Brand-building models must evolve

01 August 2011

NEW YORK: Marketers could benefit from applying more "economic-based thinking" to their brand-building strategies, the Boston Consulting Group has argued.

In a new study, BCG suggested trends like technological change, intensifying competition, disruptive innovation and category maturation are fuelling the need for new approaches.

"Google, Apple, Nike, Louis Vuitton … These companies demonstrate without question that a brand can drive tangible financial impact and increase value for employees, customers, and shareholders," it said.

"Too often, however, brand transformation efforts falter because they lack the rigor and discipline that are applied to other business initiatives."

BCG asserted that adapting to shifts in the market firstly requires understanding how buyers choose between brands, triggers typically not only rational but also depending on emotional factors.

In sample research, BCG asked consumers to rank the top two emotional benefits they desired when engaging out-of home activities like visiting retailers and restaurants, or travelling.

Being "at peace" scored 15%, ahead of the 10% logged by "comfort", having a "sense of pride" and feeling "personally connected".

When at home, 10% of those polled mentioned being "at peace", while goods and services regarded as boasting "family friendly" credentials were cited by 8%, and 7% valued "splurging on me".

Combining such qualitative data with insights drawn from an assessment of the competitive landscape, and quantitative exercises like market sizing and tracking brand health, should yield an accurate picture of a given sector.

Next, BCG recommended identifying attractive "market spaces", and particularly "white spaces" not owned by an existing player, or segments adjacent to current areas of in-house strength.

This involves establishing how many customers for a brand or category would be interested in buying a repositioned product, and why.

Having discovered a viable proposition, the third step is constructing a "brand benefit" ladder covering technical attributes at the bottom, functional advantages in the middle, and emotional characteristics at the top.

"On the basis of the detailed analytics undertaken in the previous stages, executives can demonstrate the financial value of delivering each layer of the brand ladder," BCG said.

"As a result, guidelines on how much to spend on brand reinvention, and when to stop spending, are much clearer."

BCG employed the example of Starbucks, the coffee house chain, which uses high-quality ingredients, unique flavours and eco-friendly practices to create a strong technical basis for its status as "the third place".

At the functional level, Starbucks is perceived as offering better-tasting drinks, a small "treat" and relaxing experience, alongside implementing fair trading policies.

Emotionally, these traits translate into impressions of sophistication and discernment, fusing with a mixture of indulgence and feeling responsible for supporting ethical behaviour.

Equally, business leaders derive "social" benefits from being seen with Apple's iPad and carrying a Whole Foods tote bag lets people show off their "eco-conscious" attitudes.

BCG said: "A competitive view is ... a critical factor in building the full brand ladder, because efforts to address these gaps may run straight up against a competitor's superior offering and capabilities."

"In Europe, for example, Audi's Quattro four-wheel drive system so thoroughly defines that space that there is little room for other carmakers to claim similar territory."

The final phase of the process incorporates organising communications and corporate strategy based upon the positioning pursued.

The study said: "In conjunction with advertising and public-relations agencies, marketing executives should develop communication plans that align consumer advertising programmes with the new emotional benefits and brand positioning."

"Executives must also convey a thorough understanding of the new positioning within the company, so that the brand essence can help align all internal and frontline functions around a unified vision of the brand."

Data sourced from Boston Consulting Group; additional content by Warc staff