Author: Jim Riley Last updated: Sunday 23 September, 2012
What factors are important in building brand value?
Several factors are crucial in building successful brands, as illustrated in the diagram below:
Quality is a vital ingredient of a good brand. Remember
the “core benefits” – the things consumers expect. These
must be delivered well, consistently. The branded washing machine that leaks,
or the training shoe that often falls apart when wet will never develop brand
Research confirms that, statistically, higher quality brands
achieve a higher market share and higher profitability that their inferior
Positioning is about the position a brand occupies in a
market in the minds of consumers. Strong brands have a clear, often unique
position in the target market.
Positioning can be achieved through several means, including
brand name, image, service standards, product guarantees, packaging and the
way in which it is delivered. In fact, successful positioning usually requires
a combination of these things.
Repositioning occurs when a brand tries to change its market
position to reflect a change in consumer’s tastes. This is often required
when a brand has become tired, perhaps because its original market has matured
or has gone into decline.
The repositioning of the Lucozade brand from a sweet drink
for children to a leading sports drink is one example. Another would be the
changing styles of entertainers with above-average longevity such as Kylie
Minogue and Cliff Richard.
Communications also play a key role in building a successful
brand. We suggested that brand positioning is essentially about customer perceptions
– with the objective to build a clearly defined position in the minds
of the target audience.
All elements of the promotional mix need to be used to develop
and sustain customer perceptions. Initially, the challenge is to build awareness,
then to develop the brand personality and reinforce the perception.
Business strategists often talk about first-mover advantage.
In terms of brand development, by “first-mover” they mean that
it is possible for the first successful brand in a market to create a clear
positioning in the minds of target customers before the competition enters
the market. There is plenty of evidence to support this.
Think of some leading consumer product brands like Gillette,
Coca Cola and Sellotape that, in many ways, defined the markets they operate
in and continue to lead. However, being first into a market does not necessarily
guarantee long-term success. Competitors – drawn to the high growth
and profit potential demonstrated by the “market-mover” –
will enter the market and copy the best elements of the leader’s brand
(a good example is the way that Body Shop developed the “ethical”
personal care market but were soon facing stiff competition from the major
high street cosmetics retailers.
This leads onto another important factor in brand-building:
the need to invest in the brand over the long-term. Building customer awareness,
communicating the brand’s message and creating customer loyalty takes
time. This means that management must “invest” in a brand, perhaps
at the expense of short-term profitability.
Finally, management should ensure that the brand is marketed
“internally” as well as externally. By this we mean that the whole
business should understand the brand values and positioning. This is particularly
important in service businesses where a critical part of the brand value is
the type and quality of service that a customer receives.
Think of the brands that you value in the restaurant, hotel
and retail sectors. It is likely that your favourite brands invest heavily
in staff training so that the face-to-face contact that you have with the
brand helps secure your loyalty.