Issues of Modern Brand Management

Almost three-quarters of the leading brands from as long as thirty years ago were still market leaders in 2001 according to speakers at this year's GfK annual conference on issues of modern brand management held recently in Nuremberg.

One example cited was Nivea, with sales of almost 2.5 thousand million Euros, which celebrated its ninetieth anniversary in 2001. A large family of brands has evolved - particularly in the last ten years - from 'Nivea-Crème', a brand which first appeared on the market in 1911. Nivea can now be found almost everywhere, and is undoubtedly a global brand in its market area.

Dr. Rolf Kunisch, Chairman of Beiersdorf AG, spoke at the conference about the factors that ensure successful brand management, taking Nivea, among others as an example. Stability and competitive advantage are important factors. Nevertheless, retail brands and discounters such as Aldi have in the last two decades become significantly more important. Their growth though has had little impact on the brand leaders, but has been at the expense of the weaker brands - that was the message from two other speakers, Thomas Bachl and Professor Dr. Hermann Diller.

Strong brands have - as suggested by the subject of the conference - the best chances of making further progress - while weak brands must continually fight to avoid being squeezed out by more successful competitors. Market leadership is well worth having - that was another theme taken up by speakers - because market leaders can usually command significant price premiums. They not only achieve economies of scale, but are also more profitable.

Professor Dr. h.c. Lothar Späth, Chairman of Jenoptik AG and ex-Prime-Minister of Baden-Württemberg, spoke on the subject of 'Market Leadership through Innovation'. Prof. Späth believes that innovation is the key issue in modern society, both for businesses and also for the economy of the country as a whole. This is because in the international competitive environment, the development of new products and services, as well as the organisation of production processes on an efficient basis, leads to continuous growth and to employment. Whether a company makes progress in the global market, depends increasingly in Prof. Späth's view on its ability to generate new products, and to launch them successfully onto the market. This is particularly dependent on understanding customers' expectations and wishes. Experience has shown that it is not the products which are undoubtedly 'objectively' best, which succeed on the market, but rather those that reflect the needs and wishes of their consumers and users.

Thomas Bachl, Managing Director of GfK Panel Services Consumer Research, spoke in his talk about the impact of price promotions on the market position of a brand. He went through the results of a proprietary research project, in which price promotions on 157 brands during the years 2000 and 2001 were examined. Only those promotions were successful which - and this was a major finding of the project - were able to replace foregone sales and profits by increasing demand and customer loyalty. In Thomas Bachl's view, what is critical for the strategic success of a promotion is that buyers who take advantage of such promotional offers, are attracted to the brand, and develop a loyalty to it. Therefore it is important with price promotions to give careful consideration to buyer behaviour both before and after the promotion. Thomas Bachl emphasised that around 60% of promotions lead in the long-term to an erosion of a brand's position. The reason, the speaker explained was that excessive price promotions hold more dangers for leading brands than for weak ones. During promotions, manufacturers of strong brands should keep an eye on those customers who have for many years been loyal to the brand, but whose views on its value could be undermined, with the result that they might change to another brand. Retailers on the other hand profit from all types of price promotion.

Professor Dr. Hermann Diller, holder of the Chair of Marketing at the Friedrich-Alexander-University of Erlangen-Nürnberg, considered the opportunities provided by intelligent pricing policy. He outlined the results of a research project which he undertook using GfK consumer data on 21 product markets over the 1998 to 2001 period. Intelligent pricing management is in the opinion of Prof. Diller one of the most important tools of marketing strategy, even if it is not often effectively used. Companies that operate a successful pricing policy, do not concentrate just on price-conscious consumers, but above all on consumers who are willing to pay extra for products providing certain quality levels. So-named 'price champions' succeed in keeping the prices of their branded products up, or even in increasing them, without losing brand share. Prof. Diller demonstrated that consumers vary in their price-awareness, and that they react differently to various situations. That provides, Prof. Diller believes, huge scope for intelligent pricing concepts. Innovative and promising tools such as the increasingly common bonus programmes being offered by retailers, which many consumers like, may provide modern pricing management with opportunities based on additional attractive options.

Dr. Rolf Kunisch, Chairman of Beiersdorf AG, spoke on the subject of brand maintenance. Not only the Nivea mega-brand belongs to his company, but also a large number of other brands which are leaders in their own sectors, such as for instance Hansaplast, Labello, Tesa or Eucerin. Only as a result of continuous attention to the brand image will a brand be successful - that is proved by the brands managed by Beiersdorf. Other important aspects of brand maintenance are product quality as seen by the consumer, the stability of brand communications, and the essential process of continuous innovation to keep the brand abreast of current developments. Equally, Beiersdorf concentrates strategically on only a small number of global brands, which are then adjusted worldwide to local market conditions.

All articles 2006-22 written and edited by Mel Crowther and/or Nick Thomas unless otherwise stated.

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