Brand Equity of Maggi

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The fact that brands are a part of the company equity is now a universal concept, however what this awareness implies has not yet been fully analyzed. As is often the case, phrases such as ‘brands are our equity’ become company leitmotivs. The truth is that, when taken at its word, this brand equity awareness has actually revolutionized operational marketing. The most salient aspects of this development are described below.





Implications at the top:

The first noticeable change in the fact that top management itself is now in the habit of paying close attention to their brands. In the beginning, brands were considered as a mere communications issue, then the sole prerogative of the marketing managers, nowadays; CEOs themselves consider brands to be their responsibility. A former CEO of Nestle, Thailand, declared: ‘Brands can no longer be entrusted to the marketing people only’. They have thus disowned in a certain way, as they are no longer the only ones in charge of brand policy.

Nowadays, financial, accounting, technical and legal managers, and of course managing directors, are all participating in this task. The new situation has also led multi brand groups to redefine the position held by the communications managers. No longer serving the marketing departments, they now directly report to general management. This is the case at Whirlpool Europe, thanks to their new position, communications managers are now able to manage fund allocation for the creation of a new brand independently from market share constraints and from the relative power pressure exerted by the group’s various brands.

In terms of organization, companies have become aware that their structures are often too ephemeral for efficient brand management. A company must have people who ensure continuity in and respect for the brand’s intangible attributes once they have been defined. On the other hand, companies have become aware that a given brand can be linked to several different technologies. Buitoni, for instance, is a brand that sells frozen, canned and vacuum-packed foods, all produced by different companies and marketed by different sales teams. It became necessary to create a new profession: brand management across companies.

Finally, the typical pyramid-shaped marketing structures have caused responsibilities to be diluted and managers to specialize more and more in one particular facet of the brand. That is why the Danone group has flattened its hierarchy down from four to three tiers, thus leaving a brand marketer, a brand marketing manager in charge of the brand’s overall management and a marketing director in charge of coordination and, more specifically, of the ‘mega-brands’.

The end of dispersal:

Apart from the brands new internal environment, the notion of brand equity means it is essential to manage the value of this equity. In doing so, they key word is ‘capitalization’. Yet it seems impossible to capitalize on several brands at the same time, unless the company is a powerful multinational. Most companies therefore reduce their brand portfolios and focus only on one of several brands. As a matter, brand portfolios are often overloaded, due more too successive acquisitions than to thorough planning of what each brand needs to do, both for its consumers. This tendency is even stronger in the industrial sector, as many companies pursued their growth through buy-outs, they now have to cope with a stack of local brands, product or product-line brands and company brands, as well as with a set of problems for which they are not prepared.

Reducing the brand portfolios has a corollary effect; few brands now encompass more products. Products whose brands no longer exist must be allocated to existing ones. Danone, for instance, covers more than 100 product...
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