BRAND VITALITY: FUELING DYNAMISM
How to give Italian brands an energy boost
Just as there are many contributors to human wellbeing, there are multiple factors that go towards building a brand that’s bursting with vitality.
BRANDZ analysis has identified five key attributes shared by healthy, strong and valuable brands that each reflects the extent to which a brand is delivering Meaningful Difference – a vital contributor to Brand Value.
Brands that score highly on all five aspects are the most successful: they are “healthy” brands. Those that are low on all five aspects are “frail” and the least successful. Brands with a mix of high and low scores are “OK”.
These five key health indicators can be combined into a single score we call a brand’s Vitality Quotient, or its vQ. The average score of all brands is a vQ of 100. Those with a score over 110 – making them at least 10 percent above average – are those we say are healthy overall. A vQ score of 95 or under means it’s time to call emergency services.
Nurturing brand health makes good business sense. A strong vQ score means a brand is meaningfully different, and this can drive growth in brand value. In fact, globally, brands with a vQ score of 110 or more have a brand value almost 70 percent higher than brands with a low vQ score. Some of the best-known and most valuable brands are those with high vQ scores: names like Google and Ikea.
The five key indicators underpinning healthy brands and contributing to vQ are:
1. There’s a strong sense of brand purpose, so the brand makes people’s lives better
2. Brands must be innovative, which means they’re seen as leading the way in their sector and shaking things up.
3. They must also have strong communications, with creative powerful and memorable advertising.
4. They provide a great brand experience that meets consumers’ needs, and is available when and where consumers need it
5. Over time, consumers come to love the brand, and that helps sustain the brand until the next innovation.
Healthier brands are worth more
Brands in the Italian Top 30 that have a vQ score of 110 or higher are, on average, worth almost double what those brands with a vQ of 99 or below are worth. This clearly demonstrates that vitality matters to the bottom line.
Brands can look at how they perform on the five individual health indicators when they are seeking clues to improving their overall brand health. When one or more of the indicators is flagging, overall brand health – and brand value – can suffer.
What’s the prognosis?
The healthiest brands in the Top 30 Most Valuable Italian Brands ranking are those that score well on all five of the key health indicators: purpose, innovation, communications, experience and love. They generate a Vitality Quotient far higher than the 100 average.
A high vQ score benefits a brand in several ways. Brands with a high vQ have more than double the Brand Power, which is an indicator of their ability to drive sales. They are better positioned to be able to justify a premium or to feel “worth it” to consumers.
Healthy brands tend to develop a personality type that further reflects well on them. Those brands with a high vQ score are more likely to be described as trustworthy, “in control”, desirable, creative and friendly. They under-index on negative brand personality traits, such as being uncaring or arrogant.
Brands with a high vQ are more strongly positioned for future value growth.
The average Potential score for high-vQ brands is an especially important bellwether for the future strength of brands. A Potential score that’s almost 20 percent higher than the average brand puts these brands at a significant advantage as they look ahead.
The foreign brands in Italy with the highest vQ scores are led by IKEA (which has a vQ score of 153 in Italy), Amazon (151), Apple iPhone (137), Nike (126) and
Samsung (123). They are not eligible for inclusion in the Top 30 as they are not of Italian origin, but they are clearly making a deep impression on Italian consumers.
Brand health does not come about by accident, nor is it determined by the category in which a brand operates. It is the result of a concerted focus on investing in the factors that contribute to better brand health, and being meaningfully different in the eyes of consumers.
How Italian brands measure up
Brands that make the Top 30 ranking in Italy this year are significantly healthier than average brands in the country. This is to be expected, and underlines the role of brand vitality in driving higher brand value. While 43 percent of brands in the Top 30 are healthy, and only one brand (or 3 percent) is frail, it’s a less positive picture across the Italian brandscape. Only 9 percent of all Italian brands rank well enough on all five aspects of vitality to count as healthy and the vast majority – 59 percent – are just “OK”, while 32 percent are classed as frail. Among the Top 10 brands in the Italian BrandZ ranking for 2018, six are healthy, and none is frail.
Leading Italian brands compare well against the most valuable global brands when it comes to taking care of their health and welfare. Unlike France and the UK, which had comparatively few healthy brands at the top of their BrandZ ranking, Italy’s brands are only a little way behind the leaders in the BrandZ Most Valuable Global Brands ranking on measures of vQ.
THE ROUTE TO BETTER BRAND VITALITY
Brand purpose is what a brand sets out to achieve, beyond making money. It is the way a brand makes people’s lives better – not just the practical, literal things that a product or service does for someone. Having a strong sense of purpose is increasingly important as consumers seek brands that don’t simply do a good job at a fair price, but also do something positive for the community or the environment. Brands with purpose make consumers feel good. Brands with a strong purpose are significantly more valuable; high-purpose brands in the Italian Top 30 are worth more than double those with low purpose (US$2,867 million compared to $1,363 million).
Leading brands in the Italian Top 30 for purpose
Italian brands are among the most purposeful in the region and, indeed, the world. They significantly outperform brands in Spain and the UK.
Brand Purpose in action – Barilla
In addition to its mission to inspire great meals, Barilla has made public its desire to do “Good for you, good for the planet”, linked to the Sustainable Development Goals of the United Nations Agenda 2030. Barilla produces an extensive sustainability report, which is available online, and has been making change in the business and supply chains for the benefit of its consumers’ health, the environment and local communities.
Innovation is not just the preserve of technology brands. Any brand that is seen as doing something new, or setting trends for their category, will get talked about and tried. When trial goes well, that can lead to a longer-term relationship and, ultimately love, which correlates strongly with innovation. Innovation can mean developing a product that does something different, providing an innovative service, or expanding into a new category. Crucially, any innovation by a brand needs to be recognized as such by consumers, otherwise it doesn’t count as innovation. Innovation creates a strong predisposition for sales. Innovative brands in the Italian Top 30 are worth, on average, close to twice what low-innovation brands are (US$3,426 million versus $1,819 million).
Average Brand Innovation Score (Top 30 brands)
Italian brands are seen as lagging behind those in other large markets on innovation, but they still edge ahead of France, Italy and the UK. Globally, the US and fast-growing Asian markets have the edge on innovation in consumers’ minds.
Brand Innovation in action – Enel
In a category in which brands often compete on price, innovation is proving an important way of standing out from the crowd. The utility company Enel is showing how a focus on innovation linked to clean energy and a fresh approach to mobility can drive brand success. Its e-Mobility strategy includes the sale of a range of electric bicycles, and the e-Smartlife programme helps drivers of electric cars easily locate charging points and manage their charging via their smartphone.
Strong communication has two key elements to it, and neither one alone will be effective. At its most basic level, brands need to be doing sufficient advertising in the right places to be visible and recognisable to the people they’re trying to reach. But being vocal and announcing a brand’s presence is not enough on its own; brands also need something genuinely engaging to shout about. Brands therefore need to do great things, and then tell people they’re doing them. One without the other means wasted resources, but strong communication and share of voice put a brand at a clear advantage. Brands that perform well for communications are worth around 50 percent more than poor communicators (US$2,777 million compared to $1,966 million).
Average Brand Communication Score (Top 30 brands)
This is a clear area of strength for Italian brands, which on average outperform their European neighbors for the effectiveness of their communications, with only US and Global brands slightly ahead.
Brand Communication in action – TIM
TIM stands out in a highly competitive telecommunications market with communications that break the norms for the category. A recent campaign features the YouTuber and dancer Sven Otten, who dances with Spiderman to show how people can stay connected wherever they are and whatever they’re doing. TIM is also a prominent sponsor of leading sports teams and sporting and cultural events, including the national football team, the Serie A Italian football league, EXPO 2015 and the Sanremo Music Festival. This all chimes with the brand’s youthful and energetic image.
A brand not only has to deliver a great experience at every point of interaction, and help consumers at every step, it also has to remind consumers, through effective communications, that it is focused on doing this well. Experience starts long before a person considers buying a product, and lasts well beyond the moment of purchase and even the moment of consumption. It includes every exposure to an ad, every experience on a brand’s web site, and every minute they spend waiting for help at a counter or on the phone. Providing a great brand experience cements the relationship between consumers and brands. They also tend to be worth more: brands with high experience scores are more than twice as valuable than poor performers in the Italian Top 30 (worth an average US$3,114 million, compared to $1,404 million).
Average Brand Experience Score (Top 30 brands)
The most valuable Italian brands perform at the same level on experience as their counterparts from France and Germany, but they are slightly behind leading US and Asian brands.
Brand Experience in action – Lavazza
Lavazza has long been synonymous with coffee and Italy, and the brand says that while the actual act of drinking a coffee is brief, the pleasure of the experience should last much longer. Lavazza has been extending its offering in recent years, with vending machines, capsule systems for home-made Lavazza, flagship stores celebrating coffee, and it has produced a coffee machine for use on the International Space Station (ISS), called the ISSpresso machine. Lavazza has since 1993 produced its annual calendar, a celebration of coffee and artistic photography, which Lavazza says are both seductive generators of energy “consumed quickly, (though) the pleasure they offer continues like a delightful aftertaste”.