What do Coca Cola, Disney, Nike and Ralph Lauren all have in common?
They all benefit from strong brand management.
Ralph Lauren has never strayed from offering classic contemporary fashion despite dramatic fluctuations in that industry. Disney has defined family entertainment by creating and marketing a stable of characters and films that it can make recognizable worldwide within weeks.
Automakers' sudden interest in brand management comes from a realization that for too long they have concentrated more on marketing price supports than the merits of their brands. This fixation on incentives naturally limited profits and magnified losses in bad times. But more important, it diluted the identity of their products and confused buyers.
A basic business practice in other consumer or packaged goods industries for decades, brand management is now being embraced by automakers with a vengeance. Indeed, it has become as important today as product quality and customer satisfaction were back in the 1980s.
But what is it, really? Essentially, it is a consistent focus on the value, integrity, positioning and image of the brand. The goal is to manage these four variables to maximize both sales and profitability.
The heightened level of competition in the 1980s coincided with demographic shifts that created an abrupt change in consumer preferences. This forced many manufacturers to produce new models that did not support, and often contradicted, the image of their brands.
Consider General Motors Corp.'s major reorganization of its marketing and product planning functions that began about 18 months ago. Under Ronald L. Zarrella, the vice president and group executive for North American sales, service and marketing, each vehicle's brand becomes the focal point in GM's market and product strategy.
In the automotive industry, image is the most important variable in brand management. In its most basic form, the image creates the brand's identity and differentiates it from competitors. When an image is clearly established and communicated, it creates an aura or mystique which encourages potential buyers to want to vehicle.
Yet image is the one dimension where manufacturers run the greatest risk of failure.
If a particular nameplate's role, for example, is to provide performance-oriented vehicles that push the styling envelope, every model in its product portfolio should support and reinforce that theme.
But what happens when the market trend runs toward sport/utility vehicles and away from raw boy-racer performance cars?
Many will often deviate from the positioning of their brands if sales are on the decline or if they see an opportunity with a hot new product concept that may not support the brand image. To its credit, Cadillac has resisted the temptation to rebadge a Chevrolet or GMC sport/utility vehicle.
A decade ago, GM's luxury car division did much harm to its image and credibility when it decided to funnel as much as 20% of its production through daily rental car agencies because of slow sales. Although that strategy provided Cadillac with an additional 200,000 units in sales over a four- to five-year period, it probably cost much more in terms of lost image appeal and future market opportunities.
Consistency is extremely important. Manufacturers that have stayed the course are benefiting from the strongest brand images in the market today. BMW and Jeep have some of the strongest brand images in the industry today because they have not wandered from their core characteristics.
That does not mean that manufacturers cannot alter a brand's image over time. Evolution, not deviation, is the key.
One of the contributing factors behind GM's market share erosion in the '80s was an inability among some divisions to attract new generations of buyers. For example, Oldsmobile Div. saw its sales plummet from just over a million units in 1986 to a low of about 387,000 units in 1995 largely because it did not replenish its traditional buyer base.
Brand management has been a long time coming to the auto industry, but it is not too late. Manufacturers who nurture and support a strong brand image and identity will allow manufacturers to fully tap the maximum sales and profit potential of their product lines and truly satisfy their customers.
