To Succeed Companies Must Build The Brand From The Top

10th Nov 2011

For companies to become successful, branding can no longer be delegated to a mid level marketing function. Instead boardrooms and chief executives must take charge of the brand strategy, lead the brand development, manage its implementation and be fully involved in performance tracking and benchmarking.

Branding should be represented at the board level and be equally represented along with all company functions. For example there is a rapid development taking place across Asia where more and more companies are starting to realize that branding is a stategic issue that can drive competitive advantage and shareholder value.

The Japanese spent some 30 years creating strong brands such as Sony and Toyota, the South Koreans started during the 1990's and created brands such as Samsung, LG and Hyundai and now other countries including fast growing China and India are following suit.

Branding enhances shareholder value, it can become a catalyst for better leadership, it enables a shared vision to be driven through the organisation , and it can help to balance short - term and long - term perspectives and performance.

There are several stakeholders concerned with brand equity, such as the firm, the customers, the distribution channels, media and other stakeholders like the financial markets and analysts, depending upon the type of company ownership.

But ultimately it is the customer who is the most critical component in defining brand equity as it is his or her choices that determine the success or failure of the company and the brand.

Customer knowledge about the brand, the perceived differences and its effects on purchase behavior and decisions lies at the heart of brand equity. The knowledge and associations attached to the brand result in choices that have a direct impact on the brands financial performance and shareholders value.

An effective measure of value is brand equity, and many studies provide strong evidence that brand equity greatly impacts brand valuation and hence the market valuation of companies.

Brand equity is the combined measure of brand strength and consists of three sets of metrics, knowledge, preference and financial.Each of the measures under these three metric sets is critical and the board must ensure that the brand portfolio scores high in each of these paremeters to optimize the financial outcome from strong brands.

Brand value is driven by margins that the brand is able to charge, and customer loyalty. These two issues have to be benchmarked againest competitors. However, if brands are well known and hence are valued very highly, they are also part of the public space. The reason for buying brands is that we have an emotional bond to them due to their ability to connect us to communities.

Modern society is overloaded with information, and the average person receives far more information than one can possibly digest properly. Therefore, people seek to simplify the world by relying on a variety of indicators to minimize the amount of searching and information processing needed to make reasonable decisions.

Once people believe a brand works for a certain purpose or reason, they are less likely to seek out new information that challenges the assumptions.

In conclusion Billabong Surfwear is one of the best examples of this. It is excellent at balancing these issues of brand leadership. Nike is another example of a company that moved from a pure diversified manufacturer towards a company with strong cash flows from Branding.

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