The business model or brand management, as a priority
Posted: Mon Dec 09, 2024 9:02 am
Professor of the Strategic Branding course at the University of the Pacific. General Manager of Vitapro.
In one of the sessions to define the company's long-term strategy, and with the help of external consultants, the members of the Management bc data thailand Committee held a broad discussion regarding what competitive advantages and capabilities we should have in order to achieve success.
One question the consultant challenged us with was: Should we have a competitive advantage in creating business models superior to those of our competitors or should we have the ability to create and develop better brands than them?
Although it may seem like a somewhat obvious discussion to some, this question generated an interesting controversy.
On the one hand, there were those of us who, with a marketing bias, believe that building strong brands is essential for business success; while on the other hand, there were executives who defend that it is more important to develop each stage of the value chain to generate a competitive advantage.
Common sense tells us that it is necessary to create and develop a solid business model first, and that the brand is part of it; or, could anyone in their right mind think that a solid brand by itself solves a weak business model? Believing this would be “putting the cart before the horse”, as a good friend would say.
The discussion then turned to the fact that many of the failed product launches were due to weak business models, rather than product flaws or poor advertising and promotional campaigns. Thus, according to statistics provided by Professor Jordi Montaña of ESADE, “the failure rate of new products reaches around 35%-40% in mass consumption and 18% to 20% in industrial products.” Is this relatively high rate due to the inability to create strong brand equity in the brands launched? Or is it because the business model on which the launch was based was not evaluated from all angles? It is a question that every failed launch would have to answer, but most likely, it is a combination of both.
On the other hand, a strong argument from a senior executive of the company regarding brand management as the key and differentiating element was that generally thanks to brands a company can be valued with additional “goodwill”. We are what we are thanks to our brands. Technology companies base their value more on the value of the brand than on the assets they have or future financial flows.
Thus, both elements have important arguments to give them top priority. Both are fundamental parts of the business and must be seen as a whole; because having the capacity to create their respective models , and incorporating solid brand management, we ensure sustainable growth over time. There will be some cases in which the brand may have less weight in the business model , where distribution and customer service may be the fundamental pieces of it, but there will be other models, where the brand will be the fundamental engine to ensure growth.
If so, then marketing executives must incorporate this expanded view of what the brand means and its role in the business scheme. They must also take sufficient time to design strategies before thinking about managing the brand. On its own, the latter does not solve all problems, but it can help a lot, because it can represent all the elements of the value proposition: the lowest possible cost, timely delivery at the point of sale, product use and experience, sales promotion, timely contact on social networks, and even after-sales service.
It is important for marketing executives to recognize this reality and share this holistic vision of the value proposition. It is essential to have a vision beyond traditional marketing (the 4Ps) to have a complete management of the entire business.
The final conclusion of that strategy session was: “Our competitive advantage must be based on having human talent that can create and develop business models, incorporating all the elements of the value chain that constitute it, but also, that can manage and strengthen the brand equity of the brands so that they are the preferred ones of our consumers and clients.” If we achieve this, we will be one step ahead of our competition.
In one of the sessions to define the company's long-term strategy, and with the help of external consultants, the members of the Management bc data thailand Committee held a broad discussion regarding what competitive advantages and capabilities we should have in order to achieve success.
One question the consultant challenged us with was: Should we have a competitive advantage in creating business models superior to those of our competitors or should we have the ability to create and develop better brands than them?
Although it may seem like a somewhat obvious discussion to some, this question generated an interesting controversy.
On the one hand, there were those of us who, with a marketing bias, believe that building strong brands is essential for business success; while on the other hand, there were executives who defend that it is more important to develop each stage of the value chain to generate a competitive advantage.
Common sense tells us that it is necessary to create and develop a solid business model first, and that the brand is part of it; or, could anyone in their right mind think that a solid brand by itself solves a weak business model? Believing this would be “putting the cart before the horse”, as a good friend would say.
The discussion then turned to the fact that many of the failed product launches were due to weak business models, rather than product flaws or poor advertising and promotional campaigns. Thus, according to statistics provided by Professor Jordi Montaña of ESADE, “the failure rate of new products reaches around 35%-40% in mass consumption and 18% to 20% in industrial products.” Is this relatively high rate due to the inability to create strong brand equity in the brands launched? Or is it because the business model on which the launch was based was not evaluated from all angles? It is a question that every failed launch would have to answer, but most likely, it is a combination of both.
On the other hand, a strong argument from a senior executive of the company regarding brand management as the key and differentiating element was that generally thanks to brands a company can be valued with additional “goodwill”. We are what we are thanks to our brands. Technology companies base their value more on the value of the brand than on the assets they have or future financial flows.
Thus, both elements have important arguments to give them top priority. Both are fundamental parts of the business and must be seen as a whole; because having the capacity to create their respective models , and incorporating solid brand management, we ensure sustainable growth over time. There will be some cases in which the brand may have less weight in the business model , where distribution and customer service may be the fundamental pieces of it, but there will be other models, where the brand will be the fundamental engine to ensure growth.
If so, then marketing executives must incorporate this expanded view of what the brand means and its role in the business scheme. They must also take sufficient time to design strategies before thinking about managing the brand. On its own, the latter does not solve all problems, but it can help a lot, because it can represent all the elements of the value proposition: the lowest possible cost, timely delivery at the point of sale, product use and experience, sales promotion, timely contact on social networks, and even after-sales service.
It is important for marketing executives to recognize this reality and share this holistic vision of the value proposition. It is essential to have a vision beyond traditional marketing (the 4Ps) to have a complete management of the entire business.
The final conclusion of that strategy session was: “Our competitive advantage must be based on having human talent that can create and develop business models, incorporating all the elements of the value chain that constitute it, but also, that can manage and strengthen the brand equity of the brands so that they are the preferred ones of our consumers and clients.” If we achieve this, we will be one step ahead of our competition.