Pop Idol is more than a programme, it is a brand. Where does the biggest part of the profits for TF1 (France’s leading television channel) come from? Not from the commercial breaks that it sells to advertisers, but what are known as spin-off products from programmes. Ushuaia, the channel’s flagship programme dedicated to nature and ecology, became a cult programme, attracting millions of loyal viewers each week. It also turned its star presenter into a celebrity, a defender of the planet’s threatened biodiversity, its ozone layer, its temperature, its inexhaustible marine resources and so on.
Ushuaia was thus a name loaded with
emotive values and with power. It was of interest to industrialists. TF1 created a specialised department to capitalise on licences from programmes viewed as brands.
Ushuaiamet l’Oreal’s urgent need for a shower gel brand for the supermarkets. It was also of interest to sellers of camping equipment and the like.
However, not all programmes are suited to becoming commercial brands. To do so, their values must be able to transmute metaphori- cally into products. Thus Thalassa is a cult programme dedicated to the sea, sea dwellers, ships and so on, which has appeared on French television every Friday evening for more than 20 years. It has a loyal audience at 8.45 pm who would not miss it for the world, and its audience share is strong and stable.
However, to date, this devotion has not created a flourishing business. What could be sold under its name?
Star Academy (Pop Idoloutside France) is the opposite example: it is the flagship programme among adolescents, who talk of nothing else and make systematic use of tele- phone voting (a major source of revenue for the TF1 channel), which increases their level of involvement. Their obsession needs other consumables to express their burning devotion. There is now a major magazine (the second-biggest adolescent magazine in read- ership terms), as well as many licences and spin-off products.
Disney’s business model is based on the profits created by movies which must become brands and lead to a huge stream of licenced products. Disney would not produce a film, such as Men in Black, that although a great movie created no profit flow from licences.
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Part Two
The challenges of modern
markets
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What is actually new in strategic brand management? Since the 1990s companies have been well aware that brands are an asset, and that consequently they should always be reinforced and nurtured by tangible innova- tions and intangible added values.
The 10 key principles of strategic brand management are known:
I Capitalise on a few strategic brands, which all convey a big idea, a vision, and are driven by the desire to change the customer’s life. No brand should be without a strong intangible component.
I Nest all variants and sub-brands under these mega-brands, to nurture them.
I Act as a leader and be passionate about increasing the standards of the category.
I Sustain all brands by a constant flow of innovations (product, service etc) in line with their positioning.
I Create direct ties with your end customers to deepen the link and the attachment, especially in markets where the trade pushes its trade brands. In fact the main
competitor of many a so-called strong brand is now the trade brand.
I Deliver personalised services.
I Reward customers’ involvement to make them become active promoters of your brand, not simply loyalists. Word of mouth is indeed the real sign of success: when customers become active ambassadors because they feel passionate about the brand – as a result of what it did to them and the community of values. Reichheld (2006) has shown that the rate of promoters among the customer base is directly correlated to the growth rate of the company or the brand.
I Encourage communities that share your values.
I Quickly globalise the brand and its products.
I Be ethical: big is not beautiful any more, and consumers have become cynical about size. Do not only adopt rapidly the perspective of individual benefits, also take into account collective benefits (recyclable products, organic ingredients, ethical and sustainable trade, helping the poor, etc).
6
The new rules of brand
management
If the brand principles given above have remained constant, their implementation has had to adapt to new markets, new customers, media and technological realities, and the effects of globalisation on costs.
First of all, let us state that one traditional manner of building brands is now defunct, or in any case has lost its reference status. This was elevated to a dogma by Procter & Gamble (P&G) in the last century, at the time of the arrival of mass marketing, made possible by large superstores, motorways and television. I learnt it myself at the beginning of my career, when I moved to P&G. In short, in this model of ‘brand building’, everything followed from a superior product, which responded better than the competition to a need expressed by customers. Then distribution was set up, and then a large promotional campaign was done in order to promote trial, prior to re-purchase and loyalty formation. This approach corre- sponded to the state of the market, of customers and of technology. It is no longer suitable for today’s world. Proof of this is that it has not prevented the rise of distributors’ own brands, cheaper copies, and in particular the discount and hard discount sectors.
This model of brand building, of constructing and defending the brand over time, runs into four stumbling blocks today:
I Are there durable, meaningful differences between products these days?
I Is there still a large amount of shelf space available for brands in the big superstores or with wholesalers, which are now pushing their own products?
I Are there still mass media, taking into account the fractioning of the audience?
I Are there still loyalists? The rise in the rate of promotions makes customers more sensitive to price, less faithful, more oppor- tunistic. The case of mobile telephones is a typical one. In France, as everywhere in Europe, 13,800,000 sales were made in
2006 by the dominant mobile operators (Orange, SFR, Bouygues, etc). Of these 10,225,447 were to clients who had just given up their contract with one of these operators! It is true that the multiplication of advertising on lower and lower charges can only lead to disloyalty. Moreover, benchmarking and copying smooth over the differences.
Everywhere, cheaper alternatives to the major brands now hold significant market shares, even majority shares in mass-consumption goods. This is true of both consumer and industrial products: many B2B brands complain at the substitution of their products by cheaper Chinese imports in client companies, not to mention the generalisation of the practice of using inverse auctions as a method of selecting suppliers. Here, only the price counts.
Let no one be deceived: even if everyone thinks of Danone when the yoghurt market is mentioned, Danone is in a minority on the shelves at Carrefour. Even if Fleury Michon is the name that comes to mind in terms of processed meat products, distributor-brand, low-cost hams hold the dominant market share. Of course it is possible to argue that distributor brands are also brands, and that in fact to speak of the decline of brands is deceptive: the reality is that a new type of brand is replacing other brands on the shelves and in customer choices. Danone yoghurts replaced Nestlé’s; Carrefour yoghurts replace Danone’s. Tesco Finest is replacing Tropicana, and so on.
We showed in Chapter 4 that if distributor brands are brands, they are not brands exactly like the others, since their positioning is always relative. They are structurally posi- tioned between the cheapest products and the major brands. They are therefore relative brands. Do they have a financial value in themselves? No.
On the other hand, the rise of products on the hard discount circuit, unbranded products
and Chinese imports clearly demonstrates that the traditional brand no longer responds to the needs of all buyers. It has ceased to be universal. The market is segmented by price, and different types of operators excel in each price segment. The ability of brands to be present in each segment is a challenge.
Nevertheless, for example, Bic does indeed try to occupy the bottom-of-the-range segment, although it is apparent that there are now much cheaper ballpoint pens and disposable lighters than Bic produces.
The pre-eminence of price in the factors determining consumer choice shows that a certain type of marketing has reached its limit, as has the habitual manner of managing brands.