Comme chaque mois, le pôle de recherche « Place Value and identity » spécialisé dans la filière viti-vinicole de NEOMA Business School publie en exclusivité sur Wine Business News ses articles de recherches académiques.
Equity for origin-bounded Brands
While most branded products can have a relation to a place, they do not have an obligation to it. Although for wines, as well as for numerous origin products, the relationship between brand and place is fundamental. Unlike the distinctions made in the country of origin literature between country of manufacture, country of assembly, country of design, etc., Origin Bounded Brands (OBB) are created when manufacture, production, assembly, and design all occur in the same place. OBBs are identified by three key features: 1) a clearly identified origin marker (e.g. made in, product of, etc.), 2) regulation of the origin materials (collective trademarks, regional agreements and/or legal protection) across all design, production and assembly stages and, 3) the explicit use of the origin in the marketing mix related to the product. For example, Pommery champagne comes from Champagne, France and cannot be called champagne if it is produced elsewhere than in Champagne with grapes not originating from Champagne, as regulated by international treaties.
Marketing literature discusses the importance of brand equity at length. By capitalizing on key assets and reducing potential liabilities, brands, like businesses, ensure longevity by building equity. However, little is known about building brand equity when brands have an inseparable link with their origin. Consequently, this evokes questions such as: a) how do OBBs create sustainable brand equity when the name, the symbol and the origin of the brand must remain static, and b) what are the benefits and risks to firms of OBBs or those looking to invest in OBBs? The answers to these questions remain obscure because research often reviews brand origin and product origin separately even though congruency between product and brand origin is important as well as it being an actual market phenomenon.
First, a review of brand equity and its components is due. The assets that augment brand equity include brand loyalty, brand name awareness, perceptions of quality and positive brand associations. However when brands are bounded to their origin, it appears that they benefit from additional assets: tolerance for inconsistencies and authenticity perceptions. Wines are an excellent example of OBBs that can be inconsistent, as different vintages will produce different wines from the same producer. Origin allows consumers to have expectations about products and establish quality perceptions that remain somewhat flexible because consumers can make the distinction between a product’s stylistic consistency and simple duplication. For OBBs, when the physical features of an origin (e.g. climate) yield an inconsistent product, the strength of the brand helps buoy the image of the product. Likewise, an OBB product is perceived as authentic, more so than a regular brand, because it has a connection to history and represents the purity of a specific, static place, which consequently makes it harder to imitate.
Alternatively, all brands have liabilities that can reduce brand equity, and these include making poor management decisions and creating too many brand extensions. OBBs must be particularly careful of origin incomprehension, and vigilantly protect their origins. Products with origins require consumers to have at minima an understanding on geography and why that geography contributes to the unique selling proposition of the brand. When consumers do not have a clear understanding of the value of place, brand devaluation or misattribution of quality is likely to occur. Terroir, as previously highlighted (October edition of the Lab), is an example of a hard-to-understand origin concept that leads consumers to have different perceptions of products in consequence. As well, not protecting origin or not making it an important part of an OBBs marketing proposition can lead to the devaluation of the brand. For example, if international trademark laws did not protect the parcels of Burgundy, their value on the market would certainly not be as high as it is today. Thus, beyond production guarantees (e.g. fair trade, organic, etc.), OBBs require appellation and other origin-based labels to certify the uniqueness of their origin. This is particularly important as consumers demonstrate lower price sensitivity and experience higher quality perceptions toward such labels.
The fundamental link between origin and brand of OBBs means that this type of brand, as opposed to other brands, must respect the scope of its resources, maximize their uses, but without compromising them due to short-term objectives or sudden competition. The debate regarding the expansion of the winemaking region of Champagne speaks directly to this point. By adding hectares, more champagne could be produced, but the scarcity and the authenticity of the product may also be reduced in consequence. Likewise, origin-based brand equity can be lost when firms succumb to the typical difficulties of brand building such as outsourcing materials or processes, or creating message and product strategies that do not reinforce the origin.
Would Petrus be as famous if it was made with American grapes? Would Clos Rougeard wines be as prized on the market if there were more than 15 different cuvees versus the actual five? Would any wine be as appreciated if it did not indicate an origin on its packaging? The most likely answer to all these questions is certainly no. As such, managers and producers of OBBs, which are likely to be well represented in the readership of this web site, should consider that the brands they manage are unique. OBBs represent a unique place, sometimes also a unique workmanship, but must be sourced, produced, and especially managed with the ultimate respect for origin. Managers forgetting this fundamental aspect of their brand(s) might find their brand equity fall and thus reap the negative financial and perceptual consequences of abandoning their origin. Finally, it should be noted that all origins are capable of producing OBBs but it is those that preserve their origin that best capture market share.
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Lapoule, P. (2007). “Le management des marques terroir des distributeurs européens,” Paper presented at the XVIème Conférence Internationale de Management Stratégique, Université de Québec à Montréal, Montreal (June 6-9).
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