branding

Posts on branding and brand development

Oscars, PWC and reputational damage

We have seen a number of brands suffering reputational damage over recent years – BP, VW, Sports Direct, BHS – to name just four that spring readily to mind.

By comparison, the glitch at the Oscars is just an amusing sideshow. However, it brings into sharp focus the importance of attention to detail in everything a brand does. The bigger the brand the more small details matter.

Brands are about people – not only the people in the organisation, but the people with whom they interact. The brand exists at this nexus of interaction. The right brand values are shared throughout the organisation, so every point of interaction should reflect those values. That should include attention to detail in servicing customers and dealing with the world in general.

Mistakes happen, people are human. But often particular brands are chosen because among their perceived values are reliability and being a safe pair of hands. The brand has a reputation which has a tangible value.

For such brands, damage to that reputation can be costly.

Every brand loves to be involved in high profile projects as they have the potential for exposure and building that valuable reputation. However there is the very real danger of those human slips and errors, should they occur, happening in full public glare.

Does sales need marketing – does marketing need sales?

The Institute of Sales and Marketing Management has recently updated its identity and is now just the ‘ISM’ and it’s not clear which ‘M’ has been dropped. Hovering over the logo on their website shows the alt tag: ‘Institute of Sales and Marketing‘, while the copyright line on the foot of the same page states ‘Institute of Sales Management‘ – curious.

Throughout the rest of the site, the ISM acronym is used consistently. Though worryingly, this is also used by the ‘Institute of Supply Management’ and the ‘Incorporated Society of Musicians’ amongst others.

However, it’s not the nomenclature that is concerning. From the tone of the language and discourse it’s clear that we are now talking about pure sales skills and expertise. There is no mention of marketing. We must assume that this is a conscious policy decision and there has been a schism between sales and marketing in the eyes of the organisation.

This is intriguing – because a little while ago, I was at a CIM (Chartered Institute of Marketing) event where speakers were bemoaning the historic drifting apart of the two disciplines and suggesting both would benefit from bringing them back together.

As a marketer, I would like to see this re-engagement. I’m sure many of my fellow practitioners would benefit from the cross-fertilisation of ideas – and a straw poll of my sales friends suggests similar viewpoints.

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.

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.’

 

What Darwin can teach us about branding.

DarwinMention ‘Darwin’ and ‘Branding’ in the same sentence and people immediately jump to the conclusion we are talking about that (usually misunderstood) concept of ‘Survival of the fittest.’

The root of the Darwinian view of evolution was far more fundamental and can provide a valuable perspective when looking at brands and how they too evolve. It was a bottom-up rather than a top-down concept. Instead of lifeforms evolving according to some pre-conceived plan, Darwin proposed that their development was the result of small changes and mutations – some were successful and led to the prospering of the organism – others, which failed to improve outcomes were bred out by natural selection.

With brands we sometimes overestimate the importance of control and brand-management. A good deal of what makes brands special comes out of natural evolution – doing small things very well, keeping and building upon the successful and eliminating anything which does not contribute to the viability of the brand.

It is the tiny details that matter. Small product benefits, notable customer service actions, minute points where expectations are exceeded.

Changes do not happen in isolation, they are relative to the environment. We talk about organisms evolving and adapting to their environment – brands must do the same. Change is constant.

Many of the great brands we all admire existed long before the heavy hand of brand management was there to direct them – and they evolved and adapted as clever and able people in all parts of the organisation did their jobs very well, getting better in small ways all the time. We have also noted the dinosaurs who failed or were unable to adapt to the changing environment.

If there is a lesson to be learned it is that concentrating on the details of the small things that brand does – and doing them well – improving the basics is vital. Allow the brand to change as the needs of customers evolve and develop, and apply only a light touch to the steering of management.

Brands must have walls, windows and doors

Walls, Windows andLet’s think of a brand as a fine building with walls, windows and doors.  These are the essential and useful features of any building. Properly constructed and used a building is sound, welcoming and vibrant, but care must be taken in the use of those same features to ensure that it doesn’t become a fortress, or worse, a prison.

WALLS

A brand’s walls define what it is, its scope and boundaries. Walls people understand a brand in terms of what it does and what it doesn’t do. This clarity is as important for those working on the brand  as it is for the public outside. As well as separating the brand, walls also connect – they are the touch points where the public contact the brand.

The danger is that walls can become fortifications. The brand can feel too safe and secure behind them and avoid contact with the challenging world outside. The walls can grow too high and the brand can no longer see out and understand what is happening outside.

WINDOWS

Fortunately brands also have windows. Through the windows the public can see into the brand and understand it. These are the communications conduits – advertising, press and public relations, digital and social media windows. It’s through these windows that the brand can speak, shout, wave and smile.

Windows work both ways – not only should the world be able to look in on the brand, but the brand can observe, understand and take note of the world it inhabits. These are the windows of customer service, and research – where the brand watches and listens.

Brands can choose how big to make their windows and how many. Plenty of big windows shed a lot of light into the brand and not all brand stewards like this. When problems occur its all to easy to start drawing the curtains.

But windows are useful for communication – you can see, show and demonstrate, but there is always that pane of glass between the brand and the public. To genuinely engage we need doors.

DOORS

Doors are where people actively connect with the brand. They are the points where the public purchases products and services, where the become emotionally involved. These are the gateways where the brand comes forth and meets its people – but more importantly, where it allows the world in – not just to observe but to connect. Doorways are where we place our welcome mats.

All three elements are equally important for a sound and effective brand:

Walls define the purpose, borders and remit of the brand, showing both public and staff where the brand stands.

Windows are vital for communications – transparency is the key.

Doors are where the public and the brand meet – not where people are locked out.

Brand quirks are good for you.

A brand quirk is a feature or attribute that does nothing to enhance the performance of the product or service, but provides a unique point of differentiation.

QQIn areas where the delivery may be considered a commodity, differentiation is at a premium. This is where the value or a ‘quirk’ may be really telling  – it ups the ‘Quirk Quotient’.

Some of the most notable examples appear in the confectionery or countline sectors. There are very few real differentiators between chocolate bars, few notable differences you can make. The most we can manipulate are marginal variations around a few popular themes.

Consider the shape of the ‘Toblerone’ bar. It has no effect on the taste of the product, provides no enhancement in itself – but it is a quirk or huge value in brand identity and differentiation.

The round Smarties tube is another quirk. It provides no tangible benefit. In fact, I heard a well-reasoned argument from a packaging specialist that a rectangular tube makes far more sense, providing better space occupancy in transit. I understand it was even tried once, but for the public, the round tube is part of the Smartie offer.

The hole in a Polo mint or a Lifesaver has no flavour enhancing property – it is a quirk – but of inestimable brand value.

Quirks are as important as brand assets as are brand names, logos, colour schemes and all the other identity collateral.

Though we understand their value, quirks are among the most difficult things to create successfully. They are often serendipitous, springing from creative irrelevancies and often coming from unlikely quarters within the organisation.

Consciously creating a valuable quirk is as difficult as creating a video that is ‘guaranteed’ to go viral.

If you have a brand that is clearly differentiated in terms of the benefits it delivers, you should concentrate on communicating them. If not, a quirk may help. There is no handbook to creating a killer quirk, but I suspect that the necessary conditions include an organisation that loves and believes in its product or service, that creates a truly innovative environment and has people with a sense of fun and playfulness.

Do you really own your brand?

When writing or talking about brands, I often find myself using the term ‘brand steward’, which I admit some folks find puzzling. The reason is that I feel uncomfortable with the phrase ‘brand owner’.

When a ‘brand’ is sold, for example, what is actually transferred? It may be the business in terms of premises, or means of production or delivery, but most usually it is the intellectual property – the brand name and all that goes along with it.

There are a lot of intangibles associated with the IPR including reputation, customer expectations and a brand promise. But I suggest these intangible assets are not owned. Nobody created the emotional values and connections – they emerged from the interaction between the public and the brand.

Of course there is a lot that companies can do to help manage, steer and nourish these intangibles, but they certainly don’t ‘own’ them: hence my use of the term ‘brand steward’.

If the company does not own the brand, then who does? Well, if we accept that the brand, the intangible assets emerge from this interaction, then the public has as much claim to ownership of the brand. Without either of these two parties – the public or the company – the brand would not exist.

It’s up to all the brand stewards to ensure the brand flourishes and that is by being sensitive and authentic to your partners in ownership – the public.

It’s all about the brand.

Lest we forget. Sometimes it is easy to pay lip-service to the importance of the brand and we may forget how truly fundamental it is. At its core is public interaction with ‘the organisation’. I have been following this phenomenon as displayed in the automobile arena – one where business, marketing and technology are leavened with more than a little irrational emotion.

The organisation takes an action, perhaps on pricing, styling, engineering or distribution, which moves the brand from position B1 to B2. The public experience the change and their perception move the brand interaction from P1 to P2. This affects the brand, for good or ill, and the organisation responds either actively or passively, and the brand moves from B2 to B3. The public experiences the reaction and again interacts… and so it goes.

Some of the shifts we have seen have been quite seismic. Powerful established brands such as GM or Ford have seen major brand movements – sometimes the result of economic forces, other times generating financial tremors. New players, old brands, sleepers – at root all doing the same thing, just making and selling cars. The fundamentals vary little – the impact upon the brands, and the brands’ impact upon the markets is what drives everything.