved business results, which in turn makes the company amore attractive place to work and raises its status in the market-place for talent.

Putting this model to work can best be understood by looking atthe experience of two companies—Home Depot, which built itsbrand from scratch, and Continental Airlines, which successfullyrepositioned an ailing brand.

Inside Home Depot’s big orange box Home Depot, the home maintenance and renovation retailer,created one of the most successful business designs of the 1990s,with the company enjoying 42 percent combined annual marketvalue growth. Founders Arthur Blank and Bernard Marcus rec-ognized that employees were as important as products and sys-tems in delivering the company’s brand promise: “Low prices arejust the beginning.” Before Home Depot was founded, home-owners typically had to visit a number of stores for the tools andmaterials necessary to complete a project. It also was difficult tofind good advice for the entire project from stores offering prod-ucts that addressed just one aspect of the project.

Home Depot targeted the unmet needs of do-it-yourselfers seek-ing value, convenience, and advice. The chain never aspired tothe lowest price, but focused instead on being the single destina-tion store. To capture a larger share of the customer’s businessrequired generating the confidence and excitement in customersthat would encourage them to try new projects. The companyrelied heavily on its human capital to support this brand promise:

• People. Many of the employees in the stores have expertise ina building trade.

• Processes. Employees work throughout the store, not just indesignated areas. There are no aisle numbers, a feature meantto encourage employees to escort customers from plumbingto paint—raising the likelihood the customer will buy multi-ple products.

• Structure. Home Depot offers hassle-free returns, any time,for any reason. To make this happen, Home Depot has mini-mized paperwork and given employees authority even inunusual situations such as when the customer lacks a receipt.

72


Promise

There are no aisle numbers

at Home Depot, a design

feature meant to encour-

age employees to escort

customers and talk about

the project at hand.

continued from page 67

• Information and knowledge. Employees have data on all theproducts within their specialty division. The company spon-sors frequent, department-specific training on products andbuilding techniques.

• Decision-making. Senior management hammers home a keymessage in workshops, surprise store visits, and otherencounters with employees: We’re in the customer relation-ship business, not the transaction business. To deliver on thatvision, the company gives associates and managers discretionin choosing the product mix, ordering, in-store signage, andlayout.

• Rewards. Pay-for-performance plans apply to store and assis-tant managers, who can earn up to 50 percent of base pay ina bonus that’s based on improvements on historical results.

By developing a strong corporate culture around the customerexperience, Home Depot has created a powerful brand anddelivered superior financial results and shareholder value (seeExhibit 5). Wall Street has recognized these efforts. As theinvestment house BancBoston Robertson Stephens put it,“Home Depot’s associates are trained to value the customer firstand foremost, and we believe it is this essential element that hasenabled Home Depot to grow as quickly as it has and still berecognized as one of contemporary retail’s premier serviceproviders.”

Delivering a superior customer experience did not happenovernight for Home Depot, and the process requires continualvigilance, especially as a company reaches Home Depot’s current



Exhibit 5 Home Depot’sbranded experience hasproduced superior valuefor shareholders

700

600

500

400

300

200

100

01992 1993 1994 1995 1996 1997 1998 1999 2000

Ind

exed

Sh

are

Pric

e (1

992=

100)

Home Depot

S&P 500

Note: Fiscal year data.Source: Computstat.

Building SupplyRetail Index


size of nearly 200,000 employees. Arthur Blank acknowledgedrecently that Home Depot associates have been lax about escort-ing customers to the right aisle rather than simply pointingwhere to go. That’s a problem he vows to fix.

Continental soars againPerhaps even tougher than building a new brand is the challengeof turning around an ailing brand. Even a brilliant plan can bestymied by existing business processes, residual ill will amongcustomers, and creditors who are reluctant to embark on a totallynew course.

In 1990, Continental Airlines was faced with reviving itsbrand—indeed, its entire business. On the verge of bankruptcy,the airline decided to reposition itself from serving low-margin,price-sensitive “backpack and flip-flop” leisure travelers to serv-ing higher-margin, service-sensitive business travelers.

But repositioning the brand would require something more fun-damental than changing the advertising message: Continentalneeded to create an entirely new customer experience. Businesstravelers have completely different priorities from leisure travel-ers. Often under tight deadlines, they value on-time arrival,seamless service at the counter and on the phone, and rapid reso-lution of problems. Creating an advertising message that prom-ised to address these needs without doing so in practice wouldfurther erode, rather than enhance, the Continental brand.

Continental had few internal capabilities to execute the newstrategy. For years, Continental’s on-time arrivals, baggage han-dling, and customer complaints had ranked among the worst ofthe major airlines. Employee morale had plummeted, as reflectedby high absenteeism, turnover, and workers compensation claims.The customer experience, and by extension the brand, were indisarray. So what was Continental to do?

The company first embarked on a comprehensive identity andimage redesign effort—starting with intensive research amongemployees, customers, and travel agents to determine prevalentperceptions of the airline and opportunities for change. To rein-force Continental’s desired image as the airline of choice forbusiness people, all aspects of the company’s identity were totallyredesigned, including the logo, aircraft exteriors and interiors,employee uniforms, tableware, airport facilities, signage, andmarketing collateral.

74


Promise

Continental wanted to

reposition itself to serve

business travelers, but that

meant rethinking the

company’s business design

to enable employees to

create the desired customer

experience.

While these changes, implemented over several years, were acritical foundation for improving the airline’s image (in the eyesof employees as well as customers), transforming the customerexperience would require Continental to rethink the employees’role in creating that experience.

Gordon Bethune, who took the helm as CEO in 1994, recog-nized that Continental needed to develop new organizationalcapabilities to support the new brand promise targeted at busi-ness travelers. “Cash problems, reliability problems, marketingproblems ... they all have at their base the people who are doingthings that don’t make sense,” Bethune wrote in his book aboutthe turnaround, From Worst to First. Viewing employees as value-creating assets—rather than as expenses to be minimized—heunderstood that human capital changes were essential to realizethe full potential of Continental’s significant investment in iden-tity redesign.

Bethune and his management team were able to push throughan integrated plan to align and enable employees to deliver onContinental’s new promise of excellent service for the businesstraveler. The company reinvented the organization along eachdimension to reinforce the new promise:

• People: A new emphasis was put on employees being advo-cates for the Continental brand. For example, Bethune haslunch with each new class of flight attendants to communi-cate their role in the brand’s success. At least one corporateofficer sits in on the final interview of each flight attendant.

• Processes: Continental refocused employees on the customerexperience and customer service. Executives, too, began towork differently, symbolized by spending time alongsidebaggage handlers and gate agents. Executives were no longerpermitted to take vacations during peak travel times.

• Structure: The 800-page manual was ceremoniously burnedin a parking lot and replaced by an 80-page documentmailed to all employees. Employees wrote the new corporatemanual and were given broader leeway to make amends withupset customers and make operational decisions.

• Information and knowledge: Hundreds of bulletin boardsthroughout the system give a continuous update of perform-ance on key criteria. A CEO voicemail to the firm each week



The airline gave employees

far broader leeway to make

decisions and shifted the

focus from rules to

performance.


discusses the state of the company and efforts to keep opera-tions aligned with the brand strategy. Upper managementhosts a monthly open house for employees to ask questionsand give feedback. And a telephone hotline is staffed aroundthe clock to take employee suggestions.

• Decision-making: The old emphasis on individual compliancewith rules was replaced with a focus on raising overall airlineperformance—fewer late arrivals, customer complaints, lug-gage snafus, and involuntary denied boardings—and eachemployee’s contribution to that performance.

• Rewards: Employees receive a $65 bonus each month thatContinental ranks in the top three airlines for on-timeratings. This program is self-funding because of decreasingpayouts to other airlines to accommodate missed connec-tions. Perfect attendance is also rewarded by the chance towin a Ford Explorer (more than fifty have been won).Performance-based rewards were also put in place for salesand customer service employees.

Continental’s new strategy of focusing on business travelers andhelping employees to satisfy this demanding segment has beensuccessful on many fronts and over a sustained period. Employeeproductivity and retention have sharply improved, with turnoverdown 45 percent, workers compensation claims down 51 percent,and revenue per employee up 20 percent from 1994 through1998. Committed, enabled employees have driven higher cus-tomer satisfaction, as reflected in several awards by independentrating firms, including in the critical business traveler class. And

76


Promise

Exhibit 6 Continental’sturnaround

Net

Inco

me

($m

illio

ns)

Note: 1993 net income included extraordinary gains of Chapter 11 proceedings.Source: Computstat.

1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

Chapter 11reorganization

4,000

2,000

0

-2,000

-4,000

Aligning human capital

strategy with brand

strategy has one

overarching benefit:

Customer priorities end

up driving the whole

enterprise.

greater employee and customer loyalty have dropped directly tothe bottom line (see Exhibit 6). These results attest toContinental’s success in realizing the vision articulated in a strat-egy statement back in 1990: “Our success depends on our cus-tomer experiences with and perceptions of our service. We willinvest to ensure superior personal service. Our employees willhave the tools they need to achieve the status we seek.”

Connecting with customersYou can brilliantly position a brand to appeal to the most valu-able customers—today’s and tomorrow’s. You can identify thoseelements of the brand that drive customer choice. You can designa customer experience that should enhance those brand equityelements in all the interactions between customer and company.But if the entire business doesn’t deliver on the brand promisemade to customers, brand-building efforts go for naught. Andbecause such an effort hinges on the commitment and capabili-ties of employees, companies must learn to unleash the full forceof their human capital.

Developing employees into enthusiastic, knowledgeable brandambassadors is not easy to do. It requires internal marketing thatis as sophisticated as external marketing. It requires metrics thattrace and quantify the linkages between customer/employeeinteractions and the brand promise. It requires a constantreassessment of employee skills and tools so that workers areequipped to anticipate changing customer priorities and how thebrand must evolve in response.

Indeed, this approach to aligning human capital strategy withbrand strategy has one overarching benefit: Customer prioritiesend up driving the whole enterprise. The needs of key customersshape the brand promise, which in turn determines how thecompany invests in its human capital and what tasks employeesdo each day. At Home Depot, customers have suggested amajority of the items that the company eventually has stocked.The main reason for any firm to deploy technology and otherphysical assets is to enable employees to deliver a customerexperience that drives brand equity ever higher.

* * *

Human capital strategy and tactics are not usually included inmost discussions about brand building. Yet as the sum of thearticles in this issue makes clear, brand-building activities need




to be integrated into a company’s overall business strategy inorder to capture mindshare among customers, employees,and investors.

The successful brand today is embedded in every aspect of thebusiness design, starting with customer selection and movingright through to a company’s organizational systems—in particu-lar, how employees interact with customers. This integratedapproach ensures that the brand will be a powerful tool forachieving sustainable competitive advantage.

In the end, the Wedgwood imprint and the Harley-Davidsontattoo represent more than the memory of a product transaction;they celebrate a cherished experience. Achieving that visceralconnection between customer and company is the essence of asuccessful brand strategy.

Carla Heaton is a vice president of Mercer Management Consultingbased in Boston. Rick Guzzo is a principal of William M. Mercerbased in Washington, D.C.

78


Promise


Rethinking Brand Strategy

By Eric Almquist and Kenneth J. Roberts

As never before, brand management has become acrucial element of corporate strategy. In today’s clut-tered marketplace, a powerful brand creates a clearsignal that cuts through the static. It can help acompany break away from the pack in creatingshareholder value. It can protect profits from beingdiverted to competitors or to customers. But at mostcompanies, brand management is governed by anumber of serious misconceptions. Too many execu-tives believe that brands are built primarily by adver-tising, that brands are used primarily to influencecustomers, that brands can’t be quantified and ana-lyzed. Overcoming these misconceptions calls for anew approach to brand strategy, one that integratesbranding into a company’s overall business design.This approach targets a wider set of constituenciesfor the brand campaign and uses sophisticated mar-keting science tools to help make sound brand-building investments. It creates a customer experi-ence that embodies the brand across the multiple“moments of truth” that can make or break a brand.And it ensures that the entire organization, particu-larly customer-facing employees, delivers on thepromise implicit in the brand.

Assessing A Brand’s Health

By Andy Pierce and Suzanne Hogan

Different business moves—extending into new prod-uct categories, acquiring another firm, expandingonto the Internet—raise distinct brand issues. Toaddress those issues requires a deep and dispassion-

ate understanding of one’s current brand status.Without such knowledge, managers can neitheranticipate the impact a business move will have ontheir brand nor gauge the brand’s potential to drive abusiness move. A formal brand assessment thusbecomes a crucial prerequisite to most major strate-gic initiatives. Marketing science tools can determinewith precision whether and exactly how much brandmatters—or could soon matter—in a given industry.These tools also help answer a number of key ques-tions about a company’s brand: How effective is mybrand architecture? How relevant is my brand nowand likely to be in the future? Is my brand position-ing strong and consistent across all of the key audi-ences? What elements of my brand actually affectcustomer choices about my product or service? AmI making the right investments in the brand? Acomprehensive self-assessment of the brand helps toidentify areas of strength and weakness, creating abaseline of information with which to make smartdecisions about the next business and brand moves.

Anticipating Brand Opportunities

By John Kania and Adrian J. Slywotzky

A strong and longstanding brand has traditionallycreated barriers to entry even when new competitors’products were superior or cheaper. While consistencystill has value, a static brand increasingly risksbecoming irrelevant to customers’ shifting priorities.Yet brand innovation has its risks, too, as Coca-Coladiscovered when it created a new brand image withNew Coke. In a world where business models arebeing reevaluated continually, when is it time to

Executive SummariesThe new brand strategy: Are you experienced?

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reinvent the brand? Pattern recognition can helpmanagers anticipate how and when a brand mustevolve. Mercer has recently catalogued some twentyspecific brand patterns that reflect the migration ofvalue from one brand or set of brands to another. Ithas also identified leading indicators of when a par-ticular pattern might emerge. Exploring three ofthese patterns in depth—“Concentration toProliferation,” “Chasm Crossing,” and “BrandedExperience”—offers lessons for managers.Companies that spot emerging patterns and capital-ize on them early on will be rewarded with a dispro-portionate share of the brand value in an industry.

Designing the Branded Experience

By Kathryn H. Feakins and Michael Zea

For many products, brand building traditionally hasfocused on advertising and promotion. In today’sservice-intensive economy, however, a company’srelationship with its customers often extends beyondthe purchase of the physical product. Customers aremore likely to have an ongoing experience with acompany, an experience composed of multiple“moments of truth,” from negotiating a financingpackage to getting technical support or training.These interactions drive actual customer behavior—for example, paying more for a service or trying arelated product under the same brand. The relativereturn on investments in different customer interac-tions can be measured using rigorous marketing sci-ence tools. The successful effort by the U.S. petrole-um company, Conoco, to create a new conveniencestore brand provides some lessons in designing aneffective branded experience. Conoco identified itstarget customers—convenience store “connois-

seurs”—undertook a sophisticated assessment oftheir priorities, and determined which customerinteractions really mattered in building the brand.From the layout of the stores to the coffee brewedfresh every 30 minutes, every aspect of the customerexperience supports and enhances the brand.

Delivering on the Brand Promise

By Carla Heaton and Rick Guzzo

Many companies fail to deliver the great experiencethat is promised by their marketing campaign.Especially difficult is aligning the brand promise andthe human interactions between employees and cus-tomers, interactions that can bring a well-designedcustomer experience to life. In order to makeemployees effective “brand ambassadors,” managersneed to understand what employees value and howthey experience the brand. And managers need toovercome the barriers, from inefficient businessprocesses to misplaced incentives, that typicallyimpede even the most capable and committedemployees. Smart brand building involves a fact-based, scientific process to measure the impact ofdifferent employee investments on brand strength. Itemploys six organizational “levers” to align humancapital practices and investments with the brandpromise. The experiences of two companies illustratehow successful such an approach can be. HomeDepot built a successful brand by getting employeesto become involved in customers’ home renovationprojects, rather than merely selling them products.Continental Airlines revived an ailing brand by tar-geting business travelers and empowering employeesto deliver the experience that such travelers expect.

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Repenser la gestion stratégique de la

marque

Par Eric Almquist et Kenneth J. Roberts

La gestion de la marque est devenue plus que jamaisun facteur crucial de la stratégie d’entreprise. Dans lecontexte d’un marché de plus en plus saturé, unemarque forte est comme le signal lumineux d’un

phare à travers le brouillard. Une marque puissantepeut permettre à une entreprise d’être en tête dupeloton en termes de création de valeur pour l’ac-tionnaire. Elle peut empêcher la migration des pro-fits vers les concurrents ou les clients. Toutefois, dansla plupart des entreprises, la gestion de la marque estl’objet d’un certain nombre d’idées erronées. Trop de

F R A N Ç A I S

dirigeants sont convaincus qu’une marque est avanttout créée par la publicité, qu’une marque sertsurtout à influencer le client, et qu’une marque nepeut être ni quantifiée ni analysée. Pour vaincre cesidées reçues, il faut une nouvelle approche de la ges-tion stratégique des marques intégrant la notion demarque dans le business design global de l’entreprise.Cette approche cible une audience élargie pour lacampagne de communication de la marque et utilisedes outils sophistiqués de marketing conduisant àdes investissements solides dans le domaine de lamarque. Elle crée une expérience du client relative àla marque lors de tous les “moments de vérité” quipeuvent faire ou défaire une marque. Et elle assureque l’organisation tout entière, et notamment lesemployés en contact avec le client, est à la hauteurdes engagements inhérents à la marque.

Evaluer la santé d’une marque

Par Andy Pierce et Suzanne Hogan

Introduire de nouveaux types de produits, acquérirune autre entreprise ou intégrer l’Internet dans sastratégie, sont autant de décisions qui soulèvent desquestions relatives à la marque. Pour appréhender cesquestions, il est nécessaire de comprendre de façonapprofondie - et dépassionnée - l’état actuel desmarques de l’entreprise. Sans cela, les dirigeants nepeuvent pas anticiper l’impact de telle ou tellestratégie sur la marque, ni mesurer à quel point lamarque pourrait devenir un levier stratégique poten-tiel. L’évaluation préalable du capital marque devientainsi une condition impérative à la réussite de la plu-part des stratégies. Les outils de la marketing sciencepeuvent permettre de déterminer avec précision l’im-portance de la marque aujourd’hui - et à l’avenir -dans un secteur donné. Ces outils aident également àrépondre à un certain nombre de questions clés surles marques d’une entreprise : La construction demes marques est-elle pertinente ? Mes marquessont-elles adaptées au marché d’aujourd’hui et leseront-elles demain ? Mes marques sont-elles bienpositionnées de façon cohérente pour chacun desgrands segments ciblés? Quels éléments de mes mar-ques influencent réellement les choix des consomma-teurs vers mon offre ? Est-ce que je fais les bonschoix en termes d’investissement marque ? Une éval-

uation exhaustive des marques permet d’en identifierles forces et les faiblesses et de réunir des informa-tions clés pour la conception de son prochain busi-ness design et la mise en oeuvre de ses stratégies degestion de la marque.

Anticiper les opportunités liées aux marques

Par John Kania et Adrian J. Slywotzky

Une marque forte et pérenne a longtemps créé desbarrières à l’entrée d’un marché même quand lesproduits concurrentiels étaient meilleurs ou moinschers. En revanche, si la cohérence a toujours de lavaleur, une marque statique risque de plus en plus dedevenir inadaptée à l’évolution des priorités desclients. Pourtant, innover n’est pas sans risquesquand il s’agit des marques, comme l’a découvertCoca-Cola en créant une nouvelle image de marqueavec “New Coke”. Dans un univers où les modèlescommerciaux sont sans cesse réévalués, quel momentest-il le plus opportun pour réinventer une marque ?La reconnaissance des patterns peut servir auxdirigeants à anticiper comment et quand une marquedoit évoluer. Mercer Management Consulting arécemment catalogué une vingtaine de patterns spé-cifiques aux marques qui reflètent la migration de lavaleur d’une marque - ou d’une série de marques -vers une autre. Les indicateurs clés pour déterminerquand un pattern donné est susceptible d’apparaîtreont également été identifiés. Les dirigeants peuventtirer des leçons de l’étude approfondie de certains deces patterns, notamment : “De la concentration versla prolifération » et “L’expérience marque”. Lesentreprises qui savent identifier et capitaliser avantles autres sur les patterns émergents se verrontattribuer une part disproportionnée de la valeur desmarques dans leur secteur.

Concevoir l’expérience marque

Par Kathryn H. Feakins et Michael Zea

Pour de nombreux produits, la construction d’unemarque s’est longtemps focalisée sur la publicité et lacommunication. Cependant, dans le contexteéconomique actuel très axé sur le service, la relationd’une entreprise avec ses clients s’étend souvent au-delà de l’achat du produit lui-même. Les clients sontplus susceptibles d’avoir une expérience prolongée


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avec une entreprise, c’est-à-dire, une expériencecomposée de plusieurs “moments de vérité”, allant dela négociation d’un financement à l’obtention d’assis-tance ou de formation. Ces interactions sont les vraisleviers du comportement du client qui condition-nent, par exemple, sa volonté de payer plus cher unservice donné ou d’essayer un produit de la mêmemarque. Le rendement relatif des investissementsdans différents types d’interactions client peut êtremesuré à l’aide d’outils marketing rigoureux. Desleçons intéressantes sur la conception efficace d’uneexpérience de marque peuvent être tirées de la réus-site des efforts de Conoco, une société pétrolière,pour créer une nouvelle marque de petites boutiquesde distribution, « convenience stores », aux Etats-Unis. Après avoir identifié ses clients cibles, c’est àdire, les « connaisseurs » de ce type de magasin,Conoco a réalisé une évaluation sophistiquée de leurspriorités et a identifié lesquelles étaient vraimentprioritaires pour bâtir la marque. Ainsi, de la disposi-tion des magasins au café frais préparé toutes lestrente minutes, la marque est valorisée et renforcéepar chaque aspect de l’expérience client.

Respecter la promesse de la marque

Par Carla Heaton et Rick Guzzo

De nombreuses entreprises ne parviennent pas àdonner à leurs clients l’expérience merveilleusequ’elles leur promettent à travers leurs campagnes de

marketing. Il est particulièrement difficile d’alignerl’engagement de la marque et la totalité des échangesentre les employés et les clients de l’entreprise, alorsque ce sont justement ces interactions qui permet-tent de faire vivre une expérience client bien conçue.Pour transformer les employés en « champions de lamarque » efficaces, les dirigeants doivent comprendrece que les employés valorisent et quelle est leur pro-pre expérience de la marque. Ils doivent modifiertout ce qui peut freiner même les employés les pluscompétents et motivés, qu’il s’agisse de processuscommerciaux inefficaces ou de systèmes d’incitationinadaptés. La bonne construction d’une marquerequiert un processus scientifique, et fondé sur lesfaits, destiné à mesurer l’impact des différentsinvestissements relatifs aux employés sur la force dela marque. Ce processus implique six « leviers » d’or-ganisation conçus pour aligner les pratiques deressources humaines et d’investissement avec lapromesse de la marque. Les expériences de deuxsociétés illustrent clairement la force potentielled’une telle approche. Home Depot a construit unemarque forte en persuadant ses employés de s’impli-quer réellement dans les projets de bricolage desclients au lieu de se contenter simplement de leurvendre des produits. Continental Airlines a revitaliséune marque en difficulté en ciblant les voyageursd’affaires et en responsabilisant les employés quirépondaient aux attentes de ce type de voyageur.


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D E U T S C H

Markenstrategien im Wandel

von Eric Almquist und Kenneth J. Roberts

Effektives Markenmanagement ist heute einwesentlicher Bestandteil jeder erfolgsorientiertenUnternehmensstrategie. Ziel dieser Strategie muß essein, auf dem „vielbevölkerten, geräuschintensiven“Markt mit einem unüberhörbaren Signal durch dieGeräuschkulisse zu dringen, sich von der Masseabzuheben und so den Unternehmenswert zusteigern. Eine wirkungsvolle Markendifferenzierungist darüber hinaus ein probates Mittel, um dafür zusorgen, daß die zu erzielenden Gewinne nicht von

Konkurrenten oder Abnehmern vereinnahmt wer-den. Dennoch gehen viele Markenmanager vonfalschen Vorstellungen aus und lassen sich nochimmer von der Überzeugung leiten, daß man einestarke Markenpersönlichkeit in erster Linie durchWerbung aufbaut, daß sich dadurch vornehmlichEinfluß auf den Kunden ausüben und daß sich eineMarke weder quantifizieren noch analysieren läßt.Um diese Mißverständnisse auszuräumen, muß dasUnternehmen seine Marketingstrategie revidierenund das Markenmanagement als festen Bestandteilim übergeordneten Business Design verankern. Als

Folge dieses neuen Strategieverständnisses erweitertes das Zielgruppenspektrum der Markenkampagneund bedient sich ausgefeilter wissenschaftlicherMarketinginstrumentarien. Die für die erfolgreicheEtablierung einer Marke notwendigen Investitionenwerden dadurch erst nachvollziehbar. EffektivesMarkenmanagement setzt auf den FaktorMarkenbindung, der darüber entscheidet, ob derKunde auch in den zahlreichen „Stunden derWahrheit“, die über Wohl und Wehe einer Markeentscheiden, seiner Marke treu bleibt oder nicht.Außerdem wird dadurch das Gesamtunternehmen—und insbesondere jeder Mitarbeiter mitKundenkontakt - verpflichtet, das mit der Markevermittelte Nutzenversprechen tatsächlicheinzuhalten.

Wie gesund ist meine Marke?

von Andy Pierce und Suzanne Hogan

Geschäftspolitische Entscheidungen, wie dieEinführung neuer Produktlinien, die Übernahmeeines anderen Unternehmens oder dieDigitalisierung durch den Einstieg ins Internet,nehmen zwangsläufig Einfluß auf spezifischeAspekte der Marken- und/oder Marketingpolitik.Eine gründliche und objektive Analyse des jeweili-gen Markenzustands ist deshalb die unerläßlicheVoraussetzung für eine vorausschauende strategischePlanung. Der Markenmanager muß im Vorfeld ein-schätzen können, wie sich eine bestimmteEntscheidung auf die Marke auswirken wird bzw.inwieweit ein bestimmtes Markenpotentialunternehmerische Entscheidungen anstoßen kann.Ein effektives strategisches Management baut daherzwangsläufig auf der formellen Beurteilung desaktuellen „Gesundheitszustands“ der Marke auf. DieMarketingwissenschaft verfügt über fundierteInstrumentarien, mit deren Hilfe relativ präziseeingeschätzt werden kann, ob und wie bedeutsameine Marke innerhalb einer speziellen Branche tat-sächlich ist—bzw. in Kürze sein wird. Darüber hi-naus bedienen sich die Unternehmen dieserWerkzeuge, um Antworten auf die für denlangfristigen Geschäftserfolg entscheidendenKernfragen in puncto Markengesundheit zu finden:Verfügen wir über eine effektive Markenarchitektur?

Wie wichtig ist die Markenpersönlichkeit jetzt, undwie wichtig wird sie in der Zukunft sein? Ist unseine einheitliche Markendarstellung in bezug auf allewichtigen Zielgruppen gelungen? WelcheMarkenmerkmale sind im Hinblick auf unsereProdukte und Serviceleistungen tatsächlich für dieKaufentscheidung des Kunden ausschlaggebend?Machen unsere Investitionen in diesem Bereichüberhaupt Sinn? Diese Fragen sind Teil derSelbsteinschätzung eines Unternehmens, was seineStärken und Schwächen im Markenmanagementanbelangt. Ziel und Zweck dieser Methode ist dieSchaffung eines Informationspools, der alsVergleichsbasis bei Entscheidungen zur Marken-und Geschäftspolitik herangezogen werden kann.

Markenchancen erkennen und nutzen

von John Kania und Adrian J. Slywotzky

Eine bekannte und seit langem etablierte Marke istselbst für die unter Umständen qualitativ höherwer-tigen oder günstigeren Produkte vonKonkurrenzunternehmen oftmals eine schierunüberwindliche Marktzutrittsschranke. Kontinuitäthat für viele Kunden bei ihrer Kaufentscheidungzwar noch immer Gewicht, aber eine statischeMarke läuft zunehmend Gefahr, von denKundenprioritäten abgehängt zu werden.Andererseits hat z.B. der gescheiterte Versuch vonCoca-Cola, sich mit New Coke ein neuesMarkenimage aufzubauen, aufgezeigt, daß auchInnovationen Risiken bergen. In einer von Wandelund Vielfalt geprägten globalenWettbewerbsstruktur wird jedes Business Designimmer wieder hinterfragt und auf seine Effektivitätund Effizienz hin abgeklopft. Angesichts der rasan-ten Entwicklungen am Weltmarkt kommt es auf denrichtigen Zeitpunkt an, um eine bereits eingeführteMarke wieder „neu zu erfinden“. Das Erkennen vonrepetitiven Mustern ist hierbei ein wichtigesHilfsmittel. Mercer Management Consulting haterst kürzlich etwa zwanzig verschiedeneMarkenmuster—brand patterns - katalogisiert, umdie Wertverlagerung von einer Marke zur anderen zuverdeutlichen. Außerdem identifizierte Mercerwesentliche Indikatoren, die auf sich herausbildendeMuster frühzeitig hinweisen. Eine interessante und


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informative Lektüre für jeden Markenmanager sindhierbei die detaillierten Analyseergebnisse von dreiidentifizierten Markenmustern: „Von derKonzentration zur Expansion“—„Brückenschlag“—„Markenerlebnis“. Durch eine frühzeitigeMustererkennung und die geschickte Nutzung diesesZeitvorteils kann sich ein Unternehmen ein größeresStück des Markenkuchens innerhalb einer be-stimmten Branche sichern.

Wie ein Markenerlebnis entsteht

von Kathryn H. Feakins und Michael Zea

Für viele Produkte galten Werbung undVerkaufsförderung lange Zeit als die traditionellenWerkzeuge für den Aufbau einer neuen Marke. Inder heutigen Dienstleistungsgesellschaft geht jedochdie Geschäftsverbindung zwischen Kunde undUnternehmen oftmals über den Kauf des physischenProdukts hinaus. Der Kunde tendiert heute stärkerzu einer langfristigen Geschäftsbeziehung, die voneinem Finanzierungspaket bis hin zu Support undSchulung reicht und vielfältige „Stunden derWahrheit“ durchläuft. Der Erfolg oder Mißerfolgdieser Interaktionen bestimmt das weitereKundenverhalten. Hier entscheidet sich, ob derKunde gewillt ist, einen höheren Preis für eineServiceleistung zu akzeptieren oder ein ähnlichesProdukt derselben Marke zu testen. Mit Hilfestrenger marketingwissenschaftlicher Kriterien läßtsich die relative Investitionsrentabilität verschiedenerInteraktionen bewerten. So hat die US-Mineralölgesellschaft Conoco durch die Einführungeiner erfolgreichen Marke für die von ihr betriebe-nen Convenience Stores gezeigt, wie ein wirksamesMarkenerlebnis entsteht. Conoco hat zunächst diePersonengruppe definiert, an die sich ihr Angebotprimär richtet—an die „Connaisseurs“, die gernesolche Convenience Stores aufsuchen –, dann derenPrioritäten mittels einer ausgefeiltenBewertungstechnik eruiert und schließlich festgelegt,welche Interaktionen mit dem Kunden für dieMarkenetablierung tatsächlich von Bedeutung sind.Vom Architekturdesign des Ladens bis zum alle 30Minuten frisch aufgebrühten Kaffee—jeder einzelneAspekt trug entscheidend zum Gelingen desMarkenerlebnisses bei.

Vom Umgang mit dem Markenversprechen

von Carla Heaton und Rick Guzzo

Viele Unternehmen können nicht halten, was ihreMarketingkampagne verspricht. Außerdem erweistes sich oft als besonders schwierig, dasMarkenversprechen einerseits und dieWechselbeziehung zwischen Mitarbeitern undKunden andererseits in Einklang zu bringen. Obeine Marke zum Verkaufsschlager avanciert odernicht, hängt neben der sorgfältigenMarkengestaltung eben auch von der ge- odermißglückten Interaktion zwischen Mitarbeiter undKunde ab. Versierte Markenmanager versuchendeshalb zu verstehen, was ihren Mitarbeitern wichtigist und was sie selbst von der Marke halten, die sieverkaufen sollen. So werden aus Mitarbeitern erfolg-reiche „Markenweggefährten“. Außerdem gilt es,ineffiziente Geschäftsprozesse und falsch gesetzteAnreize abzubauen, die als typischeMotivationshemmer auch den besten undengagiertesten Mitarbeiter auf Dauer entmutigen.Zur geschickten Markenetablierung gehört ein aufTatsachen basierendes, wissenschaftlichesBewertungsmodell, mit dessen Hilfe sich präziseAngaben zum Einfluß der verschiedenen investivenMaßnahmen im Personalbereich auf denMarkenerfolg machen lassen. Dieses Modell bedientsich sechs organisatorischer „Hebel“, die eineVerknüpfung des Markenversprechens mitentsprechenden personalpolitischen Maßnahmenund Investitionen zum Ziel haben. ZweiUnternehmen haben bewiesen, daß dieses innovativeKonzept funktioniert: Die amerikanischeBaumarktkette Home Depot legt ihre Mitarbeiternicht einseitig auf den bloßen Verkauf einesProdukts fest, sondern bindet sie vielmehr in dieRenovierungs- und Umbauprojekte ihrer Kundenein. Und der US-Fluggesellschaft ContinentalAirlines ist es gelungen, ihrer etwas flügellahmenMarke neuen Auftrieb zu geben, indem sie ihrenMitarbeitern mehr Handlungsspielraum bei denServiceleistungen für Geschäftsreisende einräumtund dadurch die Markenidentifikation sowohl beider Zielgruppe als auch bei den Mitarbeitern stärkt.


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E S P A Ñ O L


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Replantearse la estrategia de marca

Por Eric Almquist y Kenneth J. Roberts

Nunca antes la gestión de marca había sido un ele-mento tan crucial de la estrategia empresarial. En elsaturado mercado de hoy día, una marca poderosaemite una señal clara que acalla las demás. La marcapuede ayudar a una empresa a destacar de la masacreando valor para los accionistas y puede impedirque los beneficios se desvíen hacia a la competenciao hacia los clientes. Sin embargo, en la mayoría deempresas, la gestión de marcas se rige por una seriede graves conceptos erróneos. Muchos directivoscreen que las marcas se crean principalmente medi-ante la publicidad, que se emplean sobre todo parainfluir en los clientes y que no pueden cuantificarseni analizarse. Superar estos conceptos erróneosimplica desarrollar un nuevo planteamiento deestrategia de marca que integre la creación de marcasen el diseño de negocio de la empresa. Esteplanteamiento tiene por objetivo un conjunto másamplia áreas en el desarrollo de la campaña de marcay emplea sofisticadas herramientas de marketingpara ayudar a realizar inversiones acertadas encreación de marca. Ésto origina una experiencia decliente que muestra la marca en todos los “momen-tos críticos” que pueden crear o destruir una marca,asegurando que toda la organización, especialmentelos empleados que atienden a los clientes, cumple lapromesa implícita en la marca.

Evaluar la salud de una marca

Por Andy Pierce y Suzanne Hogan

Las diferentes medidas comerciales (entrar en nuevascategorías de producto, adquirir otra empresa,expandirse a través de Internet) plantean cuestionesde marca diferenciadas. Abordar estas cuestionesexige una comprensión profunda y objetiva del esta-do actual de la marca propia. Sin este conocimiento,los directivos no pueden prever el efecto que unamedida comercial tendrá en su marca ni medir elpotencial de ésta para impulsar una iniciativa comer-cial. Una evaluación seria de la marca se convierte asíen un requisito esencial para la mayoría de las inicia-tivas estratégicas principales. Las herramientas demarketing pueden determinar con precisión la

importancia, si la tuvieran o pudieran tenerla en unfuturo, de los asuntos de marca en un sector deter-minado. Estas herramientas también pueden ayudara responder a una serie de preguntas clave sobre lamarca de una empresa: ¿Hasta qué punto es eficazmi arquitectura de marca? ¿Qué importancia tienemi marca ahora? ¿Cuál será su importancia en elfuturo? ¿Se está posicionando mi marca de manerafirme y consistente en todos los ámbitos clave? ¿Quéelementos de mi marca inciden realmente en laselecciones del cliente respecto a mi producto o servi-cio? ¿Estoy invirtiendo correctamente en mi marca?Una autoevaluación exhaustiva de marca ayuda aidentificar los puntos fuertes y débiles y a establecercon ello una base de información para tomar deci-siones inteligentes sobre las próximas medidas com-erciales y de marca.

Prever oportunidades de marca

Por John Kania y Adrian J. Slywotzky

Las marcas fuertes y consolidadas han creado tradi-cionalmente barreras de entrada incluso cuando losnuevos productos de la competencia eran superioreso más baratos. Aunque la coherencia sigue siendoimportante, las marcas estáticas se arriesgan cada vezmás a perder su relevancia ante las prioridades cam-biantes de los clientes. Aun así, la innovación demarca también tiene sus riesgos, como descubrióCoca-Cola cuando creó una nueva imagen de marcacon la Nueva Cola. En un mundo donde los mode-los comerciales se reevalúan constantemente, ¿cuál esel momento oportuno para reinventar la marca? Elreconocimiento de modelos puede ayudar a losdirectivos a prever cómo y cuándo debe evolucionaruna marca. Mercer ha catalogado recientementeunos veinte modelos concretos de marca que reflejanla emigración del valor de una marca o conjunto demarcas a otra. Asimismo, ha identificado los indi-cadores principales del momento en que podría sur-gir un modelo determinado. Para los directivospodría resultar interesante explorar a fondo estos tresmodelos (“Concentración frente a Proliferación,”“Cruce del Abismo,” y “Experiencia de MarcaCreada”). Las empresas que divisan modelos emer-gentes y les sacan partido con anticipación se verán

recompensadas con una cuota desmesurada de valorde marca en un sector.

Diseñar la Experiencia de Marca Creada

Por Kathryn H. Feakins y Michael Zea

Para muchos productos, la creación de marca tradi-cionalmente se ha centrado en la publicidad y laspromociones. No obstante, en la economía basadafundamentalmente en los servicios de hoy día, larelación de una empresa con sus clientes a menudotrasciende de la simple compra del producto físico.Los clientes son más susceptibles de tener una expe-riencia continua con una empresa, una experienciacompuesta de múltiples “momentos críticos”, desdenegociar un paquete financiero hasta recibir asisten-cia técnica o formación. Estas interacciones dirigenel comportamiento real del cliente, por ejemplo,pagar más por un servicio o probar un producto rela-cionado con éste y de la misma marca. La rentabili-dad relativa de las inversiones en diferentes interac-ciones con clientes puede medirse usando rigurosasherramientas de marketing. El esfuerzo que realizócon éxito Conoco, la compañía petrolera esta-dounidense, para crear una nueva marca de superme-rcados de barrio debería servir de ejemplo sobrecómo diseñar una experiencia eficaz de marca creada.Conoco identificó a sus clientes objetivo (“expertos”en este tipo de tiendas), llevó a cabo una complejaevaluación de sus prioridades y determinó las inter-acciones con clientes que realmente importaban paracrear la marca. Desde el diseño de las tiendas hastauna máquina que prepara café cada 30 minutos, cadauno de los aspectos de la experiencia del clientesostiene y mejora la marca.

Cumplir la promesa de marca

Por Carla Heaton y Rick Guzzo

Muchas empresas no logran ofrecer la gran experien-cia que prometen en su campaña de marketing. Enespecial, resulta difícil alinear la promesa de marca ylas interacciones humanas entre los empleados y losclientes, interacciones que pueden lograr materializaruna experiencia de cliente bien diseñada. Para hacerque los empleados sean unos “transmisores de marca”eficaces, los directivos deben saber qué valoran losempleados y cómo experimentan la marca.Asimismo, deben superar las barreras: desde procesoscomerciales ineficaces a incentivos mal asignados,que normalmente desaniman incluso a los empleadosmás competentes y comprometidos. La creación demarca inteligente implica un proceso científico,empírico, que consiste en medir el efecto que tieneen la fortaleza de la marca la inversión realizada enlos empleados. Este proceso emplea seis “palancas”organizativas para alinear las prácticas de capitalhumano y las inversiones con la promesa de marca.Las experiencias de dos empresas ilustran lo satisfac-torio que este planteamiento puede ser. Home Depotcreó una marca de éxito haciendo que sus empleadosse implicasen en proyectos de reformas del hogarsolicitados por clientes, en vez de simplementevenderles productos. Continental Airlines revivióuna marca en decadencia orientándola a las personasque viajan por motivos de negocios y autorizando alos empleados a ofrecer la experiencia que esos via-jeros esperan.


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Repensar a Estratégia de Marcas

Por Eric Almquist e Kenneth J. Roberts

Agora e como nunca, a gestão de marcas tornou-senum elemento crucial da estratégia das empresas. Nomercado desordenado de hoje, uma marca poderosaemite um sinal claro que sobressai na confusão. Podeajudar uma empresa a diferenciar-se das restantes nacriação de valor accionista. Pode ainda impedir que

os lucros sejam desviados para os competidores oupara os clientes. No entanto, na maioria das empre-sas, a gestão de marcas é dirigida por uma série defalácias. Um elevado número de executivos têm aopinião que as marcas são em grande parte construí-das através da publicidade, que são usadas para influ-enciar os clientes e que não podem ser quantificadasnem analisadas. Para ultrapassar estas falacias é

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necessária a utilização de uma nova abordagem àestratégia de marcas, que integre a gestão de marcasno modelo geral de negócio da empresa. Esta abor-dagem recorre a um conjunto mais alargado de ele-mentos da gestão de marcas e utiliza sofisticadas fer-ramentas de marketing para ajudar as empresas arealizarem investimentos sólidos no desenvolvimentoda marca. Cria uma experiência para os clientes quepersonifica a marca nos vários “momentos da ver-dade” que se podem traduzir no sucesso ou no fra-casso de uma marca. Adicionalmente, assegura quetoda a organização - particularmente os empregadosque contactam com os clientes - forneçam o serviçode acordo com a promessa implícita na marca.

Avaliando a Solidez de uma Marca

Por Andy Pierce e Suzanne Hogan

Diferentes iniciativas de negócio—expandir-se paranovas categorias de produto, adquirir outra empresa,entrar para a Internet—suscitam questões distintasrelacionadas com a gestão de marcas. A abordagemdessas questões requer um entendimento profundo eimparcial do estado da sua própria marca. Sem esteconhecimento, os gestores não poderão antecipar oimpacto que uma iniciativa de negócio poderá ter nasua marca nem avaliar o potencial da marca emincentivar essa iniciativa. Assim, uma avaliação for-mal da marca é um pré-requisito crucial na maioriadas grandes iniciativas estratégicas. As ferramentasde marketing podem determinar com precisão se amarca tem importância—ou se poderá vir a serimportante—e o grau exacto dessa importância numdado sector. Estas ferramentas ajudam também aresponder a uma série de perguntas chave sobre amarca de uma empresa: Qual a eficácia da minhaarquitectura de marca? Qual a relevância da marcahoje e no futuro? O posicionamento da marca daminha empresa é forte e consistente para todas asaudiências chave? Quais os elementos da minhamarca que realmente afectam a escolha dos clientesnos meus produtos ou serviços? Estarei a realizar osinvestimentos certos na marca? Uma auto-avaliaçãoextensiva da marca ajuda os gestores a identificar asáreas de vantagem e desvantagem, através do desen-volvimento de informação de base com a qual

poderão tomar decisões acertadas sobre posterioresiniciativas de negócio e de marca.

Antecipando as Oportunidades de Gestão da

Marca

Por John Kania e Adrian J. Slywotzky

Tradicionalmente, uma marca forte e com uma longaexistência cria barreiras à entrada de competidores,mesmo que estes possuam produtos superiores oumais baratos. Embora a consistência ainda tenhavalor, uma marca estática corre, cada vez mais, orisco de se tornar irrelevante face à mudança das pri-oridades dos clientes. Contudo, a inovação das mar-cas tem igualmente os seus riscos, como descobriu aCoca-Cola quando criou uma nova imagem demarca com a New Coke. Num mundo onde os mod-elos de negócio estão em constante reavaliação, qualserá a altura certa para reinventar uma marca? Oreconhecimento de padrões pode ajudar os gestores aantecipar a forma e o momento em que uma marcadeve evoluir. A Mercer catalogou, recentemente,cerca de vinte padrões específicos das marcas quereflectem a migração de valor de uma marca ou deum conjunto de marcas para outra(s). Identificouigualmente os principais indicadores que nos levam areconhecer quando é que um determinado padrãopoderá emergir. A análise em profundidade de trêsdestes padrões—“Concentration to Proliferation,”“Chasm Crossing,” e “Branded Experience”—fre-quentemente proporciona lições para os gestores. Asempresas que identificam padrões emergentes e quedesde o início os capitalizam serão recompensadascom uma desproporcionada quota de valor de marcano seu sector.

Desenhando a “Branded Experience”

Por Kathryn H. Feakins e Michael Zea

Para muitos produtos, a construção de marcas tem-sefocalizado tradicionalmente na publicidade e na pro-moção. Contudo, na actual economia intensiva emserviços, a relação de uma empresa com os seusclientes ultrapassa frequentemente a mera compra deum produto físico. É mais provável que os clientestenham uma experiência contínua com uma empresa,uma experiência composta de múltiplos “momentosda verdade”, desde a negociação de um pacote finan-


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ceiro à obtenção de suporte técnico ou formação.Estas interacções determinam o comportamentoefectivo dos clientes—por exemplo, pagar mais porum serviço ou experimentar um produto relacionadopertencente à mesma marca. O retorno relativo dosinvestimentos nas diferentes interacções com osclientes pode ser medido através de ferramentas demarketing rigorosas. O êxito do esforço da Conoco,a companhia petrolífera norte-americana, na criaçãode uma nova marca de lojas de conveniência propor-ciona algumas lições no desenho eficaz de uma“branded experience”. A Conoco identificou os seusclientes alvo—“conhecedores” de lojas de conveniên-cia—realizou uma sofisticada avaliação das suas pri-oridades e determinou as interacções com os clientesque eram realmente importantes na construção deuma marca. Desde o “layout” das lojas ao pormenordo café feito de fresco de meia em meia hora, todosos aspectos da experiência do cliente suportam ebeneficiam a marca.

Cumprir a Promessa feita pela Marca

Por Carla Heaton e Rick Guzzo

Muitas empresas não proporcionam a experiênciaagradável que prometem nas suas campanhas demarketing. Particularmente difícil é alinhar apromessa da marca com interacções humanas entre

os empregados e os clientes. Estas interacções podemdar vida a uma “experiência para os clientes” bemconcebida. Para transformar os empregados em “rep-resentantes da marca” eficazes, é necessário que osgestores percebam o que é que os empregados val-orizam e qual a sua percepção relativamente à marca.Além disso, os gestores têm de ultrapassar as bar-reiras, desde processos de negócio ineficientes aincentivos desalinhados, que tipicamente desencora-jam até o empregado mais qualificado e empenhado.Uma construção inteligente da marca envolveprocessos científicos baseados em factos para medir oimpacto dos diferentes investimentos efectuados nosempregados e na força da marca. Emprega seis “ala-vancas” organizacionais para alinhar as práticas e oinvestimento no capital humano com a promessa damarca. As experiências de duas empresas ilustrambem o sucesso que uma tal abordagem pode ter. AHome Depot construiu uma marca de sucesso con-seguindo que os seus empregados se envolvessem nosprojectos de renovação de casas dos clientes em lugarde apenas lhes venderem os produtos. A ContinentalAirlines reanimou uma marca em declínio, através daorientação para passageiros de negócios e da pas-sagem para os seus empregados do poder de propor-cionar a experiência que estes passageiros esperam.


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Documents

Marketing Branding - Brand Strategy - Are You Experienced (Mercer Management Journal) - 2000