With only 8 days left before we usher in 2016, the criticality of long term strategic thinking for brand owners and brand builders is more than ever before.
Anne-Cécile Michaud, Global Chief Strategy Officer, Havas Media Group, recently put a strong case forward for brands to have a longer term view (over reactive, sporadic, indisciplined, short-term and knee jerk decisions). Her full viewpoint is here:
The viewpoint above assumes even more importance when we realise that this is coming from a media agency perspective, who play a critical role in shaping the design, components, execution and measurement strategy of a brand’s marketing and communication campaign. So, if strategic partners of brands can see the danger in the decline of long-term thinking, why cannot brand owners themselves? This article is not meant to be a treatise of strategic thinking frameworks for brand building, but more to highlight why long-term perspectives and direction is important.
Consider the following examples that bring out the importance of having a long-term focus on building brand equity and loyalty rather than focussing on short term sales spurts or cost reductions:
1) Impact of advertising on long-term and short-term sales: This Nielsen Catalina Solutions (NCS) Study looked at 23 US packaged food brands and conducted an in-depth assessment of the factors that influenced the long-term effectiveness of each brand’s advertising campaigns. More details can be accessed at the link below, but in short “the average multiplier for the long-term effect of advertising is approximately twice that of the short-term effect”
2) Importance of brand building in Asia: The whole world’s focus is on Asia for its dynamism, consumer confidence, openness to adopt and assimilate new thinking and for having an unsurmountable appetite to experience the best of what the world has to offer. A recent A.T. Kearney article on building strong organisations in the ASEAN region pinpoints the importance of strategic brand building with one key sentence:
“Low prices and tactical ads can drive sales and even scale—until the next guy comes along with a lower-priced product.”
The whole article (with a specific section on the importance of brand building) is here:
3) Radical and disruptive innovation requires long-term thinking:Back in 2010, the respected NESTA published a paper outlining how consumer preferences shape the innovation process in organisations. NESTA’s research identified two important modes by which consumer preferences influenced the innovation process in organisations. Below is what they found for radical innovations:
“Radical innovations responding directly to consumer needs and preferences occur as a result of a focus on longer-term consumer trends and hidden preferences that feed into the organisation through market scanning (either of the consumer or competitors), blue-sky thinking or discussions with clients”
This WSJ article beautifully highlights how a cost-focus strategy under the ownership of a private equity behemoth has negatively impacted growth for all brands in the portfolio:
Some key facts from the article that highlight the dangers of short-term thinking:
– After being bought by 3G two years back, Heinz lost market share in 65% of categories in which it had brands – Short term focus severely inhibiting growth strategies that require investment, commitment and an element of risk taking
– Heinz had only 2 major product launches in the US in its 2 years under 3G ownership – Short term cost cutting severely disrupting the innovation process
– Similar stories of failed innovations and infrequent new product introductions among other brands that 3G owns – Burger King and AB InBev (owned indirectly)
The examples above cover the domains of advertising / marketing, being strategic about brand building in high growth regions and how a focus towards severe cost-cutting can impact brand health. In short, we have got a holistic perspective on the importance of long-term thinking.
As brand owners increasingly embrace a disruptive age for brand building, there is an increasing need to adopt a few guiding principles for brand building:
1) More Courage: Even in the midst of stock market turmoils, shareholder dissent, increased threats of acquisitions and chaotic industry and category dynamics, brand owners need more courage in devising and sticking to long-term brand building strategies
2) More Understanding: When I say more understanding I mean more deeper understanding of a brand’s consumers. Long-term thinking can only be shaped if a brand not only knows its consumers very well but can also predict shifts in needs and preferences
3) More Patience: We need more patience on seeing a strategy through to its fruition, to not succumb for low hanging fruits, to not over-promote or over-discount to match competitor strategy, to not experiment with next social media platform that emerges, to stay close to your brand’s values and promise, not to look at every in-category and cross-category need state as the next billion dollar opportunity and more importantly than anything else, the patience to ignore all the voices that say that your brand is doomed if it does not jump on to bandwagon No. XXXXXX
4) More actionability: One of the common reasons to fall back on short-term, myopic decisions for brand growth is because they are easier to implement and action. Volumes have been written about the challenges and complexities of activating long-term strategies in organisations. For longer term thinking to have both the required and desired impact, activation through purpose-driven and disciplined processes is critical
If the above four principles, in their varying degrees of impact, can be adopted by brand builders, we should slowly and gradually see the emergence of stronger brands built on solid consumer-driven platforms.
I am very keen to know your thoughts and perspectives in the comments section below.
To leave you with some great reading, below is a piece from HBR outlining the reasons behind “why brands are managed by quarters when they are built over years”: