Volkswagen embedded brand values

Volkswagen and brand contagion

A brand is a social construct and as such it does not exist in a vacuum.  It is socially and historically contextual. A brand narrative draws upon these contexts and informs our understanding and our emotional relationships that they engender.

The recent issues facing Volkswagen bring these connections into sharp focus. When we consider the brand values of VW, we see them as shared and deeply embedded in those of the German auto industry in general. They include technical and engineering expertise, quality of manufacture and attention to detail. These qualities we see shared and associated with other individual brands such as Mercedes and BMW.

If many VW values are shared and embedded in our perceptions of German car manufacture, they also draw upon what the world may see as German national values. These may include probity, rule-following, bureaucratic fussiness and openness.

It’s easy to see how VW has enjoyed and built its brand persona upon the wider perceptions of both the industry and national values.

However, just as the brand may suffer from any failure in the encompassing brand values – the converse is also true. VW’s apparent lapse in standards, running contrary to our perception of their values, also has repercussions for the German auto industry as a whole. We may question the brand values of the whole cohort.

As the ripples spread out, long-held impressions of German national principles and brand dimensions cannot avoid damage. This in turn may affect and cause us to questions those values as attributed to other businesses and brands closely identified with national characteristics.

It is a salutary reminder that no brand is an island and value it may acquire or inherit from a sector, industry or a nation is synergic. All may prosper or suffer damage from the actions of others.

brand plans and planning.

The problem with brand plans

Brand planning is vital – but brand plans are usually obsolete almost immediately. The world and market places are constantly subject to change.

Classic brand planning lies in researching and amassing data about the market environments, your products and services, your competitors’ activities and much more. By analysing this data you can arrive at a number of optional directions for evaluation and then agree on courses of action.

The reality is that we are dealing with a snapshot in time. The research data is increasingly obsolescent as we are using it. The world is changing, and competitors are not standing still – they are making and implementing plans of their own.

Brands are social constructs – as such they present multiple possibilities but are historically and socially contextual. This is why plans that seemed brilliant upon completion lie gathering dust on office shelves. Events overtake them and brand stewards have to react to real-world dynamics.

Are brand plans useless?

So does this mean that planning is useless? Absolutely not. It is working through the planning process that should prepare those working on the brand for the moving brand landscape. The changes of direction will be informed by the research and learning of the planning process. The act of working through the research, evaluating options and identifying potential goals allows us to be flexible and prepared to respond, not only to potential threats, but to opportunities.

One of the key benefits of planning is the identification of brand objectives. Again, however, a word of caution – even objectives may not be fixed. Imagine a military strategy the objective of which is to capture a hill where the enemy has his artillery placed: just before the attack, the general learns the artillery has been moved to another hill.  The overall objective to take the artillery is still valid, but the hill is no longer the ‘objective’.

Anyone who has been on a business-planning course has probably been exposed to SMART objective setting – Specific, Measurable, Achievable, Realistic and Time Based. A great discipline, but I would suggest it encourages too rigid an approach. Fuzzy objectives may be more useful in the world of brands and we should not be afraid of them.

Plan the approach.

  • Assemble as much intelligence as you can at the start
  • Work through it diligently
  • Identify as many optional approaches as possible and the ‘pros’ and ‘cons’ for each
  • Set objectives, but keep them big picture and ‘fuzzy’ if necessary
  • Use flexible media to note your plans – post-it notes etc – be prepared for change
  • Monitor your brand arena constantly – look for change and opportunities.

Three great brand tools come together.

3 great ideasImportant disciplines combine in a powerful branding approach.  Sometimes it’s just a matter of timing that familiar techniques and technologies can be sparked by a catalyst arriving at the right moment. Not only does the time have to be technically right, but the intellectual and cultural environment needs to be open to the opportunities.

The three branding disciplines I’m thinking about are semiotics, grounded theory and big data.


Semiotics provides us with an approach based upon cultural and societal meanings and the signs and signifiers that point to them. Currently there is a movement to understand emotional significance rather than declarative knowledge about brands and how deeper meanings are embedded in the brand narrative.

A semiotic approach to branding and brand development needs an analytic understanding of the cultural environment that a brand and its consumers inhabit. We need to discern the history, myths, metaphors and symbols that shape the consumers’ world and behaviour.

The major challenge has been the difficulty in finding our way into the data. As much of the meaning is unconscious, traditional research using primary survey techniques is not effective. Asking for views and opinions is of little value as people won’t or can’t answer truthfully – this is not because they want to mislead, but they honestly can’t access those deeper meaning.

Grounded Theory

This is where grounded theory comes in. Grounded theory is a very different qualitative approach. Rather than beginning with a series of questions we are looking for answers to, we approach the data without a theory. It is an ethnographic approach collating all the data we can from the environment. This may include published information, commentary from the media surrounding the subject, observation of the environment and practices, visual images, perhaps video, film and advertising, historical data, songs – in fact the whole cultural tapestry.

What the practitioner is looking for are patterns – recurrences of structures across a wide range of data. There is no pre-conceived theory but we are looking for codes and meanings that are emergent from the data.

As you can imagine, sourcing and amassing the masses of data necessary and then applying meaningful analysis can be a daunting and very labour-intensive task. This was the case in the past, but now we have the final piece in the jigsaw – big data.

Big Data

It is now possible to access amazing volumes of data from a mass of sources – textual, visual and auditory. Equally importantly there are now the analytical tools to process and understand the data – to look for those illusive and emergent codes and recurrences. One of the significant advantages of ‘big-data’ is its cultural richness.

Bringing together these three threads provides us with an approach to branding which allows us access to deep emotional understanding. We can get to grips with the deep meanings that drive the human essence of markets.

Top tips for international branding.

Building brands in your own market takes time, application and sheer hard work.

The world today is a small place – brands have to exist and work on a much bigger stage. This may appear a daunting prospect, but there are a few simple things that it’s critical to get right. Once these are addressed export branding becomes a much more manageable activity.

The fundamental point to remember is that every market is different. Not just the far-flung and exotic markets, but even those closer to home with whom you may perhaps share a common language. The underlying variable is culture. Cultural norms, values, narratives and mythologies go to make up what a market actually is.

The more time you devote to understanding these subtleties the more successful you are likely to be. Peoples’ main attachment to brands and key influencer of choice is emotion. The semiotics of your brand is bound up in shared emotional and cultural values. In turn these are manifest in language, symbols, colours and the whole catalogue of brand communications.

What’s the value of a brand? Not a lot say Amazon.

Amazon-logo-700x433I’ve written a lot about brand valuation and how many businesses under-value their brands. Now one of the most powerful brands, Amazon, claim their brand isn’t worth that much.

One issue with brand value is its contentious status so far as balance sheets are concerned. Although a good deal of work has been done to standardise brand valuation in accounting practices, it usually only becomes manifest on sale, acquisition or transfer. This is just where Amazon came unstuck and found itself in the US Tax Court.

There has been a good deal of discussion concerning international corporate giants using subsidiaries overseas to make the most effective use of favourable tax environments. Like Starbucks and Google, Amazon followed a well-worn path to Europe – Luxembourg to be precise. So far so good.

Obviously the Amazon brand was important as the parent company transferred some of the associated intellectual property to the subsidiary for a fee.  However, in the view of the IRS, the fee was not enough. Amazon undervalued their own brand!

Why would they do this? Simply to reduce their tax bill in the US choosing a move favourable regime in Europe.

The details are now the meat of argument for the tax lawyers. For brand specialists and marketers it presents some important issues. The trial should aid the clarification and status of brand valuation. Moreover, it should help identify the position of a brand and its associated intellectual properties as corporate assets.

If Amazon succeeds in defending its own low valuation, it would be interesting to see how it would argue reversing that position should it wish to sell.

This case will be watched with interest, not by just accountants and tax lawyers but also by brand owners and marketers.

Brand Valuation – “Do you want to be seriously rich?”

Gold_BarsValuation of brand equity matters to all businesses – how to value it and why protect it.

My first grasp of what brand valuation meant came to me not through a marketer but from a wise accountant.

I was running a marketing services business and we’d had a few good years. Going through my year-end accounts, my accountant asked, “Do you want to be seriously rich?”

“Silly question,” I thought. But he explained: if I was enjoying the day-to-day business, happy to take a good salary and dividends from time to time – then, I would take one route. However, If I wanted to realize some serious wealth from the business I would have to think differently. At some point I would have to look at perhaps selling all or part of the business – perhaps privately or as shares, or maybe a franchise.

If I wanted to take some value out of the business, I would have to think like a buyer and work out where the value lay.

It was not in the fixed assets – as a service company we had virtually no plant, machinery or stock. Current assets would vary. All we had was whatever cash in hand sat in the bank.

He pointed out that an important part of any value would lie in the intangibles. It would be about the name, the reputation – in the brand.

I had been using the brand as a promotional tool, but up to that point had not seen it as an asset.

This is a position many medium size companies are likely to find themselves in. It is only when a business is considered for acquisition that thought is given to the brand and its valuation. However, consideration of the value of brand equity is important for all size businesses, and throughout their progress. It ensures that the owners and managers protect and polish the intangible assets just as they would the tangible ones. Then, should the time come to realize some equity from the business it will be in the best possible position.

Let’s be realistic – for small businesses and those in the early stages of their growth, the real worth of the brand may represent only a very small fraction of the total company worth. However, companies grow: even the biggest brands started small. It’s never too early to think about brand valuation.

How do we value our brand?

As you can imagine there is a good deal of discussion around this tricky subject and there are half a dozen approaches. In practice there are three key approaches but most valuation uses one of three approaches – or often a combination of one or more.

Cost-based valuation

This method includes approaches such as ‘creation cost’ or ‘investment cost’ – calculating the amount that has been invested in bringing the brand to its current market position. On it’s own, this is problematic as it takes no account of value – has the investment been wisely spent? It is also difficult for a new brand which may have had strong fortuitous growth with low cost.

Another approach in this category concerns ‘replacement valuation’ – what would it cost to build a brand to the current position from scratch.

Market-based valuation

These methods look at comparisons based upon reported values in the marketplace based upon such approaches as P/E multiples or turnover multiples. There are obvious issues here if the brand is innovative where comparisons are difficult. Again there needs to be a good deal of maturity of both the brand and its market sector.

Income-based valuation

These approaches try to assess the income generated by the intangible assets. There is a good deal of estimation required but if approached rigorously should provide a perspective with some ecological validity.

There is the price premium method which considers the premium the brand can command over an unbranded product.

Royalty relief makes a theoretical assumption that the business does not own the brand and estimates the cost to license the brand from another party.

The excess earnings method looks at the profits over and above accounting for all tangible assets and attributes that excess to the value provided by the brand.

Other methods in this category include income split and incremental cash-flow methods.

Know your value

It may seem like a distant issue, but brand value needs nurturing if one day it is to be realized. It may not appear on your balance sheet yet, but a wise owner should keep an eye on the brand equity and make periodic estimates of its worth.

As John Stuart, Chairman of Quaker said at the beginning of the 20th century –  

‘If this business were split up, I would give you the land and bricks and mortar, and I would take the brands and trade marks, and I would fare better than you.’