How Valuable is your Brand?


Industry Pundit Keith Price reflects on the true value of your brand, exclusively for Orchard.

When it comes to buying baked beans and ketchup, only Heinz will do for my delicate palate. It's gone beyond a simple preference over rival brands - it's now a loyalty since childhood. I'm not alone in this (surely?). Thousands of brands have registered a permanent place on customer shopping lists, whether its for groceries or business suppliers, and buoyant profits have followed.

However, in the kind of tougher economic climates that we've become accustomed to of late, brand loyalties can slip. A study in November revealed that UK shoppers have shown the lowest level of customer loyalty in Europe, with bargain hunting now a popular activity for many of us - not just David Dickinson. Brands, as a result, are having to work much harder to retain loyalty. As profits drop, the temptation for marketers to switch their own loyalties away from brand development in favour of creating short-term demand is growing.

But is this the right approach? Are brand values too vulnerable to change for a lack of continued investment? We asked two agencies - one a business-to-business specialist, the other with considerable consumer experience - to help us understand the value of a brand.

Manchester's GyroHSR recently launched a study into the preferences of today's key business-to-business marketing decision-makers. The resulting Brand versus Demand paper looked at the options available to firms during what experts predict will be a fragile recovery from the recession. According to the agency, it boils down to a choice between two different approaches - 'distress' and 'long-term value'.

"Harsh times require decisive action," states the report, looking at the case for a demand-focused strategy. "Every penny matters and budgets are being stretched to the limit. The only option for B-to-B marketers is to focus activity on direct response and demand generation."

On the flip-side, however, the paper makes a compelling case for long-term brand investment. The key benefits for building and maintaining a strong brand include its power for supporting and maintaining premium pricing strategies; reducing sensitivity to future price increases; defending the business against emerging competitors; and making demand generation activities more effective.

It's not just business-to-business marketers that have faced this crossroads, either. All marketers at one point or another have naturally considered the array of options at their disposal - including moving their focus away from brand development.

But it boils down to understanding the value of your brand to the company. And understanding its resilience to difficult conditions. But how do you measure a the value of a brand? Is it your most valuable asset?

"If measuring the value of a brand were a simple equation, all marketers would be out of a job," quips Warren Drumm, head of digital strategy for GyroHSR. "The way brand value is measured will be dependent entirely on the metrics that are important to the brand, be it the product or service, the level of quality or just awareness."

Our other expert is BJL managing director Nicky Unsworth, who believes calculating a brand's true value is difficult - but that the proof is in the pudding for companies that have continued to invest in their number one asset.

"Kraft bought Cadbury for £11bn and Lenovo paid $1.25bn for the IBM PC business, which I don’t think was in profit at the time," she says. "Whilst the value of brands will alter depending on many variables, the fact is that they will be more robust in a downturn and worth more than their unbranded equivalents. In fact the recently published Brand Z report by Millward Brown shows that the top 100 global brands outperformed the S&P index in the States (the index of 500 US companies) by over 30% in 2009."

Strong, well-established brands are undoubtedly less susceptible to change than new or emerging ones, and there are certain attributes to a brand that make it more robust and, therefore, protected against the elements of a tough economy.

"Top brands are built via well devised long term strategies based on clear positioning, strong market knowledge, great customer insight and a clear and compelling brand personality," Unsworth says.
"The brands which remain strong take nothing for granted: they track their brand, talk to their consumers, know what the competition are doing, and make sure they evolve their offer. Importantly they see building the brand as a long term strategy, and are consistent, and constant, in their communications."

Engaging with customers in two-way conversations has proven to be a shrewd approach for brands - particularly those that have successfully negotiated the social media landscape. But whatever the medium, understanding your customers and their relationship to the brand will give you a distinct advantage in achieving long-term success, even if it means losing out on short-term sales.

Drumm concludes: "The way to ensure the value of a brand is protected is to listen and react to opinion. By interacting and showing your audience you care about what they have to say, you will go a long way to protecting the brand."

There's no doubt that creating immediate demand and boosts in short-term sales has its place - especially when times are bleak - but if you have a strong, enduring brand in place, then it's probably your most valuable asset and that deserves to be protected.

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