As the mutual fund industry matures, it is increasingly pulling its marketing expertise from companies that know nothing about mutual funds or even financial services but know a lot about branding.

Until the last few years, mutual funds have not had to worry much about branding. They pushed their funds through brokers or set up 800 numbers, formulas that worked well enough without much marketing support.

But today, with thousands of mutual funds to choose from, funds have become a commodity. And in order to catch an investor's attention, mutual funds must now either have a good niche product or a recognizable brand, according to D. Chris Brown, an analyst with Financial Research Corp. of Boston.

"There are too many funds," Brown said. "Mutual fund companies can no longer say that they have a totally unique investment expertise."

Mutual fund companies are trying to hire marketing executives from major consumer product manufacturers to run their branding and marketing campaigns, according to Brown. He recently conducted a study in collaboration with PricewaterhouseCoopers of New York called, "Winning in an Uncertain World: A Study of Mutual Fund Costs and Strategy."

At least three of the 24 fund companies surveyed for the study have recently hired marketing executives from major consumer goods companies, including from Proctor & Gamble of Cincinnati, Ohio and named them to head their marketing or branding efforts, Brown said. He did not disclose the names of these executives or the fund companies who hired them.

A marketing and branding expert from one of these major companies can contribute a lot, according to Brown. He can help develop a company's advertising, communications, technology use, database and relationship management. Brown says that relationship management cannot be overlooked. For instance, mutual fund companies can try to develop relationships with broker/dealers and fund supermarkets comparable to the relationship Proctor & Gamble has developed with Wal-Mart, one of P&G's biggest distributors, he said.

Mutual fund companies have generally concentrated most of their resources on sales and wholesalers rather than marketing, Brown said. But that can not continue with so many mutual funds competing.

"It just isn't enough anymore," Brown said.

There is probably only one fund complex - Fidelity Investments - that does not have to improve its brand, said Geoffrey Bobroff of Bobroff Consulting in East Greenwhich, R.I. at the MarkeTrends Conference earlier this month in Boston. The company spends millions of dollars each year on television, print and Internet advertising.

Robert Gould, a partner at PricewaterhouseCoopers who worked on the FRC study, said mid-tier mutual fund companies are more likely than larger companies to hire outside marketing executives.

"It is a way to leapfrog the firms that got there first," Gould said. "You're bringing in a ringer, really."

Mutual fund expertise is not that necessary to build a brand, Gould said. Mutual funds are becoming commodities, with price and performance the only factors that differentiates them from each other, he said. A branding campaign must create a persona and build loyalty for a fund company, Gould said.

Branding is not as important to the smaller fund companies who manage niche funds. These smaller companies differentiate themselves with the niche strategies they employ, and they tend to build their business through relationships with financial advisors, said Brown of FRC.

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