Now is the time to unleash your brand. Reverberations of coronavirus have spurred long-term behavioral shifts from consumers as well as an economic downturn across continents, which means it’s high time for chief marketing officers (CMOs) to reconceptualize what brand means to them.
People have shifted their purchasing behavior towards online in ways never seen before. At the same time, the global economy shrank 4.4 percent in 2020, with contractions expected to last well into the first half of 2021 before a rebound. In the aftermath of these shockwaves, marketers across the globe are being forced to consider how to unleash the power of their brand to drive strategic and operational outcomes across their organizations.
The prevailing theory is that ongoing brand investment is the only way to weather an economic storm such as a recession. As pointed out by the Institute of Practitioners in Advertising, brands that invested in growing excess share of voice by 8 percent during the 2008-9 downturn, increased their market share by an average of over four times more during the recovery phase.
Supporting real-world sales data from GfK also demonstrates how investing in innovation during times of crisis can set course for a long-term successful business and brand performance, with the brands that do so enjoying a greater market share post-recession. For context, the indexed average market share of global brands that continued to advertise during the 2009 recession was 119 in the year afterwards, compared with a score of 71 for those failing to do so.
Companies with strong brands bounce back quicker too. Data from branding consultancy Landor shows that during the 2008-9 financial crisis, the value of the world’s top 50 most valuable brands fell 15 percent less than their S&P 500 counterparts and their businesses rebounded 33 percent faster the following year.
“Put simply, brand is the foundation of a successful company because it sets off a chain of events – a virtuous cycle – and a strong brand reduces the cost of acquiring new customers,” explains Gonzalo Garcia Villanueva, Global CMO at GfK.
“Once customers are acquired, an integrated brand keeps them loyal and willing to pay a premium price. When all conditions are the same, companies with a strong brand will find their customer loyalty and retention rates are much higher.”
Having a strong brand has other benefits too as it makes it easier to launch new products or existing products into new regions, reducing the investment case for entering new markets; not to mention that higher advocacy levels speed up pipelines.
What is clear is brand resilience is the order of the day for smart businesses. However, there are still several painpoints marketers need to overcome to truly harness the value of their brand to leverage growth and increase its contribution to their company’s bottom line.
In our Brand Unchained report, we explore how marketers can unlock the power of brand as well as business performance by touching on three key areas: marketing empowerment, connecting brand to business and staying one step ahead of the curve.
A jumping off point for CMOs is to overcome the concept of brand as a siloed function and showcase its value across the business. In short, senior marketers must feel empowered to make the case that brand is ubiquitous and touches every facet of the business.
This can be achieved through collaborating with other departments, making use of the data at their fingertips to show what a brand is contributing and championing the customer in an omnichannel world.
Marketers need to demystify the abstract nature of brand, argues Gonzalo Garcia Villanueva, Global Chief Marketing Officer at GfK. He says: “CMOs must question whether their products and communications are generating a brand premium and what is the optimal amount they should spend on brand-building. Only then will they truly understand the economics of their brand and prove return on investment.
"This also has the bonus of unleashing the opportunity for profitable growth across the business, from planning promotions to investing in internal innovation."
There is already a shift underway in how CMOs view brand. As a result of the pandemic and other market uncertainties, Gartner data shows that one in three CMOs rank brand strategy as one of the top three strategic priorities. This is a significant leap from the lowly position near the bottom of the list in 2019.
Brand’s rise to the top also highlights the need for marketers to ensure they have the strongest possible measurement and performance capabilities in place, so they can execute campaigns that drive strategic objectives. Right now, that’s not quite the case.
According to GfK data, four in ten CMOs across the Asia-Pacific region say brand positioning is a priority. However, a shocking 72 percent aren’t tracking brand performance.
What’s clear is marketing’s contribution is often misunderstood and undervalued, yet its remit is now expansive. To unleash the power of a brand, marketers must elevate their role above its traditional function and partner with other parts of the business. This will lead to a brand management ecosystem that is sponsored from the top and cuts across the organization. Marketing should be the connecting tissue that fuels brand value.
For that connecting tissue to be effective, however, it needs to be powered by data, hard numbers that substantiate the strength and perception of the brand. A company that cannot quantify its brand value will never be able to measure its impact. Only with data can a business understand how its brand is performing for or against it.
But in a world where CMOs are inundated with metrics and overwhelmed with data it can be hard to know exactly where to start.
For marketers looking to unlock the true potential of their company’s marque, the Brand Unchained report is a great starting point, offering insight into the exact kind of insights they need to measure just how much their brands contribute to the bottom line of their wider business.
One brand already doing this is METRO AG, the global cash-and-carry giant, which develops all its brand elements to give a strong and consistent approach across markets. The company realizes that without tracking these elements, it cannot improve.
“This allows us to adapt, improve and galvanize growth,” explains Alicja Korkosz-Foltyn, Head of Global Branding at METRO AG. “We then use these rich local insights to refine our global strategy and amplify it locally, designing products, services and communications that are relevant to our target audience. By doing so, we provide additional value to our customers, independent businesses around the world, while driving our sustainable growth.”
This is where the concept of brand revenue premium is really valuable. This metric offers marketers a revealing glimpse into just how much of a premium consumers are willing to pay for their brand over a competitor’s. Whatever their status, all brands will benefit from precise insights rooted in sales reality.
“Understanding the power of brand offers marketers a new level of oversight into how people really view a company and the choices they make,” says GfK’s Product Lead on Brand Innovation Debbie Cunningham.
If CMOs can deliver tangible insights into how their brand is positioned and what this achieves for them in terms of business performance, then they can start to engage other parts of the company in living and breathing that through choices made by the wider business.
“From an exec perspective, having tangible insights into brand value helps leadership teams spot opportunities for investment, whether that’s a particular country or region, or a new industry. It also gives an indication of where profitable growth opportunities sit,” says Cunningham.
“For sales, it shows how the promotions you run and the pricing you set impact your brand in a positive way or whether they’re doing more long-term damage than good.”
Finally, as marketers grapple with an increasing consumer appetite for omnichannel brand experiences and growing pressure from consumers to showcase their purpose, they must learn to transform with confidence and stay one step ahead to secure their future and stand out from competitors if they’re to unleash the full capability of their brand.
The growing trend towards brand purpose and integrity is now an increasingly important way to drive consumer attention, rather than simply a hygiene check.
Customers expect brands to not only provide a good reason for shopping with them and to be clear and transparent with their offering, but also to align with their values. This is showcased in recent GfK insight which reveals that 65 percent of Generation Z women believe the brands they buy should support causes important to them. Similarly, 64 percent of consumers prefer to buy products or services that appeal to their ideals, a rise of 16 percent since 2011.
“Lack of brand purpose is costly,” cautions Iember Gordon, Head of Retail Marketing at American Golf, which has recently been looking to diversify its consumer range by pursuing a strategy of inclusion around women and children.
“Consistency is also important. Our consumer website carries the same brand values and design as our physical stores. Our staff, customers and stakeholders all receive the same brand messages, they all know we champion inclusivity. When the brand is working consistently, the company’s personality and vision can be amplified via tactical activity.”
In the current climate, it’s important for brands to consider the different ways in which the pandemic and resulting economic downturn has impacted consumers in different ways across borders.
According to McKinsey data, consumers in China, India and Indonesia have consistently reported higher optimism than the rest of the world, while those in Europe and Japan remain less optimistic about their country’s economic outlook.
In line with this, there have been significant changes to consumer spending behaviors. Across Western markets in particular, people are shifting their money into essentials and cutting back on discretionary categories.
However, the changes wrought by COVID-19 run much deeper than sentiment and spending. Consumer behaviors and purchasing habits are changing, and many of these new ways will remain post-pandemic. For CMOs, there is an opportunity to use this change as a catalyst for creativity and reframe their approach to marketing and strategy.
In the short term, this means brand purpose will no longer be relegated to the public relations team, but will instead play a key role in driving consumer trust. For many marketers, the opportunity to harness a greater sense of purpose offers a new dimension on which to build their brand equity. This applies not only to the core mission of their brand, but also to their corporate values, which are drawing evermore attention from consumers.
GfK’s annual Consumer Life 2020 study also supports the idea that consumers around the world are growing evermore conscious. Now 48 percent of consumers say they will only buy products or services from a trusted brand, which is a significant increase on the 31 percent who said the same in 2011.
In the long term, a shift towards sustainability is a universal challenge for individuals and businesses alike as planet Earth struggles against the tide of the climate crisis. Marketers will have a role to play, not only in driving real-world change through brand initiatives, but also in guiding their corporations through unchartered territory and helping them cater to the needs of a greener consumer.
Numbers crunched by GfK detail how 33 percent of consumers currently go out of their way to make sacrifices that benefit the planet when buying products. A further 59 percent believe brands have a responsibility to the environment, marking a rise of 9 percent since 2015. Similarly, Accenture data finds 43 percent of people are switching brands because they don't align with their beliefs.
CMOs are uniquely placed to help their brands meet these consumer expectations and enable consumers to live up to their best intentions.
“This is going to have a long-term impact on marketing and creativity because brands will have to tailor their communications for customers, based on whether they’re willing to pay a premium for products that do good for the environment,” says Eric Villain, Managing Director, Marketing Effectiveness, GfK North America.
So, if marketers truly want to secure the future of their brand they must stay abreast of these trends and use the current state of flux we find ourselves in as an opportunity to be more creative about how they define and communicate their brand beliefs.
In short, it has never been so important for CMOs to feel empowered to unleash the power of their brand and unlock business performance.
In a world shaped by a pandemic, with a fluctuating economy and a society of consumers in flux, marketers need accurate and precise brand intelligence to help them make the case that brand drives business. If armed with the proper toolkit, marketers can justify long-term brand-building as well as show the commercial and strategic value of their discipline.
But it goes beyond that as measuring brand value will allow sales teams to plan long term and give business leaders the information they need at their fingertips to make big, crucial decisions.
To make this transformation with confidence, businesses need to stay one step ahead of the curve, securing the future of their company through a solid understanding of what’s coming next in an unpredictable climate.
GfK’s Brand Unchained report is an excellent starting point to help marketers and their peers set off in the right direction.
Read the full report to free your brand from its shackles and embark on a journey that will showcase its true potential