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Branding For Value Creation

Branding is one of the most difficult challenges the entrepreneur faces in creating and then subsequently realising value in the business venture.


The brand challenge lies in moving the venture’s value from the ‘personal’ brand position in the market place that the business has in the start up/emerging growth stages – i.e. the entrepreneur himself or herself – to a ‘market leadership’ brand position in the rapid /next level growth stages, with a fully defined ‘brand platform’ that aligns the entire organisation to focus and deliver the ventures sustainable and valuable brand proposition to the customer market segment it dominates.

BUILDING THE BUSINESS VALUE
Value is created by what you have done –not what you should have done. Whether you are building value for realisation or for family succession, investment analysts and financiers agree that a market leadership brand grows significant business value.

BRANDS
Brands are the most stable and sustainable assets in a business, living beyond the years of most CEOs, Chairmen, management teams /changes and through any short-term family, economic or technological cycle. They create sustainable wealth and therefore reliable income and earnings for a business. Consider the following brands in this regard:

  • Xerox , invented in 1938 and selling now in more than 150 countries
  • Hoover, invented in 1907 and synonym for suction cleaning
  • Bassett’s Allsorts, created in 1899 and represented by ‘Bertie’
  • Horlicks , invented in 1873 and now consumed at the rate of 200 million mugs –full in 20 countries.

How They Work
Strong brands sit on a three-leg stool: first, they are built on a compelling idea that attracts loyal customers by solving an unmet or unsatisfied need; second, they ‘stand for’ something important in and to their markets and third, they become the ‘organising’ principle and lever for all management process and decisions within the business.

Brands become the short-hand for a consumer in markets – shortening the consumers ‘learn’ time and maximising their ‘feel’ of assurance about the purchase. Over time the brand comes to encompass all of the positive and negative associations, perceptions and experiences that an interested (or potentially interested) consumer has about the company and its brand position. The sum total of these will define the brands equity or value for the consumer. Where brand equity or value is high or higher than competing brands, then the consumer will always include it in their purchase consideration set. According to McKinsey & Co. the top three brands in a consideration set will secure as high as 70% of the sales opportunities in a market. For those brands placed fourth or lower, the opportunity for sales falls to 40%.

Building A Brand
In the early stages of an entrepreneurial venture, the entrepreneur himself/herself is the brand position and the primary driving force to deliver it. In the served market place, he or she personifies the business and its product offer. The entrepreneur lives and breathes the business and what it can do for prospective customers and will personally engage in significant promotional, PR and sales activity. This creates the initial ‘personal’ brand, whereby market credibility is built through the entrepreneur’s own: expertise, honesty and future-orientation
FIGURE 2 FROM ‘PERSONAL BRAND’ TO ‘LEADERSHIP BRAND’

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Significant initial headway can be made on this basis. However, competing in the market place based only or largely on the basis of a personal brand and product (which can be copied by competitors) is not sufficient to bring the business into rapid growth stage.
Significant scaling of the customer base and revenues requires;

  1. Research and development of a leadership ‘brand position’ that is grounded in a compelling idea that captures customers attention and loyalty by filling an unmet or unsatisfied need. This represents the continuing ‘stakeholder value’ created by the business, even as management/ownership evolves and changes over the years.
  2. Communicating that brand position in a striking, visually distinctive way to the target customer segments and
  3. Making an indelible , favourable impression on the customer, using a brand platform that gives clarity of organisation-wide focus and a holistic delivery of the brand position by all people, process and technologies in the organisation. This third element is the key to an entrepreneurs exit at maximum value realisation and to establishing the brand corporate governance for the business going forward.

A Leadership Brand
Leadership brand positions are built, over time in a very specific progression of four consumer perceptions: differentiation, relevance, esteem and knowledge.

FIGURE 4 HOW A LEADERSHIP BRAND IS BUILT

Differentiation: This is the foundation stage and how great brands are born. Differentiation is the brands ability to stand apart in the market and is the extent to which it is perceived as being unique, different and distinctive. Without this foundation – a brand will not survive as the market evolves.

Relevance: This about how appropriate the brand is to the target customers wants and needs. Without broad relevance, a differentiated brand may a niche brand.

Brands that achieve high levels of both differentiation and relevance can lead or even define a category and thereby contribute strongly to operating income. The next two foundation blocks to high brand equity are esteem and knowledge, which in combination define brand stature. Leadership brands excel in both brand strength and brand stature (this achievement reinforces an organisations focus on maintaining the highest standards of corporate governance!).

Esteem: This is about how good a target audience feels about a brand and comprises quality and popularity as the critical dimensions. Being held in esteem helps a business cope with downturns and bad times. Esteem is about reputation and reputation is a corner stone of corporate governance

Knowledge: The market knows and understands what the brand stands for , what the company’s products and services are, the positioning , promises and values. This is the end result of all ‘communication’ and ‘experiences’ that the market receives over a period of time
Brand Platform

Building to sell also crucially means taking the steps to create the ‘brand platform’ for your leadership brand position and which then operates the business to continually and consistently deliver the value that customers will pay for.

This process entails translating the brand position into a set of key customer ‘brand values’. These ‘values’ guide how all staff, processes and technology are engineered to deliver the brand position – in effect becoming the set of levers or short-hand to guide all management decisions and business strategy (Figure 6). This can be done by creating a set of ‘brand principles’. Often these brand principles are then translated into staff manuals and customer charters.

It is in this crucial process (brand position – brand values-brand principles – brand platform for business operation) that the entrepreneur achieves the twin key challenges of securing the leadership brand position that is delivered by the organisation consistently and continuously – thereby enabling him/her to exit the business in a sale at maximum value realisation or in a successful family succession.

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