Quick takes

Strategy & Leadership

ISSN: 1087-8572

Article publication date: 1 August 2000

Citation

(2000), "Quick takes", Strategy & Leadership, Vol. 28 No. 4. https://doi.org/10.1108/sl.2000.26128dae.001

Publisher

:

Emerald Group Publishing Limited

Copyright © 2000, MCB UP Limited


Quick takes

Editor's note

"Quick takes" presents the key points and action steps contained in each of the feature articles. Catherine Gorrell prepares these summaries.

Page 4The power of the brandScott M. Davis

A brand is more than what a company sells; it is what a company does and, more importantly, what a company is. Many companies are not maximizing their financial returns because they are not maximizing the power of their brands to create distinctiveness and value.

A brand creates a relationship with the customer. Strong brands own a unique and easily articulated positioning in consumers' minds. Hallmark, for example, means caring; 3M means innovation; FedEx means guaranteed on-time delivery. These positions are the basis for competitive distinctiveness.

If you want to use your brand to drive growth, you must first create a customer model that will give you a comprehensive understanding of your customers' beliefs and behaviors. A customer model helps to answer questions such as:

  • How do customers decide between one brand and another when making a purchase? What factors do they consider? What criteria do they use? What perceptions and beliefs do they hold that may or may not be true?

  • How does your brand stack up against competitor brands? What are your relative positions on key decision criteria?

  • What opportunities exist for potential brand growth and expansion?

Developing a customer model has several benefits. First, it helps determine what customers really think about a brand. Second, it uncovers perceptions that consumers mistakenly view as facts. Reversing these unchallenged perceptions can drive growth. Third, focussing on the brand and its competitors often reveals new information that can be used to maximize customer-brand relationships and market positioning.

Customers' knowledge and perceptions of the brand are formed by their every contact with the company. Employees' actions at every customer touch-point contribute cumulatively to that customer's perception of the brand. It is important, therefore, for a brand to be owned and managed by every employee in the organization.

A brand is dynamic; so are consumers. A customer model must be updated every 12-18 months to keep it in line with what is actually happening in the marketplace. Keep your brand vibrant by diligently reviewing its performance and attentively refining the promise, acceptance, trust, and hope it represents for customers.

Page 10Cyberbranding: leveraging your brand on the InternetAlan Bergstrom

Branding is an important means of simplifying the decision-making process for buyers and users. If managed properly, brands can create difference, relevance, and affinity. A company's brand is often an under-leveraged asset that can drive sales, share, and profits, beefing up the revenue side of the balance sheet after two decades of focusing on the expense side with TQM, BPR, and downsizing activities.

Determining the right role and strategy for your Internet brand requires careful research and deliberation. Key factors to consider include:

  • Branding on the Internet is not much different than branding in general, but it must be done with more care. Follow the classic principles of achitecting a brand (build it over time, invest it with personality traits, and make those traits the foundation of credibility), then go further to leverage the fact that the Internet allows flexibility to tailor a brand to a specific target customer segment.

  • Right now is the cheapest time there is ever going to be to build a brand on the Internet.

  • The brand invokes customer loyalty because it embodies the relationship of functional and emotional attributes that the customer has with the company. Unfortunately, most Web developers fail when they focus on the utilitarian aspects of the Web site and do not infuse their designs with the understanding that the company's brand is based on the user experience, which must come first.

  • The Internet represents opportunity and challenge for all brands. However, when migrating existing brands to the Internet, it is a mistake to assume that the Internet is simply another channel of distribution and that the brand will have the same appeal to Internet users as it has to those who buy through traditional channels. For many users, it is a new category with a much broader reach and ability to market one-to-one.

The Internet is a tool and an opportunity. Stick to the basics. Do not be fooled by the siren songs that suggest "spend, spend, spend" or "there is no time – this is Internet speed." Bad business is just bad business. Go forth with care to establish and maintain your brand's market leadership position.

Page 16To build brand equity, marketing alone is not enoughRichard Schreuer

The wave of the future is to drive brand equity, thus enabling the strategically wise enterprise to distinguish its offering and to rise or stay above commodity status. To successfully reinforce the brand's value, a company must merge the management of customer satisfaction (the focus of operations and quality programs) with the management of branding initiatives (run by marketing communications).

New technologies and distribution channels are giving consumers access to better information, more choices, and lower "costs of switching." In this environment, branding will become increasingly important. Yet, as brand importance grows, consumers are becoming more sophisticated about the relationship between brand promise and performance. Brands that do not deliver on expectations will suffer as customers not only leave but also share their negative experiences with friends and other consumers on Internet chat rooms and Web sites.

The author makes the following observations:

  1. 1.

    Both marketing communications and operations generate brand-driven behaviors.

  2. 2.
    • Customer satisfaction efforts seek to explain and optimize behavior through improvements in customer interactions.

    • Branding activities seek to explain and optimize behavior through improvements in competitive image positioning.

  3. 3.

    The practice of managing these functions in separate business units is no longer effective. The distinction between marketing communications and operations is artificial, because they both strive toward the same goal: positively influencing consumer behavior.

  4. 4.

    Operations must do more than simply produce satisfied customers; customer contact must reinforce the brand's value proposition.

  5. 5.

    An integrated measurement model is needed to link customer satisfaction and branding. The model should analyze both the exposure and reactions to company operations and marketing communications to determine the relative impact that each is having on brand image and, consequently, on consumer behavior.

Marketing communications and operations play synergistic roles in driving brand equity because experiences with the brand reinforce or undermine brand expectations. An integrated approach is essential to creating a strategically sustainable competitive market positioning.

Page 21Value nets: reinventing the rusty supply chain for competitive advantageDavid Bovet and Joseph Martha

Market realities are forcing business leaders to transform how they think about inventory, warehousing, manufacturing, shipping, and all the other costs associated with the supply chain. The winners in today's markets are using innovation and collaboration to create value nets to replace their outmoded value chains.

Meeting real customer demand. After decades of defining and refining supply chains, companies are still left with unsold inventory and dissatisfied customers. One of the biggest problems with this model is that supply is based on forecasted demand. Value nets, on the other hand, respond to real demand. In these digitally connected networks, customers' choices trigger sourcing and delivery activities. Thus, value nets are dynamic networks of customer/supplier relationships and information flows. Value nets create value for all participants – company, suppliers, and customers.

Building a value net. Lessons from Apple Computer, Weyerhaeuser, Herman Miller, and others show that a value net begins with a strategic focus on process rather than on product. Each of these companies has created a unique network of value-creating activities, but all share two principles that are common to the design of all value nets:

  • The Net is fast, adaptable, and aligned with customer requirements and links its participants through digital technology.

  • The Net is capable of giving customers what they want, when they want it.

Two approaches. Established companies follow one of two approaches in creating a value-net business design: the reengineering or self-reinvention approach, which is difficult, costly, and risky; or the clean-slate approach, which allows the freedom to adopt the best approach to serving customers without worry over "old baggage."

Whichever approach you choose, consider the following advice:

  • Begin with customers.

  • Outsource activities that others can do faster, better, cheaper.

  • Choose your supply partners carefully, and leverage their resources.

  • Design around build-to-order and rapid delivery capabilities.

  • Keep your hard assets to a minimum, but be scalable to real demand.

  • Digitize the net.

  • Adopt clear goals and metrics that matter.

In a world where customers would not tolerate excuses, value nets offer a cost-effective structure to delight each and every customer and keep them coming back for more.

Page 27E-transformation basics: key to the new economyPanna Sharma

E-business is the basic ground rule for doing business in the twenty-first century. This means utilizing networks and near-time interactions to accomplish the empowerment of customers, the enhancement of trade, increased business agility, the virtual extension of the enterprise, the evolution and invention of products and services, and/or the development of new markets and audiences. The net result is to generate new forms of immediate value for companies.

Trends in the marketplace. Several trends point to the e-transformation of business. These trends focus on allowing companies to get to the customer faster and with more value. Signs of the new Internet economy include the new digital marketplace, the emerging role of alliances and hyper-partnering, new market indices, the emergence of Internet-protocol-based enterprise software providers, and new cultural management and organizational expectations.

The net economy. In 2003, there will be a major shift in the US economy as the portion of the economy driven by the electronic medium will surpass that driven by industrial companies. When we complete the transformation from an economy based on physical assets to one based on the economics of information, business leaders will have to change their entire approach or be overtaken.

Best practices for the new economy. E-leaders have already developed best practices that others can adapt:

  • Operate under a "destroy your business" philosophy, which forces executives to think about innovation and the potential challenges of new entrants.

  • Go beyond boundaries. Successful transformation is about relying on new leaders, forcing executives outside their comfort zone, and requiring them to depend on others.

  • Focus on partnerships and alliances and create virtual business units to support common goals and objectives.

  • Develop programs across units and businesses to enhance innovation and customize offerings.

  • Create scorecards to monitor performance on critical e-transformation initiatives.

When companies e-transform, it would not matter whether they are competing in a different space tomorrow than they are today, because they understand their businesses in a new way. Companywide structural and conceptual changes will allow them to react quickly to generate new forms of value that address the evolving demands of investors, partners, and customers.