Branding is the key factor in most business successes. Brand leaders consistently win out in most markets, do relatively well in recession, and show higher profitability through higher perceived quality levels and higher price premiums. There is considerable research evidence to support it, including the Brand Finance report and McKinsey's brand asset survey amongst others. Companies who have invested consistently over a long period and through good times and bad, reap the benefits of strong bran equity.
Strong brands are a key requirement for growth
This usually requires considerable investment over time and many of today's brand leaders have been in a leading position over decades - Kellogg, Colgate, Schweppes, Coca Cola, etc. More recently of course, technological and social change combined with globalisation, have seen the remarkable growth of "new" brands - Google, Ebay, but these tend to be the exceptions not the rule.
Unfortunately, the value of the brands, both more critically in the consumer's mind as well as in the balance sheet, is not always reflected in the time and attention given by many companies' top management. In a recent EIU study, "Guarding the Brand", the senior executives who were interviewed ranked the corporate brand as the third most important corporate asset after human capital and an established customer base, and although over 90% felt that their CEO took ‘active consideration of brand issues', nevertheless over 40% felt that senior executives ‘paid only lip service to brand considerations'.
A tougher branding environment?
Today, there are too many brands and products chasing consumers. Consumers also have increasing buying power and much better information that in the past as a result of Information Communications Technology (ICT), globalisation and higher marketing sophistication. Younger consumers do not appreciate being "marketed at" and are suspicious of traditional marketing communications, often creating or preferring their own word of mouth or community exchange. The result al all of this is brand fragmentation, frequent lack of brand focus, and a dilution of marketing resources - ie. Failure to put enough ‘muscle' behind a focused, range of brands. Hence, many of the big consumer good companies have been ‘pruning' their brand portfolio and concentrating their investment on so-called ‘power brands'- for example Unilever in its ‘Path to Growth' plan is focusing upon 400 global brands out of its original 1600.
The brand should embody the desired positioning and consumer value proposition
Successful brands occupy or ‘own' a strong position in the consumer's mind, which is where the crucial battle takes place - consumers own the brand in this sense. In the strongest cases this can even be reflected in everyday language, for example (in English at least) Xerox; Kleenex; Scotch tape; and nowadays "to google" has become a verb.
Strong brands should exemplify a clear value proposition - Volvo stands for safety, BMW for driving pleasure, Mercedes for engineering, etc. In this sense the brand embodies the strategy fir the business or product and so the brand strategy should be integrated within the overall strategy for the business.
Strong brands combine rational and emotional values
There are many brand frameworks but most of them are variations around the two key dimensions of rational (functional) and emotional (symbolic) values, with the latter possibly becoming more critical. A brand is not just what the product does for the consumer (its function or attributes), but also what it represents to its key stakeholders (benefits; attitudes; feelings).
Strong brands guarantee future income streams
It is sometime felt that branding is an ephemeral subject of little relevance to the serious business of business, especially by some of the financial community - "brands are emotive and you cannot measure emotion". Also, costs are generally easier to measure but the return on marketing investment is much harder to quantify. Brand value can be measured using consumer measures such awareness, image, attitudes, loyalty, sales or marketing share. Increasingly, nowadays efforts are made to quantify the financial brand value. Brands create shareholder value in terms of cash flow, investment or cost of capital. They do this by means of higher volume growth, higher process, lower costs or higher asset utilisation. They are also increasingly recognised as intangible assets in the balance sheet. This is especially important for acquisitions - France Telecom paid over 40 Billion Euros for Orange, primarily for the brand rather than the fixed assets.
Conclusion
Brands are arguably the key asset which a company possesses and should therefore, be a top priority for the senior management. They represent far more than just the name, the logo, or the advertising, but rather the embodiment of a company's differentiation and positioning. The brand proposition must be authentic, with any claims for brand values reinforced by the customer's own experience in actual use.
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