Strong Brands, Profitable Brands: How Greater Alignment with Ideals Leads to Best Results

Transcription

1 Insights&Trends I42/2014 Metrics Strong Brands, Profitable Brands: Estimation of a brand s value and its contribution to business has always been considered the main challenge in measuring intangible assets. But what are those brands that make the highest contribution to business value? What brands achieve greater financial result? The stronger the brand, the higher the company s stock price. Brand equity is intangible value that determines to what extent associations evoked by a brand are able to predispose stakeholders to prefer this brand to others or pay a premium price for the brand now or in the future, says Adolfo Fernández, Director for Customer Service at Millward Brown, Madrid. This definition of brand equity enables us to carry out accurate evaluation of brand value and its economic role. In fact, the fastest growing brands are those that have a close and positive relationship with consumers and thus achieve superior financial results. According to the recent study by the expert and former Global Marketing Director of Procter&Gamble Jim Stengel, those brands that embrace a social ideal and use it in their activities, in the last 10 years achieved 400% more favourable results than their competitors from Standard&Poor s 500. Connection is Key New research methods allow scientists to make progress in measuring emotional connection between brands, consumers and other stakeholders as well as its correlation with the economic value of these brands. Non-intrusive qualitative methods of observing behaviour in real environment as well as online environment (such as Facial Coding or Eye Tracking, interpretation of facial expressions or eye movements on the screen) enable scientists to define emotions experienced by a consumer at the moment of contact with the brand, such as seeing the product in the shop window or in commercials on the television. This document was prepared by Corporate Excellence Centre for Reputation Leadership and among other references contains statements made by Adolfo Fernández, Director for Customer Services at Millward Brown, Madrid; Javier Mancebo, Intelligence Director at Havas Sport & Entertainment; and José Carlos Villalvilla, General Director for Eco-Efficiency and Power Services at Iberdrola during a discussion titled New Measurement Frontiers: from Reputation to Customer Value organized by Anuncios magazine jointly with Conento and Millward Brown in Madrid, on October 18, 2012.

2 Graph 1: An overall picture of how brands generate a financial return Meaningful Brand Associations Different Salient In-market Activators Brand Predisposition $ s Power Premium Potential Volume share Price Index Value share growth Source: MillwardBrown, Significant, catchy and unusual associations lead to stronger connection between a brand and different stakeholders Progress made in market research in the last four decades made it possible to improve efficiency of brand measurements. For example, the segmentation technique evolved from analyzing purely demographic characteristics of consumers to evaluation of elements related to the brand: 1980s: social and demographic segmentation (consumer s age, sex, nationality, job, income, marital status, number of children and other dependents). This segmentation is useful for developing brands portfolio but insufficient for explaining preference of this or that brand. 1990s: psychographic segmentation (consumer s desires, needs, purchasing behaviour, habits, life style, beliefs), in addition to the social and demographic information. This segmentation is useful for differentiating the brands portfolio but insufficient for exploring new growth opportunities. 2000s: brand equity (what s useful and necessary for the consumer) in addition to the previous two types of segmentation and the information that they provide. This segmentation is useful for classifying brands by associations and focusing on investments in key brands but insufficient for identifying true value and economic potential for market segments. 2010s: new segmentation (unsatisfied needs, desires, potential use, holistic vision, relation to sales, financing volume and impact of different groups of consumers). This segmentation is useful for predicting growth of brands, detecting changes in market conditions and consumer reactions to changing conditions as well as making tactical and strategic decisions based on economic data. A brand s connection to its stakeholders should be based on a grand ideal, an idea about the world, life and society shared with the stakeholders an idea that will guide different associations evoked by a brand (memories, impressions and feelings) and serve as the basis for its competitive advantage and differentiation on the market. Significant, catchy and unusual associations lead to stronger connection between a brand and different stakeholders and thus greater possibility that the brand will be picked by the consumers to be used, by employees to work for, by shareholders to invest, by suppliers to become partners, etc. However, above all, strong connection ensures stakeholders predisposition to trust the brand. Core Ideal Metric and Brand-Z Brand equity measurement tools have undergone significant changes over the last few years as a result of the processes described above. In the context of the economic crisis and dynamic social changes caused by technologies, brands do not need description of the current situation. What they do need is evaluation and projections of the future in order to make the right choices in the continuously turbulent environment. That s why Millward Brown developed two methods for performing brand measurements. Core Ideal Metric measures the degree of association between a brand and a specific ideal consisting of five large groups of aspirations and corresponding fundamental human values: Joy: creating numerous happy experiences. Connection: making sense of human relations. Exploration: opening new horizons and setting new limits. Pride: generating trust, strength, vitality and security. Impact: changing the society and the present status quo. Insights&Trends 2

3 The key to brand management and measurement is to understand what brands are supported by consumers rather than what brands are purchased This association is then adjusted to market comparables and its unique features and evaluated in terms of its brand strength and market share. Another method is called Brand-Z. It uses several key elements in order to evaluate and calculate brand value. More specifically, it uses six dimensions: Bonding. Advantage. Relevance. Presence. Perceived price. Performance. According to Stengel, the brand ideal does not only propel created emotional connection or achieved differentiation, but also enables the brand to become its own key engine of success, strength and support for other brand equity dimensions, such as price, presence, relevance or performance. Three key conditions help this brand ideal to strengthen value dimensions: Passion: encourage people s selfexpression and release their potential. Fun: encourage to see the positive side of life and inspire happiness. Emotion: embrace integrity and free your feelings. Graph 2: Bike Company X Web Analytics Framework Accordingly, Millward Brown uses three indicators to estimate the value of a brand by using different combinations of three elements (meaningful, different and salient): Power. Prediction of the market share based solely on perceptions: are consumers predisposed to prefer this brand to others? Premium. Prediction of the price based solely on perceptions: are consumers predisposed to pay more for this brand than for others? Potential. Forecast of market share s growth based solely on perceptions: are consumers predisposed to continue using the brand and not switch to other brands? More than Advertising ROI The world of brand sponsorship is somewhat away from those fields where measurement tools are developing at a gigantic pace. Javier Mancebo, Director for Intelligence at Havas Sport & Entertainment, believes that other tools should be used in the field in addition to the famous ROI (return on investment) widely used in advertising. When applied to sponsorship, ROI means the advertising value of the brand s presence in the media when it appears together with the event or object that it sponsors. 1 Business Objective 2 Goal 3 KPI 4 KPI Target Sell Bike Parts Effective Marketing Build Goodwill More Sales Monthly Revenue $15,000 / mo Increase unique visits Monthly Unique Visitors 13,000 Make a Profit Profit Margin/Sale 40% CRM build a customer DB Draw Qualified Customers Serve as resource to riding community # of new registrations / mo 300 / mo Conversion Rate 3% # of pageviews of resource pages 1500 / mo 5 Segmented KPI: (example) # of new registrations / mo Total Reg Goal = 300 Results = 332 (110% of Goal) Percent Paid Search % Organic Search 67 20% Referrals 17 5% Direct 25 8% Source: Kaushik, Insights&Trends 3

4 Mancebo notes that all these models are based on the same variables such the play time, presence of the brand (recognition, advertising space, visibility and ratio) and value in terms of advertising cost. These criteria are used for negotiating the conditions of sponsorship, but not really for evaluating its efficiency. That s why it is important to make another step further and evaluate the efficiency of sponsorship and its contribution to the brand, by analyzing all points of contact between the consumer and the sponsorship (the mass media, participation in events and social networks) that in turn generate knowledge in the form of three variables: Recognition of the brand. Association with specific regions. Knowledge of products/services. This knowledge should then be evaluated in terms of the changes in perceptions that it brought about (attributes, associations, values), attitudes that it generated and behaviours that it encouraged (purchasing intention, recommendation, etc.). Conclusion: Support is More Important Than Sales The key to brand management and measurement is to understand what brands are supported by consumers, what brands are trusted and viewed as an expression of life ideals. Only these brands are able to achieve superior results in terms of trust, connection with the stakeholders and economic and financial results. That s why brand measurement tools should aim to analyse not only purchasing behaviours, but also the behaviours of support, as well as the propensity to recommend and defend brands, as already manifested in social networks and the digital environment. Finally, according to José Carlos Villalvilla, General Director for Eco-Efficiency and Power Services of Iberdrola, integration and involvement of all business units at the moment of measuring intangibles, especially in the case of reputation, is another key to success in the new business model, which implies continuous and overall measurement of achieved value. Insights&Trends 4

5 Leading by reputation 2014, Corporate Excellence - Centre for Reputation Leadership A foundation established by major companies aiming to excel in the management of intangible assets and facilitate promotion of strong brands with a good reputation and a capacity to compete on the global markets. Our objective is to become the driving force, which would lead and consolidate professional reputation management as a strategic asset, fundamental for building value of companies around the world. Disclaimer This document is a property of Corporate Excellence Centre for Reputation Leadership developed with an objective to share business knowledge about management of reputation, brand, communication and public affairs. Corporate Excellence - Centre for Reputation Leadership is the owner of all rights to the intellectual property related to images, texts, drawings or any other content or elements of this product. Corporate Excellence - Centre for Reputation Leadership is the holder of all necessary permissions for the use of the document and therefore any reproduction, distribution, publishing or modification of the document without its express permission is prohibited.