Exploring the Essence of Brand Portfolio Management Daniel

Daniel Filipsson Filipsson Daniel During the past two decades research has shown that brands are among a company’s 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 leverage In-Between Brands: Exploring the Essence of Brand Portfolio of Management Brand Essence the Exploring In-Between Brands: strategies within complex brand portfolios. Moreover, the majority of today’s established brand concepts do not represent the reality of contemporary brand management. Instead, they tend to be based on dichotomies and simplifications. In addition, there is a lack of criticism towards many of the established brand concepts resulting in the reduction of brand management to a number of static categories and stagnated defini- tions – thereby missing out on the analysis of important intersectional issues between the various categories. This book explores the somewhat forgotten area of intersection, investigating the territory in-between brands. The findings show that conventional brand management models and terminology do not fully explain common marketplace strategies and practice. As a result, this research introduces a more realistic viewpoint and dynamic framework that is based on conver- gence and that allows migration and iteration rather than today’s static approach. The framework, named the brand leverage palette, introduces various nuances between different leverage strategies, both adding clarity and offering guidance by explaining different migration movements among today’s brand portfolios. Exploring the Essence of Brand Portfolio Management Daniel Filipsson Daniel Filipsson is a marketing researcher at the Stockholm University School of Business focusing on strategic brand management. In addition, he has a background of working with business development and marketing and has combined his academic research with his professional experience as a brand consultant, leading projects with both Swedish and International clients. ISBN 978-91-7155-777-3 School of Business Licentiate Thesis in Business Administration at Stockholm University, Sweden 2008 In-Between Brands: Exploring the Essence of Brand Portfolio Management Daniel Filipsson In-Between Brands Exploring the Essence of Brand Portfolio Management Daniel Filipsson © Daniel Filipsson, Stockholm 2008 ISBN 978-91-7155-777-3 Front cover image: © Magnus Aldemark Front cover design: Magnus Aldemark and Thomas Wide Printed in Sweden by E-Print, Stockholm 2008 Distributor: Stockholm University School of Business To my parents Preface Branding is defined by American Marketing Associations as: “a name, term, design, symbol, or any other feature that identifies one seller's good or ser- vice as distinct from those of other sellers”. It is a phenomenon that has grown in importance as well as interest over the last two decades (Klink and Smith, 2001; Keller, 2003a). However, the interest in branding began when the industrial revolution and mass production created a need for entrepre- neurs to establish a favorable position for themselves in relation to other manufacturers. In the beginning, positioning and brand promises were mainly about functional benefits such as selling shampoo with brand promises like – “100-times more foam”. In the increased competitive landscape of today, when production and consumption no longer are a matter of strictly functional benefits (Schroeder and Salzer-Mörling, 2006), there has been a shift towards visual, emotional, symbolic and self-expressive values such as – “Because you are worth it”. Branding and strategic brand management has since the late nineteenth-century transformed from something which mainly concerned FMCG (fast-moving-consumer-goods) companies towards something that is of importance for all types of companies and organisations in- cluding B2B-companies, non-profit organisation, government and political parties. During the past two decades research have shown that brands are among a company’s most valuable assets, and something that plays an important part in everyday life – being the core focus of most marketing strategies (Kapferer, 2001; Klink and Smith, 2001; Keller, 2003a; Schroeder and Salzer-Mörling, 2006; Arvidsson, 2006). One reason for this is that many companies are facing an increasingly competitive situation which demands long-lasting competitive advantages, something that a brand can provide since it represents a non-time limited exclusive right which can be seen as a never-ending asset (Melin, 1999). Another reason is that we live in an increasingly complex world, with indi- viduals facing more and more choices with less and less time to make them. It is here that the attributes of a strong brand becomes interesting in terms of the ability to simplify consumers’ decision making, reduce risks, and set expectations (Keller, 2003a). Moreover, the growing competition in global markets, rising cost and clutter in mass-media advertising, need for effi- ciency, integrated communication and the search for alternative communication have all resulted in the greatly heightened importance of brands globally (Askegaard, 2006). Furthermore, brand issues have made it to the board- room, with many executives considering their brand(s) an important form of immaterial capital (Keller, 2003a; Arvidsson, 2006). Brand value has ac- quired growing weight in financial decision-making (Arvidsson, 2006), not least since a company’s reputation and image now carry the same risk and returns as a company’s financial situation (Laforet and Saunders, 2005). An example of this importance is that 59% of Coca-Cola’s, 61% of Disney’s and 64% of McDonald’s capitalisation is attributed directly to the value associ- ated with the corporate brand (Balmer, 2006). Moreover, for companies such as BMW, Nike and Apple, the brand represents more than 75% of the accu- mulated stock value. These examples show that consistent brand building results in added-value – not at least for the shareholders perspective. This has also led to brand building and brand management being considered more and more as strategic areas that management need to take into consideration (Melin, 1999). However, in today’s competitive landscape, it is not enough to just create strong brands. There is also a need to find alternative and more cost effective solutions to every day management problems as well as for future develop- ments and innovations. The focus lies not in constructing intangible assets (brands), but instead in managing intangible assets, considering it an established investment that needs to be managed and developed (Uggla, 2002). Contemporary brand management with its complex brand portfolios and range of brand leverage strategies (extension, co-branding, ingredient branding and mixed brands) has become more of a rule than an exception in today’s businesses (Laforet and Saunders, 1994; Bengtsson, 2002). However, as I will argue for in this research, the majority of today’s established brand concepts do not adequately take into account the myriad types of relation- ships, sub-strategies and migration processes that represent the reality of this area of brand management. Instead, they tend to be based on dichotomies and simplifications focusing on specific leverage strategies and therefore missing out on a more holistic perspective and the interaction in-between various leverage strategies – introducing the idea that there is a clear differ- ence between them. It is therefore my intention to further study this somewhat forgotten research area of intersection, investigating the area: In-between brands. Daniel Filipsson Stockholm, November 2008 Acknowledgements During the work with this dissertation, I have been inspired by, and received insights from a lot of people, people that have assisted and encourage me on this journey – something that I am extremely grateful for. Among these people, I would first of all like to send sincere thanks to my tutor, Professor Sten Söderman, for your encouragement, your support and that you have guided me all the way from the first words to the last – thank you! I would also like to send a special thanks to my assisting tutor, Associate Professor Henrik Uggla, for all our intellectual meetings, lunches and discussions regarding the “mysteries” of strategic brand management – I hope that this is something that we will continue to do. My research has also been influenced by research colleagues over the years with whom I have shared the good and the bad, research ideas and jokes. Thank you; Robert Demir, Niklas Gustafsson, Fredrik Hallberg, Anna Fyrberg, Anita Radon, Rein Jüriado and Ragnar Lund. In addition I would like to express my gratitude to Jay Simpson and Professor Evert Gummesson for their comments on the manuscript – your insights are highly valued. Thanks to Olof Karlander and Kerstin Wallentin at ATG and the research foundation of MTC who have provided generous financial support. Many thanks to Magnus Aldemark and Thomas Wide, designer colleagues at Essen International for your help with the cover design. Also, thanks to all students that I have been teaching at Stockholm University School of Business, Royal Institute of Technology, Berghs School of Communication and University College of Arts, Crafts and De- sign, who challenged me and the established “truth” within strategic brand management. I also would like to send a special thanks to my better half, Hanna Holmberg, who has been a support throughout the entire time – I thank you for everything! Another person who has meant a lot in this venture is Fredrik Ribbing, you are a great friend and have supported me in many ways throughout the years. My parents, Lars Filipsson and Kristin Filipsson, thank you for letting me know that I can do anything. Moreover, many thanks to Essen International, Thomas Sjöberg and Christine Cederstrand, who understood the importance of academic research, and who agreed to let me work part-time as a brand consultant, combining this with the writing of this dissertation. Many thanks to all of the respondents who co-operated with me in my empirical research, your openness and willingness to share were essential for my work.

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