Brand valuation vs brand evaluation

Valuing a brand as a corporate asset has been an accepted practice for some time. From an investor’s viewpoint, one of the issues was a lack of a standard methodology for arriving at a brand valuation. Things are getting a little more standardised but there are a number of possible approaches.

There are methods based upon marketing investment: these may either measure historic expenditure on brand communications, or try to equate projected communications investment with estimated brand awareness as a measure. Another approach is the excess earnings method which seeks to evaluate the additional income due to the brand. A third approach is that of ‘relief from royalty’ which takes the standpoint that if the organisation did not have the brand it would have to license it, so it attempts fo calculate the fee.

All these methods could provide acceptable models of brand valuation which is important if the company wishes to sell itself or its brand. My concern, however, is that they don’t go far enough in terms of ‘Evaluation’. Using the old adage, ‘You don’t fatten a pig by weighing it’, how can we generate information we can actually use to improve brand performance and earnings?

One view which may help us is that of Advanced Brand Values (ABV) which seeks to combine the psychological strength of a brand in its audience’s mind with accepted accountancy approaches (Hupp & Powaga 2004).

Brand valuation has its place, and that is with the accountants and financial analysts – for us brand practitioners who want to build and improve brand performance we need ‘brand evaluation’.

Brand ambassadors revisted – Gillette has another question mark.

Oh dear, no sooner do I comment on the potential pitfalls of celebrities as brand ambassadors following the Thierry Henry question, than more questions arise for Gillette with the questions over Tiger Woods’s mysterious crash. You would have thought Gillette were playing about as safe as you can get with Henry and Woods… but it just shows what a minefield celebrity endorsement can be. Beware of own goals.

The ‘Jedward’ brand or no-brand

I’ve been struggling with the issue of ‘what is a brand’ for some time… which may sound like a sad reflection from someone who makes a substantial part of his living out of branding. But I have discussed before ‘What are the necessary and sufficient conditions for something to be called a brand?’ Part of what prompted my introspection was the loose use of the brand term in relationship to personalities – the Brown, Blair, Obama, Tiger Woods, Madonna ‘brands’. Uncomfortable though I may be, I have come down to semiotics, in that a brand must be a signifier AND have a signified – and that signified encompasses brand values.

So, some personalities to encapsulate values that make them viable as brands. What clarified this was the ‘Jedward’ phenomenon. Pundits are pointing out how clever (?) they were in having now created a brand even in their demise. I would argue that at this time, they are NOT a brand. They have a signifier with no signified; there are no apparent values behind the ‘brand’ right now.

Maybe you think otherwise?

Gillette and Thierry – the dangers of brand ambassadors

It is all about value transference. There is little doubt that associating key personalities, sporting or otherwise, with a brand can provide major benefits if executed wisely and sensitively. But there are already rumours of the public (well, perhaps only the Irish public) calling for a boycott of Gillette following Thierry Henry’s helping hand in his country’s World Cup qualifier against Ireland.

Only a minor issue for the brand, I’m sure, but it does flag up the potential dangers for both the sponsored and the sponsor. Both are assuming some shared values that will benefit the brand and the personality – but things do go wrong. Stars have been known to behave badly… very badly at times.  Brand stewards can equally get involved in matters that may make their chosen personality bury their heads in their hands.

I can’t help thinking of the old music hall song by Benjamin Hapgood Burt- “The pig that walked away”

One evening in October, when I was one-third sober,
An’ taking home a ‘load’ with manly pride;
My poor feet began to stutter, so I lay down in the gutter,
And a pig came up an’ lay down by my side;
Then we sang ‘It’s all fair weather when good fellows get together,’
Till a lady passing by was heard to say:
‘You can tell a man who “boozes” by the company he chooses’
And the pig got up and slowly walked away.

Culture, brand values and evolution

Internal culture is the most powerful determinant of brand values, which, in turn affect external brand perceptions. It directly impacts the brand development as it lies at its core.

If we think of corporate culture as an organism, evolving over time, it could develop as a goldfish or a piranha.  Cultures contain positive and negative traits – each can thrive or die depending upon its environment. Continuing the evolutionary model, it is the survival of those best suited to that environment that will prosper.

It is on the management of this environment that brand leadership can have its greatest influence in ensuring positive traits are encouraged and negative eliminated. The internal culture can be nurturing or cynical, fearful or cooperative, innovative and creative or conservative and static. We have all seen the ‘power of the group’ in action in organisations – for good and ill. People who fit the current culture survive and those who challenge cultural norms and have the potential to change it leave or are marginalised – if the culture is a sound one, this may be a positive activity, but often it leads to the perpetuation of undesirable attitudes or practices.

The evolutionary view, on a wider stage, will dictate that brands best suited for the market environment will thrive and prosper – but internal cultures are often evolving independently – to paraphrase Richard Dawkins, we have the ‘Selfish Culture’. Its only purpose is to perpetuate itself. So if, for example, we have a grasping internal culture that considers customers as dumb punters, no amount of tweaking the brand image or fine words about being ‘customer focussed’ will make any difference. To build a strong brand requires strong brand values and that needs the right cultural envirenment. Corporate culture is the DNA of the brand values.

New bank brands coming to a high street near you?

Mr Darling’s promise/threat to break up some of the high street retail banks is expected to bring some new banks to our high street. Will these be completely new brands or bolt-ons to existing institutions?

I have observed brands and brand management in the financial sector with mixed emotions, though the predominant emotion is probably ennui. The truth is that more retail bank brands will probably do little for the consumer unless someone is bold enough to come up with a seriously innovative and differentiated offer. What I fear is just another smaller clone of one of the existing banks.

I am sympathetic that there is little leeway for retail banks within the current environment – if the three possible directions of differentiation are price, product and service, there is no margin in price, I would suggest, so banks must look to the two other routes. Will we see some creative new products emerging from new business models? Perhaps new approaches to customer service and delivery will present exciting new brand offerings?

Banks have not been noted for the bright ideas springing from their fertile imaginations. ‘First Direct’ was a good idea which failed to capture the market’s imagination and was quickly put into the shadows by the growth of internet banking.  The web brought a raft of new approaches, but again failed to thrill.

Will this new opportunity bring fireworks or damp squibs?

New whitepapers added to the blog

I have added a couple of whitepapers to the blog for your interest. The first, ‘Brand and Corporate Personality as Relationships – systems theory’, explores some thinking on brand relationships and some models including the brand-as-person model. The second, ‘Brand Dynamics and Eco-motive strategies’, looks at some ideas of mapping brand psychology on economic cycles.

Check them out on the ‘Whitepapers’ pages above or the links on the right.

Maclaren – a masterclass in brand communications?

British baby buggy manufacturer Maclaren are recalling some 1 million of their umbrella strollers from the US market following reports of children having fingertips amputated by the closure mechanism. Hopefully this will be a lesson on handling brand communications properly, to preserve the brand values of a long-established organization – but I have an uneasy feeling it may be a masterclass in how NOT to handle them.

In the US, Maclaren have been quick to respond – the recall, issuing a safety kit, information on the website, a hotline for worried consumers, and a joint press release with the US Consumer Products Safety Commission (CPSC).

In the UK, the story so far is somewhat different. Indeed there seem to have been no similar injuries reported so far and we understand there are no plans to recall the product in the UK.  But the response from the company has been more tight-lipped in their home market. When the story was featured on BBC Radio 4’s ‘Today’ programme, Maclaren declined to put up a spokesperson.

Okay, it’s early days, but it is here that brand damage is often most critical. They advice in this area is well known and I cannot believe that Maclaren’s corporate communications team are not fully aware of the proper ’spill drill’.  Any delay and hint of a  ‘no comment’ response is the public’s first perception of the organization’s attitude – and as we know, you don’t get a second chance to make a good first impression. Brief the team, have your spokesperson ready, be proactive in supplying information and let your brand ambassadors do their work.

Any product or service that impacts upon children is particularly sensitive. Maclaren has a good brand reputation for its products – my own kids were pushed around much of Europe in them. But the values we expect such a company to encompass and communicate must include consideration and empathy for children and parents. Importantly, we live in a global communications arena: we can’t adopt different standards in different market even though we have to adapt culturally. Cynics may suggest that one approach is applied in the US because of the actions of the CPSC and an intrinsically more litigious culture, while another strategy used in the UK because we don’t.

Damage to sales figures is painful – damage to brands can be terminal.

 

Threshers for the drop?

Noting the imminent demise of the Threshers wine stores and considering two dimensions: firstly pressures on the sector, and secondly differentiation within the sector. This could be a classic case-study question for marketing students!

Since supermarkets first carved a niche for themselves in the drinks sector ( I seem to remember Sainsburys were the pioneers), the high street wine stores have been under pressure. Apart from a small window of opportunity on Sunday evenings when even 24hr Supermarkets lock their doors, competing is an uphill struggle. Competition also comes from the convenience stores with the off-licence counter who have a more diversified offer and not so dependent upon the booze trade. Government and social pressure can also hae done little to help this besieged sector.

Within the sector little has been done to make an offer differentiated from the supermarkets. Take me blindfolded and remove the mask before a Threshers’ rack and I would be hard pressed to tell if I was in a supermarket or not.

There are small specialist wine merchants carving niches at the top end and carefully loading cases of premier crus into their customers’ 4×4s, but there are few differentiated brand offers in this difficult arena.

Oddbins and Majestic have always had rather quirky personalities that have created a measure of differentiation, but this has been a matter of personality, presentation and communications rather than a distinct business model. The sector needs some dynamic thinking if it is not to disappear altogether into the omnivorous maws of the supermarkets.

Small items of delight

Sometimes there are big items or changes that affect brands, but more often than not it is an aggregation of little things that come together to make a brand special. Tom Peters used to talk of ’small moments of delight’ – when a brand presents something small, new and surprising. It’s not necessarily going the extra mile, but often just the extra yard… then doing it again and again. Tiny points: slightly more thoughtful packaging, pro-active client service, an unexpected loyalty reward. Think of your favourite brands and what makes them special – I would suggest there may not be one ‘Big Thing’, but half a dozen small things they do very well.