Brand Stability as a Strategy

Technology and globalization impact brand stability more today than ever before, and the number of competitors is greater than ever.  Technology enables new brands to emerge and existing brands to evolve quickly. With increased competition and fast access to larger markets, brand management is a growing challenge. Brand managers have to be especially savvy and innovative in order to build brand value.  Building brand value requires clarifying identity, increasing bond strength, and winning favor.

Brand identity is the market's perception of all elements of the brand. The identity can be strong, weak, or anywhere in-between.  Some buyers will purchase with no awareness of brand identity; others choose strictly out of brand loyalty.

Brand strength is a measure of adhesion between elements of the brand. When a product, or product class, becomes synonymous with a brand identity, the association between the brand's strength is maximized. Brand strength, however, does not indicate the level of favor towards a brand.

Brand favor is a quality indicator of the consumers experience with the brand: the quantity and quality of all touch points between consumers and all elements of the brand.

Brand value is the product of the three factors:  brand identity, brand strength, and brand favor. Understanding a brand's current situation helps leaders craft a strategy for steering the enterprise towards value growth.

Winning requires knowledge of the enterprise's current situation in the marketplace.  This knowledge provides insight to the brand's market potential.  Below are three hypothetical situations with extremes of the three factors, to illustrate a point.  Notice that each situation calls for a different strategy.

• Situation A:  Low brand identity, High brand strength, High brand favor
• Strategy:  Promote the brand, Re-evaluate elements, etc.
• Situation B:  High brand identity, Low brand strength, High brand favor
• Strategy:  Improve total customer experience
• Situation C:  High brand identity, High brand strength, Low brand favor
• Strategy:  Transform the brand

Variation among the three factors is at least, in part, a function of the brand's level of specialization in the market, something that is irrelevant if comparing brands within the same market; however, if comparing brands across differing markets, the challenge becomes more complex. When managing multiple brands, each brand needs to be normalized based on it's degree of specialization in the marketplace. This calls for a dissertation, perhaps with entrepreneurial opportunity.  Any takers?

Major shifts in these factors can produce rapid gains or losses for shareholders. If not managed, these factors expose the brand to undue risk: risk of unexpected losses and risk of missed opportunity: an environment that allows competing brands to leap frog and new brands to emerge. Managing the range and variation among the three factors is key to reducing exposure and creating brand value.

When the three factors are managed, brand performance becomes more predictable. A brand's ability to more accurately forecast performance improves its ability to plan and execute. When a brand demonstrates improved ability to forecast, plan, and deliver-to-plan, shareholder confidence grows. Still, high shareholder confidence should not be confused with high brand value. After all, brand managers can reliably cannibalize one brand in order to strengthening another.

Profitability is strongly correlated to a brand's level of specialization.  Specialty brands tend to have higher margins, with increased volatility and higher risk.  Brands in the specialty market rely heavily on innovation. Transforming brand offerings helps the brand keep pace with changing market conditions.

Brands that reside in the commodity market are more stable, and have lower margins with less risk.

Big opportunities are created when leaders stabilize brands within the specialty market. A strategy of innovation is used to strengthen their degree of specialization as they manage the variation in the three factors (brand identity, brand strength, brand favor). Stability of these three factors breeds shareholder confidence; when this occurs in specialty brands, you get high confidence and high margins- a combination that fuels growth and maximizes brand value.