Say Goodbye to Textbook Cases: How successful brands will be built in the future

by Walter Brecht

All it takes is a quick look at the business world to realize that textbook organizational structures, even when implemented perfectly, are increasingly coming into conflict with conditions in the real world. Market conditions have changed, and will continue to do so in the years ahead. The current economic situation will reinforce this trend and ultimately make its effects permanent. The question is: how will these developments influence brands?

To get right to the point, it is not advisable to make helter-skelter changes to established brands. Even in cases involving a solid brand positioning and a coherent brand identity, brand management methods should be put under the microscope.

The parameters for brand success

There are eight key points that brands managers will need to keep in mind when devising a brand strategy in the years to come.

1. Efficiency
Inflated demands, growing cost-consciousness, increasing complexity, and communication overspill all result in a need and a longing for efficiency—the kind of efficiency that is not experienced as a burden but as a relief. Investments in optimized brand management structures and processes provide the efficiency that is needed. That’s what makes them a wise decision. But they are also worthwhile because they create value at a time when sales pressure is increasing and it is necessary to exploit cost synergy effects and enhance efficiency.

2. Convergence

Brand worlds often collide when innovation cycles merge with new technologies. This demands a great deal of flexibility and foresight on the part of brand managers.

3. Multi-channel

The mushrooming diversity of new media and formats means brands can no longer be visible everywhere in equal measure. At the same time, the line between communication channels and distribution channels is becoming increasingly blurred. Brand builders need to provide sustainable, adaptable answers regarding the scope and type of exposure they want their brands to have in selected media/channels, and they need to manage them in an integral manner.

4. Self-segmentation

Like communication, distribution is also no longer a simple one-way, top-down undertaking. In the future, clients will increasingly decide on a case-by-case basis, at each point along the experience chain, how much proximity or interaction is desired. The brand builders of tomorrow will do well to adapt their expectations to the respective situation, while always remaining true to their brand values.

5. Diversification
In addition to the trend toward increased integration of branding measures, strategy-driven diversification is also becoming more and more important, particularly in the branding arena. This is due to expansion into new markets, and also due to the acquisition and the creation of additional brands designed to make the portfolio more resistant to crises. Future brand-building activities will include analytic processes that provide quantifiable decision-making tools to help minimize risk, as well as structural models and decision trees for efficient management.

6. Individualization
The trend toward the individualization of product offerings continues unabated. Branding activities must ensure that brand strength is not diminished by the sheer quantity of variants. At the same time, it is necessary to integrate stakeholders into the “service performance” process.

7. Globalization

Globalization has been embraced not only by large corporations, but by small-to-medium-sized businesses as well. However, there are still no simple or self-evident answers to issues of global brand management. Do branding activities have to be managed the same way the world over? Should the brand identity be exactly the same in every region? Upon what basis can the decision for or against a global brand be made?

8. Social and economic change

The world is changing. To name but a few issues, climate change, new media, different ways of obtaining and processing information, food scandals, and the global financial crisis, are effecting fundamental, long-term changes in the way society thinks and acts. The keyword here is “sustainability.” Brand-builders of the future will be called upon to react to these changes, and in some cases take the lead in shaping the world of tomorrow.

Although many companies have done their homework and made significant advances in the area of branding over the past few years, existing brand management structures (to the extent they are in place at all) are often inadequately meeting the complex demands of the future. A study by Bruhn on the subject of integrated communication confirms this impression and identifies the organizational and structural barriers to successful implementation of branding strategies. This is an area in which management will continue to be challenged, and will be called upon to take advantage of state-of-the-art brand-building tools. In the future, managers will need to establish organizational and decision-making structures that transcend theory-based “either/or” considerations and instead allow for pragmatic “both/and” solutions.

The way forward: thinking outside the box

When facing these new challenges, brands must avoid textbook solutions, and instead think outside the box. Below are four new ways to think about brand building.

1. Centralized and decentralized

Previously, centralized brand management was considered fundamental to successful brands. However, currently market and business realities point in another direction. There is now a need to be close to markets. The transformation of company departments into profit centers shows all too well that more factors influence the brand than was previously believed. As such, brand building and brand management require more decentralized structures.

Nevertheless, “totalitarian” brand management is not the goal. Rather, the organizational process between company headquarters and branches must be anchored to ensure that the consolidation of all brand communication effort is the “sine qua non,” and counteracts the “silo mentality.”

This requires clearly defined responsibilities between central and decentralized departments, as well as authoritative entities capable of ensuring that coordination processes facilitate cooperation on clear, common objectives. Responsibilities must be assigned on the basis of the brand’s experience chain and the relevant communicative focal points, including their relevance for the brand’s business. Establishing rules for dealing with conflicts can turn disputes about power and resources into constructive solutions. Interactive instruments such as CI-nets, brand management portals, and brand filters not only enhance the exchange of information but also facilitate consistent, efficient brand-building activities, even in companies with decentralized organizational structures.

2. Integration and differentiation

Ever since the business of branding began, the issue of integration and differentiation has been a salient one. But in light of the increased significance of brands as a factor for creating added value, it is more crucial today than ever before. Up until now, branding textbooks have admonished companies to choose one of the two models to the exclusion of the other. Today, however, it is no longer possible to adhere to a purely integrated brand model. The need among companies for more differentiation is putting pressure on the integrated brand model. In the world of business, gut decisions are simply too dangerous. The risk of damaging a successful brand through integration is too great. At the same time, there is tremendous pressure to take advantage of the alluring effects offered by integration. Brand management must find a way to respond to these trends and enable both flexibility and stability.

The future of brand building offers decision-making tools for processes such as these. First, it requires a clearly defined brand model for managing the portfolio, which sets out peripheral activities in addition to the brand’s core areas. This makes it is possible to bring all the various options, from integration to differentiation, into alignment.

Second, it requires the necessary instruments and methods to perform quantitative analysis. They make it possible to raise the value, customer preference, and stretch of the brand. They develop and bring to fruition strategic scenarios that add value to the brand. These brand management instruments allow for a “both/and” option that can achieve added value for an entire brand system.

3. National and international

As a result of internationalization, many companies see their brands facing unknown challenges in diverse foreign markets. National brands that led the field in their domestic markets must confront unfamiliar socio-cultural conditions and communication channels in foreign countries. A national brand in a foreign country is not automatically one that’s international. And an international brand is not automatically the same in every country. The spectrum of issues requiring strategic steering decisions is broad, from different languages and tastes, to local customs and cultural aspects.

Brand builders with a long-term strategic vision respond to these challenges with an international brand management structure—a set of clearly defined responsibilities, ranging from global development and decision making to communication and regional implementation, including any adaptations that may be required in respective national operations. All this is established on the basis of a clear (brand) vision and brand personality, with the help of ongoing coordination among all companies and agencies involved. And it’s all done by a competent, preferably intercultural team, and from a strategically chosen location.

4. Cross-media and cross-channel

The blurring and merging of communication and distribution channels can be seen as one of the most important developments of the past few years. In the future, communication with indirect references to sales offerings will be even more crucial than today, when it comes to establishing customer loyalty, identification with the brand, and proximity to purchase decisions. On the other hand, distribution is increasingly becoming a facet of (brand) communication. Here again, strict separation between the two categories hinders the exploitation of the brand’s full potential. From now on, efficient interaction between brand management and sales management will be a decisive factor for brand success.

For example, Deutsche Telekom’s new shop concept includes different options for a variety of consulting situations and information needs. The most important aspect is that potential customers can decide for themselves how much nearness or distance they desire, and whether they want to access information at a terminal or talk to a salesperson. So to make optimal use of brand management and add value to the company, it will in the future be necessary to analyze all of the diverse brand touchpoints. Once the most important touchpoints have been determined, it will be necessary to formulate the brand themes and define how each of the brand’s various appearances can work in concert to create a coordinated brand identity. The crucial point here is to think beyond traditional “advertising media.” In the service sector in particular, where customers can’t “touch” what they are buying, customer service—and therefore employees themselves—becomes a key medium for transporting the brand identity. Once again, there is great potential for success through carefully coordinated interaction between the two disciplines.

The bottom line

The future of brand-building and brand management lies in defining, integrating, and steering all of these requirements. In addition to a more flexible understanding of brand management structures and state-of-the-art instruments, this will also require a new self-image. Whether it is a shift away from a “corporate design police,” to an internal brand consultant; or from a brand administrator to a valued-asset manager or ambassador of the brand. Because the relationships are so complex, brand management must demonstrate a high degree of intelligence and competence in the area of relationship management. Successful brand-builders will not simply rely on existing, static organizational structures, but create new, more suitable ones.

Walter BrechtWalter Brecht is CEO for Central and Eastern Europe, based in the Cologne office. He is responsible for the strategic and operational management in these important markets. Since 1995 he has played an integral role at Interbrand Central and Eastern Europe managing important key accounts. As a very experienced brand expert, Walter Brecht is always aware of the challenges and demands that tomorrow will bring to our markets and our clients.