Brand Management and Organizational Structure

Brand Management

Brand and Brand Management usually go together, but not all the time. While most business types will benefit considerably from branding, Brand Management - as practiced by fast moving consumer goods companies and several other industries - is not for everyone.

The core management theory behind Brand Management is that treating the brand like a business in it's own right enables managers to be put in place to orchestrate all the aspects of managing that business. Brands are the focus of decisions and accountability, and this approach enables everyone and everything involved in the brand to share a common business mission - delivering the brand promises to the marketplace.

The Brand Wheel

As illustrated in the following diagram, Brand Management deals with much, much more than what many people think of as "marketing". Marketing is concerned with far more than just the advertising and demand generation side of things.

Here, things can get somewhat philosophical. Even though all the above functions may not report to the Brand Manager directly, he or she is really acting in a sort of general management role. One of their absolutely key tasks is to ensure that the organisation understands the value which the brand is promising to deliver to customers and the brand identity that the business wishes to project in order to maximize it's appeal and build customer franchise and brand equity (see Brand Profile).

Is this very different from what a business unit manager does in many other industries? The answer depends on how the management accounts are structured... In an organisation that has fully implemented brand management the entities around which allocations, operating expense budgets, headcount, and sales targets are structured are the brands, rolling up into brand groups, which themselves may roll up to categories. While functional areas such as manufacturing, customer service, IT, sales channels, and marketing communications may all have their own budgets and structures, they will also be accounted for (and possibly matrix-managed) across the brands. The organisation will be managed principally on the P&Ls of the brands.

Brand Equity versus Customer Intimacy

Over time, of course, brand equity takes on a life of its own. The brand identity may be seen as the core asset to be developed and grown, while individual products and services may play a supporting, even transitory role in developing the strength of the brand in the marketplace.

Ultimately the danger here is that Brand Managers adopt a style that has much in common with product-centric organizations... The central focus becomes the Brand, and not necessarily the customer base or customer intimacy.

Paradoxically, the Brand Management approach can be akin to the production-focused business whose focus is to develop ever "better" products and find customers to sell them to.

The dangers of loosing touch with customers are enormous.

Customer Franchise and Customer Equity

Maximizing a business' customer franchise, or customer equity, is now being contemplated as the greater goal, with brand playing a supporting role. In some circumstances this means that individual brands may be de-emphasize or sacrificed in order to maintain or build more profitable, long-term relationships with customers.

This does not mean that Brand Management is unimportant, but it does mean that it has to be balanced with an overriding discipline which puts customers and growing the value of a business's customer franchise - its customer equity - as the central objective of a business.

Being customer-centric, not brand-centric

To many it will seem illogical to speak of brand management as if it were not customer-focused. All Brand Managers go to considerable effort to develop greater understanding of customers, talk about being customer-focused, and ideally develop customer-centric branding strategies.

The challenge, however is not to pay attention to the needs of customers, but to drive the business around the objective of building stronger, broader, more enduring, and valuable relationships with customers.

Brand and Organizational Structure

It may be that a company can take decisions that build both brand equity and customer equity.

But what matters is how the power in an organisation is structured when decisions have to be made about tradeoffs between brand and customer-relationship.

An organisation that is inherently brand-centric may make dangerous choices for the long-term.

An organisation structured to bias decisions in favour of maximizing customers' value from the relationship, is building stronger and more enduring profit streams.

To this end, an increasing number of companies are putting "Customer Segment Managers" and "Market Managers" in place.

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