Mediamatic Magazine Vol. 7#3/4 Jules Marshall 1 Oca 1994

Global Brand War: Real or Phony?

What's in a name? Until the 1980s, the question was the province of poets, philosophers and linguists, but by the end of the decade, it was firmly within the bailiwick of accountants and expensive lawyers. They were the years in which economic and post modern literary theory collided to produce the Decade of the Brand.

Enlarge

Global Brand War: Real or Phony? - published in Mediamatic Magazine Vol. 7#3/4 (1994)

From the moment a generation of Smart Young Things began to graduate at the beginning of the 80s with the fashionable texts of Roland Barthes and Jean Baudrillard still fresh in their minds, and turned with unerring instinct to the careers that would define the decade - advertising and banking - the collision was inevitable.

The key message of semiotics – that symbols (including trademarks and logos) have a rich and powerful web of meanings and emotional associations attached to them meant that, in theory, companies should be able to understand and leverage that power – or at least pay someone to do it for them (a fact first intuitively appreciated by Coco Chanel in the twenties).

In fact, by extrapolation, the brands themselves were worth money. and by 1988, Wall Street thought so too. In a flurry of brand-driven mega-deals, huge consumer goods giants bought up other consumer goods giants, paying way over-the-odds, purely on the recently-conceived value of the companies' brands: kkr paid $25 billion for rjr Nabisco - double its book value. Philip Morris gobbled up Kraft for $12.9 billion – four times its book value and Nestlé paid $4.5 billion for Roundtree – five times over the going rate. 1988 was, said the boss of food giant Sara Lee, The Year of the Brand.

The companies were gambling that brand value was somehow fixed and eternal, a belief that was spectacularly questioned in April this year – Friday 2nd actually, or 'Marlboro Friday' as it has been dubbed - when the markets wiped $13.4 billion off Philip Morris' stock market value on news that the company had cut the price of its popular smokes by 40c a pack, thereby tacitly admitting that it was losing sales to so-called 'generic' cigarettes – unadvertised cheapos sold in chain stores on their low price alone.

There were fears that a global price war would break out as the markets laid into manufacturers' products from of diapers and cars to condoms and newspapers, slashing the market values of the parent companies on the grounds of vulnerable branded products. In the aftermath, the world's business magazines lurched for explanations; what had happened?

The marketing world had suspected for some time what was going on and even had academic-sounding titles for their conclusions. Perceived Product Parity was one explanation, or the widespread belief by consumers that there were no relevant or discernible differences between rival brands. At the same time, researchers noted, there were 16,800 new trademarks launched last year in the usa.

Faced with a blizzard of names, retailers auctioned-off shelf space and forced discounts, forcing larger chunks of advertising budget into promotions. These effects were compounded by the rise of the own-label brands of chains such as Sainsburys in the uk and Albert Heyn in Holland: across Europe, 20% of supermarket sales are now accounted for by such products. Indeed, many supermarket labels have been turned into brands in their own right, selling a full spectrum of products from fresh sandwiches to clothes and holidays. The trend continued in the frugal 90s with the rise of 'no-name chic' companies such as Muji and The Gap.

The fear was widely expressed that we were witnessing the death of the brand and maybe even The End of Advertising. Brands - the most powerful of which were created by advertising to the masses, created in their turn by limited-channel broadcasting – would cease-to-be as new media technologies made 500-channel 'narrowcasting' possible. Not only would mass media no longer be there for the branding process, consumers were turning increasingly to independent third-parties for their purchasing information and choosing to skip the ads. Long term shifts in profits from manufacturing to retailing are now continuing down to the consumer, concluded bankers Goldman Sachs.

Down but not Out

Brands are not going away; they are evolving, counters Ron Meijer, creative director of Amsterdam ad agency Imagine. What happened in the 80s is that brands were stretched and over-used as companies leveraged their power and associations to bootstrap new products into the market place: clothing ranges named after cigarettes, putting 'mg' on practically every British-built Japanese car, new varieties of Mars bar, etcetera.

There was, believes Meijer, a misunderstanding as to what brands are and how high a hoop they can be made to jump through.Take Heinz Ketchup:// It began as a man with a great recipe, but he made into a belief: he branded it, says Meijer. When you buy Heinz Ketchup, you are buying a belief – that it will be of high quality. Brands are flags to be recognised, a signature of trust.//

Brands were also abused, or as us marketing guru Larry Light put it: Bargained, belittled, bartered and battered. There is a semantic difference between image and reputation, says Meijer. It's okay to make extra money out of brands, but it was overdone. People are not fooled any more. They are more image-literate: a product must live up to its 'story'.

Marketing lost its way during the 80s. It used to be that you designed a product, decided who to sell it to and how, then did some marketing to check you were not doing anything stupid. Then it became so that everyone was looking at the marketing statistics before they made anything. The rise of the so-called generics happened because everyone was reading the same marketing information, chasing the same niches, says Meijer.

It's time to re-load the brand, he believes, a process which advertising is only partly responsible for. It will take more to make a valuable brand in the future. Hype is easy and getting easier with new techniques and tools. But consumers are no-longer surprised by small ideas any more. And they are asking questions about the ideas behind the product, not just the product. The boundary between product and company is eroding. Look at Benetton or The Body Shop: where does the company end and its products begin?

Brand Evolution

In Holland, food giant Unilever faced a storm of protest from retailers when it cut the price of its premium brand Magnum choc-ice by 12%. They were worried about dilution of the brand's 'quality' image. It has so-far failed to respond to arch-rivals Proctor & Gamble's 10-15% price cuts in their competing range of detergents, and in the us the price of Unilever's Ragu range of pasta sauces has not fallen in response to pressure from cheapo imitations. It's a huge effort, but brands must be maintained in periods of economic downturn, said the Unilever chairman. Skittish investors remain to be convinced.

And yet, September's Financial World Magazine found in its annual table of the world's most valuable brands that Marlboro is still top – although its value has dropped 6% - to $39.5 billion. (Coca Cola remains second at $33.4 billion). Indeed, The Observer newspaper found that fears that ad spending would suffer in a brand war were unfounded as marketing budgets rerouted resources back from promotions to brand building.

Meijer believes we are seeing a redefining of how advertising reaches its target for the 90s. The old attitude was I have the audience and the money to reach them; now I'll decide what to say to them'. ''Today, advertisers must find the consumer, listen to what their interests and concerns are, then add something to the conversation. We have to positively attract.

Every community needs a 'village green' - a communal space where people go to chat – and something to talk about that they have all seen, ''he elaborates. The art of advertising is to find these village greens: it might be cnn (because we all like to feel part of the global village sometimes), or an appeal to their 'European-ness', to Amsterdammers or some other level of communality.

Products or services are a result of human actions added to raw materials or thoughts. Brands are in essence signatures under these added values. Advertisers will simply have to work harder in future to (re) create the values and commitments they undersign with their brand.