BRANDTOOLS
JULY/AUGUST 2007
Creator
The Brand Value
EVERY DAY BRAND OWNERS AND MANAGERS AROUND THE WORLD ARE MAKING MULTI-MILLION
DOLLAR DECISIONS ON INCOMPLETE INFORMATION ABOUT WHAT MAKES THEIR BRAND PERFORM OR
NOT PERFORM. PATRICK COLLINGS EXPLORES A NEW MODEL THAT FILLS IN THE GAPS.
(SEE BRAND VALUE CREATOR MODEL ON PAGE 34)
M uch is written about brand positioning and communication but
neither is worth much if the brand owner is unable to deliver
the brand to the intended market as promised. Often, to reach the
market, brands have to navigate a myriad production, logistical, legal
and competitive challenges that can negate a brand’s promise and
performance.
Despite the bedrock importance of brand delivery it has largely
been ignored in traditional market research, which has tended to focus
on survey numbers such as advertisement recall and overall customer
satisfaction, as well as purchase intent and behavioural information.
While these statistics are indicative of the likely performance of a brand,
they fail to fully address whether the brand will be purchased.
Simply stated, brand owners and managers around the world
are making multi-million dollar decisions every day on incomplete
information about what makes their brand perform or not perform.
In seeking to address this, Jannie Hofmeyr, Director of Innovation
in global research house Synovate’s brand and communication practice,
has developed a new research model known as the Brand Value Creator.
The model takes a more holistic approach to brand research and looks
at all the important factors that influence and affect consumers, and not
just the marketing communication.
In looking at the model, I am going to largely skirt its empirical
element (consumer psychology in opinion forming and decision making)
and its predictive element (the translation of brand equity measures into
marketing investments and sales performance) in order to concentrate
on its holistic focus, which highlights the type of research information
brand managers should be factoring into their decision-making process.
The Brand Value Creator model moves left to right through the broad
stages of branding and selling and on to modelling and forecasting.
Starting at the left, the model identifies three areas as key in the creation
of brand value.
32 B®AND
Key #1
the development of a superior
The first important area is in
business process that enhances the customer experience.
Examples of innovative business process include Dell’s logistical
infrastructure which cut out the middle man and delivered made-to-
order computers to the customer. Toyota also built very reliable cars
through its “just in time” and “zero defects” manufacturing systems.
“These brands also created value in other ways. But they illustrate
the point that business engineering is one of the keys to brand value
creation. And a key point is this: the business processes they pioneered
led to an enhanced customer experience. In other words, the new
business process didn’t just create greater efficiency or better margins.
It also improved the customer’s experience of the brand – and so, built
the brand,” Hofmeyr said.
The reverse is, however, also true. Poor internal processes can hurt
brands and their bottom line. Sony’s production delays in releasing its
PlayStation 3 gaming console allowed Microsoft and Nintendo to gain
market share for their competing game consoles. Sony is now trailing its
competitors and having to cut prices to catch up.
Key #2
brand value can be created is the
The second area where
marketing environment and relates to how brand value
can be created in the market place through market
dominance. Hofmeyr offers the example of Coca-Cola as a brand that
dominated the soft drink retail space to the detriment of its competitors.
“There is probably no company that has understood [market
dominance] better through history than The Coca-Cola Company.
They designed the first stand-alone fridges because they understood
that delivering the brand cold would be the key to creating impulse
consumption,” Hofmeyr says.
BRANDTOOLS
JULY/AUGUST 2007
Business Process
Processes enhance
customer experience
Marketing
Environment
Competitor activity
and sales environment
impact sales
Branding
Communication
Selling
Information
shapes brand
image
Modelling &
Forecasting
“By designing the stand-alone fridges they also ensured that they
were ‘the only game in town’ when it came to on-the-spot, impulse
consumption. From the start, (Coca-Cola) has understood the importance
of dominating the physical aspects of the consumer landscape.”
Key #3
The third area, communication, is the one that traditional market research
focuses on and deals with the creation of brand value in the
minds of the consumer through brand communication,
pricing, packaging as well as prior experience of the brand
by the consumer and recommendations from others.
The “Intel inside” campaign is a great example of value creation in the
minds of people and succeeded in turning a component – which most
people didn’t truly understand – into a must-have. As Hofmeyr says:
“Before the campaign, no-one cared what was in their computer. Once
the campaign had gained momentum however, many people wouldn’t
buy a computer unless it had an Intel inside.”
He also offers bottled water as an example of where brand
value creation is almost entirely in the mind of the consumer where
a label and massive mark-up in price turns a commodity into an
almost luxury item.
The next component of the model, the strength of brand relationship,
is a measure which illustrates the propensity of a consumer to consume
a brand, all things being equal.
The component following the brand relationship measure is one of
the key differentiators of the Brand Value Creator model. It looks at
the impact of barriers, in particular the realities of the market place and
how they affect the consumers’ propensity to buy a particular brand.
These include:
[ Distribution, with some brands struggling to get listed and onto
the retail shelves. At Sagacite Brand Agency, where I work, we refer
34 B®AND
Predicting Sales
brand relationship
Impact of barriers
Strength of
MIND
to this as the problem of depth and breadth of distribution: getting
your brand onto shelves of enough retailers (breadth) and getting
sufficient quantities of your product onto any one shelf (depth).
[ The relative or absolute cost of the product, including temporary
discounts to sell a product (in the UK retail market many South
African wines are almost constantly on promotion to attract buyers)
and the inability of consumers to afford luxury or premium brands
in developing countries.
[ Existing contractual cycles that prevent new entrants from getting to
the buyer while the current contract is in force.
[ Regulatory factors, such as the South Korean law that requires
retailers to give local cigarette brands more prominence than
imported ones. In South Africa, black economic empowerment
scorecards would also form an industry-regulated barrier to firms
not meeting BEE requirements and therefore being ineligible for
certain tenders or contracts.
[ Other factors, such as historical purchasing patterns and the role of
influencers in the buying pattern.
In the final component of the Brand Value Creator, predicting sales, is
an assessment of the strength of the brand relationship combined with
a quantification of the impact of market barriers. This assessment allows
the model to forecast behaviour and market share for the brand with a
high degree of accuracy.
The Brand Value Creator appears to have resonated with brand owners
seeking better answers to what drives and influences the performance
of their brands. Within the first six months of its release the model has
been used in more than 320 research projects around the world. ®
Patrick Collings is a founding partner in Sagacite Brand Agency and can
be reached at patrick@sagacite.co.za.