Integrating Firm Strategy and Brand Management through Brand Orientation. Simon M zungu, Bill Merrilees, Dale Miller, Griffith University

Transcription

1 Page 1 of 8 ANZMAC 2009 Integrating Firm Strategy and Brand Management through Brand Orientation Simon M zungu, Bill Merrilees, Dale Miller, Griffith University d.miller@griffith.edu.au Abstract This paper develops a conceptual model that integrates firm strategy and brand management. The model is process-based and includes the following stages: strategic front end, bridge/ interface, operational / brand management, performance outcomes and environmental feedback. While the model does not introduce new concepts, it synthesises the extant concepts and mindsets to develop a coherent integrative framework. Successfully integrating firm strategy and brand management could contribute to superior customer value and consequently brand equity and sustainable competitive advantage. The model is iterative and includes an environmental feedback component to facilitate brand renewal. The model contributes to strategy and brand management knowledge. Keywords: brand management, brand orientation, strategy, brand equity

2 ANZMAC 2009 Page 2 of 8 Integrating Firm Strategy and Brand Management through Brand Orientation Introduction A brand is the face of a business strategy Scott Galloway, Prophet Brand Strategy, cited in Aaker and Joachimsthaler (2000) The practitioner s quotation above, while intuitively appealing, challenges academia and practitioners to provide a framework that enables the brand to be the face of a business strategy. In other words the role of the brand within the business strategy needs to be established. Should the role of the brand be simply symbolic, a face as the above quotation might suggest; or is brand integral to and inseparable from the business strategy? Providing an answer to this question is not easy, due to the fragmentation of knowledge domains that contribute towards this. These domains include strategic management, strategic marketing, strategic brand management, relationship marketing and services marketing. Often the various domains do not adopt an inter-disciplinary approach and as a consequence they tend to exclude other domains, explicitly or implicitly, in their treatment of issues that they deem to fall within their respective domains. Strategic management and strategic marketing offer one such example of exclusion in the literature, which is briefly discussed below. There is agreement that the purpose of the firm is to survive by matching its strengths (resources) to the opportunities in its environment, while minimising internal weakness and the impact of environmental threats (Barney, 1991; Wernerfelt, 1984). This strategic mindset supports the adoption of the SWOT analysis as a strategic analytical tool. However, strategic management adopts an inside-out mindset, which emphasises the internal side (strengths and weakness) of the firm. The focus of strategic management is on resources (Barney, 1991), capabilities (Teece, 1998; Teece, Pisano and Shuen, 1997), core competencies (Prahalad and Hamel, 1990) and organisational learning (Mahoney, 1995). On the other hand, strategic marketing emphasis the external environment and adopts the outside-in view, which is market-oriented and where strategy is market-driven by the needs, wants and desires of the customers (Day, 1994; Kohli and Jaworski, 1990). Others argue for an integrated approach to strategic management and marketing (Srivastava, Fahey and Christensen, 2001). Accepted by both the inside-out and outside-in views, is the increasing importance of intangible resources. The brand, through brand equity is widely accepted as the main intangible asset of the firm and hence calls for its careful management (Aaker, 1992, 1996; Aaker and Joachimsthaler, 2000; Kapferer, 2004; Keller, 2003).The brand management literature, however, is also fragmented and suggests several brand management paradigms. These include: a product paradigm with focus on managing the marketing mix; a projective paradigm with focus on managing the brand identity; an adaptive paradigm with focus on managing brand image; and a relational paradigm that focuses on managing brand relationships (Louro and Cunha, 2001). According to Louro and Cunha (2001) focus on marketing mix and brand identity suggest an internal strategic orientation, while that on brand image suggests an external one, whereas that on relationship suggests both internal and external orientations. Previous literature examines strategy and brand management separately. Although the voice of the literature is fragmented, this article takes on the challenge posed by the opening quotation, to develop a framework or generic model that can serve to guide the integration of firm strategy and brand management, conceptually and practically. An overview of the model is provided, followed by its development through its component justification and the paper concludes with a discussion of its contributions.

3 Page 3 of 8 ANZMAC 2009 Conceptual Model The conceptual model is shown in Figure 1. The model synthesises the fragmented mindsets that contribute to the development of a holistic framework for integrating firm strategy on one hand, with brand management on the other. Premised on the view of marketing as process, that is rooted in relationships with customers, which involves managing the making, facilitating and keeping of promises, the model is process and brand promise-based (Bitner, 1995; Brodie, Glynn and Little, 2006; Gronroos, 2006). It involves the following stages: (1) strategic front end, (2) bridge/ interface, (3) operations / implementation/ brand management, (4) performance and (5) environmental feedback. Although it is represented in a linear fashion, this is not to suggest that all elements of the model are sequential. The model stages are developed and justified in the next sections. Stage 1: Strategic Front End The strategic front end stage includes three components of the model: strategic management input, strategic marketing input and firm / corporate strategy. The inclusion of these components in the model is based on the argument that developing strategy based only on the internal strengths and weaknesses of the firm (inside-out /strategic management view) without taking the opportunities and threats that lie in the environment into account (outside-in /strategic marketing view), could lead to an incomplete and lopsided firm strategic. A more robust firm / corporate strategy, capable of guiding corporate behaviour and the way resources are deployed by the firm could be achieved by the integration of the strategic management and strategic marketing inputs. Others have suggested the need for integrating these inputs (Srivastava, Fahey and Christensen, 2001). Through a market orientation, the firm can acquire intelligence, which enables it to understand experiences and values sought by customers and the strategies pursued by competitors (Kohli and Jaworski, 1990). Through strategic management analysis the firm can develop a clearer understanding of its internal strengths and weaknesses. These strengths and weaknesses pertain to resources currently available to the firm and those it would seek to develop, in order to be competitive, including human and capital resources, capabilities and the nature of its internal culture (Barney, 1991; Mahoney, 1995; Prahalad and Hamel, 1990; Teece, Pisano and Shuen, 1997). Stage 2: Bridge / Interface Adopting a brand orientation could facilitate the development of a process and relationshipbased means to market the firm and its products (Gronroos, 2006). A brand orientation also offers the opportunity to integrate the inside-out and outside-in mindsets, because it implicitly incorporates both. From an inside-out perspective, brand orientation views brand as a strategic resource for the firm, which is not reactive to the changing whims of the market/customer (Urde, 1999). The outside-in view is implicit in brand orientation, based on the knowledge that a brand can form relationships with customers (Fournier, 1998). In addition, brand can also be viewed as a promise of functional and emotional benefits to customers (de Chernatony, 2006; Kapferer, 2004). Adopting brand orientation could enable the partial closure of the gap between strategy and performance (Wong and Merrilees, 2007).

4 ANZMAC 2009 Page 4 of 8 Figure 1: Brand Promise-Centric Brand Management Conceptual Model Strategic Front End Bridge/Interface Operational Brand Management Performance Outside-In View Strategic Marketing Input Communicate Brand Promise Firm/ Corporate Strategy Brand- Orientation Brand Promise Resource Deployment Prepare Organisation To Deliver Brand Promise/ Custom ers Superior Customer Value Brand Equity Inside-Out View Strategic Management Input Deliver Brand Promise Environmental Feedback Brand promise is included in the model in order to provide greater focus to brand orientation and hence a stronger interface between firm strategy and implementation / brand management. Clearly defining the brand promise could benefit both the firm and its internal and external stakeholders. Brand promise, sometimes referred to as brand essence (Keller, 2003) and brand identity promise (Aaker and Joachimsthaler, 2000) is considered the heart and soul of the brand (Schultz, 2001), which requires deliberate management Within the organisation, brand promise enables employees to understand the meaning behind the presented brand (Berry, 2000; King and Grace, 2005). To external stakeholders, a communicated brand promise allows them to understand the values and aspirations of the brand (de Chernatony, 2006). When brand promise is made explicit, it allows customers to understand the rational and emotional benefits provided by the brand and provides them with a basis to form informed expectations (de Chernatony, 2006; Kapferer, 2004). Stage 3: Operations / Implementation/ Brand Management This stage involves deployment of resources through the following processes: communicating the brand promise; preparing the organisation to deliver the brand promise; and delivering the brand promise. The resource based view (RBV) of the firm identifies four criteria for a resource to generate sustainable competitive advantage (SCA) namely: value of the resource, its rareness, its inimitability and its difficulty to substitute with another resource (Barney, 1991). When a firm clearly articulates its corporate strategy through a brand promise and uses the promise as a platform for deploying resources, one could argue that the resources so deployed have a greater chance of meeting the above criteria for SCA and result in a strategy that is difficult to copy.

5 Page 5 of 8 ANZMAC 2009 Communicating the brand promise is an essential aspect of the implementation/brand management stage, because it allows employees, customers and other stakeholders to know what the brand stands for, its values and aspirations. Understanding the brand meaning could create a greater chance of employee buy-in and commitment, which the literature suggests is essential to brand delivery (de Chernatony, 1999; King and Grace, 2005). Communicating the brand promise also benefits the customer because doing so could assist expectation formation, which could also reduce customer s information processing costs (de Chernatony, 1999). Preparing the organisation to deliver the communicated brand promise is crucial to strategy implementation and involves internal branding (de Chernatony and Segal-Horn, 2003). The process facilitates the development of a brand oriented corporate culture that results in senior management commitment and employee buy-in to live and deliver the brand promise. It enables management to examine the commitments which organisational members make to one another and to customers (Ulrich and Smallwood, 2007). Internal branding focuses the entire firm on delivering the brand promise and could reduce the deleterious effect of functional silos that prevents inter-functional cooperation (Aaker, 2008; Gulati, 2007). Preparing the organisation to deliver the brand promise also implies ensuring readiness of the firm s dynamic capabilities (Teece, Pisano and Shuen, 1997), core competencies (Prahalad and Hamel, 1990) and learning culture (Mahoney, 1995), which contribute to superior customer value. Tasks such as staff training and designing brand elements that include logos and packaging fall under the organisational preparation process. The inclusion of the promise delivery process in the model is based on the view that credibility, trust and reputation are contingent upon the brand delivering its promises (Delgado-Ballester and Munuera-Aleman, 2005; Devine and Halpern, 2001; Erdem and Swait, 2004). Credibility, trust and reputation are valuable market-based assets of the firm and contribute to SCA (Hooley et al., 2005; Srivastava, Shervani and Fahey, 1998). Further, the interactions of the employees and customers represent the moments of truth for the brand that can influence service quality evaluations and as such it is recommended that these encounters are managed (Bitner, 1995). For this reason, the promise delivery component is included in the model. Stage 4: Performance The model components for this stage are: delivery of superior customer value and brand equity. Delivering superior customer value, which in turn translates to brand equity, superior financial performance and SCA (Kapferer, 2004), is the main goal for the firm. In other words, when customers are satisfied with the cluster of values that they experience from the brand (de Chernatony, 2006), the result is market-based assets including brand loyalty and reputation (Aaker, 1992; Kapferer, 2004) and a favourable bottom line (Kapferer, 2004). The brand equity component in the model is the performance outcome of integrating firm strategy and brand management. Brand equity could be measured using consumer-based measures (Aaker, 1992; Keller, 1993) or in combination with financial outcomes (Feldwick,

6 ANZMAC 2009 Page 6 of ; Kapferer, 2004). Both measures could provide management with vital performance feedback. Stage 5: Environmental Feedback Because the environment in which the brand exists is dynamic it is important that the brand stays relevant to the trends occurring in its environment, so as to sustain brand equity. The importance of keeping the brand relevant has been noted by others (Keller, 2003) and hence inclusion of environmental feedback component in the model. The model is thus iterative and continues through out the life of the brand. Discussion and Conclusion The conceptual model outlined in this paper makes a contribution by configuring extant concepts in a new way. The new model contributes towards integrating firm strategy and brand management. In the strategic front-end stage, the model integrates inside-out and outside-in strategic perspectives, which could contribute towards the development of more robust corporate strategies. By including brand orientation and brand promise as the interface stage between strategy and implementation, the model contributes towards the continuing evolution of branding (McEnally and de Chernatony, 1999). The model is sufficiently generic to apply to the corporate brand context as discussed above and also other branding contexts. The model could equally apply to firms that operate as a branded house, where products offered bear the corporate brand name (e.g. Sony) and to those that operate as a house of brands, where the firm markets products under different brand names (e.g. Proctor and Gamble; Unilever) (Keller, 2003). This is so because in both cases the corporate strategy drives brand management. The literature shows that branding pervades most marketing contexts (Keller, 2003; Shimp, 2003) and as such the model is relevant in several contexts and not just to corporate branding as outlined in the model. However, while the model makes a contribution, its refinement through empirical work is recommended. Understanding how the model plays out in the real world, could facilitate further development and refinement of the model. References Aaker, D. A. (1992). The value of brand equity. Journal of Business Strategy, 13(4), Aaker, D. A. (1996). Measuring brand equity across products and markets. California Management Review, 38(3), Aaker, D. A. (2008). Marketing in a silo world: The new CMO challenge. California Management Review, 51(1), Aaker, D. A., Joachimsthaler, E. (2000). Brand leadership. New York: Free Press. Barney, J. (1991). Firm Resources and Sustained Competitive Advantage. Journal of Management, 17(1), 99. Berry, L., L. (2000). Cultivating service brand equity. Journal of Academy of Marketing Science, 28(1),

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