Branding Strategy Insider

The Metrics of Brand Equity

There are several stakeholders concerned with brand equity, such as the firm, the customer, the distribution channels, media and other stakeholders like the financial markets and analysts, depending on the type of company ownership. But ultimately it is the customer who is the most critical component in defining brand equity as it is his/her choices that determine the success or failure of the company and the brand.

Customer knowledge about the brand, the perceived differences and its effects on purchase behavior and decisions lies at the heart of brand equity. The knowledge and associations attached to the brand result in choices which have a direct impact on the brand's financial performance and shareholder value.

Brand equity is the combined measure of brand strength and consists of three sets of metrics: knowledge, preference and financial. Each of the measures under these three metrics is critical and the boardroom must ensure that the brand portfolio scores high in each of these parameters to optimize the financial outcome from strong brands.

Knowledge metrics measures a brand's awareness and associations through the many stages of recognition, aided, unaided and top of mind recall. Similarly the functional and emotional associations of a brand are important drivers of brand equity. It is crucial for brands to score high on both awareness and association attributes to establish and sustain their presence in the market place.

The New Positioning

This week I came across a 1997 interview I gave to Bob Lammons. The more things change the more they stay the same...

Q: What's the battlefield look like to you these days?

"Well, there's good news and bad news on the battle front. The good news is that, because of all the downsizing and re-engineering we've gone through in recent years, U.S. companies have learned how to handle global competition very well. The bad news is it is still amazingly competitive out there -- kill or be killed."

Q: In The New Positioning, you talk about the explosion of information in business today, and our inability to handle it. Isn't it good to have lots of information?

"Not really. Many people have so much information these days it paralyzes them. The Internet has made things worse, because it's full of non-edited information. I call it 'non-information.' It's a vast wasteland of unfiltered facts, pseudo-facts and non-facts, and the mind doesn't know what to do with all this data."

Q: You quote experts like Edward de Bono and Jack Welch on the "lost art of thinking." Does this result from information overload?

"To some extent, yes. The thing I find dramatically missing in business today is common sense. Many managers are so concerned about losing their jobs, they spend a disproportionate amount of time collecting and generating data to back up whatever decisions are ultimately made. "

Q: How can business-to-business communicators benefit from this insight?

The Law of Leadership

It's better to be first than it is to be better.

Many people believe that the basic issue in marketing is convincing prospects that you have a better product or service.

Not true. If you have a small market share and you have to do battle with larger, better-financed competitors, then your marketing strategy was probably faulty in the first place. You violated the first law of marketing.

The basic issue in marketing is creating a category you can be first in. It's the law of leadership: It's better to be first than it is to be better. It's much easier to get into the mind first than to try to convince someone you have a better product than the one that did get there first.

You can demonstrate the law of leadership by asking yourself two questions:

1) What's the name of the first person to fly the Atlantic Ocean solo? Charles Lindbergh, right?

2) What's the name of the second person to fly the Atlantic Ocean solo? Not so easy to answer, is it?

The second person to fly the Atlantic Ocean solo was Bert Hinkler. Bert was a better pilot than Charlie-he flew faster, he consumed less fuel. Yet who has ever heard of Bert Hinkler? (He left home and Mrs. Hinkler hasn't heard from him since.)

In spite of the evident superiority of the Lindbergh approach, most companies go the Bert Hinkler route. They wait until a market develops. Then they jump in with a better product, often with their corporate name attached. In today's competitive environment, a me-too product with a line extension name has little hope of becoming a big, profitable brand.

Anatomy of a Marketing Plan

A marketing plan is a request for funds in return for a promised level of incremental revenues, unit sales, market share or profits. One can develop marketing plans for products, services, market segments or brands. The critical components of a marketing plan includes the following:

•    Summary
•    Objectives (attract new consumers, create new uses, increase share of requirements, incent trial, encourage repeat purchase, encourage add-on purchase, increase awareness, increase loyalty, change value perception, increase emotional bond, extend into new product and service categories, etc.)
•    Situation Analysis
•    Market analysis
•    Competitive context
•    Customer profile (segments, needs, attitudes, behaviors, insights, etc.)
•    Strategies and tactics (touching upon all key marketing components that will be used: product, packaging, pricing, distribution, advertising, publicity, sales promotion, selling, etc.).  Be specific.
•    Operations considerations (impact on plant capacity, need for new assets, etc.)
•    Financial projections
•    Pro forma profit and loss statements, balance sheets, cash flows, etc.
•    Including funds required to execute plan
•    Supporting customer research (qualitative research, concept testing, volumetric modeling, market test results, etc.)
•    Risks and contingency plans

Sponsored By: Brand Aid

Brand Positioning Basics

Positioning is something (perception) that happens in the minds of the target market.

It is the aggregate perception the market has of a particular company, product or service in relation to their perceptions of the competitors in the same category.

It will happen whether or not a company's management is proactive, reactive or passive about the on-going process of evolving a position.

But a company can positively influence the perceptions through enlightened strategic actions.

In marketing, positioning has come to mean the process by which marketers try to create an image or identity in the minds of their target market for its product, brand, or organization. It is the 'relative competitive comparison' their product occupies in a given market as perceived by the target market.

Re-positioning involves changing the identity of a product, relative to the identity of competing products, in the collective minds of the target market.

De-positioning involves attempting to change the identity of competing products, relative to the identity of your own product, in the collective minds of the target market.

The Process of Positioning

Generally, the product positioning process involves:

• Defining the market in which the product or brand will compete (who the relevant buyers are)
• Identifying the attributes (also called dimensions) that define the product 'space'
• Collecting information from a sample of customers about their perceptions of each product on the relevant attributes

The Cure For Brand Myopia

Earlier this year I decided to ride the London Eye. It was busy - so busy that the line of people queueing to purchase tickets snaked out of the ticketing room and onto the street overlooking the Thames. In an attempt to manage the line, the Eye's management had constructed a queuing system using barriers. Staff informed customers as they joined the queue that to reduce its length, only one member of each family group could stand in line. The rest of the group would have to wait outside for the 25 minutes it was going to take to get to the end of the line and buy tickets.

And that is how I spent part of my weekend - shuffling sadly along airport-style queueing lanes as part of an army of separated fathers, husbands and boyfriends. Occasionally a child or mother would visit the line and enquire on the progress being made. One husband and wife took turns to queue while the other watched over their four children.

Intriguingly, all of this happened in direct association with British Airways, the Eye's sponsor at the time. The BA logo hovered conspicuously overhead throughout this sombre experience. In direct contrast to BA's TV campaign, in which a family is united by the airline, this BA experience was all about separation. While BA's sponsorship of the attraction was an attempt (for the most part successful) to associate its brand with Britain, entertainment and the 21st century, my queuing experience - which took longer than my trip on the Eye - created an entirely different brand experience. It bracketed BA with the inane systems, dislocation and pointlessness I associate with all air travel.

There is a tendency toward brand myopia among brand managers. They see only the big brand strategies they commission and ignore the everyday experiences that actually constitute the brand from a consumer's perspective.

Marketing Mistakes, Marketing Lessons

Long ago and far away, I started my career at General Electric. It was the early 1960s and, in hindsight, it was a wonderful time. Competition, as we know it, just didn't exist.

GE's main full-line competitor was a company called Westinghouse, but by today's standards, it was barely a real one. Westinghouse was a player, but GE actually saw the company more as a necessity. If that competition ever went away, the government would pounce on GE to break its hold on "electricity."

Back then, nobody really worried much about mistakes because CEOs figured they would be able to get any lost business back in the end. (Jack Welch hadn't yet arrived at GE. After he took over, everyone worried a lot more about mistakes.)

What's Changed

Today there are so many competitors that they quickly take your business if you make a mistake. Your chances of getting it back are slim unless someone else in turn makes a mistake. Hoping for competitors to make mistakes is like running a race with the hope that other racers will fall down. It isn't a very smart strategy.

Even worse is the large number of participants in each race. Every category is haunted by what I call the "tyranny of choice." Consumers have so many choices that one false step brings not just one, but an army of competitors to take advantage of your misstep. And what's especially tragic is that you don't get that business back. It's gone. Does General Motors come to mind?

Now let’s take a look at some of the most prevalent blunders in our hypercompetitive world and hint at the lessons they provide.

The "Me-too" Mistake

Many people believe that the basic issue in marketing is convincing the prospect that they have a better product or service. They say to themselves, "We might not be first but we're going to be better."

That may be true, but if you're late into a market space and have to do battle with large, well-established competitors, then your marketing strategy is probably faulty. Me-too just won't cut it.

The 9 Characteristics of a Strong Brand

A strong brand is defined and characterized by the following 9 dimensions:

   1. A brand drives shareholder value
   2. The brand is led by the boardroom and managed by brand marketers with an active buy-in from all stakeholders
   3. The brand is a fully integrated part of the entire organisation aligned around multiple touch points
   4. The brand can be valued in financial terms and must reside on the asset side of the balance sheet
   5. The brand can used as collateral for financial loans and can be bought and sold as an asset
   6. Customers are willing to pay a substantial and consistent price premium for the brand versus a competing product and service
   7. Customers associate themselves strongly with the brand, its attributes, values and personality, and they fully buy into the concept which is often characterized by a very emotional and intangible relationship (higher customer loyalty)
   8. Customers are loyal to the brand and would actively seek it and buy it despite several other reasonable and often cheaper options available (higher customer retention rate)
   9. A brand is a trademark and marquee (logo, shape, colour etc) which is fiercely and pro-actively protected by the company and its legal advisors

Sponsored By: The Blake Project - 2008 Brand Education Seminars

Brands Always Win

Greetings from  Riga where I am running a two-day session on branding for Latvian companies. I arrived to discover that, by way of a very Baltic introduction to the session, the organisers had drafted a delightful parable to explain the importance of branding.

Aleksander lived in Liepaja. One weekend he decided to travel to Riga to find a wife. On Friday night he met a beautiful girl called Alina.

They sat and talked and finally Aleksander asked her to marry him.

"Why should I marry you?", she asked. "Marry me because I am tall, 175cm." Alina thought about this for a while but then she saw another boy on the dance floor. She stood up and began to walk away. "Why will you not marry me?" asked Aleksander. "Because that boy over there is 5cm taller than you so I should marry him instead," she replied as she disappeared.

On Saturday night Aleksander met another wonderful girl called Sandra.

They sat and talked and finally he asked her to marry him.

"Why should I marry you?" Sandra asked. "You should marry me because I am rich, I have 50 Lats in my bank account," said Aleksander. Sandra agreed immediately and off they went for a celebration dinner. After their meal Aleksander received a bill for 45 Lats. As he was paying the bill Sandra began to walk out.

Defying Demographic Segmentation

I started to feel it in late 2006. An inchoate sensation in my knees that gradually moved up my spine as the weeks progressed until it finally started to influence my thought processes.

Looking back on my actions it is clear that my behaviour patterns had begun to radically change long before I actually realised anything was different.

My growing interest in plants and sudden attraction to gardening implements should have tipped me off. Then there were the protracted conversations with colleagues about superannuation and pension plans that were genuinely exciting.

Most telling of all was my increased predilection for real-estate agents' windows. Even when in Tokyo visiting friends last month, I found it impossible not to stop and scan the properties on display, despite the fact that the words and numbers that accompanied each picture were as indecipherable to me as they were irrelevant.

Consumers, you see, don't age. Instead, we leap from one demographic segment to the next. Rather than following the gradual chronology of life, marketers have always clustered us into classic sub-groups.

I have been ageing all the time, but as far as marketers are concerned, whether I am 18 years and two days old or 34 years and 300 days, I am the same man. Until, of course, I cross the threshold into the next market segment, then I change completely.

I turned 35 on December 20, 2006. While it is not a milestone for most cultures, we marketers realise its significance. I left behind the 18- to 34-year-old segment that accounts for 64% of lager consumption, 68% of football attendance and 79% of soft-core pornography. I became a card-carrying member of the 35- to 55- year-old segment that dominates market sectors such as barbecues and erectile dysfunction.