Strategic megabrand management: does global uncertainty affect brands? A post‐9/11 US/non‐US comparison of the 100 biggest brands
| DOI | https://doi.org/10.1108/10610420810916344 |
| Date | 31 October 2008 |
| Pages | 436-451 |
| Published date | 31 October 2008 |
| Author | Gabriele Suder,Claude Chailan,David Suder |
| Subject Matter | Marketing |
Strategic megabrand management: does global
uncertainty affect brands? A post-9/11
US/non-US comparison of the 100 biggest brands
Gabriele Suder
CERAM Business School, Sophia Antipolis, France
Claude Chailan
International University of Monaco, Monte-Carlo, Principality of Monaco, and
David Suder
CANCA, Nice, France
Abstract
Purpose – The primary purpose of this study is to identify if and how international terrorism has altered the rank and value of brands, and whether the
increasing uncertainty of globalizing risks need an adaptation of international brand management.
Design/methodology/approach – The methodology for this study was exploratory and quantitative at the same time, and utilized longitudinal brand
ranking and a cross-sector and cross-industry data in a comparative research design. Both descriptive and relational statistics are used to analyze the data.
Findings – The key findings reveal that, in the five consecutive years after 9/11/2001, brands have experienced significant moderation in rank and
value. A significant gap in the evolution of US and non-US brands was found in this period of time. The evidence calls for brand management that
reflects the risks that globalized at the same pace as brand reach.
Research limitations/implications – The limitations to the study are that the findings cannot explore all possible causes of uncertainty, but it
nevertheless provides strong indications.
Originality/value – Managers should not assume that terrorism and other globalizing risks only cause direct physical destruction; they need to be
adequately prepared to handle indirect impact that can alter the rank and value of their brands.The paper identifies specific areas for future megabrand
strategy and calls for its internationalization.
Keywords Terrorism, Brands, Uncertainty management
Paper type Research paper
Corrigendum
In the original 2008 publication of this article the mention of
Dr Chailan as second author was omitted. This has now been
corrected in the online version of this article. The cor rect citation is
thus: “Strategic megabrand management: does global uncertainty
affect brands? A post-9/11 US/non-US comparison of the 100
biggest brands” by Gabriele Suder, Claude Chailan and
David Suder, Journal of Product & Brand Management,
Vol. 17 No. 7, 2008.
An executive summary for managers and executive
readers can be found at the end of this article.
Introduction: from brand management to
megabrand strategies
The objective of this research article is to shed light on the
evolution of brand management into a crucial strategic tool
for international business operations. On basis of the
literature available in this field, we analyze the largest 100
brands (hereafter categorized as megabrands) in terms of
ranking and value modifications in the 2001 to 2005 period, a
mature globalization period, with the first ranking referring to
pre-09/11 findings. The sample and its analysis provide us
with significant findings that open crucial questions about
US/non-US brand strategy and perceptions, and the future
application of global megabrand policies. We then shed light
on the causal factors that global terrorism may contain and
tentatively propose brand strategy solutions, but do not
exclude other causal factors or co-factors that will need
further inquiry. Overall, our hypothesis is that brands serve to
bring security[1]. Accordingly, if the source of that brand is
less secure, then it will be less effective as a brand. This
hypothesis needs to be qualified: In particular, would one not
expect that the short run reaction to insecurity is to be more,
rather than less brand loyalty? The findings of this study have
a strong indication that this assumption can be reversed, and
we indicate that indirect impacts of global terrorism might be
the reason. Further, it is important to show that negative
security shifts in the US have been greater than a general
increase in malaise in the global markets where the brands are
sold. Again, the data indicates that movements in brand value
and ranking appear to respond to more than such a malaise.
Being a simple “identification tool” at its very start, brand
names have become a critical part of a company’s strategy.
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1061-0421.htm
Journal of Product & Brand Management
17/7 (2008) 436–452
qEmerald Group Publishing Limited [ISSN 1061-0421]
[DOI 10.1108/10610420810916344]
436
Academic research has shownthat one major historic reason for
brand success is the diminished risk perceived by the consumer
(Roselius, 1971; Kapferer, 1991; Keller, 1998; Riezebos, 2003).
McCarthy (1971) highlights the three primary roles of brand:
.identification and purchase simplification function;
.brand has a projective, symbolic and imaginary function
and provides the consumer with a status; and
.brand guarantees quality, protection and risk reduction for
the consumer by pointing out to its source.
For these reasons, companies are willing to consider brands as
an important asset of their balance sheets or to invest huge
amounts of capital to buy them (Lafore
ˆt and Saunders, 1994).
The power of brands is founded on consumers’ aversion to
uncertainty. For a long time, consumers made their food
buying decisions based only on a product’s visual aspect,
ignoring its brand name, accepting instead the grocery store
owner’s opinion as selection criteria (Boyer, 2002). Later on
producers introduced clearly visible signals that identified
their products and consumers then got used to preferring the
signal as opposed to the product visual characteristics (Keller,
1998); that is, brand became more important than the
product itself (Riezebos, 2003).
Even at the present, perceived risk reduction is the first
reason consumers have for choosing a brand and this guides
brand management evolution (Kapferer, 2003). When
consumers perceive a risk in making a buying decision, they
will deploy different strategies for reducing it. Five major risks
are considered by consumers:
1 Financial risk (“making a bad deal”, which increases the
importance of the brand compared with the unit price of
the product).
2 Physical risk (being harmed by the product, especially
food products).
3 Technological risk (being disappointed by the product
performance, it is the risk of functionality).
4 Psychological risk (feeling guilty or irresponsible for
temptation, especially in impulsive decisions – or
associating harm or risk to the brand, either associated
to fear or sadness).
5 Social risk (what pairs will say or think about choices.
Therefore brand is a sign of possession for a community,
but also a sign of adherence, of patriotism or of
association to or away from particular social issues.)
Risk reduction function directly related to the brand has been
increased by the macro-economic context, especially after 09/
11 because a fragile and complex environment is expected to
increase the role the brand has to play in reassuring the
consumers’ buying decisions. Even though, we later argue
that the capacity of brands to link producers and consumers
has been rudely challenged. There have been drastic changes
of consumption habits in some markets, such as the
acceleration of the coming on-stream of the hard-
discounters in Europe, with a new approach to the quality
– price relationship and the weakening of the brand, of low-
cost airlines, and of non-brand textiles from low-cost
production. Companies have reacted to these new
challenges. This new environment has notably changed the
way in which big international companies conceive of their
brands. Brand guarantee and its image are shelter points for
consumers: normally, the higher the risk the more helpful the
brand. Consequently, brands have learned a different way of
communication (e.g. emphasizing safety themes, as carmakers
do already), to change their relationship with the environment
or towards the Third World (e.g., Nike reconsidering its
production policy in order to improve its brand image) but
also with globalization (e.g. being more respectful of local
brands, as Nestle
´is). Brands also start working on ethical
matters (The Body Shop’s cosmetics products), fair trade
(Malongo coffee) or social responsibility. But one of the major
facets of this adaptation of brands and firms to the new
situation is the coming on-stream and acceleration of
megabrands within companies.
Megabrands?
Traditionally, choosing brand strategies is the focal point for
companies, whether they are multinational groups or local
companies (Schuiling and Kapferer, 2004). Supposing that a
firm has different sources of competition, one of the strategic
issues is whether it uses one or several brands. Strebinger
(2002) states that one of the most critical problems in
branding relates to the management of a mono or multi-brand
system while Riezebos (2003) questions whether it is feasible
having just a single-brand strategy in the company, with a
prime focus on one brand and then developing additional
brands from it.
The historical development of branding includes some
deeply contradictory factors, as shown in Figure 1.
This figure visualizes and conceptualizes a company’s
willingness and need to have numerous products able to meet
the different customers’ demands as appropriate as possible,
to assure their expansion and international development, that
is, to counteract all risk of being a single-brand company.
Likewise, there is a need for limiting the number of brands
because of a second risk: that of a brand overexposure or over
usage, including the financial risk of dispersing the
investment.
The first risk leads companies wishing to develop to buy or
launch more brands in order to enter markets, segments or
customers inaccessible with only one brand. This may be an
“inflationist” process in terms of markets as it leads to create
many brands.
The second risk takes the same companies in the opposite
direction, trying to limit the number of brands in order to
maximize investment per brand, thereby making the brands
stronger and covering more territory.
Figure 1 Contradictory tendencies in brand development
Strategic megabrand management: does global uncertainty affect brands?
Gabriele Suder, Claude Chailan and David Suder
Journal of Product & Brand Management
Volume 17 · Number 7 · 2008 · 436– 452
437
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