Investor expectations: Impact on Brand Management

Brand managers have been their organization’s investors since a few decades now. While investors cannot be blamed for unleashing their

subjected to the whimsical pressures of

pressure guns (well, understandably), it does mean that brand managers are targets often finding themselves at the receiving ends of the firing.

Unforeseen levels of mergers, acquisitions and alliances took place on the Wall Street in the later part

of 1980s. These often included activities like leveraged buyouts, pounding the buyers and brand managers with heavy pressures due to the debt constituted as a

result of high profile deals. Debt ultimately invited troubles for brand managers in the form of investor’s pressures; Pressures to produce short-term cash flows to

meet debt coverage; Pressures to produce steady, predictable growth in earnings; and Pressures to justify how and why they could expect investments in marketing

strategies to ultimately add value to the company.

Such situations often take away a lot of the decision making and risk taking capacities of companies

which also pose as barriers to innovative marketing strategies.

As a result of such usually unprecedented levels of investor expectations, many companies have to

resort to strategies that would lend them short-term benefits rather than long-term. Philip Morris, for example, in April 1993 dramatically reduced its prices to wipe

off competitions it faced from low-priced competitors with the help of it new brand ‘Marlboro Friday’ cigarettes. Brand managers also increase their reliance on trade

and customer discounts (promotions) rather than advertising. During early 1990s the advertising expenditures on marketing budgets fell on-to less than 33%

plunging from 60%