It is surprising to see how brands continue to stimulate interest although so many prophets and experts have recently claimed they have no future. Today, all business managers are supposed to  have attended conferences on CRM, ECR, customer equity, relationship marketing, customer database management, e-relationships and proximity marketing: all these new tools criticise the old brand concept and focus on the most efficient techniques to serve the most profitable customers. They claim that conquering new clients is of no value any more: profitability will  come from mastering databases and loyalty programmes. Despite this, managers keep on attending conferences on brand management. Why haven’t they been convinced that brand management is an outdated tool? They have learnt that all these useful techniques soon lose their potential to create a lasting competitive advantage. The more they are diffused and shared, the more they become a standard, used by all competitors. What is customer equity without brand equity? There are very few strategic assets available to a company that can provide a long-lasting competitive advantage, and even then the time span of the advantage is getting shorter. Brands are one of them, along with R&D, a real consumer orientation, an efficiency culture (cost  cutting), employee involvement, and the capacity to change and react rapidly. This is the mantra of Wal-Mart, Starbucks, Apple and Zara. Managers have also rediscovered that the best kind of loyalty is brand loyalty, not price loyalty or bargain loyalty, even though as a first step it is useful to create behavioural barriers to exit. Finally, A Ehrenberg (1972) has shown through 40 years of panel data analysis that product penetration is correlated with purchase frequency. In other words, big brands have both a high penetration rate and a high purchase frequency per buyer. Growth will necessarily take these two routes, and not only be triggered by customer loyalty.

Leave a Reply

Your email address will not be published.