Essay About Successful Brands And Attractive Market

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Building value-based branding strategies
PETER DOYLE
Warwick Business School, University of Warwick, Coventry CV4 7AL, UK
Marketing professionals oversimplify the problem of building successful brands. As
companies such as Xerox and Procter & Gamble have learned, brands can have strong
consumer franchises yet still not generate value for investors. Brands that create shareholder
value have to meet four requirements: (1) a strong consumer proposition, (2) be
effectively integrated with the Ž rms other value-creating assets, (3) be positioned in a
sufŽ ciently attractive market and (4) be managed in order to maximize the value of the
brands long-term cash Џ ow. This paper shows that, when managers attend to all four
determinants, they can enhance brand values and develop more effective marketing
strategies.
KEYWORDS: Brands; shareholder value analysis; marketing; strategy
INTRODUCTION
In recent years many of the companies most renowned for their branding and marketing
skills have been seen to stumble on the stock market. Coca-Cola, Procter & Gamble, Marks &
Spencer, Gillette, Xerox and British Airways have all jettisoned their chief executives in the face
of sliding share prices. Brands have not been the promised panacea in todays highly competitive
environment. In contrast, many of the companies that have dramatically succeeded in creating
value for investors, such as Dell, Vodafone and General Electric, have not been noted for their
branding investments.
Many marketing-orientated companies such as Procter & Gamble and Gillette have oversimpli
Ž ed how brands add value to the performance of a business. Marketing has overwhelmingly
focused on the importance of developing an attractive consumer proposition and establishing a
relationship with the customer through consistent and continuous brand investment. In contrast,
this paper demonstrates that, if brands are to create value, four factors are required (Fig. 1).
Certainly an attractive consumer value proposition is the number one underpinning of a successful
brand. However, this is not enough. The brand has to be effectively integrated with the Ž rms
other tangible and intangible resources, which are the foundations for its core business processes.
The market economics in which the brand operates must also permit returns above the cost of
capital to be earned. Finally, management has to pursue brand strategies that are directly linked
to shareholder value creation.
By focusing solely on their customer value proposition, managers can over-invest in brands.
Like Procter & Gamble they can overestimate the growth potential of their brands, which
in turn can trigger damaging erosion in their margins (Business Week, 2000). The results can
only be a declining share price and the unravelling of the companys corporate strategy. For
JOURNAL OF STRATEGIC MARKETING 9 255-268 (2001)
Journal of Strategic Marketing ISSN 0965-254X print/ISSN 1446-4488 online © 2001 Taylor & Francis Ltd
DOI: 10.1080/09652540110079038
marketing executives, ignoring the market realities and the Ž nancial drivers of the share price
leaves them exposed in the boardroom as functional advocates rather than genuine contributors
to the balanced development of the business. The remainder of this paper looks at the four
determinants of brand performance.
BRANDS AND THE CUSTOMER VALUE PROPOSITION
Marketers normally see their key area of expertise as building and developing brands. A brand
with a successful customer value proposition (Bcp) can be considered as consisting of three
components, namely an effective product (P), clear differentiation (D) and, most importantly,
added values (AV), which give customers conŽ dence in the functional or emotional beneŽ ts of
the brand. In summary,
Bcp = P Ч D Ч AV. (1)
Building a successful brand starts with developing an effective product or service. Unfortunately
today, with the speed at which technology travels, it is increasingly difŽ cult to build brands and
certainly to maintain them on the basis of superior, demonstrable functional beneŽ ts. Comparably
priced washing powders, personal computers or auditing Ž rms are usually much alike
in the performance they deliver. In order to gain and retain customers, managers need to look
at differentiating their offers further though design, logos, packaging, advertising, service and
similar. Besides making the offer look different, differentiation is the central way in which the
brand seeks to communicate its added values.
Added values aim to give customers conŽ dence in the choices that they make. Choice
today