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Insights: Jane Piper On Brand Value

A valuable brand in any sector, is all about the size, strength and quality of a brand’s connection with its customers, and understanding how the brand can create value and generate revenues for a business.

Global brands today have very well established models in place for managing their international portfolios, and targeting emerging markets to provide the powerhouse of business growth is nothing new. But when it comes to both understanding and growing the financial value of a brand, for whatever reason, either financial or strategic, it has often been down to one of a number of different accounting methodologies.

However, with a new International Standard (ISO 10668) on Brand Value developed by teams from across the globe including China and ASPAC countries (Piper was a member of the UK team), that’s all changed, although the standard has yet to achieve widespread awareness in Asia. Designed to tell businesses how to value a brand, the Standard also specifies identifying how a brand drives value for a business, the brand’s strength and the impact of the brand in driving overall demand for a business.

The real secret is putting in place measures and key performance indicators (KPIs) to manage brands in relation to financial performance – what strategy to adopt, how best to develop, manage and grow a brand and secure a price premium that a valuable brand can deliver.

Regardless of sector or geography, consumer brands in retail, luxury or FMCG, technology or service brands, all have a common goal: what makes a customer prefer your brand over a competitor? Look at what Apple did.
We all make choices on what brands to buy ¬– to eat, drink, use or wear. The question is how does a brand create real value for a business? We asked branding industry specialist Jane Piper for her insights into what this means for consumer brands looking to grow their share of the market, especially in China.

RIA: What measures are there to monitor the connection between brand and revenue generation?

JP: Even the banks are talking about connectivity with synergies to drive revenue generation across their global businesses. Where you can identify and actually pinpoint the strength of a brand’s connection with its customers, current and potential – the greater the opportunity to generate cash.

For the measures, they differ across sectors. But if we take retail, an example would be the direct correlation between increase in brand recall and connectivity leading to increase in consumer multichannel purchase.

Brand connectivity being defined as the size of a brand’s community (fans – Facebook, Twitter, YouTube, Weibo, etc) and the strength of that relationship i.e. the volume of activity, ratings, reviews, blogs aligned with the profitability of the multichannel customer who shops both in store and online.

This means understanding what it is about your brand that makes consumers love you: product quality, taste, design, value for money, innovation, and identifying how best to extend a brand’s reach through connecting and communicating with customers in different markets and territories.

There are many ways of delivering the connection between brand and revenue generation, depending on what sector and market environment you operate in.

RIA: So what would be a good example of a brand developing its connectivity such as in China?

JP: If we look at the luxury brands market in China, which despite the global economic slowdown and impact on the luxury sector overall, China’s consumer sector is continuing to grow and accounts for an increasing share of global sales for luxury brands.

We can see the shift in key consumer trends on an annual basis, the importance of brand recognition continues to increase year-on-year both in tier 1 and tier 2 cities. Together with a rise in the number of consumers who would pay a premium for well-known brands.

And combined with the surge in digital trends for Chinese consumers who are increasingly interacting online, visiting online forums and researching brands on the internet (some 70% searching twice a month), this demonstrates a major shift in consumer attitudes. An increase from 22% in 2011 to 40% of consumers intent to purchase online in just a year.

The proof will be the speed to monetise online activity, with the importance of the luxury in-store brand experience so well embedded in China, and the major luxury brand groups committed to their bricks and mortar strategies. But with over 50% of Chinese consumers already using their smart phones within the retail space as part of their customer experience in retail transactions, the growth in m-commerce (i.e. on smartphones) is only likely to increase.

RIA: Do you have examples of brands utilising KPI?

JP: Dunhill is a great example of a brand directly developing its connectivity with wealthy and younger Chinese consumers through social media and the power of Weibo. The launch of its ‘Trafalgar’ spring collection campaign in Shanghai last March, was designed to be innovative and inspirational, and was a phenomenal success on Weibo connecting huge numbers of potential new customers to the brand very quickly.

Another good example of a brand using innovation in product design to create IP and generate brand value is Dyson with its new Airblade product. With the brand’s roots in the UK and manufacturing base in Malaysia, its latest unique new product not only looks good and is revolutionary in design, is space ergonomic and designed to use up to 69% less energy. With its premium price tag, the cost savings to its commercial customers in payback on reduced energy use, will far outstrip the upfront outlay.

RIA: So in summary, what actions should a business take?

JP: Each organisation is different, but a good starting point would be to review a brand portfolio and its management structure, together with the basis of reporting on brand performance. This means a good overview of the existing systems in place to manage the IP portfolio, reviewing how much knowledge there is on asset value, including the remit and resources assigned to this.

And then to ensure your brands have value creation firmly embedded in their DNA and strategies for growth and development. For example understanding how and where the brand creates value from a customer perspective – is it design, functionality, quality, service, and how best to connect your brand to the widest possible audiences. Another example is through brand partnerships with other companies in differing sectors but with similar values and ethos. Cross over between customer groups is an easy way to extend brand’s connectivity.

Thirdly, to identify a set of measures to monitor brand performance in line with revenue generation dependent on demand drivers, that supports other key performance indicators within your organisation.

Finally managing brand risk, for example from sourcing and sustainability of supply, is increasingly important in today’s consumer activist society, while businesses also need to ensure they have brand protection strategies on trademark portfolios.

RIA: In that case, what can a valuable brand deliver for a business?

JP: A strong and valuable brand commands a premium, not just in the traditional price premium capacity, but especially to potential investors.

This may be in relation to a private equity investment buy-in, buy-out or an MBO, equity investments, the setting up of a joint venture, in mergers and acquisitions as well in IPOs, where a strong and valuable brand is of extreme importance.

As the Chief Executive of Intercontinental Hotels Group, Richard Solomans, was quoted in the FT (20/02/13) in announcing their latest results said, “At times like this it’s very much about winners and losers: the strong are getting stronger and capital is attracted to strong brands.”

 

Jane advises businesses in Asia and Europe on brand value and works in partnership with Censere on brand related projects. For further information see http://www.janepiperbrandstrategy.com
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