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Brad VanAuken Photo What is brand leadership?

by Brad VanAuken, BrandForward, Inc.

November 2007

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Every year Business Week publishes Interbrand’s updated list of the best global brands by value.  In 2007, Coca-Cola topped the list again at a value of over $65 billion. This list is based upon Interbrand’s assessment of brand asset value. This has always begged the question for me, “What is brand leadership?” Should brand asset value be its primary metric or is there something more to this leadership? To be able to manage brand leadership one must be able to measure it, which assumes one knows how to define it.

I think about it in this way. What benefits does a strong or leading brand provide to its owners? Here is the list I have compiled over the years based upon rigorous marketplace studies. A strong brand:

  • Has very high awareness
  • Receives a lot if free publicity/buzz
  • Is perceived to be unique in relevant and compelling ways
  • Is admired and has high purchase intent
  • Increases customer loyalty
  • Decreases price sensitivity
  • Enables the owner to charge a price premium
  • Results in increased market share, especially for the target customers
  • Provides increased bargaining power with business partners
  • Provides a platform for growth beyond the current products and product categories
  • Helps attract and retain talented employees
  • Helps the management team align employees in support of the brand’s promise
  • Often provides clarity for budgeting and capital investment decisions
  • Increases an organization’s sales, profit margins, stock price and market valuation

What are the most important measures of these benefits? From my work over time, I focus on these measures:

  • Awareness
    • Top-of-mind unaided awareness
  • Publicity
    • Cost/value of the publicity if it had been purchased as advertising or other paid marketing communication
  • Relevant differentiation
    • The degree to which the brand is perceived to be relevant to the target customer’s needs
    • The degree to which the brand is perceived to be unique in its delivery of important customer benefits
  • Admiration and purchase intent
    • Customer brand perceptions: trustworthy, likable, admirable, stands for something important to me, up-and-coming/on the move
    • Purchase intent scores
  • Customer loyalty
    • The size of the purchase consideration set and the brand’s position in the consideration set (ideally the brand is a “category of one” with no perceived competitors)
    • Willingness to recommend the brand to a friend
    • Repurchase intent
  • Price sensitivity/premium
    • Unit price premium over generic, unbranded products in the category
    • Propensity to switch brands if the brand in question is out of stock (ideally, the customer insists upon the brand)
    • Propensity to switch brands if the customer is offered varying levels of price discounts on competitive products
    • Historical unit sales response to price variations
  • Market share
    • Overall market share by product category
    • Average share of requirements (for individual buyers)
  • Bargaining power
    • For manufacturers, especially of fast moving consumer goods (FMCG), paying less than average in slotting allowances and other trade terms to acquire retail shelf space
  • Brand extension
    • Percent of business from new products/services under the same brand name
  • Employee recruitment/retention
    • Caliber of new hires
    • Employee satisfaction
    • Employee turnover
  • Brand asset value
    • Market value minus book value
    • Licensing royalties (amount of money that can be charged to another organization for use of the brand’s identity)
  • General financial measures
    • Sales
    • Profit margins
    • Stock price
    • Organization’s total market valuation

If a brand scores well against a majority of these metrics, it is certain to be a leading brand with great financial value to its organization. Based upon this, this is my definition of brand leadership:

Brand Leadership

Leading brands are perceived to be relevant, unique and compelling. They inspire customer loyalty and enable organizations to charge price premiums. They increase bargaining power with business partners, make it easier to hire and retain talented employees and provide organizations with clear strategic direction and platforms for future growth. Together, these lead to well above average financial performance and a market valuation that far exceeds book value.

Leading brands are organizational assets that must be preserved, enhanced and leveraged for the benefit of their organizations.

 


 

Brad VanAuken is president and founder of BrandForward, Inc., a full-service brand management consultancy with clients throughout the world. Previously, Brad was the vice president of marketing for Element K, a leading e-learning company and director of brand management and marketing for Hallmark Cards, Inc. During his tenure as Hallmark’s chief brand advocate, Hallmark received the Brand Management of the Year award. Recognized as one of the world’s leading experts on brand management and marketing, Brad is a much sought after speaker and writer. He wrote the books The Brand Management Checklist and Brand Aid. His free online brand management and marketing newsletter is read by thousands of marketers throughout the world. Brad has a BS degree from Rensselaer Polytechnic Institute and an MBA from Harvard Business School.

Email: vanauken@brandforward.com
Company Profile: BrandForward, Inc.
Company URL: http://www.brandforward.com

 

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