Creating and managing
brand value Interbrand
www.interbrand.com
Leveraging Brand Value
in a Downturn
INTERBRAND INSIGHTS
In the last recession, what did Wal-Mart have that Sears lacked?
A strong and differentiated brand.
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Colgate-Palmolive
Gillette
Share Price Indexed as of 01. 1990
P&G
S&P 500
Source:
Yahoo Finance
01.1990 07.1990 01.1991 07.1991 01.1992 07.1992 01.1993
Date
No 2 February 2001
Leveraging Brand Value in a Downturn
Interbrand
Historically, retailers have followed market trends quite closely. In the recession of the early ’90s however,
Wal-Mart showed that it could buck the slow pace of the economy and reap economic benefits. How? By offering
a clear value proposition to consumers and delivering on it. Wal-Mart built its brand by aligning its
organization to deliver the brand in everything it did.
This is Brand Value Management in action. Today’s most successful companies manage their intangible assets as
intensely as their tangible assets.
In the face of a slowing economy, most companies scrutinize their physical assets in order to assess what is
critical for their business and what is expendable. However, these same companies also decide to cut
investments needed to support their intangible assets, including brands, without even a cursory examination
of the ramifications.
Successful companies such as Wal-Mart have demonstrated that managing your brand assets with the same
intensity as your portfolio of tangible assets can generate significant long-term returns. Recessionary cycles are
not the time to cut all spending in support of your brand; rather, it is time to spend more efficiently.
As a first step in your internal analysis, Interbrand has created a Brand Efficiency Audit to help you identify the
drivers of value in your brand portfolio. This focused assessment will help you realize the maximum return on
your brand investment, even in the most difficult of economic cycles.
Our Brand Efficiency Audit is a management tool designed to:
• Establish a foundation for achieving financial targets
• Determine the return on specific brand related investments
• Provide guidelines for management of a portfolio of brands
• Reinforce and leverage the loyalty your brands enjoy among key customers
Lessons learned from the recession of the early ’90s are illustrative in today’s potentially serious economic slowdown. The following graphs are examples of industries
and companies where a well-managed brand alleviated cost and inflation pressures and stresses on earnings in order to maximize share price.How To Leverage
Brand Value:
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Merrill Lynch
S&P 500
Bear Stearns
01.1990 07.1990 01.1991 07.1991 01.1992 07.1992 01.1993
Source:
Yahoo Finance
Share Price Indexed as of 01. 1990
Date
Merrill Lynch was seeing the return on
its early ’90s branding investment in its
ability to build and leverage its reputation
in a broader market. It may have
outspent Bear Stearns to do so, but the
positive return was clear.
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50
100
150
200
250
300
Colgate-Palmolive
Gillette
Share Price Indexed as of 01. 1990
P&G
S&P 500
Source:
Yahoo Finance
01.1990 07.1990 01.1991 07.1991 01.1992 07.1992 01.1993
Date
Branded goods companies, who have
been delivering trusted products to
consumers for 50 years or more, can
be more certain about customer loyalty.
The market appreciates this
security of earnings.
Leveraging Brand Value in a Downturn
Interbrand
Ten Lessons in Branding Best Practice
Audit Your Brand Investment Portfolio. Audit the brand assets that you have as part of your corporate or
line of business brands to determine what is really valuable and what is not; what could be phased out, what
could be sold, what should be kept. Take advantage of this time to prune your brand assets to find the greatest
opportunities for managed growth.
Focus on Contingency Planning. Develop scenarios just as you would with physical assets – which would
be the first to go? Which the second? Which brands are critical to your core business and you would keep at all
costs?
Enhance Customer Insight. In a downturn, many companies see research as expendable. However, understanding
their customers at this moment is even more critical. You should protect your budget and preserve the
longer-term projects concerning innovation and trends. Your business must know where your customers are
going over a time horizon that will allow you to come through the downturn in a better competitive position.
Build Internal Brand Supports. Examine ways in which the stronger brands in the portfolio (or the stronger
businesses) could support the marketing efforts of the weaker brands or weaker businesses. Now is a good time
to determine if every subtle brand distinction actually matters to customers.
Evaluate and Eviscerate. Take a sharp knife to every unnecessary product brand, sub-brand or program
brand. Business units have a habit of creating new brands for reasons other than for the benefit of customers or
the bottom line. Each of these costs money to support and distracts attention from core issues.
Build on Existing Equities. Having identified which brands enjoy the strongest customer loyalty, companies
should explore ways of further leveraging these brands. Product line extensions and licensing can be especially
powerful as efficient ways of unlocking brand potential.
Don’t Compromise on Your Brand Promise. There might be temptation to cut back on product quality or
service quality in order to squeeze a few extra margin points. Don’t do it! If you lose confidence in your brand’s
promise, your customers will be the first to know.
Don’t Discount Accrued Brand Value. Resist the temptation to use price discounting to maintain volume
targets. Take the risk of losing a few customers in the short-term and focus on revenue rather than volume. It will
cost much more to reverse the negative impression of “the deep discount” after the event than it accrues your
business in the short term.
Keep Talking. Don’t stop communicating with your customers. In a downturn, people don’t stop buying; they
just buy more cleverly. Take advantage of the general decrease in marketing spending to grab a larger share of
voice and define yourself in a less cluttered marketplace. In good times, the best tactic may be advertising, but
now is the time to evaluate less traditional ways of communicating with your customers.
Define Minimum Standards of Upkeep. It is important to understand what brand investment must be
sustained in order to protect your asset. The amount of dollars necessary to retain your brand’s value is money
worth spending.
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Creating and managing
brand value Interbrand
Founded in 1974, Interbrand serves the world with
34 offices in 22 countries. Working in close partnership
with our clients we combine the rigorous strategy and
analysis of brand consulting with world-class design
and creativity.
We offer a range of services including research, strategy,
naming and verbal identity, corporate identity, package
design, retail design, internal brand communications,
corporate reporting, digital branding tools, integrated
marketing services, and brand valuation.
We enable our clients to achieve greater success by
helping them to create and manage brand value.
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