CLASSIC JACK: The Rebirth of Brand Loyalty

Published: July 5, 2007 at 08:06 AM GMT
Last Updated: September 20, 2007 at 08:06 AM GMT

By Jack Myers

From Jack Myers 1993 Book, AdBashing

Originally Published in 1993

During the past 15 years, a dynamic shift in the corporate world has been away from sales and marketing-driven management and toward MBA schooled financial management. Many corporations now are realizing that a balance is necessary and that textbook management, focused solely on quarterly profits, is not productive. Corporations in the 1990s and beyond, are beginning to depend on marketing to maintain and improve their market position and respond to a highly competitive marketplace for which traditional case study training did not prepare financial management. During the next ten years marketing professionals will take over the top positions in their companies as they wrest corporate control from the finance departments.

A 1990 article in The Marketer, the publication of the Association of National Advertisers, points out that '"Increasingly, consumer goods marketers are being tapped by companies and services that are not marketing-driven and being asked to transform the corporate culture. The reasons why are legion and obvious: all businesses are facing greater competition, increased costs across the board and a consumer body that is about as pesky to define and hit as a mosquito. The marketer - bless him - is supposed to divine and manage all of these changes.'"

What the average marketing manager has experienced, however, says The Marketer, '"is everything from blank stares at your buzz words to outright hostility at your presence.'" Throughout the 1990s and beyond, marketing managers will be turned to increasingly for their expertise. Blank stares and hostility will change to desperate pleas for direction.

There are those who believe the bullish economy of the Reagan era was a false economy, buoyed by leveraged buyouts and increased corporate and government debt. These individuals correctly point to low individual savings, decreasing consumer confidence and the sustained economic recession of the early 1990s. While some economists envision a continuing economic slide, I envision an invigorated economy in the second half of the 90s, founded on a return to power of America's marketing management.

Several studies have tracked the disintegration of brand loyalty during the 1980s. Brand equity, which took years to build, has eroded as corporations have concentrated their marketing efforts on short-term promotional activities and simultaneously cut back on the percentage of their marketing budgets devoted to establishing brand equity.

Companies generated brand loyalty for their products at a time of minimal competition and when mass media were available at comparatively low costs. They aggressively promoted their brand image and identity through mass media advertising.

As consumers became less homogeneous in their tastes and the numbers of products increased, competition became fiercer. Manufacturers shifted strategies away from mass media and toward targeted marketing and promotional couponing efforts, attempting to incent customers to purchase their products. Ultimately, the marketing process has imploded on itself; companies have emphasized price cutting, promotions and trade allowances. The more price cutting and couponing they do, the more consumers expect them and base their buying decisions solely on price. The more trade allowances offered by marketers, the more demands retailers make in return. As marketers have placed more emphasis on short-term promotion, the equity value of their brands has collapsed. Now companies are faced with the challenge of rebuilding brand loyalty and rebuilding profits at a time of intense competition and fragmented, expensive media.

To respond to this challenge, business requires a new set of paradigms. Whereas corporate marketing executives have been operating under financially restrictive parameters, future corporate directions must entitle them to act aggressively and creatively. A complete reversal of the strategic/tactical balance should be considered.

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