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Category: Brand Value & Pricing

Brand Value & Pricing

Why Brands Drive Financial And Business Results

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Brands Financial Impact

We are often asked about the impact of brands on financial, business performance and growth. Enough research has been conducted on this over time throughout the world that one could write and entire book on this subject. I will not do that here. But I will be a bit more detailed than I have in the past about this.  The bottom line is that strong brands have a very strong positive impact on financial and other business results. Following are data points on some of the ways in which this occurs.

A recent Nielsen study demonstrated that strong brands command higher loyalty rates. Consider the lifetime value of more loyal consumers. The study also showed that strong brands generate three times more market share than brands with moderate reputations.

Millward Brown Optimor reported that its BrandZ Top Most Valuable Global Brands significantly outperformed the S&P 500 in 2013.

In another study, Feng Jui Hsu, Tsai Yi Wang and Mu Yen Chen examined the relationship between brand value and stock performance using Interbrand’s Global 100 Brands ranking. The brand portfolio outperformed the S&P index in various holding periods and generated a significantly positive risk adjusted alpha.

An earlier study (for the period 1994-200) reported by Thomas J. Madden, University of South Carolina, Frank Fehle, Barclays Global Investors and Susan Fournier, Boston University, found that firms that have strong brands create value for their shareholders by yielding larger returns with less risk than industry benchmarks.

Another study conducted by Andrea Guerrini, PhD, assistant professor at the University of Verona and Francesco Zaffin, management consultant, looked at the top 60 brands in Interbrand’s annual ranking between 2006 and 2010 and identified positive correlations between brand value and share prices primarily in the intangible product categories such as business and financial services. 

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Brand Value & Pricing

The Role And Value Of Branding

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Brand Value

So many people misunderstand the role of brand. They think it’s a synonym for marketing, and marketing is a synonym for media spend.

  • A brand tells people who to value and why.
  • Marketing tells them how the brand is valued, and where to access it.

The purpose of your brand is to use that perceived value to provide you, through marketing, with sustained sales at a greater level of return than the market is inclined to give you over the longer term.

The objective of every brand should be to lift what people are prepared to pay, to motivate people to value you more than they would do otherwise. It doesn’t matter whether you’re a discount brand, a scale brand, a luxury brand or a cult brand, that’s the goal. It doesn’t matter whether these are boom times or bust.

If you’re not a brand, you’re a commodity. You are only worth the value that the market assigns. And in good times, many companies are happy with that. They stop spending, ride the commodity wave and bank the organic growth. They allow themselves to believe the increases are all their own doing.

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Brand Value & Pricing

Commanding A Premium Price

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Samsung Apple Brand Strategy

In a recent post on iMedia Connection, Millward Brown Optimor’s Pandora Lycouri and Dmitri Seredenko conclude that Samsung can’t buy love. In “Can Samsung Buy Love?” they contend that simply outspending Apple is not going to overturn the strong emotional connection with users that Apple has earned through consistent innovation and iconic style. Maybe not, but it might help Samsung charge a price premium over other brands.

I have recently spent some time exploring how some brands manage to charge a price premium. Premium is the ability to command a price premium in any product category; it is not the same as luxury. Luxury brands practice an extreme form of premium marketing and additionally leverage the power of scarcity. Limited supply helps convey a perception of exclusivity.

In the course of my exploration, I have spent some time exploring the mobile phone category in the USA using BrandZ data and Euromonitor. Given the fast-paced nature of the market it is the marketing equivalent of studying how fruit flies evolve. Brands enter the market with something new, they evolve to fend off competition and then, like as not, die. Anyone remember Palm?

The fascinating thing about the entry of the Apple iPhone to the category was the way the brand immediately supported a price premium over the available brands because it was clearly seen to be different from them. Functionally and from a design viewpoint, it was unlike anything else and so it commanded a price point unlike anything else. This was apparent in our data from 2008 onwards even though the brand took a while to establish widespread salience.

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Brand Value & Pricing

Customer Motivations: The 7 Reasons We Buy Now

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John B. Watson, a key figure in the development of behaviorism, famously said that effective advertising revolved around three basic emotions: love, fear and rage. (Get the backstory on this here). It’s a nice meme. But is it still accurate?

After all, at the time that Watson set forth his hypothesis, advertising was built largely on a framework of persuasion and repetition and took place on set channels in set formats and within highly structured societal expectations. But as societal rules have relaxed, and marketing has evolved new expressions, has our consideration-set broadened and if so, what does it include now?

Depending on how broadly you interpret Watson’s concepts, they all still apply.

We still buy for reasons of love – loyalty, habit, prestige and attitude are all motivations that help us form powerful bonds with brands. We buy what feels good to us, what we know, what we agree with, what we feel we deserve, what the brands we associate with say about us and when brands express through statement, belief or action things that concur with our worldviews.

We still buy for reasons of fear – risk, danger and prevention all drive us to seek out brands that we believe will help us in a world that, at times, feels threatening and uncertain. We also don’t want to miss out – on a bargain, a discount, a perceived opportunity or a trend. More and more, people actually fear being out of the loop.

We still buy for reasons of rage – outcry, rebellion, justice, a wish for change and an undercurrent of impatience all push us towards different brands in different sectors because we refuse to accept something or we want to disrupt the status quo or we wish to condone a “champion” of what we see as right.

What’s fascinating though is the extent to which online, the upgrade culture and social collectiveness have combined to introduce new, often  globally based, motivations that Watson might never have imagined. Today, we don’t just act for ourselves. We act alongside, and with a very powerful awareness of, others.

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Brand Value & Pricing

How Graphic Standards Build Brand Value

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Graphic Standards Manuals, Brand Guidelines or Brand Standards are a critically important management tool for brand owners to insure their brand identity assets are correctly and consistently reproduced over all media channels.

Developing these documents is a big undertaking in both time and money. Naturally brand owners and managers responsible for insuring their brand assets are faithfully reproduced will insist that their creative services partners (ad agencies, design firms, PR firms and web development firms) take this document seriously.

Recently, a client was expressing frustration over an issue where their in-house designers where stretching the brand standards and guidelines for the sake of style and creative expression of a new marketing campaign. This is appears to be a common occurrence for marketing communication executives and managers charged with maintaining the integrity of their brand identity over time.

As a designer myself for many years, I have some sympathy for both sides of the argument.

Coloring Outside The Lines

As I wrote in an earlier post on Branding Strategy Insider, the discipline of creating visual identities has changed significantly over the past decade. The trend in corporate identity and brand design continues to move to more flexible, adaptable and experiential solutions. No longer can “identity” be a static marker stuck in the lower right hand corner of an ad.

Flexible and stylistically changing visual design is now baked in to contemporary corporate and brand identity programs. An early adopter of this trend was MTV. The iconic letterform of the MTV logo has a constantly changing visual motif allowing each generation to connect with the brand’s unique philosophy and highly emotional promise.

Another example of this trend for experiential identity design is Virgin. Throughout its vast business, the brand’s expression and visual language shifts and changes to suit its expressive needs.

Creative people (naturally) resist staying within the lines of strict visual guidelines. Graphic designers – although well meaning – seem to be the worst offenders. This new generation of creative professionals have a different worldview, as they have grown up in a world were the rules seem to change every minute.

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