New Challenges in Branding

Brent Felgner, February 5, 2007

Brand building, acquisition, and tiering is hotter than ever in retail and consumer products — so much so they may be contributing to shorter life spans for some brands and perhaps diluting the value of all.

In any event, the massive proliferation of brands in recent years — some out of thin air, others even reborn from the grave — brings with it a minefield of potential dangers that is altering brand management strategies at every level.

That likely carries implications for long-established but recovering brands like Cannon, which have fought tooth-and-nail to return to market, or for still-developing lines, like Sears' Ty Pennington, seeking their niche. Indeed, branding was one of the buzzwords and a topic discussed during the recent National Retail Federation convention.

But some believe the term is being tossed around too loosely and being applied, notably in home textiles, to the designer du jour.

"There's a big difference between a brand and a label," offered Trudy Sullivan, group president for Liz Claiborne, following a Financo panel on global branding during the NRF.

Others argue the differences are merely semantic. But for many marketers introducing those new labels, the prospect of creating a new brand seems to hold the keys to the kingdom: higher sales and profits, better placements, longer life. And consumers have continued to respond — at least for now — despite the prospect of being confused by some brands' efforts to tier their business into new channels or not really being sure what the unfamiliar name and face are all about.

Analyst Marshal Cohen of the NPD Group said, "The market understands the difference between a true brand and a fictitious brand. The consumer does not. Even I don't know who some of these people are."

Reason to exist

A brand and its value exist in the eye of the beholder. Cohen and others point out that if consumers perceive hard brand attributes like product quality and reliability, or soft ones, like its status, that's probably enough of a reason to exist. Marketers who stay true to those core elements will likely succeed. But that's often not the case.

"It's almost as if we've placed too much emphasis on the brand [name] and not enough on the qualities that make it a brand," Cohen said.

"I ask consumers, 'Tell me the difference between the Lauren brand and the Ralph Lauren brand over there,' and they know the difference. Ralph is one of the few that has understood how to maintain the different integrities of all his different brands — Polo, Black, Purple, whatever. That's what got Ann Taylor in trouble when they opened up the Loft. What's the difference? Consumers didn't know and it takes the high end and brings it down."

The Loft was first introduced as a more affordable version of Ann Taylor stores and the strategy was a near disaster, suggested Kay Krill, president and ceo of Ann Taylor, during an NRF session. It has since taken about five years to reverse the damage.

"It was not a successful strategy," Krill offered, noting the company recognized this and altered course: "We began to move the Loft to a more spirited and casual direction. The Loft began to differentiate itself in the marketplace."

Adding qualities

Cohen suggested three specific areas in which to build brand attributes: convenience, customization, and indulgence. Each of which goes beyond price.

Explaining the convenience attribute, he highlighted the development of "lifestyle centers" as the return of "Main Street, USA," along with the development of the automobile dashboard as "one of the fastest growing restaurants in the country."

Customization, he said, makes customers feel like part of the brand; he cited the Nike ID, shoes that permit the owner to design elements online, including color and personalization.

"It's about understanding how to tap into the emotional connection with the consumer," Cohen said. "But you can't have a mass-produced product and call it customized — the customer will read right through it."

He said the indulgence attribute extends beyond luxury to products at all levels — an "all about me" value that makes life simpler, easier, or better. The dramatic rise in self-purchases during the holidays provides evidence of that demand, he said.

Maturing domestic markets, the growing emphasis on newly opened world markets, combined with brand-building has helped push both established and developing brands offshore, Financo panelists suggested. China is one of the most interesting untapped markets, because of its growing affluence and an increased demand for products from the United States, suggested Steve Sadove, ceo of Saks.

"We think in terms of where there is luxury today and where there is not," he explained. "But unless you can get the distribution of the core luxury brands, you're not going to have a market. And if you can't get the brands, you don't go."

Moreover, identifying trusted partners and aggressively communicating brand attributes is critical to the knowledge transfer in global markets, Claiborne's Sullivan said. Brand execution is critical and the brand owners must be very protective of the value of their properties, she said. And the Web must play a role.

"In a world with global fashion offers consumers 24/7 access to anything they want, it will be essential to use the Internet as a global branding vehicle," Sullivan said.

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