Investment in brand supercharges value
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.
This is an “X Factor” of sorts, and we call it Brand Contribution. Brand Contribution is scored on a scale of one to five, and it is a measure of the strength of a brand in the mind of the consumer. 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.
Businesses that focus on brand development can supercharge their performance in the rankings. For example, Michelin and Total have very similar brand values, and rank 12th and 13th in the 2017 Top 50. Total is a much bigger corporation than Michelin, with much more financial value, but it has a Brand Contribution of just one out of five. Michelin, meanwhile, makes up for its comparative lack of financial might with a Brand Contribution score of five – the maximum possible – and this powers it to a place just ahead of Total. Likewise, L’Occitane, which finishes 41st in the Top 50, is a much smaller business in financial terms than both Michelin and Total, but its brand value is fueled by a Brand Contribution score of five.
Brands with high Brand Contribution scores tend to be worth more. In the French Top 50, the brands with a high Brand Contribution score (of four or five) are worth an average of $6.0 billion, while the average value of those with low Brand Contribution scores (one or two out of five) is just $2.6 billion. This is a difference of more than 40 percent, and it underlines the importance of investing in a strong brand.
High Brand Contribution scores don’t just come from the categories that might seem inherently more appealing or prestigious to consumers. While high-end brands certainly feature among the best brands for Brand Contribution, there are also many more accessible brands that put in a strong performance. Renault and Peugeot cars and Activia dairy products, for instance, both have high Brand Contribution scores, as do Decathlon stores and Evian water. They demonstrate that category boundaries are not a barrier to building a strong brand.
The luxury fashion house Chanel works to balance its rich heritage with the need to be innovative, both in its range and its communications. Celebrities as diverse as film stars and pop singers make products relevant to new generations of consumers, and have helped the brand evolve definitions of femininity that it portrays. The brand’s association with events, such as the Calvi on the Rocks music festival in Corsica, also lends it a youthful personality while remaining true to the essence of what founder Coco Chanel created over a century ago.