3030 Auditorium 01/04 - DEKRA Certification

COLUMN
Provocative proposals by Ulrich Grothe – Part 4. The St. Gallen-based
business consultant and lecturer is convinced that companies waste valuable
potential by taking a timid approach to marketing. Which is why he is urging
companies to:
Take marketing decisions at the top level!
Getting your
priorities right
At times of crisis the first instinct is to
reduce costs. In parallel to this, the
management try to come up with an
idea to catapult the company back to
success. There is a flurry of visits from
business consultants. Discussions are
held with the strategists on reorientating
the company, and with investment
bankers on whether a merger or acquisition
could increase market power. In
the face of these important matters,
brand management gets pushed onto
the backburner. The marketing departments
will sort something out.
If we accept that the value of companies
today is based to a large extent on the
value of their brands, then we should
start to seriously question our priorities.
This applies all the more given that we
are not talking exclusively about consumer
goods producers here. The
The author:
Ulrich Grothe is a partner of MAB
Consulting St. Gallen, Director of the
Institute for Strategic Management
at the Boston Business School and
lecturer in the St. Gallen Management
Programme. He advises well-known
companies on corporate strategy
and innovation management.
Contact:
grothe@mab-consulting.ch
brands of IBM, General Electric and
Intel are valued at between 30 and 50
billion US dollars, putting them among
the ten most valuable brands in the world.
What makes
the brand value?
Companies with powerful brands can
push through higher prices, enjoy greater
customer loyalty, attract the most capable
employees and have significantly
lower costs when launching new products.
It is scarcely surprising, then, that
they are so popular with the stock exchanges.
Their high value also gives them
protection from hostile takeovers. At the
same time they find it easy to obtain
shares in other companies through share
swaps.
I know what you’re about to say: “That
may be true for the majors, but things
are different for small companies like us.”
In response I would cite the experience
of Kärcher, Jungheinrich, Würth, Hilti,
Stihl and many others. Companies with
great products which started from humble
beginnings and whose rapid growth
was basically down to their excellent
brand management.
Brand building
pays dividends
We respect brands. But how do you
create such valuable respect? Goretex,
Bose,Bosch, Shimano, Recaro and
many others have followed the example
set by Intel and market their products
to their clients’ customers. The actual
buyers pay more for these premium
products but can then charge higher
prices in turn. Here we are talking
about so-called ingredient marketing.
A lot can be achieved for a small amount
of money. Opposition leader Angela
Merkel with a windswept hairdo – everyone
in Germany had a good laugh and
ended up talking about it. The media
impact of this campaign was enormous
in comparison to its cost. Schwaben
Bräu served 1.125 litre mugs of beer at
the Stuttgart Volksfest. The customers
paid the normal price for a litre but were
given an eighth of a litre extra, free, by
Schwaben Bräu. This was talked about
way beyond the city borders of Stuttgart,
particularly after the rivals (unsuccessfully)
tried to press charges against the
brewery. Tupperware has never paid
any money for advertising, yet a Tupperware
party is started somewhere in
the world every 2.7 seconds.
What is the key factor?
In nearly all the examples listed above,
the companies concerned kept a tight
hold of the reins when it came to building
the brand. Bold campaigns such as
those launched by Sixt, Schwaben Bräu
or even Puma require true entrepreneurial
decision-making. It is seldom that
managers in marketing departments
are daring enough to think so unconventionally.
Which is why this is one
area you should not delegate – but take
the decisions yourself at the top level!