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The Brand Value
(SEE BRAND VALUE CREATOR MODEL ON PAGE 34)
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.
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.
The ﬁrst important area is in
the development of a superior 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-toorder 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.
The second area where
brand value can be created is the 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.
Processes enhance customer experience
Strength of brand relationship
Impact of barriers
Competitor activity and sales environment impact sales
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 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 The third area, communication, is the one that traditional market research focuses on and deals with the creation of brand value in the
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 email@example.com.
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