A Capability-Based View of Brand Management

Abstract

Brands are assets that are intangible in nature. This provides companies with the potential to extract higher rents or prices from customers (Keller and Lehmann 2006). Key to building strong brands lies in the way firms manage their brands. This capability called brand management includes all the activities that firms undertake to develop and maintain brands (Low and Fullerton 1994). Brand managers are the ones who manage brands and hence become an important resource in developing brands. Brand management capability has developed from being an administrative function to a more strategic function (Rust et al. 2004; Low and Fullerton 1994). Merz et al. (2009) trace the development of brand management originating from individual goods-focus (Copeland 1923; Low and Fullerton 1994) to value-focus (Park et al. 1986), relationship-focus (Aaker 1992; Keller 1993), and finally toward stakeholder-focus. Relying on the knowledge or capability-based perspective (Barreto 2010; Cohen and Levinthal 1990; Helfat and Petraf 2009; Kogut 1988; Levinthal and March 1993), we argue that for effective brand management firms need to have certain capabilities and knowledge. The brand management capability of an organization is an operant resource (Vargo and Lusch 2004, 2008), which enables an organization to achieve competitive advantage (Grant 1996; Hunt and Morgan 1995; Challagalla et al. 2014) by creating strong brands. This capability and knowledge is an idiosyncratic and unique resource which is hard to imitate (Barney 1991) since it is a combination of several organizational and personnel characteristics. However, despite its importance, few studies have explored the antecedents of brand management capability within an organization. Using Complex Adaptive System Perspective (Grant 2003; Arikan 2010; Paswan and Tran 2012), we argue that brand management capability is developed through the interactions between the senior management, other internal managers, external stakeholders such as advertising agency and channel personnel, external environmental factors, and brand managers. The importance of this study is highlighted by the fact that marketing function, especially brand management, has come under a lot of criticism for the lack of objective financial measures to determine its value (Nath and Mahajan 2011; Srivastava et al. 1998). With increasing importance of brands and brand management (Keller and Lehmann 2006; De Chernatony and Cottam 2009, Cui et al. 2014), it is imperative to identify factors that facilitate the creation and management of strong brands. Finally, this study contributes to the increasing calls to view brand management function as an application of knowledge, contributing to the viewpoint of marketing resources being dynamic capabilities (Day 2014; Kozlenkova et al. 2014). The proposed framework will help firms that are lagging in one or more of the dimensions of brand management capability (i.e., organizational, human, or relational).