How Can You Brand A Banana?
By Dannielle Blumenthal, Ph.D.
March 2010
Disclaimer: This presentation was produced by me independently as an educational document to be shared with other interested communicators. It does not
reflect the views of my agency, nor is it intended to promote any agency or organization.
Take Charge of Your Communication
King Solomon Knew It
“A good name is
more desirable
than great riches.”
- Proverbs 22:1
Artist: Lars Justinen
And So Did The Leaders of Modern Industry
"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."
- Quaker Chairman John Stuart, ca.
1900, quoted in Brand Valuation
World’s #1 Brand: Coca-Cola
• Estimated value of the brand
alone: $68.7 million
• Brand is recognized by 98%
of the world’s population
• World’s #1 provider of
“sparkling beverages, juices
and juice drinks and ready-todrink teas and coffees”
• For nearly half a century (47
years), has increased stock
dividend every year
Sources: 100 Best Global Brands 2009”, Investor report 2008, America’s Greatest Brands, Volume III (2007),
Company website; see also here
We Intuitively Know Why People Pay More,
But Can We Demonstrate The Impact?
Relating Brand to Financial Value
Brand = overall
image of
organization,
product, service,
person, etc.
Image = composite
of such things as
name, trademark
(logo), customer
loyalty, reputation,
etc.
Valuable brands are
said to have “brand
equity,” or added
value due to the
brand
Brand value = how
much a buyer would
pay to acquire the
brand; usually it is
positively influenced
by brand equity
Brand
Creates
Value
“Brand Blindness”
•
Intangible value consists of
brands, human capital, and
other assets that can’t be
easily quantified.
•
Despite their immense value,
organizations tend to ignore
their importance precisely
because they can’t be
measured or controlled.
•
However, numerous studies
have shown that intangibles,
including brands, make up a
greater and greater
percentage of organizational
value and therefore merit a far
greater focus.
Intangible Value Is Well-Documented
•
“Accenture estimated that intangibles
accounted for almost 70% of the
value of the S&P 500 in 2007, up
from 20% in 1980.” — John Gerzema,
The Brand Bubble: The Looming Crisis
in Brand Value and How to Avoid It
•
“Brands and other intangible assets
now contribute the bulk of shareholder
value in many sectors…. 72% of the
value of the companies surveyed
was not reflected in published
balance sheets.” – “Current Practice
in Brand Valuation” (June 2000)
Already A Decade Ago, Demonstrated Impact
Source: “Current Practice in Brand Valuation” (June 2000); “FTSE” is the Financial Times
and Stock Exchange (UK)
The Trend Continues Today
• “In a year of global
financial turmoil, when
every key financial
indicator plummeted,
the value of the top 100
brands increased by 2
percent to $2 trillion.” –
BrandZ Top 100 Brands,
2009
More Evidence…
•
“The value of the world's top 10 brands
exceeds the market capitalization of 70%
of U.S. firms.” (John Gerzema, interview
with Bloomberg News (2008)
•
“The total worth of the 250 most valuable
global brands is more than France's Gross
Domestic Product.” (John Gerzema,
interview with Bloomberg News (2008)
•
“Brands account for about 30% of the
market capitalization of the S&P 500—
around $4 trillion of the S&P’s $12
trillion.” (Joanna Seddon, EVP, Millward
Brown Optimor, who oversees the Brand
Z™ Top 100 report, cited in The Brand
Bubble)
•
“Brands account for more than one-third
of shareholder value.” —Interbrand/JP
Morgan Study, 2002
Visual Depiction of Brand Contribution
to Market Capitalization
“Absolut” Proof
•
•
•
•
•
“In the 1970's, American consumers accounted for
60% of the vodka purchased worldwide. However,
99% of the vodka consumed in the United States
was being produced inexpensively by American
distillers, the prevailing opinion being that all vodkas
were alike.”
“If Absolut was to face the challenge of breaking into
the American market, it would have to create an
image that set it apart from the cheaper American
vodkas.
“What Absolut needed was a way to show that it
was the best vodka available, without actually
saying that it was the best vodka available.
“After creating Absolut's distinctive packaging…in
1981, the company…created an ad featuring a
bottle of Absolut, photographed with a halo over it.
The caption: "Absolut Perfection."
“When the Absolut ad campaign began in 1981, the
company was selling 20,000 cases annually in the
U.S. In 1995, sales topped 3 million cases, an
increase of 14,900%”
Source: “Absolut Vodka: A Branding Case Study”
Compare
Versus
The Case of UBS
•
•
•
•
During the 1990s, financial services
firm UBS grew through mergers and
acquisitions.
By 2000, UBS found that it “lacked
international brand awareness and
recognition in key markets.”
Brand firm Prophet hired after
spokesman himself “stumbled over the
group’s confusing brands”.
After 5 years:
– In 2004, UBS ranked #45 in
BusinessWeek’s annual listing of the top
100 global brands (the rankings are done
by Interbrand, a competitor to Prophet
– “UBS' share price increased more than
170%--over 4 times the industry average
and over 4 times performance of S&P
500”
Sources: Prophet Brand Strategy; The Financial Times; BusinessWeek/Interbrand
A Similar Example: Credit Suisse
• 2005 - “The group announced its business strategy to unify its global
banking businesses…to allow it to communicate as an integrated
organisation.”
• January 2006 – New brand identity launched
• May 2006 – Financial Times reports rise in net profit of 35%, due to
“new integrated ‘one bank’ strategy” (May 3)
Source: The Brand Union
And Don’t Forget Reputation
• According to a 2009 Reputation
Institute study:
– 57% of consumers would give the
most reputable companies across
the globe the benefit of the doubt in
a time of crisis.
– 40% people would refuse to support
the 20 least reputable global
companies in a crisis.
In light of the
2010 faulty brakes
scandal, what will
happen to Toyota?
Source: Reputation Institute, Global Reputation Pulse study 2009 –
“measures the corporate reputations of the world’s 600 largest
companies in 32 countries”
Understanding How Your Brand Builds
Value Helps With Business Decisions
•
•
•
•
•
•
•
What kinds of businesses or brands to invest in
Requests for marketing dollars
Where to spend marketing dollars
How to measure return on marketing investment
How to use different brands for different parts of the organization
What kinds of organizations to partner with
How to communicate with stakeholders about these decisions (you
can show a logical basis)
Source: Adapted from “Brand Valuation: The Financial Value of Brands,”
Interbrand
Yet Even Top Private Sector Marketing Executives
Find Brand Measurement Challenging
Question
Chief Marketing Officers/
Senior Marketers
Do you quantitatively understand how your brand impacts
demand?”
55% - “No”
As of today, does your brand influence all decisions made
at your organization?
64% - “No”
Why not?
49% - “Inability to prove financial benefit of brand”
39% - “Metrics do not support the importance of brand”
When it comes to proving the effectiveness of
branding/marketing initiatives, board/C-suite demands are
increasing.
80% - “Yes”
If you had a quantified understanding of how, when and
where your brand created value, which of the following do
you believe would happen?
93% - “It would allow for a more focused investment in
marketing”
69% - “It would give you more leverage to secure an
investment from the board”
79% - “It would provide a greater influence across the
organization for alignment and change”
Source: “The Red Thread: The True Power of a Well-Managed Brand,” Interbrand, 2008
Various Brand Measurement Methods Are Available*
Model
Owner
Provides
Overall
Estimate of
Brand
Value?
# of Brands
# of
Consumers
How Inherent Brand Value (Brand Equity) Is
Measured
BAV
Young &
Rubicam
No
40K in total
500K
annually
(Energized) Differentiation**, Relevance, Esteem,
Knowledge
BrandZ
WPP
Yes
23K+ in all
650K in all
“Bonding” – rational and emotional attachment
(Unnamed)
Interbrand
Yes
“Several
thousand”
Not
available
Not clear (possibly relevance and brand support)
BrandMetrics
Prophet
Yes
360 brands
valued
Not
available
Not clear(“strength of feeling”)
(Unnamed)
Brand
Finance
Yes
500 annually
N/A
(publicly
available
information
is used)
Not clear (“customer loyalty, staff
retention/recruitment”)
* This information is a best estimate given information available via the Internet.
**Initially the term was “differentiation”; the authors later added “energized” based on the results of research
published in The Brand Bubble
Two Perspectives
Especially Useful for Communicators
Hierarchical—BrandZ
Overall Impact—BAV
• Equity is derived from
progressively higher score on
two attributes
• Equity is derived from high
score on 4 key attributes
– Perception of quality (rational
attachment)
– Personal affinity (emotional
attachment)
– Perception that the brand is
unique (differentiation)
– Perception that the brand is
relevant to the customer’s life
– Holding the brand in high esteem
– Feeling knowledgeable about the
brand
BrandZ’s Hierarchical Approach*
•
•
•
•
•
Bonding (the strongest attachment) Rational and emotional attachments to
the brand to the exclusion of most
other brands
Advantage - Felt to have an emotional
or rational advantage over other
brands in the category
Performance - Felt to deliver
acceptable product performance and
is on the consumer's short-list
Relevance - Relevant to consumer's
needs, in the right price range or in
consideration set
Presence (the weakest attachment) Active familiarity based on past trial,
saliency or knowledge of brand
promise
*Definitions and graphic are quoted from BrandZ.
BAV’s Overall Impact Approach
Energized Differentiation
Relevance
• Vision
• Innovation
• Dynamism
Bonding
Esteem
Knowledge
Sample BAV Calculations of Brand Premiums
Source: John Gerzema, Young & Rubicam, The Brand Bubble: The Looming Crisis in Brand Value and How
to Avoid It; numbers at left indicate added multiple, e.g. Consumers are willing to pay twice as much for
Starbucks coffee as generic
You Too Can Learn to Brand A Banana
• Name
• Logo/Visual Imagery
• Customer Loyalty
–
–
–
–
Differentiation
Relevance
Esteem
Knowledge
• Reputation
– Integrity
– Accountability
– Transparency
Remember—Your Organization Needs You!