Why Brand Strategy Is Important

So how do you explain why brand strategy is so important? Through the lens that speaks to all business leaders: value.

On average, a brand accounts for more than a third of shareholder value, according to Interbrand and JP Morgan, so anything that improves your brand should have a significant impact on the company’s bottom line. Now this value can vary by industry, as Jonathan Knowles points out in his article, “When is it true that ‘brand is our most important asset’?” And trying to put a number on the value of a brand is very difficult (the discrepancies between brand evaluation studies show). But most of the leaders realize that the brand is one of the most valuable intangible assets, and the intangible assets represent 70% of the global economy, thus the brand contributes a significant amount to their balance sheet.

But how does brand strategy directly affect the bottom line? A good branding strategy helps companies grow in many direct and indirect ways. It’s not just a “nice to have” element that brings consistency and clarity to branding and marketing. The real impact is on the main drivers of business growth.

How Brand Strategy Helps Business Growth

Ultimately, there are two ways a business can grow without creating new products or services. By lowering or raising prices, or increasing the perceived value of what they already have.

Branding, and the brand strategy that underpins this, is all about increasing the perceived value of a product or service.

Sometimes it’s about defining your brand in a way that changes or expands the perceptions of the audience you want to reach. Just as Nike did in 1988 when they realized they were going to get too narrow and elitist; They were limiting their growth by only talking to elite athletes. The summary that led to the infamous “Just Do It” slogan read:

“We need to grow this brand beyond its pure core… We have to stop just talking to ourselves. It’s time to expand the access point. We need to have a more complete set of sport and fitness rewards.” ~ A New World of Branding, 8 Principles for Brand Leadership in the 21st Century, Scott Bedbury

It is often about getting out of the weeds of product features and understanding how to reach a greater benefit and platform for your brand, to help you create more empathetic and distinct associations in the minds of your target audience. Just like the Pampers team did in 1997 when they stopped talking about dehydration and instead focused on becoming “mothers” partners at every stage of their children’s development. From being the poorest P&Gs in terms of profitability and market share growth, it has grown $1 billion year-over-year with the most aggressive brand strategy.

Identifying this larger area of ​​interest is all about identifying your reason for being. Jim Stengel, in the study of 50,000 brands over 10 years that led to his book, “Grow, How Ideals Power Growth and Profit At The World’s 50 Greatest Companies,” showed that brands that identified a strong statement of cause collectively outperformed The S&P 500 increased nearly 400% and grew three times faster than the competition. This is a statistic that makes all the members of group C sit down and take notice.

How does brand strategy improve market share

A brand is an intangible asset – but what does this really mean?

Well, brands are built in people’s minds. It is the set of perceptions, feelings, and associations we have about a company or a product. And in order to create a brand in people’s minds, companies need to build a dense “mental network” of these associations in the minds of their potential customers. As IPSOS showed in their research outlined in “Brands Don’t Buy Brands, People Do”, the more intense and interconnected these associations are, the higher your market share.

So how does brand strategy relate to this?

basic. First you have to know what you want these associations to be! What do you want to stand in people’s minds? So when you invest in building these associations — creating a brand identity, writing your About page, running ads, briefing your customer service team, developing new products, delivering a keynote at the annual event — you ensure that it all aligns. They are all related to your brand strategy so they build dense associations in the minds of your customers.

How brand strategy improves customer loyalty, acquisition costs, and preferences

I often use this graphic to highlight the impact and importance of brand strategy.

Brand strategy value

The Jim Stengel study referenced above indicates growth three times faster than the competition.
The 80% figures in my model come from two sources. First, a 2015 HBR study among 474 CEOs where 80% said an organization with a common goal would have greater customer loyalty.

Second, a study by PricewaterhouseCoopers showed that 80% of consumers prefer to purchase goods and services from companies that represent a common goal that reflects their personal values ​​and beliefs.

They both come back to answering the first question in brand strategy—what most companies today call purpose or mission—but they are just an answer to why you exist.

The other metric I use here has to do with customer acquisition costs. A study by Rokt, which is highlighted in this HBR article, “4 Factors Separating Top Marketers from the Rest of the Group,” determined that a strong brand outperforms weaker brands by a 3:1 ratio in terms of customer acquisition costs. They also highlight,

“The choice of one product over another is ultimately supported by the consumer’s emotional relationship with the brand. We see companies with strong brands outperform weaker brands in the same industry at a 3:1 ratio in terms of customer acquisition costs (CAC). Many are missing Companies absolutely link brand and performance. They invest less in the brand because the results are not easily measurable. This is the challenge when the laser approach focuses on short-term performance measures versus long-term shifts in brand strength.”

Doing the research needed to create a world-class brand strategy always involves understanding the emotional triggers, signals, and benefits that your brand needs to capitalize on so that you can identify the consumer’s emotional relationship with the brand.

How brand strategy improves employee satisfaction and retention

It’s hard to underestimate the importance of employee consideration when developing a brand strategy, but many people do. Partly because brand strategy projects are often funded by the marketing department, and depending on the strength of the CMO’s relationship with CHRO, it can be a battle to cross these silos and gather the entire leadership team around the impact of the brand strategy, and the implementation steps needed to make it work.

What is helpful, however, are the countless studies that have linked the importance of brand strategy – in particular, answering this question of “why are we” – to improving employee performance, satisfaction, and retention.

In a PwC study Putting Purpose in Action, among more than 1,500 employees and 500 business leaders in more than 39 industries, 83% of employees said that a sense of purpose gives them meaning in their daily work.

In a study sponsored by HBR EY, “The Business Case For Purpose,” 89% of CEOs surveyed said organizations with a common goal would have greater employee satisfaction.

MSU’s Dr. Valerie Judd’s “Motivating Sales Representatives Towards Greater Productivity” (recipient of the 2019 Taylor Research Award) revealed that Even salespeople (It’s notoriously associated with being money driven!) With a sense of purpose beyond money that puts in more effort over time and is more adaptable than salespeople who focus only on internal goals and quotas.

In Greg McKeown’s study of more than 500 people across 1,000 teams, referenced in his book The Basics, The Disciplined Pursuit of Less, he found a “consistent truth”:

“When there is a serious lack of clarity about what the team represents and what its goals and roles are, people experience confusion, stress and frustration. On the other hand, when there is a high level of clarity, people thrive. The truth is that motivation and cooperation deteriorate when there is a lack of Target “.

His solution for businesses is to adopt a “memorable, purposeful core intent” – another way of saying that you have to identify a clear, actionable cause for your business. Brand strategy 101.

Finally, when the brand strategy is most valuable, there is a long-term commitment to making decisions based on the four questions the business answered in defining their strategy, as this can help guide future growth.

Why – you exist
Who are you
How – do things and how they look, feel and sound
What are you doing

In a 2015 study by HBR, 84% of CEOs agreed that their business transformation efforts would be more successful if combined with purpose, and 84% agreed that an organization with a common goal would be more successful in their transformation efforts.

Another HBR study highlighted, “Put purpose at the core of your strategy,” it’s how successful companies redefine their business, which looked at high-growth companies, (those with an average compound annual growth rate of 30% or more in the previous five years ), identified that these companies have moved purpose from the perimeter of their strategy to their core, and used it to generate sustainable profitable growth, stay relevant in a rapidly changing world, and deepen relationships with stakeholders.

“What is the main difference between low-growth companies and high-growth companies? The former spend most of their time fighting for market share in one playing field, which naturally limits their growth potential. Because most aggressive battles occur in industries that are slowing, gains in Market share comes at a high cost, often eroding profits and competitive advantage when offers become a commodity. By contrast, high-growth companies do not feel limited to their current playing field. Instead, they think of entire ecosystems, The interconnected interests and relationships between multiple stakeholders create more opportunities. But these companies don’t deal with ecosystems haphazardly. They let Target be their guide.”

They conclude the article and urge leaders to constantly evaluate how the target directs the strategy, because “the advantages it can confer are abundant.”

The impact that a branding strategy can have on a business touches on several factors of business growth. So just make sure you take your time in creating the brand strategy the right global way. Do it once, do it right and get the business impact you’re looking for.

Contributed to Branding Strategy Insider By: Sarah Robb, Founder of Brand Strategy Sarah

Project Blake assists brands at all stages of development: Get hands-on guidance from experts on brand strategy, growth, and purpose.

Branding Strategy Insider is a service of The Blake Project: a brand strategy consulting firm specializing in brand research, brand strategy, brand growth, and brand education.

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