What Are Brands Good For - Niraj Dawar

What are Brands
Good For ?
MIT Sloan Management Review
Harvard Business School Case

What is a
Brand ?

A brand is a product, service, or
concept that is publicly distinguished
from other products, services, or
concepts so that it can be easily
communicated and usually
marketed.

Brands
Indispensable part of modern business.
Aggregating consumers -- reaching large
number of people with a promise to deliver a
clearly stated benefit that sets it apart from
competitors.

Key Players
Consumers Brand Managers/Firms

How Does
Brands Help
People?

Clearly state benefits of using the product,
Reduce people’s perceived risk,
Makes it easier for the people to make a
purchase decision.

Role of
Brands in
Organizations

Role of Brands (1/4)
Advertising and promotions of brands
drive traffic and sales volume.

Prime platform for building
relationships with the consumers.

Central to firm’s responses to short-
term competitive moves.

Source of MARKET POWER and
HIGHER RETURNS.

Objectives
Of This Case

OBJECTIVES
To learn about role of the
brands in the consumer
disaggregation marketing.

Situation
Analysis

Brands lead to aggregation of consumers by influencing the mass
With the rise of Information revolution 2 way communication has been
better than 1 way communication
Consumer disaggregation is more efficient and profitable than
traditional source of Brand Power, Aggregation
Then, What are Brands Good For? Firms have to highlight the role of
brand in disaggregation Marketing.
Retailers argue that in the eyes of consumer, they have greater
credibility in assembling an assortment of products and brands that
make sense for the consumer and is not perceived to be driven by an
interest in selling one brand over another

Aggregation or
Disaggregation
Marketing ?

The Information Revolution is making
consumer disaggregation vastly more
efficient and profitable than
aggregation (traditional source of
brand power)

AGGREGATION
Involves treating all consumers as if
they are the same.
Create a single type of product.
Use mass-market advertising to
deliver a single sales message to the
entire market.

DISAGGREGATION
Segmenting the market into distinct
groups.,
Designing different versions of the
product/service, customizing each to
suit the needs of a particular segment.,
The company will be able to market
each product to a group that is likely to
buy it. Harvard Business School Case

Question to be addressed..
What are Brands
good for in an
era of
disaggregation?Harvard Business School Case

The answer can be found by
examining three core areas of Brand
Management:
Consumer Relationship
Channel Relationship
Organization of Brand
management

1. Consumer Relationship (1/3)
Disaggregation offers companies the possibility of
establishing relationships in which each interaction
b/w consumer and firm builds on history of past
interactions.
Firm responds to the needs of the consumers
from one interaction to the next.
Consumer pulls information from the company
according to their needs.

1. CONSUMER RELATIONSHIP (2/3)
Companies that employ disaggregate marketing.
Quick to respond to consumer needs.
Better able to tailor their offerings.
Quick to respond to consumer needs.

1. CONSUMER RELATIONSHIP (3/3)
Communication costs are
dramatically reduced
More precise and profitable pricing.
Consumer satisfaction

Example
Kraft Foods Inc.

K af Food …
Distributing free magazines quarterly to the registered
consumers with personalized to the individual
consumer ( name of the reader on the inside cover
page)
Consumers appreciate the personalized
information

Impact

Impact of the program(1/2)
The locus of the consumer relationship shifts away from the
product brands toward a trusted and
credible umbrella brand

Impact of the program (2/2)
Tactical activities such as product-trial coupons and selective
promotions are implemented with the
targeted consumersrather than
at the brand level.

2. The Channel Relationship (1/3)
Retailers use well known brands to attract consumers to
their stores.
In eyes of consumers, the retailer has greater credibility in
assembling an assortment of products that makes sense for the
consumer.
Not perceived to be driven by an interest in selling one brand
over another.

Risk for
manufacturers

Consumer’s relationship
will be more with the
retailers’ umbrella brand
instead of the branded
goods manufacturers.

How to
Conquer?

2. The Channel Relationship (2/3)
Disaggregationprovides manufacturers
with a new medium to influence consumer
decisions that is independent of the
retailer.

Outcome

2. THE CHANNEL RELATIONSHIP (3/3)
Manufacturers realize that their brand’s chances of
survival will be better if they become an essential
element of the retailer’s value
proposition to consumer segments.

EXAMPLE
P&G made an alliance with Tesco Plc(grocery
chain in U.K.) ,
Launched Physique hair-care brand in U.K.
through the Tesco channels, using its
publications and consumer information.

3. The Brand Management
Organization
The old era model of Brand management
allowed budgets and profits to be
measured and marketing initiatives to be
developed at the brand level without
interference from other brands.

But…
Brand management systems have much to commend,
They are designed for an era of mass marketing and are
not well suited to make good use of valuable information
that is now available.
Organization

Problems…
Difficulty in pulling together information to determine
whether a specific customer is profitable, or whether
the customer and his family is loyal to the brand.
Whether the general segment to which that customer belongs
is financially attractive.

Solution
Consumer-centric
organization

Three elements to make
consumer-centric organization
Organization

1. Relationship based on
trust and responsiveness.
Organization

They should never be
unsolicited
2. Targeted communications which
are always based on an individual’s
permission.
3. THE BRAND MANAGEMENT
ORGANIZATION

3. THE BRAND MANAGEMENT
ORGANIZATION
3. Obtaining expertise in new-
product and brand
development so that the
portfolio of product brands
can be continually
rejuvenated.

Take away from
the case

The Value Proposition of Brands
Whereas assembly lines shrank the cost of
building products, brands reduced the cost
of building markets.
Brands have unique ability to aggregate
consumers into viable markets economically and
efficiently.

The Value Proposition of Brands
Brands are an excellent means of developing and
communicating a differentiated value proposition
in the market.
Brands with a basket of such value propositions
establishes a deep relationship with the
customer.

Created By: Dipanshu Sehjal, IIIT Allahabad
During an Internship under the guidance of
Prof. Sameer Mathur
IIM Lucknow
www.IIMInternship.com

What Are Brands Good For - Niraj Dawar

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