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Five ways to build and maintain value

Brand Health vQ

HEALTHY BRANDS —THE VITALITY QUOTIENT (vQ)

Five ways to build and maintain value

Just as many factors contribute to human wellbeing, several also go towards building a healthy brand.

BrandZ analysis has identified five key attributes shared by healthy, strong, and, consequently, valuable brands. Each contributes to 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 vQ. By this measure, the average score of all brands is 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 indicates 5 percent below average.

Nurturing brand health makes good business sense. A strong vQ score means a brand is meaningfully different, which drives growth in brand value. In fact, brands with a high vQ score of 110 or above grow their brand value significantly more than those with low scores:

The five component parts of vQ are:

  1. Brand purpose. The brand is perceived to make people’s lives better.
  2. Innovation. The brand is seen as creative, leading the way in its category and/or shaking things up.
  3. Communications. The brand creates powerful and memorable advertising.
  4. Brand Experience. Consumers feel the brand is uniquely able to anticipate and meet their needs as well as deliver a strong experience.
  5. Love. Consumers have a real emotional bond with the brand that helps sustain it until the next innovation.

Healthier brands are more resilient

Brands can look at how they perform on the five individual health indicators to find clues to improving their overall brand health. When one or more of the indicators is flagging, overall brand health can suffer. When healthy, growth can skyrocket.

Brands with a high vQ are more strongly positioned for future value growth

A high vQ score benefits a brand in several ways. Brands with a high vQ have nearly three times the Brand Power, which is an indicator of a brand’s ability to drive sales through deliberate consumer choice. They are also better positioned to be able to justify a premium to feel “worth it” to consumers.

The road to better health

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 these factors which directly contribute to being meaningfully different in the eyes of consumers and, as a result, a healthy, successful brand.

1. Purpose

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, functional, and literal things that a product or service does. Having a strong sense of purpose is increasingly important as consumers seek brands that not only 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 that they are getting the best.

For this and all vQ metrics, we are providing a ranking of all SA brands, not just the top 30. This provides a better understanding of who is really getting it in the market, independent of financials.

The brands that rank highly in Purpose are perceived to be making their customers’ lives better—often in very different ways. Capitec Bank is simplifying banking; Discovery is making customers’ health its business; and KOO is simply present at many a happy occasion.

Among South African brands, Dis-Chem Pharmacy should come as no surprise near the top of this list.  It regularly addresses major socioeconomic issues through initiatives like Million Comforts and Random Acts of Kindness. The brand itself, of course, embodies its own purpose by making available things needed for people to feel both healthy and good about themselves.

2. Innovation

Innovation may be a mandate for technology brands, but they certainly can’t claim exclusive title to it. Any brand that is seen as doing something new or setting trends for their category will get talked about—and people will try it out. If that initial experience goes well, it can lead to a longer-term relationship.

Innovation today is a tough but vital sell to brands in SA today, but it’s worth the investment. Two of the three brands to achieve positive brand value growth in the past year—Nando’s and Capitec Bank—also landed on the list of top five innovators.

Top SA brands for Innovation

 

Rain’s innovative data plans (discussed elsewhere in this report) are a shoe-in for the best idea to impact South African consumers in a while. Meanwhile, Nando’s jumps out of the list, which is not surprising given its penchant for putting strangely delicious things on its plates. Category-jumping Discovery is also no surprise on the list, nor is Capitec Bank, which has driven growth in brand value using both digital and organizational innovation. It’s opened its branches on Sunday, which can be a godsend for some in a country with hurried weekday, work and commute schedules. It has also simplified its offerings as well as made moves into credit cards, insurance, paperless banking, and biometric scanning.

3. Communications

Communication has two key elements. At the most basic level, brands need to advertise sufficiently in the right places to be visible and recognizable to the people they’re trying to reach. But being vocal and announcing a brand’s presence is not enough; brands also need to engage their audience. They need to do great things and then tell people they’re doing them.

From a South African point of view, Nando’s is no surprise as the leading communicator, and winner of South Africa’s Best Like Ad of 2018. The brand’s all-too-perceptive commercials drive straight at social issues in the country with a bluntness that would be shocking elsewhere. They succeed however, because they poke fun at South Africans in a highly relatable, we’re-all-in-this together way. As a result, Nando’s has become a reliable source of running commentary on the nation’s triumphs and struggles, making its ads a must-watch for anyone trying to understand SA’s unique culture and circumstances.

4. Experience

Brand experience starts long before a person considers buying a product and lasts well beyond the point of purchase. It includes every exposure to an ad, every digital interaction, and every minute someone spends waiting for help at a counter or on the phone, as well as the use of the item purchased. Providing a great brand experience is critical because it cements the relationship between consumers and brands.

The winner of this year’s special award for Brand Experience is SA’s rising ecommerce star Takealot. Having seemingly cracked the code for the category in South Africa, it is bringing excellent service and in some areas one day delivery. As Takealot expands its offerings into new areas—and continues to provide an excellent experience—it may turn South Africa’s reluctant online shoppers into true believers.

5. Love

Love in a brand context is the emotional affinity a consumer has for a brand, and it can’t be bought or manufactured. However, brands can create the conditions in which love can flourish. If they invest in innovation, promote a higher purpose, and deliver a consistently great experience, love tends to happen naturally. Love also helps sustain the relationship with a brand during economic downturns and helps brands return to growth again.

Love is not just a nice to have. It is the deserved outcome of meeting consumer needs in the best way. Some of the most loved brands are retail brands, which, while facing challenges, are among the most resilient in consumers’ minds.

While not in the Top 30, KOO is certainly in nearly every South African pantry and tops all SA brands in Love. To those outside the country, its beans, often taken on toast, are a staple food of kids, college students, and frankly everyone else too. KOO Chakalaka (a spicy vegetable relish) is an essential part of any braai, a traditional South African barbecue. That makes KOO synonymous with good times, which, in turn, helped it rank as the country’s most loved brand and win BrandZ’s special award for Love.