Brand management is the practice of managing all aspects of a brand, from tangibles such as logo and package design to the intangible tenor of the emotions a consumer experiences when purchasing a brand product or service. First used in its modern form by Procter & Gamble in 1931, brand management has become a standard method used by virtually all organizations marketing any type of product or service. This article begins by reviewing the history of brands and the origins of brand management. It then turns to the two main types of brand management, exploring the philosophies and organizational strategies associated with each. Next, it examines how the rise of Internet commerce and advertising has affected brand management. Finally, it turns to the future of brand management, anticipating what changes the field will likely undergo as the 21st Century continues.
Keywords Brand Equity; Brand Identity; Brand Manager; Competitive Advantage; Corporate Brand Personality; Functional Brand Management; Internal Brand Management; Product Differentiation
Marketing: Brand Management
In today's highly competitive marketplace, brand management has become one of the primary tools used by organizations to gain a sustained competitive advantage over rivals (Louro, M. & Cunha P., 2001; High, 2004). While all products or services can eventually be copied, brands are not easily imitated. If marketers successfully endow a brand with associations that tap into consumers' emotional states, then branded products retain some degree of product differentiation, even if the products themselves are copied by competitors (Bengtsson & Firat, 2006). This is the primary goal of brand management: to use a brand to add value to the intrinsic value of a product or service (Keller & Richey, 2006). This added value is called brand equity.
The term "brand" is understood to have a number of different meanings. Some people use the word brand interchangeably with “logo” or “label.” In these contexts, the term brand refers to the legally protected trademarks, trade names, and trade symbols used to differentiate products. Others use the term in a more expansive sense, to denote the larger bundle of trademarks associated with intellectual property, including product design and packaging, advertising content, sounds, domain names, as well as innumerable other items. Finally, still others use "brand" in an even more holistic sense, to indicate the company that owns a given brand. The terms corporate brand and corporate brand personality are often used interchangeably with “reputation” (High, 2004). The field of brand management accepts and engages with all of these different meanings of the term.
Since the beginning of the twenty-first century, brand management has expanded its scope in order to deal with the challenges and opportunities presented by the Internet. As a global marketplace, the Internet poses new legal questions about brand names and trademarks; questions that were long ago resolved in the traditional marketplace. So long as brand managers are aware of these legal issues, they can use the Internet to exponentially increase consumer awareness of brands (Loosley & Gregory, 2004).
The future of brand management will likely include many other changes besides those instigated by the Internet. The field has long been criticized for a lack of accountability, as no reliable measurements have yet been devised to measure the performance of brand managers. New research into brand metrics promises to change this situation in the near future (Keller, 2001).
History of Brands
The roots of brand management can be traced to the late 19th Century, when a number of business owner-entrepreneurs working independently of one another established the first successful, nationally-recognized branded products (Low, 1994). Before this time, brands and advertising in general had been associated with disreputable vendors, such as quack medicine salesmen. But beginning in approximately 1870, and facilitated by Civil War-era improvements in long-distance transportation and communication, as well as advancements in the art of packaging, the first hugely successful brands were born. By the turn of the 20th Century, consumers were beginning to associate brands with quality and consistency, two characteristics largely missing in unbranded manufactured goods of the period (Low, 1994).
During these early years in the history of brands, what we would now refer to as brand management was carried out exclusively by firm owners or presidents. The creators of the first successful brands were visionaries, and the novelty of branding made managing newly-created brands the personal project of these forward-looking business owners. Often these men developed brands despite resistance at every level of their organization; from the board of directors to the sales force, company employees were hesitant to embrace changes they did not fully understand (Low, 1994). No single management philosophy or organizational structure predominated during this period. Rather, brands were managed with an "intuitive and common-sense approach" by their entrepreneurial-minded creators (Low, 1994, p. 177).
Only after the market leadership of branded products was established did the management of brands become the domain of professionals. Between 1915 and 1930, the management of brands was transferred from the chief executive suite to the control of specialized managers, who worked with advertising agencies to promote existing brands and bring new brands into being (Low, 1994). During this period, a functional style of managing brands emerged. This first generation of middle managers entrusted with managing brands represented "an entirely new class of businessmen," which was not made up of independent, creative entrepreneurs, but of salaried professionals trained in functional specialties and rational problem-solving (Low, 1994, p. 177). These men used their pragmatic skill-set to conduct market research and product testing, create appropriate advertising, develop attractive packaging, prepare sales manuals, and run sales promotions. Managing brands became team-based and highly reliant on a functionally organized company model. Team members, each with their own specialty, worked together in order to develop and market a company's brands (Low, 1994).
While this functional method achieved extraordinary results during the early 20th Century, problems soon became apparent. First, poor coordination between team members (and often an outside advertising agency as well) could be disastrous. Second, companies had no formal system for promoting more than one brand in any given market. And, most importantly, no single person was held accountable for the overall success or failure of a brand (Low, 1994). It was this last grievance that Neil McElroy, of Procter & Gamble (P&G), sought to address in his now famous 1931 memo that invented both the idea of modern brand management and the term “brand management.” McElroy suggested that instead of organizing marketing and advertising departments functionally, P&G should organize these departments by brand, with each brand run by its own set of brand managers. P&G adopted this new system in 1932, with most other advertising firms following suit during the 1950s and 1960s (Low, 1994).
Between 1930 and 1950, P&G's brand manager system was adopted by very few other agencies. However, in the two decades following World War II, it was adopted en masse until, in 1967, 84% of large consumer goods manufacturers in the United States had brand managers (Low, 1994). This large-scale shift from a functional organizational structure to the modern brand manager system was largely due to the proliferation of brands. As it became increasingly common for companies to have multiple brands, it became more difficult to manage these brands with a functional system. Delegating responsibility for a brand to a single brand manager became the only system that seemed to make sense in this environment (Low, 1994). Once the shift was made, a company's various brands became nearly autonomous entities, run by brand managers with a remarkable degree of autonomy, "like a mini-company" (Pearson, 2004, p. 76).
The rapid assimilation to the brand manager system that so many companies underwent during the 1950s and 1960s contributed to a backlash against this system during the 1970s. Companies complained that the system increased the size of bureaucracies, and that brand managers had too vague a job description and too little authority to be truly effective. During this period, companies did not abandon brand management altogether, but merely adapted the brand manager system to their own company culture and needs (Low, 1994). From this time onward, brand management became a far less rigid field, dominated not by just the brand manager paradigm, but accommodating to countless new organizational approaches. Beginning in the 1980's and continuing to...