TURBO-CHARGING VALUE BY INVESTING IN BRAND
by Ellis Malovany
There are some brands that punch well above their financial weight in the Brandz™ rankings by focusing on making meaningful connections with consumers, being seen as different in their category, and ensuring through their communications that those differences are well understood.
These efforts combined form a sort of “special sauce” that adds real zing to the influence and value of brands, and we call it Brand Contribution. Brand Contribution is scored on a scale of one to five, and it is a measure of the proportion of brand equity over other in-market aspects (such as promotions or distribution). Value can of course come from in-market activity, but that from brand equity is particularly hard for competitors to replicate. This score
is what helps make Brandz™a distinct and important ranking; Brandz™is the only brand valuation methodology that includes the customer view obtained through in-depth consumer research – conversations with the people who know and buy these brands.
Brands with high scores for brand contribution tend to be resilient to challenges in the market and outperform their competitors when it comes to value growth. If a brand scores highly on this measure, consumers are predisposed to choose it over its rivals and are more likely to be willing to pay a premium for it.
Looking at Australian brands over the last 12 years, those with high scores (4-5) on Brand Contribution have grown their brand significantly. Interestingly, the top performer in this metric is Arnott’s, the only Food and Dairy brand ranked in the Top 40. Their strength and dominance within the Food and Dairy industry propelled the brand into the ranking.
Arnott’s is the only Australian brand in the ranking to have a 5 for Brand Contribution. And although four of Australia’s Top 10 brands also rank in the top 10 in Brand Contribution, most of Australia’s top ranked brands, i.e. banks, have average scores (3), indicating inherent brand weaknesses and a lack of brand resiliency. To put that in a global context, Brand Contribution scores in other countries typically features higher scores (4-5), illustrating brand weakness, which correlates with Australia’s innovation gap.
Brand Contribution is more than a function of financial performance, it multiplies the financial strength of a brand. Telstra and Crown Lager have the same Brand Contribution score, but the former is Australia’s third most valuable brand overall, but Crown Lager has demonstrated resilience to competitive threats in a highly competitive environment. Without a strong performance in Brand Contribution, brands like Arnott’s or Crown Lager might not have even made the Top 40 ranking.
Brand Contribution correlates with a brand’s value and equity. Brands that withstand competitive threats do so on the basis of delivering value. Many Australian brands have looked to reduced pricing strategies to drive short-term goals. Long-term resiliency is supported by pricing models with healthier margins stemming from the brand’s value to command a premium.
Brands can improve their brand contribution by:
- Focusing on improving brand equity and delivering to consumers the key elements that deliver loyalty and value.
- Clearly communicating the brand’s purpose and differentiation which is a core part of Meaningful Difference.
- Driving brand value through saliency, i.e. how quickly your brand comes to mind when consumers think about the category. This comes from positive brand experiences which can be delivered both in-store and online.