10 PRINCIPLES OF BRAND STRENGTH
Today, due to the downturn in the economy and the ensuing reset in customer priorities, corporations need to be more aware than ever before of the many underlying forces that impact a brand’s ongoing strength. Business is changing, but the principles of strong brands still hold true.
In the past few years, marketing accountability and a focus on isolated measurements like Return on Investment (ROI) or brand perception have led many brand owners astray from these fundamental principles. As a result, many brands are now seeing the consequences of shortsighted decision-making. One need only look to Toyota, which was so focused on increasing market share that it compromised the quality and reliability of its products – and the very foundation of its brand – to see the risks in this kind of behavior.
Interbrand’s Brand Strength Score, which is comprised of 10 components, all of which have an important and equal role in the brand’s ability to generate value, is an effort to recalibrate the focus. It brings together all aspects of a brand – its people, products, positioning and partners – to create a more holistic and accurate way of understanding and evaluating brands.
While Interbrand has always looked to these components in our years of valuing brands, the brand strength components have undergone an update for 2010 to better reflect the factors that are reshaping the marketplace. These factors include proliferation of social media, corporate citizenship, audience fragmentation, the increasing role of product design and increased pressure on ROI.
A measure of an organization’s internal commitment to or belief in its brand. Commitment is the extent to which the brand receives support in terms of time, influence and investment.
This year, the organizations that failed when it came to commitment were perhaps more visible than those that succeeded. BP, which fell off this year’s table, is one example of a company that neglected to incorporate the brand into operational execution and decision-making. If BP had stayed true to its “Beyond Petroleum” positioning, it is likely that a disaster of this magnitude would not have occurred. Instead, as news reports note, executives opted to put the brand at risk by taking shortcuts. Minimal safety precautions, rushed drilling, ignored warning signs that the well was exhibiting indicators that it might explode, and a managerial decision to shut off the Deepwater Horizon fire alarm to prevent waking up workers with 3 a.m. false alarms are all examples of an internal lack of commitment to the brand’s stated beliefs – and the repercussions, as seen here, are great.
In a quieter way, Citi has also suffered for its lack of commitment to its brand. While it has vowed to change and refocus on trust, it has yet to translate this to the customer experience. It may want to change, but until it proves that this promise is central to its decision-making process, it will continue to lose brand equity.
In contrast, ZARA, which has built its brand on providing customers with fast fashion, has shown a high level of commitment to its organization. ZARA has created internal operations that deliver on its fast fashion proposition, including providing store managers with real-time data in order to make better stock allocation decisions. Overall, ZARA’s commitment to its brand has paid off as it continues to expand each year. – Graham Hales, CEO of Interbrand London
This component examines how secure a brand is across a number of dimensions – from legal protection and proprietary ingredients to design, scale or geographic spread.
Whether it is Coca-Cola’s patent on its exact formula or IBM’s strategic acquisitions, protection is a vital brand component. This year, brands that scored high in this category include Kleenex and Apple, which both focused on protecting the integrity of their brand.
Kleenex, in many ways, holds an enviable position: The brand has become a generic term for facial tissue. However, as with other brands in this position, this comes with risks. To ensure that its brand name doesn’t go the way of the escalator, thermos or zipper, Kleenex has taken measures to protect its name by securing trademark rights – and continues to question any brand that uses its name unlawfully.
Apple is another brand that scored high in protection this year. Not only did it focus on policing its “i-“ prefix names, but it also assumed an alias when filing “iPad” for trademark status, in an attempt to throw people off and protect its product launch. Additionally, Apple stepped up the registration of all its products, from the shape of its iPod to its desktop icons and apps.
Meanwhile, a brand that saw protection lag was Budweiser. Its 14-year battle to trademark its name in the Czech Republic, Germany and Austria with Czech competitor Budejovicky Budvar (which began production of its Budweiser beer in 1895) ended negatively for the brand. Because of its failure to protect its brand name, it must now sell its beer under a different name in these markets. – Frank Chen, CEO of Interbrand Shanghai
The brand’s values, positioning and proposition must be clearly articulated and shared across the organization, along with a clear view of its target audiences, customer insights and drivers. It is vital that those within the organization know and understand all of these elements, because everything that follows hinges on them.
At heart, clarity measures the degree to which the brand and its owner are truly dedicated to understanding and defining their customer. From this stems a clear view of what the brand can offer to address an identified customer need. Without clarity, a brand lacks insight – the most precious of commodities, particularly in a recessionary climate. Indeed, as Harvard Business School suggests, instead of cutting research budgets in a recession, “you need to know more than ever how consumers are redefining value.” Boston Consulting Group agrees; it recommends that “to attract post-downturn customers, brands should upgrade their insight capabilities.” And insight doesn’t mean reams of expensive statistics: More and more companies are turning to faster and richer ethnographic techniques to observe and interact with customers, not just count them.
So clarity, as we view it, is about audiences as well as what your brand can offer. Sometimes this is almost instinctive (think Virgin and Apple). Other times, it’s the product of a deep commitment to understanding customers fully and consistently. Multi-brand organizations like P&G and Unilever, which spend ahead of their share of market on research, and invest in the best and brightest people in this area, point the way here.
At the same time, brands that achieve marketing clarity need to share that knowledge internally across key functions within the business. IBM is one brand that recognizes this. Kevin Bishop, Vice President of Brand System and Workforce Enablement for IBM Worldwide explains, ”It is the IBMer that really brings the brand to life and translates the things that really make a difference to our clients.” This is why the brand has invested in innovative initiatives like Beehive, which acts as a kind of internal Facebook for employees to share information and customer insights.
Diageo is another brand that shares its marketing clarity across its business. The brand makes its DWBB model (the Diageo Way of Brand Building) central to its marketing culture and internal communications because it forces clarity on those responsible for assets like Johnnie Walker, Smirnoff, Baileys and Guinness. The markets in which we operate are growing harder to understand, but brands that invest in clarity will out-perform those that run on the vapor of instinct. – Leslie Butterfield, Interbrand Global Chief Strategy Officer
This component looks at a brand’s ability to adapt to market changes, challenges and opportunities. The brand should have a desire and ability to constantly evolve and renew itself.
Two years of recession have impacted the globe. As a direct result, brands were forced to be more agile and responsive to socioeconomic and competitive pressure. In 2010, many brands demonstrated responsiveness by adapting to customers’ increased desire for sustainable products.
While the trend has been apparent in virtually every sector, it has been especially evident in the automotive category, where the growing concern among customers regarding fuel efficiency and greenhouse emissions, as well as demand for hybrids, has kept brands on their toes. Indeed, it is no coincidence that every car brand in our study will have some form of hybrid out in the market in the next two years. The true challenge for these brands, however, will be that new offerings adhere to the same design standards as their established models.
Another challenge has come in the need to respond to consumers by harnessing the latest technology. This is evident in the growth of smartphones – especially Apple and BlackBerry, with Nokia seemingly in retreat. Not to be forgotten is the latest innovation from Apple: the iPad. Progress with mobile phones and now smartphones has been driven by fast-developing markets, which are driving sales at an accelerating pace. While this technology has existed for some years, it is only now gaining traction as consumers respond.
Yet another challenge is the need to address competition, or perhaps to gain domination over the opposition. This year, sponsors of pivotal sporting events like the Winter Olympics in Canada and the FIFA World Cup in South Africa have been very active. Adidas is the major sponsor of football and bought sole rights for the event through FIFA. It sponsored the German national team, 11 other national teams, and provided the ball (the Jabulani). At the same time, Nike, as we have become accustomed to over the years, was extremely active through other events with its own sponsorships. Its global effort included a three-minute video, a social-awareness anti-AIDS campaign and co-branding with (PRODUCT) RED. Nike has maintained its momentum well after the football tournament ended, when others stopped. As it happened, the final was played out by one team that was sponsored by adidas, and one that was sponsored by Nike – a perfect match! – Jeremy Sampson, Group Executive Chairman, Interbrand Johannesburg
This component is about how soundly a brand is based on an internal capability. Authenticity asks if a brand has a defined heritage and a well-grounded value set, as well as if it can deliver against customers’ expectations.
Customers’ desire for authenticity has always been essential, and the recession has only magnified this need. Customers, more reluctant to spend, want to trust the brands they purchase from – and a large part of how brands elicit this trust is through authenticity and a strong heritage.
A good example of how this is taking shape is in the luxury sector. This year, the luxury brands that have prospered have been those that have remained true to their core values: brands like Hermès and Ferrari, which limit their production to focus on craftsmanship and deliver on customer expectations.
Tiffany & Co., on the other hand, which focused on shifting its value from pure luxury toward “accessible luxury for all” hasn’t performed as well in authenticity over the past few years. Luxury customers interested in making smart investment purchases are instead gravitating towards those brands (Chanel, Hermès, Gucci) that have stayed true to their roots. – Gonzalo Brujó, Managing Director, Interbrand Madrid
This component estimates how well a brand fits with customer needs, desires and decision criteria across all appropriate demographics and geographies.
The world is moving fast and brands must keep up in order to stay relevant. Whereas brands once focused on web experiences and online shopping to stay up-to-date, now they are adopting mobile practices to meet customers’ needs and desires.
Gap is one brand that has integrated mobile into its brand experience. It has developed a mobile shopping platform called Gap StyleMixer that includes video interviews, social feeds from twitter, and products that can be purchased directly from a device. Additionally, it was one of the first to partner with the app Loopt to enable consumers to win rewards for checking into various locations. Its direct mail catalogs also provide QR (quick response) bar codes that can be scanned with cell phones to get content associated with the product and allow for quick mobile shopping. Overall, the effect is a seamless brand experience – from in-store to web to mobile.
And retail is not the only sector using mobile to stay relevant. In the financial services sector, brands like Barclays and Citi have developed mobile banking capabilities to differentiate and keep up with growing demand. – Nicola Stanisch, Managing Director, Interbrand Moscow
Not only must customers recognize the brand, but there must also be an in-depth understanding of its distinctive qualities and characteristics, as well as those of the brand owner.
Apple is a brand that customers immediately understand. They know what they get out of adopting and associating with it. Its products are seen as innovative and creative. In contrast to Dell, which creates products that lack any consistent visual cues, Apple’s design is consistent and distinctive – from the clean, silver or smooth white of its laptops to the pocketsize rectangle of its iPod or iPhone.
This immediate understanding of the brand is in part due to its brand owner, Steve Jobs. Unlike Dell, which lacks an innovative face to match its brand, Jobs’s stamp is on everything Apple creates and he’s generally understood to be the brilliant visionary behind its products. Love him or hate him, he humanizes the brand by giving it a face. This means that even when Apple stumbles, as with iPhone 4’s reception problems, loyalists appear to be more accepting than they might be of another brand. Customers understand Jobs’s unwavering commitment to creating exceptional, beautiful products. As a result, they are perhaps more willing to give the Apple brand the benefit of the doubt, while the company works to ensure that its technology functions better. That’s not a card to play too often though! – Andy Payne, Interbrand Global Chief Creative Officer
This measures the degree to which a brand is experienced without fail across all touchpoints and formats.
When we think of consistency, Nike always comes to mind. With its iconic swoosh – a design element from the past – it creates one universal experience across every touchpoint, from advertisements to websites. In recent years, however, consistency has become a bit more complicated.
As brands continue to expand, they feel the pressure to adapt to local markets. But this doesn’t have to lead to inconsistency. McDonald’s, with its green-tea-flavored milkshakes in Japan and its Chicken Maharaja-Mac in India, is consistent about its inconsistency – and has endeared itself to youth around the world. Nokia has adapted to the Indian market by creating models that are also functional flashlights (which come in handy for dust storms) and only available in that market; yet the product remains consistent with its brand promise, which is all about functional and creative mobile devices. At the same time, Disney, which is expected to deliver on unparalleled entertainment experiences, suffers when it merely duplicates its amusement parks around the world; to stay consistent with its brand promise, it would do better to reinvent them to delight and entertain new and diverse customers. – Atsushi Iwashita, CEO of Interbrand Tokyo
This measures the degree to which a brand feels omnipresent and how positively consumers, customers and opinion formers discuss it in both traditional and social media.
The rise of social media means that brands have new opportunities to elevate their presence. Today’s customers provide feedback online and brands are now expected to respond authentically and quickly to that feedback, or else put the brand at risk.
A brand that does this exceptionally well and scores high in presence is Starbucks. While it may have lagged in other areas in the past few years, it continues to get social media right. It integrates many different elements – YouTube, Twitter, Facebook, a blog and mobile – combining them together to create a rich and positive online presence. Central to this is the digital dialogue the brand creates with its customers. This is achieved through a representative in every department, who reacts to the input and output happening online. Additionally, its Mystarbucksidea.com blog invites the customer to offer feedback and suggestions, which it often integrates into its brand experience. Overall, Starbucks’s effort has improved its brand perception and allowed it to create a deeper connection to customers. – Julian Barrans, Managing Director, Interbrand Singapore
This is the degree to which customers perceive the brand to have a positioning that is distinct from the competition.
This year, smartphone brands like Apple, Google and BlackBerry faced increased competition and found it particularly difficult to carve out a unique niche. All focused on creating products that stand out from competitors. Whether it’s super sensitive touch, third-party apps, faster connection speed or more social capabilities, the war is on to build and preserve loyal customers through a differentiated positioning. BlackBerry may still lead, but the iPhone is the benchmark, with other brands close on their heels.
Meanwhile, due to the financial downturn, banking brands have a new opportunity to differentiate. The previously lowinvolvement, inertia-driven category has become one driven by emotional, brand-influenced criteria. In particular, banks like Santander and Credit Suisse, which stayed relatively immune to the crisis due to conservative investment decisions, have succeeded in crafting a differentiated positioning this year.– Nina Oswald, Managing Director, Interbrand Cologne