As we approach a new financial year and a large number of businesses are focussed on finalising budgets I thought it would be worth exploring a business case for brand investment.
While many marketers and business owners recognise the importance and benefits of investing in brand, it can be challenging to draw a direct line between the power of brand and its impact on business and bottom line.
Brands have come a long way over the years and have evolved from being a single logo and a tagline to serve a whole range of other purposes. These expanding functions of brands make them difficult to assess, however, there is evidence that supports the notion that a strong brand is more compelling and therefore important than ever.
The impact brands have on business, by the very nature of their expanding purpose, are not simply limited to marketing metrics but can be felt all the way through businesses.
I wanted to explore a few ideas that reflect the value of brand:
Getting closer to your customers and stakeholders
Any brand development programme should start with research and insight. This phase provides a great deal of opportunity to talk to and understand your customers (past, present and potential) and internal stakeholders. By engaging these key groups in the process you will be able to understand their individual needs, perceptions and opportunities and what they want and need you business and brand to do for them. By understanding these key aspects you will be able to differentiate between the perceived and actual needs ensuring you align your brand more closely to each group and provide greater relevance and engagement. This will ultimately help to extend the life and value of internal and external stakeholders.
Driving Corporate Value
Admired brands have a well-documented ability to raise company share price and value. A recent report by the US Economist stated, “brands account for more than 30% of the stock market value of companies in the S&P 500 index.”
Additionally, a survey conducted by the World Economic Forum and public relations firm Fleishman-Hillard revealed “three-fifths of chief executives said they believed corporate brand and reputation represented more than 40% of their company’s value.”
Brand is closely tied to a company’s reputation. The most effective brands work to enhance reputation using it to serve as a promise to stakeholders and as a way of limiting damage when a company is unable to deliver on this promise. We have seen examples of this recently, with the like of Volkswagen, that when a company with a strong reputation makes a misstep its brand can mitigate against and/or limit damaging effects.
It is also considered that strong brands are more effective at launching and driving adoption of new products. Kasper Ulf Nielsen, an executive partner at the Reputation Institute said, “People’s willingness to buy, recommend, work for and invest in a company is driven 60% by their perceptions of the company, and only 40% by their perceptions of their products.” A good example of this is Apple, their product launches have people queueing for days to be among the first to get hold of their latest innovations regardless of product features or capabilities compared to competing products.
Additionally, brand strength can enhance company performance. A customer’s loyalty and advocacy for a brand are powerful outcomes of successful brands. A recent study by branding consultancy Siegel+Gale found that 69% of consumers are more likely to recommend a brand because it provides simpler experiences and communications. In a busy world, a brand that makes life easy for its customers can result in a commercial benefit.