For further information:
Kay Troy
(212) 339-0369
The Conference Board
For Release Thursday, June 11, 1998
Release #4421A
WORLDWIDE COMPANIES ARE RE-ENGINEERING THEIR BRANDS TO GAIN CUSTOMERS, INVESTORS AND A COMPETITIVE EDGE
Many Major Firms Are Shifting Advertising Agencies, Seeking New Partners
Major companies are aggressively rebuilding their brands to boost their images, stand out from the corporate pack and attract investors, according to a Conference Board study released today.
The study, which examines the strategy behind some of the world's most prominent brands, includes surveys with 106 marketing and communications executives of companies based throughout the United States and Europe. Companies in the study include Microsoft, General Electric, IBM, LEGO, Kodak, Levi Strauss, Bass PLC, 3M, DuPont, and Chase.
Some 43 percent of the surveyed firms have initiated a new brand strategy since 1995, aimed at increasing customer loyalty, differentiating their brand from others, or securing leadership in critical brand categories.
Large numbers of brand specialists say that profitable branding goes beyond advertising, one reason for why some companies are leaving their ad agencies to look for new agencies and new partners. While advertising continues to be a key factor in driving brands, the most successful firms see branding as a company-wide, top-to-bottom enterprise. Once handled by "logo cops" who guarded corporate identity, brand building is being rapidly linked to overall company strategy.
NEW BRANDING FORCES SHAKING UP OLD NETWORKS
"With growing frequency, companies with established brands are abandoning long-time ties with their advertising agencies to search for new partners," says Kay Troy, Director of The Conference Board's Global Center for Performance Excellence and author of the report. "Other companies that were once content to use brands at the product level are now polishing up their corporate brand. Wanted is the ability to create a brand strategy message, or campaign that will give the company a competitive edge."
THE IMPACT OF BRANDING ON PERFORMANCE, MARKET PRICES
The study suggests an emerging connection between successful brand strategies and corporate performance. Total revenue data for 1991 and 1996 obtained from 53 survey participants (23 "high success" firms and 30 others) show that the median increase in total revenues in the successful brand group was 33%, compared with 22% among other companies.
The stock value for a typical firm in the successful branding group increased 125% between 1991 and 1996, compared with 71% for a typical firm in the other group.
The larger the budget for brand building in participating firms, the more likely they are to report that their brand management effort is a success. Although the majority of firms estimated their expenditures to be under $10 million, almost a quarter reported spending $50 million or more. Those targeting a business-to-business audience typically spend less than those hoping to reach the larger population of consumers. These expenditures represented between one and two percent of 1996 sales. The study finds that the maturity of a company's brand strategy may be a factor. Almost half of the group who launched their brand strategy prior to 1990 have budgets of $50 million or more. In contrast, 60% of those who initiated a brand strategy in 1995 or more recently are investing under $10 million.
Corporate advertising is often the largest piece of the budget, and most survey participants expect their advertising expenditures to grow over the next few years. The typical company allocated 20% of its 1996 budget to advertising.
THE DRIVE FOR BETTER MEASUREMENT
The majority of firms identified eight measures as helpful in gauging the success of their corporate brand building. The measures included: market/share penetration; ability to attract a premium; customer satisfaction; market position; brand leadership; brand awareness; value; and customer beliefs about the brand.
The ability to measure success remains an elusive goal. Only 20% of survey participants say they are highly satisfied with their ability to measure results. Firms that are highly satisfied are likely to use a more detailed set of measures to gauge brand building efforts - an indication that this group had moved beyond generalities to probe the nuances that differentiate their brand. The detailed set of measures included: brand personality; customer loyalty; sensitivity to the brand within its category; and brand leadership.
"We have key metrics that span the full purchase process cycle-from initial awareness of the company all the way through customer loyalty and retention," says Ann Redmond of Microsoft. "But we also have a measurement architecture underlying that to assess the fundamentals of building brand equity. For example, we want to know how effective our advertising is, how effective our point of sale materials are, do people remember and internalize our tag line."
RALLYING EMPLOYEES
In some firms, internal audiences are targets for the brand message. The brand creates a strategic platform by embodying the corporate mission and aspirations. The challenge is to unite employees from a collection of diverse cultures around a common goal. Leading firms count "a distinctive corporate culture that serves as a platform for the brand" and "the ability to obtain support from a broad spectrum of employees," among the factors crucial to the success of their brand strategy. Over half of successful firms report that a widespread ability to articulate the brand promise is already in place. This is true for only about 15% of other participants.
GOING GLOBAL
Among the forces driving renewed attention to the corporate brand is the search for growth through global expansion. Global brand-making efforts highlighted in the report include:
n Microsoft's use of the Rolling Stones' "Start Me Up" in their worldwide ads launching Windows '95. The ads were the same in music and theme in all markets, only the language of the text, the shots of computer screens, and people's faces were altered to fit the country. n Levi Strauss' branding strategy depends on input from local staff in regional markets to help define issues and avoid marketing traps. The company's Robert Holloway explains: "One of the reasons we rely so heavily on our local people is that we know that there are different cultural, developmental, economic, and even legal issues in each market. There is greater audience sophistication in some regions, while in others we might focus on building brand awareness." n General Electric believes that its brand is perceived differently in different global regions. "It's early yet, but we think that the tiered approach we are taking in Asia is working well," says James Harman of GE. "We assess where we are perceptually with our audience and then decide on how to support the brand. The trick is knowing when to move to the next tier."
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Source: Managing The Corporate Brand, Report #1214-98-RR, The Conference Board
Information on ordering this publication can be obtained by calling The Conference Board's Customer Service Department at 212-339-0345. Copies are available free to the media (Please call 212-339-0231).
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