Saturday, 13 October 2007

The age of the Brand Facilitator

The age of the brand manager is over.

It sounds like something that’s been said before; perhaps it’s a cliché that I have been slow to catch on to. But I have had opportunity to reflect on this recently, and I write here why I have now come to accept this realisation. My interpretation of this cliché.

Brand management is over. The brand manager must give way to the Brand Facilitator.

I believe that we now live in a world that has millions and millions of brand managers. Some of them work in corporations- but most of them you will find simply on youtube- myspace – or facebook. Some have dual degrees and MBAs, most are still in high school. Some have millions of dollars and media plans. Most have a laptop, an opinion and their own communities of trust. They have frequent and regular access to the internet. To information. And they have the technology on their fingertips to interpret and comment on every piece of news. On reshaping it, propagating it and influencing the truth.

The truth is always relative. With the internet, it is totally apparent that there is no longer one truth.

The “brand manager” then, in the traditional sense no longer can believe that his brand message carries any weight. His message then is simply a set of facts and his interpretation of those facts. He can buy “share of voice”, but not the trust of a new generation of consumers that have the motivation and technology to seek their own truth.

10,000 miles away, a TV viewer sees an advertisement, interprets it in perhaps a completely different way, goes on to blog it and suddenly his interpretation is available to more people than is guaranteed by the GRP of a media planner!!

So as a brand manager, there is no longer any control.

Why fight it? Just join it. Don’t be a brand manager, be a brand facilitator.

The new age wants to find the truth for itself. The brand facilitator can then provide data and information. In an accessible way. In a responsible way. And allow the reader to create the brand on his workstation.

If you don’t like the brand the reader has created and is diffusing, you need to understand that given the same set of information, two people have come to completely different conclusions.

Which means, you need to understand why? And rework the information sharing process.

But you cannot sue the reader (you don’t even know his real name or address anymore) and you waste energy in justifying a common message to each of the billion people that have their own interpretations.

But you should begin to understand how your consumers are coming to their conclusions.

And facilitate an understanding of your brand. That’s all you should do. Facilitate an understanding. By sharing information openly and honestly.

I believe people create associations based on their interactions with brands. Ten years ago, it was easy to give out branded “pens”, “caps” and start building an interaction. Not anymore. People are interacting online. There, it is honest and responsible dialogue that will allow people to build the trust in the brand.

People need information. This gives a sense of “power”. They cannot be denied information. They will find it. The best option for us is to give out the information ourselves. Openly. So that we can be sure that at least they have the access to the most accurate information.

And this is great news. Blogs, forums and communities allow us to benefit from the views of millions others. To be a part of their opinions. People are building opinions not be watching tv, but by discusing issues. They should discuss your brand. And be free to play with it... to "own" it by creating their own interpretation of it. To be associated with it in a "personl" way. Thats where brand equity will be established. Lets not fear this. Lets embrace this.

The brand manager will have to give way to the brand facilitator, if the brand is to survive in this century and beyond.

Monday, 16 July 2007

Market share or Profitability?

The genesis of this note comes from discussions (arguments) I have had on the grounds that I believe a company searching for ”premium prices” and profitability should not search for market share as well, without defining very carefully its ”market”.

Example: Leather carry bags. Louis Vuitton is a “premium” player in the market. But has possibly les than 1% of global leather bag sales. (including non branded goods sold in open market places around the world).

Does LVMH set itself market share goals?

Or take Michelin. A “premium” product, which year after year also chases global market share of the tyre market. Clearly a formula for disaster, in my opinion.

While contemplating these ideas, I came across an article in the HBR by Vijay Vishwanath and Janathan Marc called “Your Brand’s Best Strategy”.

One of the key points I understood in this article is that a companies ambitions must be judged in line with the commoditisation of the industry it is in. Eg: mobile phones- dominated by 7 manufacturers that add to more than 70% of the market and are all focused on innovation and profitability. Each company focused on justifying a price premium. (Till the emergence of the “cheap phones” market in India and China, this model was working very well.)

Or Apple and the mp3 market. Still dominated by a number of players offering “innovation” and establishing strong margins.

Compare this to the tyre business. Consumers are neither “wowed“ by innovation, nor seem too concerned by lower priced products. No real innovation has come to the market in the last 30 years.

I want to continue with the Nokia example. Today Nokia has defined the category- with products from $50 in India to $800 in the developed world. So far, they have gotten market share as well as profitability.

Now, lets say that the market of the “low cost” phones grows 5 times more than the overall market for cell phones. Nokia will be forced to sell more in this segment. Unless it is then able to find a cost structure that allows it to have the same profitability ( in %) as for its more “upmarket phones”, its profitability will fall. (not overall profits, but profit per phone).

However, as the mobile phone gets more and more “commoditised”, it is likely that cheaper manufacturers in China will be able to deliver phones at $25 without having a high cost structure due to lower investment in R&D, manufacturing costs etc.

Would Nokia be able to match this? Should it?

Or should it then refocus on businesses that value its innovations and allow it to continuously charge premiums and reinvest profits into its innovations.

As an industry matures, many consumer segments emerge. Satisfying each segment well requires specific business models. Working and synchronising among these different models different skills in a company and eventually proves impossible.

Today Nokia and Apple can do so. Because their respective industries are still relatively new. Customer segmentation still relatively narrow. But it will not be the same 5 years from now. Where should these companies create competencies in their business models?

Perhaps it is for this reason that in a mature industry, there has never been a “premium”, innovator that has consistently maintained strong prices and continued to gain market share.

So, should financial analysts evaluate a company whose business is based on “innovations” based on “global market share”? Stupid idea.

Sunday, 24 June 2007

Porsche's mobile phone

Porsche decides to launch a range of cell phones:

When I read that Porsche was launching a new mobile phone, my first reaction was “Why?” At 1600 USD, it was expensive and definitely exclusive, but why did it seem like a terrible thing to do?

The Porsche brand offers a very specific promise- high performance driving pleasure, superbly styled and exclusive. It’s a drive that beats a BMW, Mercedes, Honda or anything else Its style makes it chic, but not overtly aggressive like a Ferrari or a Lamborghini. It isn’t shy of making a statement.

So what would a phone on the Porsche brand have to represent? Something fast and chic. Exclusive. Stylish but not gaudy (no jewellery embedded on the phone)
Easy to use.

But the big problem is the “exclusivity”. A car is easy to make exclusive once the technology is defined and mastered. But how about a T Shirt, cap, leather jacket…or a mobile phone?

Clearly, each of these categories, to be “cool”, need innovation and unique design elements in themselves. Design elements that come about from years of work- dedicated effort. Cell phones are the same game. Design is everything,

The design features that are needed to be cool are mastered by maybe Nokia, Apple (from sneak previews) in a consistent way. Companies like Sony, Samsung, Motorola, have not been able to do this often enough, in spite of their huge R&D and marketing budgets focused on this product category.

So what makes Porsche think they can do this category simply because they make a cool car. For the brand to get “re-enforced” by the product, requires a degree of sophistication that if they managed, would put Nokia out of business.

I suppose that’s what makes this so difficult to digest. I am not convinced they can make the “coolest” phone on the planet – the companies that can help them do so (Nokia/ Apple) will not help them. I think the phone will not do justice to the Porsche name.

My call- this was a pretty bad call by Porsche.