economic approach is more comprehensible and not as complex as some in the
consecutive chapters, this chapter is somewhat shorter than the other approach
chapters and focuses more on the background and assumptions of the approach. It
is important to understand this background in depth because understanding the
background will enable the reader to get a good idea of the strengths and weak-
nesses of the economic approach as well as understand the foundation for the other
approaches in brand management.
Fast-moving consumer goods manufacturer Procter & Gamble gave birth to the
first management practices of brand management with its product management
approach. The theories underlining the way that this big multinational producer of
fast-moving consumer goods during the 1930s dealt with brand management were
mainly borrowed from neoclassical economics and classical marketing theory.
The fast-moving consumer goods industry has since played a major role in the
evolution of brand management research and practice.
The economic approach builds on one of the most fundamental concepts in
marketing, namely the idea that the right marketing mix will generate optimal
sales. Neil Borden first introduced the marketing mix concept when he deducted
twelve factors that management should consider when planning and implementing
marketing strategy. One can argue that the whole idea of brand management really
rests on his initial factor theory of marketing (Borden 1964). The twelve elements
reflected internal considerations and relevant market forces in relation to
marketing strategy. It was a framework constructed to guide managers through
marketing questions and help them structure the planning and implementation of
marketing strategy.
E. Jerome McCarthy later narrowed Borden’s framework down into the Four Ps
framework we know today (McCarthy 1964). The Four Ps (reflecting product,
place, price and promotion) have since been immortalized by numerous marketing
books and become everyday marketing practice in countless marketing depart-
ments around the world and often make up the first introduction students get to
marketing and brand management.
Brand management adopted the Four Ps concept from marketing and during the
mid and late 1980s, much research focus was directed towards exploring how
different factors of the marketing mix affect consumers’ brand choice. This
chapter will give the reader an overview of key themes and concepts that have
shaped the economic approach and its applicability in practice.
The description of the economic approach is divided into four main sections,
according to the structure laid out in the introduction. The assumptions describe
the implicit view of the nature of the brand and the premises of the
brand–consumer exchange. The theoretical building blocks describe the concepts,
models and figures key to the economic approach. Methods and data provide
insight into what data to look for and how to collect it, when researching the
content of a specific brand strategy. These three scientific layers add up to a mana-
gerial ‘how-to’ guide for how the assumptions, theories and methods of the
approach can be converted into a brand management strategy in practice.
The economic approach is the first identified approach in brand management
30 Seven brand approaches