Why is Building Strong Brands so Difficult
It is difficult to build a strong brand in today’s environment. The brand builder can be inhibited by substantial pressures and barriers, both internal and external. There are 8 different factors that make it difficult to build brands:
- Complex branding strategies and brand relationships
- The temptation to change identity/executions, organizational
- Pressure to invest elsewhere
- Pressures for short-term results.
One key to successful brand building is to understand how to develop brand identities, to know what the brand stands for, and how to most effectively express that identity.
PRESSURE TO COMPETE ON PRICE
There are enormous pressures on all firms to compete on price. Price competition is at center stage, driven by powers of strong retailers, value sensitive customers, reduced capacity growth and overcapacity. Retailers have become stronger and use their powers to put pressures on prices. Whereas a year ago information was largely controlled by the manufacturer retailers are now collecting vast amounts of information and developing models to use it. As a result there is an increasing focus on margins and efficient use of space.
Orange versus BPL mobile services – What these cellular service providers are doing is to compete with each other mainly on the basis of price. If Orange is cutting its deposit amount, or reducing the general rent or tariff or airtime charges, BPL has to follow the suit. Also the cola companies like Coca Cola and Pepsi are continuously engaged in a price war.
PROLIFERATION OF COMPETITORS
New, vigorous competitors come from a variety of sources. Additional competitors not only contribute to price pressures and brand complexity, but also make it harder to gain and hold a position. They leave fewer holes in the market to exploit and fewer implementation vehicles to own. Each brand tends to be positioned more narrowly, the target market becomes smaller and no target market becomes larger.
There are innumerous players in various product categories. One of these is toothpaste. With products ranging from gel, tooth powder, herbal pastes and striped paste – the market is quite clustered. The market is so much saturated with different players in these markets that they keep competing on the positioning of their brands, which has to be different from the rest and thus cater to a particular segment of the population. Like Close-up toothpaste which is positioned on the fact that it has mouthwash for fresh breath and Colgate which stresses on its calcium content for stronger teeth.
FRAGMENTATION MARKETS AND MEDIA
At one time being consistent across media and markets was easy as there were a limited number of media options and only a few national media vehicles. However the bewildering array of media options today includes interactive television, advertising on the internet, direct marketing, event sponsorship and more are being invented daily. Coordinating messages across these media without weakening a brand is a major challenge. Coordination is all the more difficult because different brand support activities are often handled by different organizations and individuals with varying perspectives and goals. In addition companies are dividing the population into smaller and more refined target markets, often reaching them with specialized media and distribution channels. Although it is tempting to develop separate brand identity for each of these target segments it presents problems for both the brand and the customer. Since media audiences invariably overlap, customers are likely to be exposed to more than one identity relating to the same brand.
The Coca-Cola ad featuring Aamir Khan is targeted at the retailers and the rural market while the ad featuring Aishwarya Rai and Vivek Oberoi is targeted at the urban consumers. As both these ads are going on simultaneously the consumers tend to be exposed to both the rural as well as the urban face of the brand.
COMPLEX BRANDING STRATEGIES AND RELATIONSHIPS
Different identities of brands and their extensions make both brand building and managing it difficult. In addition to knowing its identity each brand needs to understand its role in each context in which it is involved. There is a tendency to use established brands in different contexts and roles because establishing a totally new brand is very expensive. The resulting new levels of complexity often are not anticipated or even acknowledged until there is a substantial problem.
Henko Compact and Henko Stain Champion both belong to the German firm Henkal. Although this is a line extension finding difference between both these products is not easy. A number of questions like “Does the name ‘stain champion’ mean Henko Compact does not remove stains? Or does it mean that Stain Champion is a technologically inferior product?” often cross the consumers mind when they consider these brands for purchase. This is because the line extension and the relationship of one product with another in this strategy are not considered.
BIAS TOWARDS CHANGING STRATEGIES
There are sometimes overwhelming internal pressures to change a brand identity and/or its execution while it is still effective or even before it achieves its potential. The resulting changes can undercut brand equity or prevent it from being established.Promise toothpaste tried to change its well set positioning and went in to emphasize the freshness aspect of its paste rather than the well-established clove oil aspect. As a result its sales went down.
BIAS AGAINST INNOVATION
Companies managing a established brand can be so pleased with past and current success, and so preoccupied with day to day problems, that they become blind to competitive situations. By ignoring or minimizing fundamental changes in the competitive situation or potential breakthroughs, managers leave their brands vulnerable and risk missing opportunities. A new competitor is thus often the source and beneficiary of true innovation.
Iodex became blinded and redundant after achieving the position of market leader and preferred to rest on its laurels rather than go in for product innovations and line extensions. As a result its leadership position was lost to Moov, which positioned itself as a remedy for backache and converted all the weaknesses of Iodex into its strengths.
Also Bata was the market leader for footwear but they did not adapt with the changing times. As a result their sales went down. Currently Liberty Footwear is the market leader.
PRESSURE TO INVEST ELSEWHERE
When a brand is strong there is a temptation to reduce investment in the core business area in order to improve short-term performance or to fund new business diversifications. There is an often mistaken belief that the brand will not be damaged by sharp reductions in support and that the other investment opportunities are more attractive. Ironically the diversification that attracts these resources is often flawed because an acquired business was overvalued or because the organization’s ability to manage a different business area was overestimated.
Pressures for short-term results generally undermine investments in brands. There are several reasons for this:
re is wide acceptance that maximization of stockholder value should be the overriding objective of the firm.
- Management style itself is dominated by a short-term orientation. Annual budgeting systems usually emphasize short-term sales, costs and profits. As a result brand-building programs are often sacrificed in order to meet those targets.
- Short-term focus is created by performance measures available. Measurements of intangible assets such as brand equity, information technology or people are elusive at best. Also long term value of activities that will enhance or erode brand equity is difficult to demonstrate whereas short-term performances like impact of promotions can be tabulated easily. This results in debilitating bias towards short-term results.
It is true that that building brands is difficult. But it is doable as is evident by those who have done so. The greatest examples of this are brands like Titan, Coca Cola, Cadbury’s etc. We can thus see that it is possible to build strong brands by building, managing and maintaining the four assets that underlie brand equity-awareness, perceived quality, brand loyalty and brand association.