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How brands can benefit your business

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7th Sep 2010
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Branding is often misinterpreted as little more than a corporate logo backed by some marketing puff. In this classic 2005 contribution to the AccountingWEB.co.uk archive, Anne Fairpo explains how branding helps organisations to define their purpose and how they are known and remembered.

All businesses want improved results. All too often, they want them this quarter or, as a long-stop, in the next six months, no matter what.

This attitude encourages an undue focus on efficiency and cost-cutting that have an immediate impact on a company's figures. But this is not a sustainable long-term approach, and can even undermine the fundamental value of the business.

Improving efficiency can contribute to a leaner and more responsive organisation. Reducing costs improves the bottom line, but there is a finite limit to how much efficiency and cost-cutting a business can sustain without damaging the core reason why customers deal with it.

In the longer term, a focus on efficiency and cost-cutting won't differentiate any company from the competition. Firstly, rationalisation is invisible to your customers (or should be) and, secondly, everyone else is trying to do exactly the same thing.

"Companies have defined so much 'best practice' that they are now more or less identical." - Jesper Kunde, A Unique Moment

Companies need to think longer term to stay in balance. The requirement for results now is compelling, but that insatiable demand will still be there next quarter, and the quarter after, regardless of this quarter's results. If results this quarter are good, the demand for the next quarter to be better will probably only increase.

The only way to deliver value to shareholders is to create it.

Most companies acknowledge this pressure, but it takes a back seat to efficiency and cost gains. Ever considered spending less time thinking about what can be rationalised and more time thinking about growing a business that appeals to customers? Being recognised is one thing - being valued and consistently chosen is better.

Growth requires companies to recognise their inherent strengths, their direction and what their strengths will need to be in the future. It's a long-term strategy for a short-term world. It isn't something that can be outsourced. But it is something that can be branded.

A brand has a number of strategic functions. It enables a company to:

  • differentiate itself from the competition
  • persist and be consistent in marketing efforts
  • deliver a message clearly and quickly
  • project credibility
  • create strong stakeholder loyalty

A strong brand can provide powerful competitive advantages such as greater customer loyalty, higher margins, and opportunities for brand extension and licensing. Interbrand has consistently shown that brands generate substantial shareholder value by securing long-term cashflows and research suggests that the best global brands typically account for more than one-third of shareholder value generated for shareholders.

Branding is an effective growth strategy because a brand is the only strategy directed at the people who matter – your employees and your customers. Strong branding is how every great organisation defines its purpose, is known and remembered.

What is a brand?

Most people understand brands in the context of packaged goods – particularly the surface design – and in corporate renaming and logos, inevitably termed "rebranding" by the press. The term brand itself came originally from the mark, or brand, stamped on goods by producers in past centuries.

As part of a growth strategy, however, a brand would be better described as a "sustainable identity" – more than the products of a company, it relates to and reflects the company itself.

Every company has a brand. Everyone you meet will form an opinion about your company, even if they have not done business with you yet. The issue then is not whether you have a brand, the issue is how well your brand is managed. This is what creates a good brand. It is not simply a logo, or an advertising strapline. It is the experience that people have in dealing with your company.

If a brand is not effectively managed then a perception can be created in the mind of your market that is not necessarily desirable. Branding is all about perception. The challenge is to manage the brand so that the opinion that people have of the company is positive.

A brand is what results from consistency: your customer comes to expect that your brand will continue to display the same characteristics, and this expectation creates a relationship between the brand and the customer.

So a brand is more than marketing: it needs to be managed in human resources, packaging, customer service, technical support, design. In short, throughout the company (and, of course, in the products or services your company supplies!)

Is branding just for larger companies?

Whether your company is small or large, branding is about getting your target market to see you as the preferred choice. Building a brand is not just about what you do; it's about what you do differently from everyone else.

Most people remember global brands - it is inevitably global brands that tend to be the strongest and most visible. That does not mean that there is no point to a small company creating a brand.

The most important thing from a small brands perspective is to be strong in its own defined market. A smaller brand has an opportunity to serve its customers in a more flexible and creative way than its greater counterparts. This applies particularly to small brands that tend to have closer connections to its customers than big, global brands.

Brand = asset

"A brand with a future is always regarded as the company's most valuable asset. Most of us recognise this, but we seem to ignore it. The reason is that the official system we live in has not been able to adjust to the change.

Other much less important assets have historically received much greater attention, things like property, machinery, and technology, assets that are annually audited. So-called human capital is an asset not yet officially valued, but much discussed, and still the value of all these assets usually depends more on the strength of the brand as an asset than on anything else. Of course, this will change over time.

Auditors will not forever accept auditing a small and less important part of the company, and the legal system will not accept having the dominant part of a company value outside of the system, so to speak". - Thomas Gad, 4-D Branding

The recognition that brands are a powerful yet under-utilised asset is the reason why trademark licensing has become a popular marketing strategy. Because many brand owners don't have the resources to pursue every viable business opportunity, they deploy trademark licensing to enter new markets beyond their core competencies. Corporate or brand licensing represents a growing share of the many trademark license agreements developed each year. A trip to any major retailer reveals numerous brand extension and co-branded licensed products.

The value of a brand as an asset has been reflected in changes to UK, US and International Financial Reporting Standards. Schedules 29-30 of the Finance Act 2002 unified differing tax treatments for intangible fixed assets such as brands, copyrights and patents so that companies' gains in respect of intangible fixed assets were chargeable to corporation tax as income and any losses qualified in respect of these assets would obtain tax relief.

To emphasise the importance of brands in financial decision making, Brand Finance in the City found that almost three-quarters of analysts wanted more information on brands in annual reports.

Branding case study - John Murphy – Interbrand/St Peter's Brewery;

Branding guru John Murray explains the strategy employed by start-up brewery, St Peter's.

My experience is in marketing and branding, not in brewing. (I founded Interbrand in 1974, now the world's leading branding consultancy with offices in over a dozen countries worldwide and close to 1,000 staff). For the last 20 or so years I have worked for many of the world's leading brand owners and written and lectured widely on the development, management and valuation of great brands.

From the outset I determined that my new brand (St Peter's Brewery) should be focused on both the home market and on export markets and that the main pillars of our brand should be:

  1. Outstanding quality
  2. Real heritage/tradition
  3. A high level of differentiation
  4. Innovation
  5. A simple, elegant branding system

The main way in which we have tried to achieve differentiation is through our bottle, because even though we produce cask beers for sale, mainly, in our own pubs, it was clear from the outset that our main route into export markets would necessarily be via non-returnable bottles (how would one get one's casks back from, say, Singapore?). The search for a truly differentiated non-returnable bottle was arduous but the solution proved to be under our noses all along because we already owned an antique 18th Century oval bottle produced for Thomas Gerrard of Gibbstown, near Philadelphia, in 1770. We had bought this bottle a year or two earlier as an exhibit in our planned brewery museum and decided to copy our 500ml bottle from it.

Finally, we fixed on a 'branding system' which we believe works well for us. The key to the system is that we have only one brand - St Peter's - but a lot of product manifestations of the one brand. We do not brand each product separately. Rather, we adopt the same branding approach for all bottled products and simply change the product description to suit. Thus, unlike many breweries who need to struggle to find a new name and a new label design, even a new bottle design, for each new product and therefore find new product development to be expensive and protracted, we can drop new products into our system with minimum fuss and expense. Most importantly, we avoid any dilution of our core brand as the one brand - St Peter's - is the focus of all our branding efforts and the brand is always presented to consumers in the same way.

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By cameret
13th Sep 2010 11:29

Branding

 As an ex-accountant turned marketing academic I can say that this article is a well balanced introduction to the concept of branding. Quite rightly the author makes the point that brands are fundamentally not really about logos advertising and cute strap lines - these are merely aid-memoirs. A brand is about achieving consistency in positive customer experience, and this involves all areas of the organisation working together to effectively achieve that. Peter Drucker, the American management guru, made the observation decades ago, that everybody in an organisation is involved in marketing, in one way or another. Good marketing, and successful brand development, are inextricably linked to long-term positive customer experiences. However, the danger is always, that one or more parts of the organisation will devalue the efforts of others, in delivering value to customers.

For the accountancy practice building a successful brand is as much about understanding what your customers value, as it is about managing your staff and systems, in a way that will deliver that value. Whether they like it or not, from the partners to the receptionist, they are all critical to brand building. One negative customer experience , even with junior office, staff can have a lasting effect on customer loyalty. Marketing departments are not always necessary for practices: what is more important is to establish and nurture a culture of customer orientation (identifying customer needs and satisfying them), which may mean biasing staff selection towards those with soft skills, rather than just selecting on technical potential. Top management understanding, and commitment, to the 'whole organisation' concept of marketing is crucial.

Beware the consultants who come offering to improve your results by changing your logo and doing some slick advertising. You should not advertise what you cannot deliver. Having a distinctive brand image may have a negative effect on profitability, if the value you deliver is not up to customer expectations. Successful brands are build on understanding what customers value, and aligning your whole organisation do deliver that value. It takes time, commitment, and attention to detail. There are no short cuts, but the longer-term dividends can be enormous.

 

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