Building brand equity part I: long live the brand
From IPhones to Tablets and Reality TV, brands have seen their power expand and grow. But that growth has also spawned problems and opportunities that brand managers a decade ago could never have envisioned. Indeed, there may be no more challenging time to figure out a strategy to build your brand equity than today.
“If this business were split up, I would give you the land and bricks and mortar, and I would take the brands and trade marks, and I would fare better than you.”
— John Stuart, Chairman of Quaker (ca. 1900)
Branding dates back to around the middle of the nineteenth century when commodities such as soap and flour and other packaged goods went from being scooped out of barrels at the local store, to becoming mass produced at factories.
Pioneering companies of the brand such as Campbell Soup and HJ Heinz, for example, used branding, or principles of ‘brand management’ primarily to create differentiation and preference for their products in the mind of the customer. The world’s most valuable brand, Coca-Cola, is around 120 years old; and the majority of the world’s most valuable brands have been marketed for more than 60 years.
By the end of the 1940’s there was growing awareness that a brand wasn’t just a catchphrase or picture printed on the label, but the company as a whole could have a brand identity. Nowadays, there is increasing pressure by companies to provide a return on investment and shareholder value. Building brand equity is one of the ways that this is achieved.
Strategies to build brand equity
Quite often, brand managers are under pressure to deliver short-term profits, and are therefore prone to focus on marketing tactics that exploit brand strengths to produce operating profits rather than on strategic investments that enhance brand equity. The reality is, companies need to strategically plan how to maintain and grow brand equity.
Name awareness is a critical factor in achieving brand success. Companies may spend vast sums of money and effort just to attain recognition of a new brand. But getting consumers to recognise a brand name is only half the battle in building brand equity. It is also important for the company to establish strong, positive associations with the brand and its use in the minds of consumers.
- The first step in building brand equity is for the company to define itself and what it hopes to represent for consumers.
- The next step is to make sure that all aspects of the company’s operations support this image, from its product and service offerings to its marketing programs and customer service policies.
- When all of these elements support a distinctive image of the company and its products in the minds of consumers, the company has established brand equity.
Consistent, strategic branding leads to strong brand equity
The idea that every ‘touch point’ of a company, including its people, processes, products and services, can some way impact on the bottom line is being embraced more and more by companies that ‘live the brand’. It’s no coincidence that companies like McDonald’s, Coco-Cola, IBM and Virgin, which ‘live the brand’, have healthy brand equities.
But the associations you try to create through packaging, PR, advertising and customer service activity won’t build equity alone. You also need to consider other aspects of the marketing mix. For example, if the brand is positioned as a premium product, then the product quality should be consistent with what the consumers expect of the brand.
If you have a premium brand then you risk diluting it if you then turn around and enter into price wars. And, your distribution channels should be consistent with what is expected of a premium brand.
Finally, if a company has a strong organisation brand with associations of goodwill and strong performance, it is not only the customers who will notice. The benefits of a strong brand equity are more predictable income stream; an increased cash flow by increasing market share, and an intantigle asset that can be sold or licensed.
A well-positioned brand will attract and retain quality members of staff, and have an effect on suppliers, business partners, the trade, media, regulators and investors – all of which carry a financial impact.
Monitoring and growing equity
The best companies have a strategy to monitor their brand equity, and they use this information to understand the trends happening around them, and they develop actionable insights to produce new products, services and acquisitions to capitalise on the opportunity. In fact, many companies with strong brands have one thing in common: innovation.
Today though, they also need to project core values. Companies have to move beyond the consumer and appreciate that they have a range of other stakeholders with vested interests – ranging from environmental groups and regulatory agencies to unions, activists, and the media – all of whom are internet savvy and can uncover simple truths about a company with a click of a mouse. Branding now has to articulate a company’s core values, and it needs to be projected into the world who (or what) they really are.
With societal, cultural and technological changes occurring at accelerated rates, marketers need news ways to reach their audiences to remain relevant. Some emerging trends include:
- Social branding – recognising that brands have a social as well as economic impact
- Online communities – Simply monitoring blogs and online message boards is a great way to catch trends in the making. Or if it’s the latest fad, blogs are a great medium to spread the word, especially if people “like” you. But beware the company that tinkers with blogs (or the “Flog” – fake blog) – like the infamous example of a UK PR agency that built a fictitious character ‘Barry Scott’ to endorse its cleaning product (similar to our Easy off Bam here in Australia) in an attempt to spruce up its image. The ultimate faux par occurred when ‘Barry’ started offering advice and sharing colourful stories of his (made up) past on other people’s genuine blog sites. McDonalds and Walmart have also found themselves in hot water in the past for similar offences.
- Product placement – New strategies are emerging to improve product visibility in the cluttered world of brands. With digital technology becoming more accessible, the ‘always on’ media will continue to reach consumers in new ways. Online advertising will shift from static banners to made-for-the-web broadcast-quality commercials, products will be increasingly endorsed in reality TV shows, music clips and even mobile phone ring tones, and ‘pop up retail’ concept stores which provide new, unexpected experiences are becoming hits.
With unprecedented shifts in technology driving huge changes in the way business is conducted, and in the way members of the public perceive and interact with brands, building band equity has never been more challenging – or exciting.