HOW MUCH IS YOUR BRAND WORTH? Recently P&G paid $57 billion dollars (£31bn) for Gillette. That’s more than enough to rub out half of Africa’s debt! And the price represented 19 times earnings! The value which P&G put on the Gillette business included £10bn for the value of its key brands. It was calculated that the Gillette brand itself was worth £4bn, Duracell £2.5bn, OralB £2bn and Braun £1.5bn. Today accounting standards have changed and the value of brands can be added to your assets on the balance sheet. With the speed of innovation increasing all the time, instant price comparisons via the internet and global competition, brands have never been more important. Often the ‘aura’ associated with a brand (reflected by the way the company does business) is the prime reason for the company being able to obtain a higher price for its goods. But brands should not be thought of just in packaged goods terms.
Today brands are important ways of differentiating service companies as well. Airlines work hard, and invest millions in advertising to create not just an awareness of their routes and prices but the ambience of travelling with them. The images of EasyJet and Singapore Airlines for example are very different. Banks also try to create a distinct brand identity since there is very little to differentiate their products.
So what is your company brand worth? A brand is something that clearly identifies a product, service or company, differentiating it from other comparative offerings, and encapsulates the benefits in a single word and/or graphic. The mere mention of the brand name should conjure up many things about the product –so in a way it’s shorthand. For example ‘Coke’ means Coca Cola which is a carbonated caffeine-based drink that is refreshing and energising and superior to other colas because it is ‘the real thing’. The letters HSBC and the red and white hexagon stand for the world’s local bank – a bank that offers local knowledge and service just about anywhere on the planet. Coming to a meaningful valuation of your brand is difficult since no two brands are the same – indeed the whole point of having a brand is that it is unique. You can try and find what value has been put on other brands in similar markets but more realistically you need to make an estimate of what the level of awareness, reputation, and loyal customer base would cost a rival to create. What this means in affect is that if you have done a good job with your branding then you can reasonably expect a certain number of customers to continue purchasing your product or service. The brand name and the graphical treatment of the logo and literature/packaging just make it easy for past customers to recognise and find your product when purchasing.
The degree to which you can count on customers returning to your brand will depend on how distinctive and how appealing you have made your brand. A brand is much more than a name and a logo. It is a promise of satisfaction. Being well known is not the same as being well-regarded. In the 80s there were a number of well-known Japanese consumer electronic brands but consumers found it difficult to differentiate between them so price and innovative product features became the main drivers of consumer choice. Sanyo, Sansui, JVC, Panasonic, and others were difficult to distinguish. By contrast Bang and Olufsen demanded huge premium pricing because it was seen as very much more stylish and artistic. The other thing to remember about the value of brands is that, like a company’s shares, the value can go down as well as up. It is very important to protect your valuable asset.
The value of a brand can be eroded by many things. First and most important, the brand must continue to deliver what it has always promised. Whether it’s a packaged grocery or a professional service the quality needs to be maintained. If a company has a reputation for good customer care it must continue to demonstrate this in everything it does – from its customer care line through to its delivery drivers. If a mobile phone company expects to be seen as friendly and helpful it is no good sending customers incomprehensible bills, or keeping customers hanging on to the customer service lines for hours. If a bank promises to treat you as an equal and act always in your best interests, it can only harm its brand value if it is then exposed for reckless selling of personal loan insurance in order to reach its internal profit targets.
At the Brandmakers Company we strive to bring out the best in brands. We look at your company, your products or services, identify their strengths and their weaknesses and establish the target markets. We develop a clear understanding of what the brand/company is promising its customers. We then work to ensure the brand is clearly and consistently presented in every type of communication and that the right message is put across in the right way to the right people. This ‘holistic’ approach ensures that money is not wasted on brand development through conflicting or confusing imagery or messages. It also ensures that every penny that is spent on promoting the brand is used to maximum advantage to create real value for the brand. If you can justifiably say your brand reflects your company’s product or service in every way, is clear and distinctive and is supported a clear positioning that runs through your literature, your advertising, your website and is understood and conveyed by your staff, then you can be sure you are making the most of your marketing budget. If it is not strongly differentiated from your competitors, your staff cannot readily say what the brand stands for, and there is a lack of consistency in your promotional material, then by all means give The Brandmakers Company a call. We’ll be happy to discuss ways in which you can get the most from your brand.
Author: Laurie Rogers – Brandmakers Ltd
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