Beware of Commodifying Promotions

There are two kinds of brand management: intentional branding and holistic branding. Intentional branding is all about what brand managers intend to do with the brand. Usually, this involves a list of the traditional activities associated with branding - everything from logo design to integrated marketing communications.

Then there is holistic branding, which goes beyond the intentions of the branding team and adopts the consumer's viewpoint. Holistic branding considers every possible interaction, intended or not, that consumers have with the brand.

Too often a brand manager's myopic focus on intentional branding comes at the expense of the holistic perspective. Take one effort from Cadbury's Dairy Milk.

From an intentional viewpoint, Cadbury embarked on an ambitious £20m campaign that focused on the centenary celebrations of the brand, using television, print, radio, online and in-store activity. The campaign was based around the aspirational message 'You dream it, we make it' and it emphasised the rich, smooth qualities of the chocolate bars.

From  the holistic view many consumers of Dairy Milk had a single recurring brand experience that was anything but aspirational.

Across the UK, Cadbury ran a buy-one-get-one-free (BOGOF) promotion through WH Smith. As consumers approached the checkout, their first exposure to Dairy Milk and its sub-brands was piles of chocolate bars, often 10-deep, on the front of the sales counter.

Then, as they paid for their newspaper, they were asked by a shop assistant whether they would like to buy two large Dairy Milk bars for the price of one. This was the real Dairy Milk brand experience for millions.

So what was wrong with this promotion? Well, pretty much everything. Using a crude BOGOF promotion such as this instantly commodified the Cadbury brand. While £20m of advertising attempted to build the brand associations of Dairy Milk and make it appear more than just another chocolate bar, the effect of being offered two for one instantly emphasised the fact that this was just another product available in bulk at discount prices. The message: don't buy it because of its richness and specialness, buy it because you get two for the price of one.

Those who did buy the two large bars were unlikely to consume them immediately. More likely, they stocked up on Dairy Milks. This meant that, after the promotion ended, future sales at full price would be hit.

These promotions can send consumer demand haywire. First a huge surge in demand during the promotion, followed by a sudden drop once the promotion ends - the so-called 'bullwhip effect' that causes chaos for inventory management and logistics.

In this case we can't forget Cadbury's other retailers. If you are a local newsagent devoting several square feet of precious shelf space to Cadbury brands at recommended prices, you are not going to be happy with a promotion that kills demand for your Dairy Milk and makes you look overpriced. If you are a major super market player, you will already have made sure that you will be the next store to be offered the BOGOF promotion.

So how could a company such as Cadbury make what seems to be an elementary error? Don't be too surprised - great brands are rarely greatly managed.

Perhaps the marketing team at Dairy Milk was unclear about the difference between sales and marketing. Perhaps its hand was forced, because if it did not run the promotion, Nestle would have stepped in. Or perhaps Dairy Milk is a brand run on good intentions, but with no holistic view of itself.

30 SECONDS ON ... CADBURY SCHWEPPES

- Cadbury was set up by John Cadbury, a young Quaker based in Birmingham, England in 1824.

- Cadbury merged with Schweppes in 1969, and the company currently has a market capitalisation of more than £10bn. Other brands in the portfolio include Trident, Dentyne, Trebor, Dr Pepper and Snapple.

- Cadbury Schweppes has four main production sites in the UK, employing 4500 people. The 60-acre site at Bournville is the biggest and remains the company's spiritual home. Each week the Bournville site alone produces more than 1.6m bars of chocolate a week.

- Cadbury's other production sites include a liquorice and gum unit in Hillsborough, Sheffield.

-  2005 marked the 100th anniversary of the launch of Cadbury's Dairy Milk brand.

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