STRATEGY FOR BRAND GROWTH
by Lim Lay Ying
Property Times, New Straits Times
23rd October 2004

Not much has changed.

Even in this age of technological innovation, business is still about people. Today, just as in the early days, the customer comes first (and is always right). Those merchants who took pains to know their customers as people, enjoyed brisk sales, improved profit margins, and gained customer loyalty.

And that’s how a brand’s reputation is determined: by what customers say about it and how they describe it in their everyday lives. Together with product leadership and operational excellence, organizations have secured market-leading positions and sustained a competitive edge over their competitors.

The I&P brand three decades ago, was one of the premier icons of success and easily one of the most recognized brands in housing development in the northern region. The brand was a household name amongst people in the north (more specifically, Penang). It was the real estate success story of the 1970s and early 1980s.

I&P was a big brand. But in the context of the real estate development business in the country, it was not in the league of major builders. For example, the company Island & Peninsular Bhd. was a relatively small developer by national standards back then, with only a handful of notable residential projects. The more prominent ones on the island include Island Glades, Island Park, and subsequently Taman Sri Nibong.

The essence of the brand’s success then was not judged by the size of the company. The true size of the I&P brand equity was more subjective than quantifiable. The company had built its brand not through advertising, promotion, or the lowest price, but through the customers they intimately serve and satisfy every day.

New paradigms

In today’s highly competitive real estate development marketplace, exceeding customers’ service expectations and providing better quality and value, are as fundamental as ever. However, the business environment is a lot more complex than before, and successful brands have been observed to lose their sizzle as competition intensifies and new players enter the market. At times, expansion into entirely new geographical boundaries or change in leadership and management philosophies internally, have also been the cause of a brand’s decline.

Maintaining pole position of a particular brand is no easy feat. But with the stakes of ensuring long-term profitability and growth of the company so high, new paradigms in brand value enhancement need to be explored.

One approach that is getting increasingly popular amongst major global enterprises is brand partnership or alliances. Alliances, which offer tremendous advantages, however are distinctly different from co branding, licensing, cooperative advertising, etc. They are about partnering with even other competing brands to create win-win situations that will yield benefits to both organizations.

When retailer Starbucks saw the need to sustain competitive advantage and extend its brand into new product categories to ensure growth for years to come, the management sought out appropriate partners with whom to attract new customers.

One of the alliances it formed was with the Pepsi-Cola company to create “Frappuccino”, a bottled cold coffee beverage that appealed to an entirely new audience. The alliance sealed in 1994-95, opened the door to new opportunities for customers to gain access to Starbucks. In 1995-96, with partner Dreyer’s Grand Ice Cream, the company developed and distributed a new line of coffee ice creams. They now offer about ten flavours – in a variety of packages and types – in retail food stores across the United States.

Enhancing brand equity

September 1998 saw Starbucks forming a long-term partnership with Kraft Foods to accelerate the brand’s growth into supermarkets across the United States. Between the period 1991 to 1998, it had twelve brand alliances which expanded the number of stores by 4,041 in the US alone. Brand allies include Barnes & Noble Bookstores, Nordstrom, United Airlines, and “Oprah’s Book Club” in addition to Pepsi-Cola and Dreyer’s.

What can be learned from Starbucks’ strategic brand alliances? It made sure that only those brands that are consistent with the brand’s reputation for quality, leadership, and expertise, fit into their expansion plans.

The same experience unfortunately cannot be said of Ritz-Carlton’s partnership venture with Bulgari. When the luxury hotel group teamed up with Bulgari Group several years ago to create an opulent new hotel chain, the company envisaged a new level of glamour for the brand. But it was nothing near what was envisioned when the first Bulgari Hotels & Resort property was revealed in Milan in May this year.

No where did the Ritz-Carton name appear – not on the hotel’s door, lobby, bath towels, or stationery. Marriott International Inc., which owns the hotel brand, had expected to get more mileage from the partnership since it was a 50-50 joint venture. It had hoped the Bulgari image would provide entree to new customers: celebrities and wealthy business people who sought quality without frumpy formality.

But unlike Starbucks’ successful moves in brand alliancing, Ritz-Carlton is having a harder time because of the Italian jeweler’s opulence and more deluxe brand image.

For real estate development organizations, strategic brand alliances can pave the way for future growth and reinforce brand positions along the way. However, at the outset of any partnership venture, the most fundamental issue is to determine the right fit so that no wrinkles in the relationship surface later on. There has to be mutual trust and cooperation in order that mutual goals and objectives can be accomplished at the end of the day.