Strategic brand value: Advancing use of brand equity to grow your brand and business

Businesses that intend to reap the benefits of using brand as a driver of business success need to begin the process by identifying and managing, in a more systematic and structured way, the associations that contribute to brand equity and are critical to enhancing the brand’s value and the extent that it financially impacts on the business. This paper is designed to acquaint the reader with a more strategic approach to both profiling and managing brand equity over time, using both qualitative and quantitative modelling approaches whose findings are correlated to business performance concerns. Introduction With such renowned brand successes as Nike, Intel and Starbucks to serve as their inspiration, businesses are becoming increasingly savvy in the way they regard and manage their brands. The value of treating their brands as assets and managing them as such is obvious given a strong brand’s demonstrable benefits of price premiums and market share leadership that drive the bottom line. Recognising these benefits is one thing. Actually realising them is another. The challenge lies in understanding how brand strategy enhances and enables business strategy. A good starting point is a better understanding of brand equity and how it drives brand value. But more than merely understanding it, businesses that intend to become truly brand driven will find a way to identify and manage, in a rigorous and structured way, its most important aspects — those that are crucial to enhancing both the brand’s value and its financial impact on the business. Brand equity revisited At its most basic, brand equity, according to noted authority David Aaker, is the set of assets and liabilities linked to a brand that add to or subtract from its value to the customer and to the business. Getting a true picture of that equity, as he detailed in his classic Managing Brand Equity, involves identifying the brand associations and levels of customer awareness and loyalty that differentiate it from competitors. The entire notion of brand equity has gained increasing attention in recent years, thanks largely to the annual study on the world’s most valuable brands conducted by Interbrand and profiled in the pages of &HENRY STEWART PUBL ICAT IONS 1478 0844 . I n t e ra c t i ve Mar ke t i n g . VOL .5 NO.1 . PP 33–39. JULY/SEPTEMBER 2003 33 Business Week. While this makes for interesting reading, it is less relevant and actionable for day-to-day strategic decisions and management. For these purposes, the focus of how much the brand is worth on the balance sheet is less important than its value in having an impact on day-to-day financial performance. Getting there requires a more strategic approach to traditional brand equity tracking. At its basis is the objective of creating an in-depth profile of a brand that, through quantitative modelling, allows for the identification and better understanding of its strategic drivers. In turn, this allows the organisation to leverage the brand’s most business-relevant aspects better to help drive improved financial performance. Advancing beyond traditional brand equity tracking The common practice among most marketing departments is to undertake the de rigueur customer attitude and usage studies that allow them to track the dimensions of the brand and compare them to competitors. But, on the whole, they have not evolved the process far enough. One is familiar with businesses which proudly point to studies two inches thick that profile the attributes of their brands. Yet they are not putting that intelligence to strategic use by analysing and prioritising the business impact of those attributes. Which are neutral associations, and which are ‘antes’ that any brand in the category must have to play? Which are key drivers of brand and business success? Which attributes can be potential drivers; which, with cultivation, have the potential to become brand drivers? And what are the negative attributes that could act as barriers to the brand’s and business’success? Once these drivers are identified and distilled down to the most influential, they are critical barometers against which to weigh brand investment decisions to help the business meet its underlying goals and objectives and, in the end, improve its financial performance. Consider the example of DuPont’s Kevlar polymer material, best known for its use in bulletproof vests and helmets, but also in things like sails, tyres, ropes and cables. Among the brand associations that contribute to its equity profile are its distinctive yellow colour, heritage of proven performance and reliability, lightweight strength and that it is original/authentic, an innovator and created a market category. While the Kevlar yellow is well known and forms a unique association to the Kevlar brand, it is a neutral attribute because it does not contribute to the purchase decision and has no impact on Kevlar’s pricing, market share or extendibility into new markets. Its heritage of proven performance and reliability are also part of the equity profile of Kevlar but have become category ‘antes’, as they are expectations of customers and competitive brands have achieved similar performance. The most powerful ‘ownable’ brand associations that are unique, important and highly associated with Kevlar are its drivers. These would include its superior lightweight strength and innovation leadership. Used in underwater applications as support cables, for example, Kevlar has been shown to be 20 times stronger than steel. Sails made of it can Strategic approach 34 &HENRY STEWART PUBL ICAT IONS 1478 0844 . I n t e ra c t i v e Ma rke t i n g . VOL . 5 NO.1 . PP 33–39. JULY/SEPTEMBER 2003 Leiser