Allyson Stewart-Allen, founder, International Marketing Partners as interviewed by The Marketer blog.
Why bother creating brands at any time? They serve a number of purposes for the business but the main ones, I would argue as one who helps create them for companies, are… 1) to skew markets in your favour by creating products and services that customers want above all others in the category and 2) to secure loyalty, advocacy and subsequently cash flow through understanding and catering to those who value your products and services.
Brands are mostly constructed on customer perceptions and direct experiences with the branded product/service, as well as built on intangibles that influence those perceptions – intellectual properties (copyrights, patents, domain names, trademarks, designs), good corporate behaviour and having local knowledge.
These IPs are legitimate assets which must be actively managed, while corporate diplomacy and conscience (less tangible but still corporate culture assets) are in the power and decisions of the brand owner’s leadership. Think about Apple’s designs, Coca-Cola’s bottle shape, Amazon’s pulling power – all of which are IPs being actively managed and defended.
Good Corporate Behaviour
You’re familiar with the recent stories of executives whose arguably autistic approach has undermined their brands, including Tony Hayward for BP, Irene Rosenfeld for Kraft and more recently Rupert Murdoch for News International.
Why has TopShop had so much success in the US while M&S hasn’t? What did they do differently that enhanced or undermined their brands? Simply it’s about brand travel – studying if and how brands can be transplanted and survive in a different clime. Ford has cracked it and many SMEs have, too, by being methodical and good listeners.
There are now many firms helping CEO’s and City analysts value brands on balance sheets to show there’s more than just IT and real estate to the way organisations create and extract value from their markets. These valuations do shore up share prices by using quantitative methods including:
- Economic income approach: where a brand is valued using one or more valuation methods that convert anticipated economic benefits into a present single amount using discounted cash flow (DCF) analysis
- Market comparable approach: where a brand is valued by comparison with similar assets which have been sold, for example using P/E ratios or turnover multiples.
- Cost approach: where a brand is valued using the sum of the individual costs or values of the brand assets and liabilities, for example the cost of building or recreating the brand.
Creating and maintaining brand assets is essential to every healthy business. You know as well as I do that those that don’t end up fighting in the trenches on “price” because they’ve not given customers a reason to differentiate. There’s no profit to be had in the price fight, which some, sadly, learn a little too late.