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Brand purpose has no single formula

News, 24 July 2015

LONDON: In his bestselling book, Grow, former Procter & Gamble CMO Jim Stengel outlined how the highest-performing companies used the power of brand ideals to drive success, but his case was flawed argue two leading industry figures.

Richard Shotton, head of insight at ZenithOptimedia, and his colleague Aidan O'Callaghan take issue with Stengel's concept that brands with a brand purpose or ideal grow faster than their peers.

Their feature "Debunking Brand Purpose" in the current issue of Admap highlights six main flaws with the thinking behind his highly successful book of 2011 and declare that there is no proof that ideals deliver success.

First, they question the methodology Stengel used to identify the best-performing brands known as the "Stengel 50", which grew by 393% between 2000 and 2011 compared with a -7% loss for the S&P 500 benchmark.

While seemingly compelling, the authors write, the problem is that at least 11 of these 50 brands accounted for only a proportion of its parent company's sales.

Calvin Klein, for example, was one of the Stengel 50 brands, but it accounted for only 43% of owner PVH's sales in 2013.

Another problem with comparing the Stengel 50 with S&P 500 is that it excluded brands listed on European and Asian stock exchanges.

Also, Stengel selected only the most successful brands from Millward Brown's database, prompting Shotton and O'Callaghan to say that "it's not surprising that the most successful brands had performed well financially in previous years".

The fourth serious flaw concerns the definition of a brand ideal because the term is so "malleable" that it can be adapted to fit most brands.

For example, the ideal defined by Stengel to describe Mercedes-Benz was that the luxury German car "exists to epitomise a life of achievement".

However, in poll of 1,000 consumers conducted by the authors to test whether that ideal was a genuine fit, only 10% recognised the descriptive for Mercedes.

Fifthly, Stengel did not compare the best-performing companies with the underperforming ones, yet these could also be said to be defined by ideals.

Smartphone vendor Nokia, for example, witnessed its share price decline by 96%, yet a full 52% of consumers in the authors' poll were able to connect Nokia with the ideal of existing to "connect people with one another and the content that is most important in their lives, anytime, anywhere".

Finally, Shotton and O'Callaghan looked at the stock market price for each relevant brand from January 2011 to December 2014 to test whether their strong performance continued beyond the period covered in the book.

Out of 23 brands monitored, only 12 outperformed their benchmark while the overall performance was 27%, far less than the nearly 400% highlighted in Glow.

"Despite Grow's popularity, there is no proof that ideals deliver success," they declare. "No one has yet uncovered the single secret to sustained business growth nor is anyone likely to. Unfortunately, it won't be long before someone else tries."

Data sourced from Admap