Does your brand work for you?
Understanding Brand Value
A brand plays a two-fold role:
1. It adds value to the customer in the form of tangible (reduction of search costs) as well as intangible (emotional) benefits.
2. It adds value to the business by increasing profit and value through higher margins, higher sales or both.
A powerful brand has a decisive impact on consumers' choice. When faced with the irresistible allure of successful brands, consumer behavior is far from rational: branded products manage to command price premiums that are not justifiable from an economic viewpoint. This is particularly true for luxury goods, where emotional involvement in the purchasing decision is highest. Common knowledge has it that Rolex watches loses a couple of minutes now and then, and that BMW's cars are less stable because of rear drive: still, even when faced with better price/performance combinations, consumers seem to be choosing perceptions over facts.
Does a brand defy rationality? Not necessarily. Rather, a brand adds value at the level of feelings, in a way that is not captured by a pure cost/benefits analysis. It creates market imperfections by allowing the product to become incomparable and escape mass-commoditization. Seen from this perspective, a strong brand represents indeed the ultimate competitive advantage:
1. Reduces the threat of substitutability and imitation.
2. Builds customer loyalty.
3. Allows for premiums across the entire price spectrum.
While a brand may be directly related to a physical product or service, corporate branding results from the public's wider perception of a company's mission, culture and values. If effectively communicated, both are powerful differentiating tools. Although conceptually distinct, the two are closely related.
For some companies, the product/service brand portfolio and the corporate brand tend to coincide. This is the case when the company is active in only one product category (BMW in upscale vehicles) or when it is identified with its major line of business (Mercedes cars). Singapore Airlines is another clear example.
When the company manages a portfolio of equally valuable brands (sometimes but not necessarily) within the same product category, corporate branding acquires a role of its own, of which the end consumer may not be aware. Viacom = the entertainment company, P&G = the FMCG company.
In some other instances, powerful brands are derived from strong corporate branding (personality). An example is when an extremely talented individual drives the business: Giorgio Armani = timeless elegance, or Phil Knight = Nike (Just Do It).
At the end of the day, and for the majority of businesses, product/service branding and corporate branding must communicate a somewhat single and consistent message in order to allow for effective positioning in the marketplace. During the last years, the importance of corporate branding has increased substantially as it covers much more in a company's organisation and among it's stakeholders than a single brand can ever do.
Great examples are The Body Shop = environmental friendly (product attributes + company values), and Singapore Airlines = A Great Way to fly (service excellence delivered by the Singapore Girl).
Brand Management is one of the most challenging disciplines as it requires sound business practices as well as marketing management flair.
Successfully companies with strong branding capabilities and well-managed brands and brand portfolios are constantly striving to develop their brands, keep them fresh and contemporary, and to manage them across categories, markets and cultures across the globe.
Successful brand management is led by high-performing marketers, and they can benefit from the following key components in brand management:
1. The brand essence (the promise) must be aligned with the underlying business model: i.e. select a distribution channel consistent with your brand positioning, the right pricing policy, a contemporary packaging, and the right management team.
2. The brand must own a unique, differentiated space in the competitive arena, whereby it's perceived positioning matches the preferences of the target customers, the distribution channels and all other stakeholders. It must deliver on the promise consistently over time.
3. Consistency in terms of strategy, investments and communication.
Successful brands are long-term investments - they must communicate a strong promise and keep delivering it over time.
Panacea can deliver total brand management solutions including:
- Total brand management
- Brand workshops
- Brand awareness/perception research and evaluation
- The brand inside and out of an organisation
- Brand values and personality development
- Brand launches
- Brand rationalisation strategies
- Brand guidelines and image management