Brand management: then and now

Quarter 1, January 2009

Tim Ambler

London Business School




Marketing has become far more professional in the 50 years since the Marketing Society was founded. This article takes a look at that development in order to speculate about where marketing will be in decades to come. These thoughts have been influenced immensely by discussions with some of the brightest young marketers of today.1
As the word 'marketing' means different things to different people, we will focus on brand management. How was it in the 1960s, how has it changed and how is brand management today? What can we expect, or perhaps hope for, in the future?
'Brand' is now a word in common currency. In this sense, marketing is a two-stage process: creating demand (brand equity) and then converting that demand into positive cash flow (selling). In both stages, marketers manage their brands to obtain satisfactory short-term profitability while at the same time building their brands for the long term. The conflict between these two objectives, with the accent usually on the first, provides much of the difficulty.
THEN
Procter & Gamble is usually credited with inventing brand managers, starting with Camay soap in the 1930s. By the late 1950s the advertising for 'fabulous pink Camay' had moved beyond cliché to being a joke. Its appearance in a cinema provoked roars of laughter and cartons being thrown at the screen. Media selection was not well connected with the target audience. Those were the days!
Cinema commercials can still provoke that reaction but not when the campaigns are products of professional brand management. The 1960s had very few of those. Marketing plans, where they existed at all, were written by the ad agencies – often UK branches of US agencies who were more advanced in such matters.
Typical of most consumer marketing companies in those days was my company, International Distillers and Vintners which created its first UK marketing department in the mid-1960s. An international marketing team for J&B Rare scotch whisky already existed: one man and his secretary. Croft Original sherry was inspired by the ad agency Mather & Crowther, using the already very successful (in the US) J&B Rare as a model. J&B was a scotch for people who thought whisky was smart but didn't much like the taste. It was based on J&B's previous international spirits success: Very Special Old Pale cognac. Croft Original was also pale in colour because sherry (then the main wine and spirit category) consumers thought fino, i.e. pale sherry, was smart but found it too dry in taste. So Croft looks like a fino but is sweet to the palate. Repeating the J&B formula may not have been deliberate but it worked. The new marketing team launched Croft by sending a case to every trade customer who ordered enough Smirnoff. Not a great launch plan but it secured distribution.
However, rather more professional brand management was becoming widespread in fmcg companies selling largely through supermarkets, which were rapidly gaining strength at the expense of traditional outlets, thanks to the abolition of retail price maintenance.
Kotler's Marketing Management was already the dominant textbook and the 4 Ps provided the structure for marketing plans. Nielsen was the main supplier of market research and was primarily used to ginger up the sales force. Every two months Nielsen would present distribution figures including facings and out of stocks, down to quite detailed sales areas. High- and low-performing sales managers were complimented and castigated respectively, whether they deserved it or not. Research was used intermittently for consumer usage and attitudes, primarily for advertising purposes. TV campaigns were researched in cinemas by testing brand preference before and after seeing a batch of commercials that included the brands being researched. Knobs on the arms of our seats were turned this way or that to indicate pleasure or interest in whatever was on the screen at the time.
It all seems fairly simplistic as one looks back but it did not seem so at the time. Only one TV channel carried advertising. Two main suppliers dominated posters and a few chains took care of cinema. Diversity lay in the press. The full service ad agencies provided figures on cost per thousand, reach and frequency. PR completed the marcoms portfolio. Specialist marketing consultants were rare as few had enough experience to sell.
Brand managers then had arguably more control over the 4 Ps, certainly marketing communications, promotions, price and, thanks to Nielsen, distribution. On the other hand, brand managers barely existed beyond fmcg and drinks companies.
Before moving on, we should note the birth of account planning in the 1960s, created in slightly different ways by Stanley Pollitt at BMP and Stephen King at JWT. This rigorous approach to using consumer market research for ad campaign development, good as it was and is, had very little attention in its early days.
FOUR BIG CHANGES SINCE THEN
The first big change followed the recognition that marketing was essentially a competitive game. Market share replaced sales as the key measure of success. The Market Science Institute in the US, founded back in 1961, claimed that market dominance was the driver of profits. Grow market share, it was thought, and profits would then increase too. We now know that is not the case; growing market share can decrease profits if it depends on excessive price cutting or promotions. We now know that increasing the perceived quality of the brand, or brand equity, drives both share and profitability. In other words, share and profits may correlate but only because both are driven by the same thing.
The second big change was the computer. The first stage was the shift, with the IBM 360 in the 1960s, from batch processing of operational data for distribution and accounting purposes to the production of marketing information. This arrived as piles of printouts. Brand managers did not care very much for all this paper but they stacked it high to impress senior managers. It was used symbolically to show that brand people had tabs on the market even when the pile was as virginal as when it left the print room.
By the mid-1980s, brand management had spread across the business community, apart from business to business and financial services. Computer terminals provided information in a more friendly fashion. But terminals meant that marketers were less likely to leave their offices.
By the mid-1990s, terminals had been replaced by PCs, then laptops, then notebooks and then the BlackBerry. At the same time, more research agencies and in-house IT departments were each offering more information on a wider variety of topics. Available information expanded exponentially.
More recently, the digital age has given us the web, emails, Excel spreadsheets for forecasting and the dreaded PowerPoint, all on memory sticks the size of condom packets. Data protection has become more important than conception. At least brand managers no longer have to carry around piles of paper, guard books (the repositories for ad campaigns) and boxes of slides.
The third big change has been complexity. Whereas the brand manager of the 1960s had to deal with about six or eight suppliers (not that ad agencies wish to be seen as suppliers), today's brand manager has to manage both creative and media agencies, other marcoms and promotions specialists, as well as a myriad of consultants and research companies. A large company may have 30 marketing services' suppliers and, of course, media have proliferated. Trade marketing and customer relationships have developed their own teams and management, often as part of sales or operations rather than marketing in the departmental sense.
No doubt there have been other big changes too, but I will mention just one more, namely accountability. Attention has shifted from sales to the bottom line. Marketers are now expected to justify their expenditures in terms of the payback. That has brought a demand for estimating customer lifetime values and customer equity. Some firms now believe they can manage customers to maximise profit. This is a complete negation of marketing: we should empathise with customers to maximise their satisfaction and only profit as a consequence of that. You could say Tesco is managed by its customers but the reality is that it is a partnership for mutual benefit.
BRAND MANAGEMENT TODAY
Marketing today is certainly more diverse – multi-sectoral, with many more opportunities, and possibly more competitive. I am often told that 'price is more important now' but that is unlikely to be true. Price always was important. Now that people have more choices, higher wealth in real terms and less time for price comparison, price is probably less important, despite price comparison websites. Talking with top young marketers today, none of them mentioned price as an issue until prompted. Penny pinching by retailers remains an issue.
The strengths of brand management today, at least in the opinion of the brand managers themselves, very much revolve around being able not just to cope with the complexity of modern marketing, but to turn that to their advantage. They are very conscious of how they can add value. As one of the respondents, Suzi Williams, observed, 'brands are no longer inert things to be controlled. They are like adolescents and we can only facilitate their development' and 'emotion leads to action where logic leads only to conclusions'.
To handle so much complexity, the numbers employed in the marketing departments of large companies have multiplied, thereby contradicting the regular headlines about cutbacks. Outsourcing is both a solution and a problem. It may be genuinely cheaper to put the work out and the agency may have better and more relevant expertise, but it is yet another agency to manage, who have different goals and may not have to implement their recommendations.
Another consequence is the universal view that brand managers do not get out enough to meet customers and share the consumer experience. No quantity of market research reports will substitute for feeling the market as it is. Some companies ensured brand managers had field force experience first and spent at least one day a week in the field. Some still do. In practice, 15% field time is quite good but the consensus was that it should, and will, grow in the future. That depends, though, on cracking the 'meetings culture' of some large firms.
There is no doubt that marketers today see themselves as tougher and more commercial. The accountability trend mentioned above is part of that, but so is marketing's coordinating role. One of the respondents for this article, Ben Crawley, said 'brand management is a great grounding in so many business issues and for networking too'. That is encouraging. Marketing has long been seen as the colouring-in department where artistic young people do their creative thing before moving to bigger marketing budgets in other companies. Judging by my respondents, that is less true. Yes, marketing is a plum job so a better marketing job will beat another role and yet more marketers now see themselves as budding general managers. They also recognise more need to increase the time and money devoted to marketing internally.
On the negative side, modern brand management has seen over-extension that has 'taken brands too far', as Liesa Johnston put it. The shortest distance between two profit forecasts is a line extension. It is a quick fix that demands no brand investment and brings instant distribution. But it can, as Baileys Irish Cream has shown, damage parent brand equity and reduce profits after the initial surge.
If true, the call for integration is encouraging because marketers should engage with their colleagues and be seen as key to achieving the firm's goals, not just marketing goals. Marketing is not just a luxury for when finances permit. MBAs today, without prior marketing experience, find it almost impossible to get marketing jobs, but that will change if brand management is going to become as commercial as my respondents claim. Marketers need general business skills and generalists need marketing skills.
There are so many facets of modern brand management that a full account would be too long and this selection is inevitably subjective. But we need to conclude with what seems to be the dominant paradigm today. As noted above, accountability is good to the extent that it keeps marketing feet on the commercial floor but bad if it:

• undermines the immeasurable long term in favour of the quantifiable short-term. In past years, short-term goals were set low enough to expect some spare cash flow once they were achieved; that could then be hidden in the following year's expenditure to protect the longer term, e.g. the ad budget; getting that past your accountants and auditors is just as feasible today; it is naïve to report a higher bottom line than it needs to be
  


• locks marketing into the perception that it is a cost to be cut like any other
  


• involves too much time forecasting, planning, and reporting – leave all that to the accountants
  


• is built on false performance measurement models like ROI or purely short-term financial figures with no recognition of the marketing asset, namely brand equity; regrettably, that is the general picture today
  


• requires simply too many metrics or KPIs – just as brand managers have to cope with complexity by increasing focus, so marketers need to agree with senior colleagues what are the metrics that matter and not be distracted by those that do not; the tool that addresses that is the 'dashboard'; none of my respondents mentioned such a thing but I am confident it is on its way.

BRAND MANAGEMENT IN THE DECADES TO COME
Clearly the web will play a growing part but it is fanciful to suggest that it will enable brand managers to have meaningful one-to-one consumer dialogue. Consumers will communicate more with each other. Smart brand managers will monitor those exchanges and learn from them but they will rarely intervene. As the poet said 'the great advantage of keeping your mouth shut is that you cannot put your foot in it'.
On the other hand, brand managers will find ways for consumers to reach them when they really have to. Today's blank wall of call centres, ex-directory HQs and FAQs is immensely frustrating for consumers with genuine issues to resolve. Brand managers cannot be swamped by such matters but systems must be found for direct communication when necessary. Expert systems should be able to deal with most contacts but highlight those that need the brand manager's personal attention.
This may be optimistic but I believe a common business language shared by marketers and non-marketers alike will emerge. The idea that figures with pound signs in front of them matter and the rest do not, is so silly that it cannot prevail for long. At the same time, brand managers should respect continuity and stop chasing the fashionable metric or business process of the month.
Peppers and Rogers' Return on Customer and Reichheld's Net Promoter Score are two recent examples. To put it politely, both are flawed. Yet marketers leap to adopt them. Maybe the Marketing Society or the Marketing Science Institute in the US will set up panels of experts to review these things, rather as NICE does for drugs, before brand managers begin to use them. No CEO would then accept unapproved metrics.
This shared language will be part of non-marketer executives becoming far more savvy about what marketing can and should do for their businesses. They will recognise that marketing is the sourcing and harvesting of cash flow. Accountants will be measuring brand equity as part of their own routines using research shared with brand managers. HR people will be agreeing internal marketing plans with their marketing colleagues to ensure employees live their brands and marketing gets the value from their consumer experiences.
As noted above, expert systems and 'in-sourcing', eg metrics and forecasting to finance, will relieve brand managers of having to slog through the data overload and complexity. They will allow focus on essentials, thereby allowing marketers to get out more, although that may be more hope than expectation.
Neuroscience is not a practical brand management tool today but it surely will be within the next 50 years. No major new marcoms campaign or promotion or repackaging will be accepted before the neuroscientists have had their say. Modern-day pre-testing will be a thing of the past. The neuroscientists will get it wrong but not as often as pre-testers do.
It was good to see that one of the respondents for this article studied neuro-psychology at university. While marketers will always, and should, come from a variety of disciplines, this one is likely to grow in importance.
A visible symbol of both these trends will be widespread use of dashboards with which to drive the business. These are already becoming commonplace in large US companies, and are such an obvious requirement as to be a near certainty.
Imagine driving a car without a settled arrangement of instrumentation. And the dashboard will itself enhance the integration of marketing metrics with corporate goals.
Notes
1. Nathan Ansell, Benjamin Crawley, Jennifer Gershon, Liesa Johnston, Richard Lawrence, Lindsay Nuttall and Suzi Williams.