Brand Leadership

Creating and progressively building strong brands is an important commercial activity for most business enterprises since:

o    • Brands are important and substantial financial assets that add significantly to the market value of the overall commercial entity.

o    • Brands that are well positioned can deliver sustainable competitive advantages – allowing firms to differentiate themselves.

o    • Brands enhance profitability – they allow companies to sell products and services at prices higher than the prevailing market rate.

For all that, however, the way that strong brands are built is rapidly changing and evolving. A new paradigm is emerging in which achieving brand leadership is becoming more important than simply building brand equity.

The Old Paradigm (Build Brand Equity) >> The New Paradigm (Achieve Brand Leadership)

To succeed in building brand leadership, a business must overcome and address four key challenges:

The 4 Key Challenges of Achieving Brand Leadership:

1. Positioning: To originate a strategy which provides identity, differentiation and empathy.

2. Architecture: To build a comprehensive architecture providing strategic direction.

3. Programs: To develop effective programs and a system to track the results.

4. Organization: To create a viable brand building organization

In effect, the paradigm for brand building is evolving from the tactical and reactive approach of t raditional brand management to the much more strategic and visionary brand leadership approach. Similarly, the focus of brand building is evolving from a limited single market scope to a much broader and more complex multiple market focus embracing the global perspective. And, at the same time, the key driver of brand strategy is evolving from measures like sales or market share to a better long-term metric, brand identity. The traditional brand management system is being superceded by the brand leadership paradigm because of the need to deal with new market complexities – competitive pressures, the evolution of channels, global competition, multiple brands, aggressive brand extensions and the arrival of complex subbrands.

Supporting Ideas

The new brand leadership paradigm is based on a number of assumptions:

o    The brand building strategy should be aligned with the business strategy of the overall business enterprise.

o    Brand leaders should be strategic and visionary rather than reactionary and focused on tactics.

o    Brands are long-term intangible assets of the business, and programs which build the brand creates assets that underpin the future success of the business enterprise.

o    Brands enable a business to avoid the need to compete on price and instead sustain premium pricing levels.

o    The actual value of the brand is difficult to quantify precisely but it can be estimated as a percentage of the earnings stream generated by each major product.

The new paradigm of building brand leadership is rapidly replacing the classic brand management system. The classic system worked well for decades, in part because brand management was always considered a high profile position. Thus, managers who were exceptional planners and doers tended to be attracted to the brand manager role. In an increasingly more complex business environment, however, the old paradigm is becoming less and less relevant. The new brand leadership paradigm is becoming more and more important.

For example, consider the brands which are today competing to achieve brand leadership:

o    L.L. Bean – with its legendary “Guarantee of 100% satisfaction”

o    Adidas – with a new focus on participation in sport rather than attempting to equip just the elite sports people.

o    MasterCard – which has become a brand leader by sponsoring the soccer World Cup.

o    Virgin Atlantic Airways – founded and led by Richard Branson with the objective of “providing all classes of traveler with the highest quality of travel at the lowest cost”.
o    Swatch – which, since its 1983 launch, has built its brand around the concept of fun, youthful and provocative watches.

Brand Equity:

o    1. Brand Awareness

o    2. Percieved Equity

o    3. Brand Associates

o    4. Brand Loyalty

Lets explain each one by one:

o    Brand awareness – is important because customers like the familiar. Awareness effects perceptions and consumer tastes. Any brand that achieves high levels of awareness is more likely to be chosen over its competitors.

o    Perceived quality – is a special type of association in the mind of the consumer. Brands that are perceived as being high quality are more profitable because they can demand and receive premium pricing.

o    Brand associations – are what connects the customer and the brand. This will be a dynamic mix of images, product attributes, organizational attributes, symbols and the brand personality. A large proportion of brand management activities are involved with forming and shaping these associations.

o    Brand loyalty – lies at the heart of the value of a brand. The greater the loyalty, the higher the brand is valued, but even those brands which have a small customer base can have high brand equity if those customers are sufficiently loyal and passionate.

By tracking and measuring each of these dimensions, it becomes feasible to measure whether or not brand equity is being increased by the actions taken.

Key Thoughts

“In an increasingly crowded marketplace, fools will compete on price. Winners will find a way to create lasting value in the customer’s mind.” – Tom Peters

“Interbrand is a firm that generates brand values. In its June 1999 study of brands, sixty brands were estimated to have a value over $1 billion: the leaders were Coca-Cola at $83.8 billion and Microsoft at $56.7 billion. In many cases, the brand value was a significant percentage of the total market capitalization of the firm (even though the brand was not on all its products). Of the top fifteen brands, only General Electric had a brand value under 19-percent of the firm’s market value. In contrast, nine of the top sixty brands had values that exceeded 50-percent of the whole firm’s value, and BMW, Nike, Apple and Ikea had brand-firm value ratios over 75-percent. The Interbrand study rather dramatically illustrates that creating strong brands does pay off and that brands have created meaningful value. It is an important statement about the wisdom and feasibility of creating brand assets.” – David Aaker and Erich Joachimsthaler

“You cannot win the hearts of customers unless you have a heart yourself.” – Charlotte Beers, J. Walter Thompson

“The key to most strong brands is brilliant execution that bursts out of the clutter, provides a boost to the brand, and creates a cumulative impact over time. The difference between good and brilliant cannot be overstated. The problem, of course, is that there is a lot of good around and little brilliance. The challenge is to be noticed, to be remembered, to change perceptions, to reinforce attitudes, and to create deep customer relationships. Good execution rarely moves the needle unless inordinate amounts of resources are expended.” – David Aaker and Erich Joachimsthaler

“The strong brands of tomorrow are going to understand and use interactive media, direct response, promotions, and other devices that provide relationship-building experiences.” – David Aaker and Erich Joachimsthaler

“Everyone experiences more than he understands – but it is experience, not understanding, that influences behavior.” – Marshall McLuhan

“Successful management involves measurement. Without measurement, budgets become arbitrary and programs cannot be evaluated. The key to effective measurement is to have indicators that tap all dimensions of brand equity: brand awareness, perceived quality, customer loyalty, and associations that include brand personality as well as organizational and attribute associations. Relying on short-term financial indicators alone is a recipe for brand erosion rather than brand building.” – David Aaker and Erich Joachimsthaler

“Leadership is part of the core identity for many brands, especially corporate brands, and with good reason. It can inspire employees and partners by setting a high brand aspiration level; the goal of being out in front makes the brand-building task exciting and worthwhile. For many customers, a leadership brand provides reassurance, while for others it implies quality and/or innovation that translates into solid functional benefits. Buying and using a true leadership brand also delivers self-expressive benefits – a feeling of importance and the satisfaction of having good judgement.” – David Aaker and Erich Joachimsthaler

“Customers ultimately drive brand value, and a brand strategy thus needs to be based on a powerful, disciplined segmentation strategy, as well as an in-depth knowledge of customer motivations.” – David Aaker and Erich Joachimsthaler

“A brand strategy must follow the business strategy.” – Dennis Carter, Intel

“We hire eagles and teach them to fly in formation.” – D. Wayne Calloway, former CEO, PepsiCo

Challenge #1

Positioning: To originate a strategy which provides identity, differentiation and empathy.

Every strong brand actually has two key elements:

1. An identity – a vision of how the brand should be perceived by its target audience.
2. Positioning in the marketplace – a communication strategy to prioritize and focus the brand identity.

Businesses that succeed in building strong brands excel at creating a rich, clear and unambiguous brand identity and supplement that with a positioning program which clarifies and elaborates on that brand identity.

The brand identity states what the organization wants the brand to stand for – the specific set of associations the brand strategist aspires to create or maintain. Since the brand identity drives and correlates all the brand-building activities carried out, a strong brand identity will always have depth and richness.

To develop strong brand identities:

1. Avoid viewing the brand too narrowly. Instead, have a broad and rich brand identity which is aspirational. A brand identity will always be more complex than just a simple tagline or three-word phase.

2. As far as possible, always link the brand to one specific functional benefit which is compelling and expressive. Everything else should then be linked to that benefit by association. Ideally, if you have a strong visual metaphor which can be used, it will become easier to communicate that attribute.

Brand identities can be elaborated four ways:

o    By identifying role models.
Role models capture the emotion of a brand and say something about its vision. Internal role models can personalize the brand and build a heritage within the organization of actions which make up the company culture.
Meanwhile, external brands can be inspirational – identifying world class performers the company would like to have as its peers or role models.

o    Through the use of visual metaphors.
Visual metaphors which are aligned with the brand identity are powerful emotive devices. They can add depth and color to the way the brand is viewed. Strong visual metaphors are memorable and provide strategic direction for the brand identity.

To create a viable brand building organization.

A good brand building organization will operate globally within a culture and organizational structure which nurtures and build the brand. That generally requires four elements:

1. A brand champion who will oversee the long-term progress of the brand – avoiding ad-hoc decisions.

2. An international communication system – allowing sharing of insights, ideas and best practices.

3. A common global brand planning process.

4. The ability to execute effective brand-building programs.

Supporting Ideas

Global brands are easy to describe but exceptionally difficult to build and maintain. In essence, a global brand has a high degree of similarity across countries in terms of brand identity, positioning, advertising strategy, personality, look and feel. The key to successfully building a global brand is to find a position that works and resonates equally well in all markets.

Building a leading global brand is not simply a matter of deciding to go international, even if you already own a successful premium brand that is well established domestically. Without effective, proactive management and the resources needed, a global brand strategy is unlikely to succeed.

Somesh Vishnani

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