The future has arrived

Does Branding Pay?

Ian Davis
KcKinsey & Company, UK

Branding is alive and well, but in many instances branding power has shifted from the manufacturer to the retailer, and in certain markets and circumstances it may be more profitable for the supplier to concentrate on products rather than on brands. For manufacturers with a genuine competitive advantage, branding will continue to pay as a commercial investment: for others it will not, and they should reshape their business accordingly.

Many people in the consumer goods world seem to believe that branding is under intense pressure and may even be headed for the knacker's yard. In support of this belief they cite the decline of previously flourishing brands, the continued price and discount pressure from increasingly powerful retailers with the associated squeeze on margins, and cutbacks in their own real advertising expenditure. From their perspective, branding, whether viewed as a marketing technique or as a business philosophy, is at best in big trouble.