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Business and Brand Strategy: A Framework for Integration 27© 2009 The Icfai University Press. All Rights Reserved.
Business and Brand Strategy: A Framework for Integration
This article discusses the integration of brand and business strategy for the benefit of a more holistic and seamless strategy development in the future. The cornerstones of business strategies and brand strategies are discussed and presented in an integrative framework with business strategy, brand strategy and market opportunity space. A checklist of questions for business and brand managers is presented and finally, future research areas are discussed.
* Associate Professor, Brand Portfolio Strategy, Head of Industrial Branding Research, Royal Institute of Technology, Sweden. E-mail: [email protected]
* * Head, Panels and Production, Nepa AB, Stockholm, Sweden. E-mail: [email protected]
Henrik Uggla* and Daniel Filipsson**
A strategic competency is something a business unit does exceptionally well, such as manufacturing or promotion that has strategic importance to that business.
– Aaker David A
In 1974, for example, BMW introduced itself as ‘the ultimate driving machine’, a slogan that endures to this day and helped turn the German automaker from a niche sports sedan in the minds of American drivers into a top luxury auto brand known for superior engineering in everything from roadsters to SUVs.
– Bert Helm
Introduction Business strategy concerns business visions, business models, strategic assets, customer bases, competitive strategy and more (Aaker, 2004). Brand strategies involve brand equities and identities, brand architecture and other strategies to create and sustain meaning in value for the brands of the corporation (Uggla, 2005). Filipsson (2008) has argued that many business and brand strategies suffer from static and unrealistic theories that hardly reflect brand and business realities of the firm.
During the past two decades research has shown that brands are among the companies most valuable assets. However, in today’s competitive landscape, it is not enough to just create strong brands. The focus lies rather in managing a range of brand leveraging strategies within complex brand portfolios. Moreover, the majority of today’s established brand concepts do not represent the reality of contemporary brand management. (Filipsson, 2008, p. 1)
In a persuasive way, Filipsson (2008) showed that global brands like Adidas, Bang & Olufsen, Electrolux, H&M, Microsoft, Peak Performance and WL Gore & Associates
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integrate brand and business strategy in a way that is absent in the contemporary brand literature. Urde (1994) argued that the notion of core competency should be extended to strategic brand management and that brand oriented companies such as Nestlé and DuPont de Neumours views the brand identity as the immaterial dimension of the companies’ core competency. Other researchers have argued for increased transparency between shareholder value and brand strategies. For example, brand extensions can reduce the volatility of cash flows and co-branding can increase cash flow through increased number of touch points between brands (Srivastava et al., 1998). Consider the beautiful convergence of brand and business strategy presented by Yum Brands, the world’s largest restaurant company in terms of brand systems.
Yum is building a vibrant global business by focusing on key growth strategies:1
• Building leading brands across China in every significant category.
• Drive aggressive international expansion and build strong brands everywhere.
• Dramatically improve US brand positions, consistency and returns.
• Drive industry leader shareholder and franchise value.
In contrast, many less brand oriented industry professionals tend to mix business and brand strategies in a way that appear quite embarrassing with respect to the rudimentary knowledge of how brand and business strategy actually differ. Professor Kapferer (2001) once referred to this phenomenon as brand nominalism, or a narrow view on strategic brand management. Consider this concern in relation to Orient Express and Indian Hotels.2
Indian Hotels recently upped its stake in the Orient Express from below 10% to 11.5%; but Orient Express CEO Paul White, in a letter to Indian Hotels Vice-Chairman Krishna Kumar, wrote that, “any association of our luxury brands and properties with your brands and properties would result in a reduction of our brands and of our business and would likely lead to erosion.” Indian Hotels’ Kumar told Time that his first reaction upon receiving the letter “was that Paul White could not possibly have drafted it...I came to the conclusion that the person who drafted this letter needs counseling.” Indian Hotels, he said, had proposed a friendly partnership in which each company would take an equity stake in the other, share expertise but remain independent.
Not only does the above quotation unfold a serious confusion between the concepts of business portfolio and brand portfolio, but also a total misunderstanding of the fundamental differences (and similarities) between brands and business strategies. The aim of the present paper is to discuss a potential integration of brand and business strategies for the benefit of all managers involved in the process of business and brand management.
1 www.yumbrands.com 2 Robinson Simon, “Is India Bad for Jaguar”, Time in Partnership with CNN, available at www.time.com/time/
business/article/0,8599,1694653,00.html
Business and Brand Strategy: A Framework for Integration 29
Background Business strategies and brand strategies are seldom carefully integrated. The brand strategy is usually marginalized in the business plan and brand strategies may also appear as abstract or overtly concerned with details by general managers (Kapferer, 2001). In addition, branding is often seen as the exclusive prerogative of marketing and communication departments, a world view, which may hinder a solid brand strategy and business growth (Kapferer, 2008). As a natural consequence of this incongruence between business and brand strategy, the brand often becomes isolated and reduced to a tactical marketing entity while in reality, it belongs to the realm of strategic management assets (Aaker, 2001). Consider how this incongruence becomes very transparent through the contrasting views in one of Interbrands discussion forums about brand and business strategies:3
“Did Starbuck begin by articulating the delivery of a desired customer experience, or was the idea simply to make money by selling coffee.”
“Bottom line—you can have a business strategy without a brand strategy but not the other way. Brand without business is like the pope without religion.”
“Seems to me, business strategy is the competitive positioning of brands.”
Regrettably, most of the arguments and discussions in this area seem to be biased by a superficial order argument; the discussion boils down to which one is more important or fundamental than the other and should therefore come first. To summarize the dialectics of discourse, the one extreme represents brand fundamentalists overtly concerned with perceptions, promises, brand equities and value propositions. The other extreme is business fundamentalists, overshadowing the brand through a lucrative perspective, their mantra is based on a simple but strong logic: business is where money comes from. In between these extremes, more realistic voices argue that brand strategy may support the business strategy and that the brand strategy articulates the brand promise.
Market Opportunity Space Market opportunity space is a real or impending expansion in areas based on a vigilant analysis of competitor, customer and market factors, as well as technological, environmental and regulatory trends. Market opportunity spaces can reside in another channel (Lancôme is a brand from L’ Oreal that is sold in other channels). Or, market opportunities may reside in totally different segments, market regions and countries. For example, Virgin Atlantic airlines are very distant from the historical core business of Virgin: music. Although a market opportunity space may exist many global companies fail to adapt to local market preferences and explore the anthropology and cultural rituals of the country.4
3 Brand D ebate, “Brand Strate gy versu s Bu sine ss Strategy: Whe re D o You Start?”, available at http://www.brandchannel.com view_comments.asp?dc_id=13
4 Niti Bhan and Brad Nemer, “Brand Magic In India”, Business Week, available at http://BusinessWeek.com/ innovate/content/may2006/id20060508_952455.htm
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Kellogg’s set up a branch in India and started producing cornflakes to give consumers the real thing. What they didn’t realize was that Indians, rather like the Chinese, think that to start the day with something cold—like cold milk on your cereal—is a shock to the system”, says Bhabha. “And if you pour warm milk on Kellogg’s cornflakes, they instantly turn into wet paper.
Business Strategy Strategic assets in a business strategy are customer bases, brand equities, material and immaterial core competencies such as patents and brand equities (Uggla, 2002; and Filipsson, 2008). Any business strategy will ultimately be based on delivering a solution corresponding to the needs and wants of a specific market segment. Importantly, business strategies may exist without brand strategies. Figure a salesman on the street, selling generic unbranded
fruit through a pushcart to transitory customers. This commercial agent may not encompass a retail brand, neither a product-brand of any kind; still, he can have a business strategy, grounded in a market segment. Furthermore, a business strategy often subscribes to one of three generic competitive strategies, like low cost leadership and differentiation or focus
(Porter, 1985). The Spanish brand Zara (Exhibit 1) delivers affordable fashion with a subtle sensitivity to market trends. Swedish brand IKEA delivers contemporary furniture on a prosuming value proposition. The prosumer propositon representing a combination of consumer and producer, purchases the goods in flat packages at retail locations in the suburbs and takes an active part in the assembly process of the furniture at home (Normann and Ramirez, 2006). Just-in-time delivery and efficient logistics enable a low end-consumer price for the IKEA consumer. Both IKEA and Zara are typical price value brands that subscribe to low-cost leadership logic. In contrast, BMW delivers premium cars to discriminating consumers in the upper, price-inelastic market segment, based on the value proposition ‘the ultimate driving machine’. The business logic in this case is to offer something more at a higher price. More technology and a more self-expressive brand personality. The Select Travel Group offers expensive vacations to paradise resorts, they practice a focussed business strategy towards a small and discriminating market segment. At Select, a Barbados vacation may include a villa and a personal butler. Although they appear very different with respect to the end-consumer offering, ZARA, IKEA and BMW seem to have crystal clear business models and are knowledgeable about their customers needs and wants. Business strategies often require a specific core competency. This core competency may also be material, such as miniaturization technology (Sony) (Hamel and Prahalad, 1990).
Branding Strategy A branding strategy is often based on three cornerstones, the brand structure, vision and core values and the brand identity (Aaker, 1996). The brand hierarchy represents the
Exhibit 1: Zara has a Brand Driven Business Strategy
Source: Inditex Group
Business and Brand Strategy: A Framework for Integration 31
underlying brand architecture for the firm to work with, some companies manage every business under the corporate brand such as Virgin, often referred to as a branded house, other companies like Yum Brands (fast foods) are organized as holding companies with distinct
product brands in a classical house of brands model.
Domestic brands such as Indian business conglomerate and car manufacturer Tata are based on a portfolio with distinct product brands. Some of the product brands in their portfolios are built organically and others are purchased from the market. For
example, the brand structure of Jaguar, which is owned by the Tata group is an individual or product brand (Exhibit 2). Jaguar brand has core values with quality and aristocratic ideals. The brand identity is based on a symbol (a stylistic jumping Jaguar) a personality (sophisticated), and a product (premium priced quality car). Although the Jaguar should remain a product brand and has few organizational associations, it infuses important business strategy associations to the Tata group, of including a true global luxury brand in the Tata brand portfolio.5 The concepts and relations between the brand hierarchy, brand values and brand identity will be further elaborated.
The Brand Hierarchy A basic brand structure may be derived from a brand hierarchy, representing four levels: the corporate brand, the family brand, individual brand and modifying name or number (Keller, 2008) (Table 1). A corporate brand refers to the name of the corporation, for example, Toyota. A family brand spans several product categories without being synonymous with the corporation, for example, Panasonic. An individual brand represents one product class, for example, Corolla is the brand for sub-compact cars from Toyota. modifying name or number identifies specific attributes of a product. For example, X5 signifies a four-wheel drive (X) and size (5 series) for BMW. Most practical brand strategies however, will encompass a combination of the above categories (LaForet and Saunders, 1999). Toyota uses a combination of corporate brand and individual brand name in their sub-brand strategies (e.g., Toyota Corolla) and BMW uses a combination of corporate brand and modifier (BMW z3). Aaker suggested that a company may use endorsed brand strategies to stand behind their offerings and transfer associations with credibility, but still keep a psychological distance with their brands. “Endorsements are powerful because endorsers are somewhat insulated from the brands they endorse. Thus, they can contribute with reduced risk that their associations will be affected by the performance of the endorsed brand” (Aaker, 2004). 5 “Jaguar is now an Indian Beast”, The Times of India, available at http://timesofindia.indiantimes.com/
Jaguar_is_now_an_Indian_beast, viewed on March 27, 2008.
Exhibit 2: The Jaguar Brand is an Individual Brand in the TATA Group
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Reframed into the context of a brand hierarchy, endorsement strategy means that the corporate or the family brand stands behind, rather than in front of the offering. For example, in the combination Post-It by 3M, the individual brand (Post-It) is endorsed by the corporate brand (3M) that transfers associations with credibility and trust to Post-It, while still maintaining a psychological distance between the brands. Endorsement allows for transfer of credibility and reputation at minimal risk (Aaker, 2004). The brand hierarchy are seldom symmetric across countries and markets, thus some sub- brands may instead be endorsed by individual brands in a different market.
The Vision and Values Brand vision and core values can help the brand to navigate towards the future. First, the brand vision should articulate something about an intended future. Sony had a vision for their brand in the 1950s: to change the bad quality image of Japanese products globally (Hamel and Prahalad, 1990). Today, the company has one of the strongest brand portfolios globally, including brands such as walkman, cybershot and Vaio. Brand values may be between three to five words capturing the essence of the brand. Disney have family, fun and entertainment. Adidas has four core values: authenticity, inspiration, honesty and commitment. These values guide the brand identity building process.
The Brand Identity Brand identity constitutes the mirror and
channel of the organization’s core values. For example, if Disney has core values with family fun and entertainment, the brand personality may be infused with friendly and sincere traits that facilitate brand resonance with the target group (Keller, 2008).
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Business and Brand Strategy: A Framework for Integration 33
In addition, the brand identity can be viewed as the immaterial part of an organization’s core competency (Urde, 1994). The brand identity can create consistency and be a promise from the organization towards its customers; identity is the association that the company aspires to create and maintain in the marketplace (Aaker, 1996). The perception
and decoding of identity is the brand image (Exhibit 3). A brand identity can be viewed as a symbol (Nike swoosh logo), a product (athletic shoes from Nike), a person (athletic and competitive) and an organization (a company with passion for sports). The core identity of a brand remains the same, while the extended identity may differ across products and markets. For McDonald’s, the core brand identity is based on organizational association with quality, service and value. The product belongs to an extended identity with country specific locally adapted menus, McAloo Tikki™ burger in India and McAtterdag™ in Sweden. Elaboration of the brand identity concept into core and extended identity has three objectives. First, it should reduce uncertainty by adding interpretation and detail to the elements of the brand identity. Second, it should increase brand managers’ ability to assess the capacity of identity dimensions to resonate with
customers and differentiate the brand. Third, elaboration can provide ideas and concepts that are useful in developing effective and efficient brand building programs (Aaker and Joachimstahler, 2000).
A Framework for Integration Given the machinery of business strategy, brand strategy and market opportunity space, these three crucial aspects need to be further integrated and put into a holistic strategy framework. Together, these three components shape the important concept of business model brand relevance, which maybe defined thus: Business-to-brand relevance represents a situation with high strategic fit at the intersection of business strategy and brand strategy, meeting and an opportunity space in the market grounded in customer needs and wants.
Jaguar creates business-to-brand relevance for the Tata group by filling an opportunity space for luxury cars in the global market place. In addition, Jaguar may create a very
Exhibit 3: Three Core Components of a Brand Strategy
Brand Hierarchy
Visions and Values
Brand Identity
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specific type of brand relevance for the Tata corporate brand by adding association with luxury and prestige that may increase global reach and enrich the Tata brand portfolio towards investors. This type of brand, with ability to transform impressions and increase brand equity, is sometimes called the silver bullet brand (Aaker, 2004). Given the potential needs and wants in the marketplace the limits to a given brand strategy will ultimately be based on the definition of the business. A broad business mission will allow for an expansive branded house strategy while a narrow mission will reduce the scope of the brand to a few product classes. Levitt (1960) confronted management to think broadly about what was or could be their realm of domain, pointing out the failure of the railroads to recognize that they were in the transportation business. The result was missed opportunities in the emerging market space. A first step to integration will be to consider the business strategy from a perspective: what business are we in? Second, business- integration must be linked to brand strategy in a meaningful way, a broad business strategy vision may facilitate business to brand relevance in several categories.
BiC has defined its business, not by competition in pens, but instead by a product attribute—disposability. It is particularly interesting to note that BiC’s decision to define their business as inexpensive consumer disposables led them to razors and lighters. (Tauber, 1981, pp. 36-41).
Brand extensions must have a logical fit with consumer’s expectations and must have leverage in the new category, an image transfer to the new product of a distinctive property associated with the parent brand that gives the brand extension an edge in the new category (Tauber, 1981).
Figure 1: Business-to-Brand Relevance
Market Opportunity Space Needs and Wants
Bustiness Strategy Core Competency Mission Vision and Values
Brand Strategy Brand Hierarchy Corporate Brand Family Brand Individual Brand Semantic or Numerical Modifier
Business-to-Brand Relevance Area
Business and Brand Strategy: A Framework for Integration 35
In Figure 1, this focal area is indicated at the intersection of three rings representing the entities of business strategy, brand strategy and market opportunity space. At the intersecting area of these three rings, brand strategy, business strategy and market opportunity converge and create maximum business to brand relevance. Business to brand relevance in this respect may be created in one of the following ways, make or buy brand identity or license brands and engage in brand alliances.
Creating and Building the Brand Identity Creating and building the brand identity for a second brand that identifies the product in a more optimal way: Toyota created Lexus for competition in the premium segment with BMW and Mercedes in order to create stronger business to brand fit in a segment where Toyota’s traditional brands lacked differentiation and self-expressive benefits. In a similar way, Nestlé created Nespresso as an innovation brand for perfect espresso and sophisticated espresso machinery for a super-premium segment for increased relevance, building on the Nes prefix, yet distancing the brand from classical mainstream products in the portfolio such as Nescafé (Exhibit 4). This strategy is referred
to in the brand literature as a linked name strategy, allowing for new associations to emerge, while linking to the established. In India, Tata Motors, India’s largest fully integrated automotive manufacturer, builds on a house of brand strategy with fully built coaches under the ‘Globus’ brand name and a range of branded buses under the ‘Starbus’ portfolio (Batra, 2005).
Extending Established Brands Extending established brands vertically or horizontally in line, vertical or and brand extension strategies: For example, Coca-Cola company usually introduces new Cola drinks as line extensions from Coca-Cola (Coca-Cola Zero). BMW cars and Uncle Ben rice extend their respective brands upmarket and downmarket in the same category under their established brands (from BMW 5 to 3 series, or from Uncle Ben rice to Wild rice). Google extended its global brand from search engines to maps (from Google to Google Earth). The Virgin company increases business to brand relevance through category extensions from music, to cars to bridal wear, always extending the promise of the Virgin brand (Aaker, 1991).
Leveraging External Brands Through Licensing A reputed brand asset can be leveraged from aligned or outside brand portfolio: Sony Ericsson licenses the Walkman brand from the Sony brand portfolio and uses it as a sub-branded ingredient for dedicated music phones. This strategy creates instant brand awareness and a point of difference from generic Mp3 formats and traditional sub-brands
Exhibit 4: Nespresso a Result of Integrated Brand-Based Business
Development
Source: Nestlé.
The Icfai University Journal of Business Strategy, Vol. VI, No. 2, 200936
in this segment such as Nokia Express Music. In a similar manner, Acer computer licenses the Ferrari brand to their top of the line laptop computers. The Virgin brand is often referred to as one of the most extended brands (Riezebos, 2008). Licensing brands in this way can create instant business-to-brand relevance.
Managing Real Brand Alliances and Co-Branding Real long-term co-branding, revolving around sharing core values, increasing brand awareness and complementary competencies in product development can be used to manage brand alliances. Indian Oil has co-branded with Citibank around a credit card with strong functional benefits for domestic retailers (Exhibit 5). The credit card has no transaction fee at Indian Oil Retail outlets. It also offers customers 10% discount on JK Radials and 7.5% discount on BIAS Tyres. This type of reach-awareness co-branding (Blackett and Boad, 1998) integrates and combines business objectives of reach (new market segments) for each partner and creating awareness (brand awareness) in the Indian market. Acer computer co-branded with luxury partner brand Ferrari for instant self-expression. The Acer Ferrari computer appeared to have a more premium attribute- profile and self-expressive benefits than a self-branded premium line like Acer computer
limited edition. Business-to- brand relevance can increase with the help of partner strategies with high brand fit.
The different strategies discussed above, reflects a holistic make or buy attitude to the business and brand strategy process. Obviously, options for serious brand based business development includes both building the brands identity from the bottom-line or buying it or licensing it from the marketplace.
Strategic Brand Migration Strategic brand migration revolves around moving brands in a desirable direction with respect to the business strategy. A sound integration of brand and business strategy may require brand migration or a transfer of established brand equities from one business portfolio to another. According to Filipsson (2008), contemporary models of brand and business strategy fail to capture the true dynamics of brand migration at mergers and acquisitions. Electrolux group incrementally migrate strategic brands like Zanussi (life of convenience) and AEG (superior effectiveness) by endorsing them with their master brand (Electrolux).
Exhibit 5: Integration of Business and Brand Strategies Through Co-Branding
Source: Citibank.
Take up for free with the Indian Oil Citibank Card
Only one of these petrol pumps belongs to Indian Oil and gives you
free fuel! Find it and get Petro coupon worth Rs. 500 free
Business and Brand Strategy: A Framework for Integration 37
True brand integration often implies gradually stronger brand endorsement strategies (Uggla and Filipsson, 2008a). The duration of a brand migration process may vary from a few months to several years. The process is often based on movement from a house of brands to a branded house (Uggla and Filipsson, 2008b). The nature of brand migration process should ultimately be dependent on business strategy objectives, calibrated with the brand portfolio objectives of the firm, such as brand relevance, synergy, leverage, clarity and strong brands (Aaker, 2004). If and when a brand becomes a candidate for integration, the strategy should be based on gradual amalgamation of strategic brand resources into a pre-arranged business and brand structure. Consider two fictive companies, Mega Group, a global company in the IT industry, deciding on buying a strong brand, Instant IT
Solutions—with good business fit and brand equity in its market segment. In the first step when the business is acquired, all brand equity is kept within the brand and Instant IT Solutions is treated as a stand alone brand. In step two, the new business is endorsed by the Mega Group, thereby transferring associations and reputation into the brand.
Third, the logo is withdrawn and the new brand is positioned under Mega Group as a sub-brand. Finally, the IT Solutions brand is presented in a more generic fashion as a descriptor under the Mega master brand (Exhibit 6). The brand council and the business group, before any implementation of the above kind, should discuss brand migration. From a business- perspective, brand migration will not be relevant if the acquired brands have extremely strong equities in their local markets. This kind of brand migration principles could be relevant to many Indian mega brands in both service and product sectors such as, Wipro or Tata group.
A Checklist of Questions for Business and Brand Integration Integrating business strategy with brand strategy is a subtle issue that requires a lot of knowledge, both with respect to business strategy and brand strategy (Table 2). In order to enable a more structured process, a checklist is provided.
• Are all of our strategies aligned with the business mission vision and values, have we considered strategic fit with business as well as brand fit and consumer fit with the market segment? For example, even if a luxury car may have a strong strategic fit with a car business, the consumer fit may not be perfectly in congruence and so a new brand needs to be developed (Lexus versus Toyota).
Exhibit 6: Integrating an Acquired Brand with Established Business6
Instant IT Solutions
Instant IT Solutions By Mega Group
Mega Group Instant IT Solutions
Mega Group IT-Solutions
6 Instant IT Solutions and Mega Group are hypothetical brands, created for pedagogic purposes.
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Can new businesses belong to our established brand family or do we have to create a new brand for the business? Do we have an elastic business vision and mission that can be extended to new business? If the new business belongs to another target market segment, has another value-proposition, other type of associations with the target group and another price range and brand promise, a new brand may be the only solution.
• Do we have a clear brand identity for the new business or should it be developed (a symbol, a person, a product and a personality)? Do we have clear guidelines for how to present our core values and brand identity?
• Before we acquire a new business, do we have a strategic vision for the brand strategy of that business? Should the brand be killed? Should the brand be integrated to our brand portfolio through brand migration or should it be developed into a family brand in its own right? Have all options in the brand hierarchy been considered? If migration is judged to be the solution, a step-by-step strategy should be developed that can handle the migration within a specific time frame.
Discussion and Conclusion Business strategies and brand strategies diverge in many respects that may inhibit a fruitful discussion across established subject boundaries. The present paper represents a serious attempt to integrate them both for more seamless brand-based business development process. Future strategizing must upgrade the brand equity part of business strategy for increased customer and brand relevance.
General management tends to marginalize and forget the subtler brand dimension of a business strategy, which can have very serious consequences for shareholders. For example, a brand with a low marketshare and low brand vitality, but high brand recognition (Sony Walkman a few years ago) may still be interesting from a long term strategic horizon (Washburn et al., 2000; and Uggla and Verick, 2008). However, famous companies such as Virgin, Tata group and Yum Brands have shown that brand and business strategy can be further integrated.
Table 2: Aligning Business and Brand Strategies
Business Concept Related Brand Concept Strategic Objective Activity
Merger Brand Migration Internalize acquired business into a master brand portfolio
Endorse the acquired brand stronger and position it as a sub- brand and as a generic business in the final stage
Co-Branding or Ingredient Branding
Visualize the strategic alliance at the brand level
Buy Brand Equity Buy brand and position it as a second brand Mini (BMW)
Strategic Alliance
Acquisition
Endorse the partners’ brand value, increase brand awareness and cash flow
Expand the business without brand cannibalization
Business and Brand Strategy: A Framework for Integration 39
The current discussion of order with respect to brands versus business strategy mirrors an egg versus chicken debate and should probably benefit from serious reframing. Where much of an organization’s brand building efforts once focused on acquiring, launching or aggressively extending brands to expand the brand and business portfolio, today’s focus is on trying to get a strategic fit and a balance between brand strategy and business strategy in a portfolio (Petromilli et al., 2002).
Constricted models indented to describe brand portfolio strategy or brand architecture with four perspectives (Aaker and Joachimstahler, 2000) and nine dimensions may actually appear as biased by elementaristic rather than holistic thinking, and academic aspiration rather than thorough management practice by many general managers and brand managers. Instead managers could approach the whole subject with an approach that is structured, yet much more flexible, and focus on issues at the intersection of business, brand and the customer (Petromilli et al., 2002). This new approach is simple but clear, with a focus on vision and values, identity and a structured brand hierarchy.
The integrative business and brand strategy framework presented in this paper, intends to bridge the secluded worlds of general management and brand management, internal and external factors (LaForet and Saunders, 1999) and facilitate integration of business and brand strategies in several important ways. First, the framework enhances the possibility of appreciating the strategic fit between a business strategy and a brand strategy in relation to a specific market opportunity space. For example, a corporation with a business strategy based on delivering quality cars for broad segments with a primary target group of families may see the limits to a given brand strategy in a new light and act accordingly. Toyota represents such business strategy and they accommodated their long-established sub- brand strategy (Toyota Corolla, Toyota Prius) with an individual brand (Lexus) when they identified a market opportunity and introduced a premium car for the upper market segments (Lexus). This may also require a modification of the branded product, sensitive to local preferences, such as with Kellogg’s cornflakes or McMaharaja in India.
Second, the model may facilitate a discussion of crucial decisions at the intersection of business management and brand management by assessing bottom line business criteria such as market share and growth prospects in the segment and brand equity variables such as, associations and brand awareness in parallel. From a business strategy perspective, a brand may have high or low market share, sales, future sales potential innovation, etc. From a brand strategy perspective, the same brand may have strong (weak) brand recognition and recall, differentiated (generic) associations, high or low perceived quality, etc. For instance, the successful decision to integrate the Walkman brand with the Sony brand portfolio as an ingredient brand for dedicated music players into Sony Ericsson’s line of music phones was based on brand tracking representing a combination of strong brand equity figures in terms of high brand awareness and brand recognition, combined with a weak position with respect to innovation and degree of inspiration. Third, the model can
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facilitate internal and external communication concerning brand driven business decisions and business driven brand decisions that can contribute to create consensus among different stakeholders. For example, the CEO and the brand manager will now be able to discuss and accommodate in a more strategic way, the emerging market opportunities, by assessing the whole opportunity space of building, extended and borrowing brand resources at the intersection of brand and business strategy. These discussions should hopefully be anchored in distinct brand portfolio objectives, such as, creating synergy, leverage and relevance for the brand and the business. By assessing more perspectives in parallel, managers may also be more ready to act upon strategic opportunism, to buy and integrate or spin-off brands when relevant (Jackson, 2008). Ultimately, this may be a new window of opportunity, not only for creating a brand driven business strategy, but perhaps more important, true business to brand relevance.
Future Research Future research should focus on further integrating business and brand strategies for the benefit of a more successful brand-based business development on all levels: strategy, tactics and business-to-brand implementation strategy. One pertinent field for future analysis will be to find the relationship between increased cash flow and brand leveraging strategies such as co-branding, ingredient branding and sophisticated brand endorsement. For example, can increased touch-points between brands increase the cash flow and to what extent can brand extensions reduce the volatility of cash flows (Uggla, 2002).
Especially, research efforts should be targeted at the imperative brand relevance area and should create and sustain brand relevance at the intersection of the business strategy, the brand strategy or the market opportunity space. Sometimes, new business can be developed under established brands; in other cases, new brands need to be developed. This will require flexible and adaptive brand architecture, much more dynamic than current conceptualization around branded houses versus house of brands (Aaker and Joachimstahler, 2000).
This research may be of a comparative nature (different business and brand portfolio styles of Indian versus European companies, e.g., a brand portfolio study of Tata group vs. Volkswagen group or focusing on a specific leverage strategy aimed at creating brand relevance (regional co-branding or co-promotion efforts for McDonald’s with a domestic Indian soft drink brand), or pure co-branding between domestic brands. For instance, the co-branding effort between Hindustan Petroleum Corporation Ltd. and Gitanjali Gems Limited would be extremely interesting to explore from a brand relevance perspective in many respects: First, how can a self-expressive brand of diamonds add relevance to a functional category like petroleum? Second, can symbolic customer-based brand equity be realized at a one-stop shop concept or does it require a more classical retail environment, like a shopping mall? Third, are there several potential market opportunities aligned with this business, such as fast food or ice cream brands.
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