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What Are Brands Good For?

October 15, 2004 | Niraj Dawar | Marketing

Brands are an indispensable part of modern business. That is true in large measure because of a brand's remarkable efficiency in "aggregating" consumers -- reaching large numbers of people with a promise to deliver a clearly stated benefit that sets it apart from competitors. But the information revolution is undermining the logic of aggregation, the very source of brand power. In fact, it is becoming evident that in an information-rich environment, consumer disaggregation is vastly more efficient and profitable than aggregation.

Using customized publications, e-mail, direct mail, Web sites and call centers that are based on a common platform of consumer information, companies are demonstrating that they can effectively and efficiently drive consumer behavior through two-way communications. Common underlying databases ensure that each interaction is personalized, regardless of the channel through which it occurs. And each interaction with the consumer builds the consumer database further, making future interactions even richer.

The implications of the information revolution for the role of brands in business are far-reaching. Many of the strategic and tactical tasks entrusted to brands can now be performed better, less expensively and more profitably at the level of consumer segments. And companies' brand-centric structures are not suited to marketing initiatives that are based on reaching segments or individuals. Given this changed environment, the author calls on companies to rethink three core areas of brand management: the consumer relationship, the channel relationship and the organization of brand management. To support his case, he draws on detailed examples involving Kraft, Procter & ; Gamble and Tesco.

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