Building Brand Vs Brand Acquisition:
Table of Contents:
What is brand building
How to build sustainable Brands
How to Value Your Brand
Measuring Brand Equity
Things to focus when Acquiring Brand
What is Brand Building
There are lots of opinions here, in our view Brand Building is a message which positions product in its right spirit. Branding is a pull strategy designed with its key ingredients like organisation strengths, value and true capabilities. It spells out a message about product characteristics which differentiate itself and offer clear product value additions to its target group of consumers.
Marketing is a contributor to push brands to make them available and ultimately make a sale. Marketing efforts certainly support brand building but its not branding. Brand is essentially what is left off after a sale is made. With great customer experience, quality service and sales pitch all help is getting the Push / Sale done. On the other hand, Branding starts much before the above exercise and stays till the product life cycle and beyond.
For example: A Volvo come with a promise of safety and its features. That’s the brand promise which needs to be delivered through advertising campaigns, service team, sales staff etc... The Brand message is what stays with the buyer and reminds him the value he believed to have bought. Promise made if deliver the exact same way thought product life cycle and usage builds brand loyalty.
Brand loyalty takes brand to all new growth trajectory through Trust generated who act as brand ambassadors, Brand loyalists and even micro Brand influencers.
Brand building exercise has to go through the minds of every employee and should be clear as to what their contribution in building the one. Ownership at each level and brand association drives quality and makes brand match their promise in an innovative environment. Every action, every advertisement campaign and every product go out in the market narrates brand story in one or the other way.
Is Branding and Marketing are cost centres: For an CFO these are cost centres and enhancement of these is crucial to judge investment made, so how you calculate returns on investment made on branding and marketing?
Marketing spends are inevitable for sales push, where not well thought off and ill researched campaigns just create financial burden without any significant value add in terms of sales growth and brand enhancement. So, to avoid marketing being a cost centre research based and focused campaigns drive sales and help build brand loyalty.
On the other hand, Brand is a cost centre and rightly so as its an asset and not a sales expense. Which help organisations maximise value and minimise efforts of its sales team to make a formidable push in the market against competition.
Brand costing should be treated similar to that of Manufacturing, Manpower, Advertising and yes as a cost centre. Having a substandard branding team is equal to that of having a poor other facilities and team. Overall brand visibility and value are outcomes of quality team with clear thought out brand vision.
How to build sustainable Brands
Building a sustainable brand takes long term vision and consistency at the core, below points are of most important in building a sustainable brand.
How did the whole idea of starting the business came across, what are the motivation factors for the promoter and what are the Gaps or opportunities spotted while launching the business. These points are the beginning and help create a vision in line with its core ideas and product fit.
You look at most successful brands across the globe and their vision statement is derived from where they all have started with the purpose. Which keeps the focus of entire team?
Over a period of long time the brand makes a distinctive place for all the audience no matter if it’s been consumed by them or not. Look at a classic case of Vodafone their tagline with amazing way of using Pup to build reliability as a message.
In many other cases the Brands Vison and Mission shall not be made public through massive advertisements, stands true to B2B brands. In such businesses the team needs to be imbibed with vision to deliver the value till the last mile.
Once you draw a vison and mission for Your Brand the next step is in Positioning it rightly with an edge over competitors. Positioning is key in creating distinctive visibility, in making niche for your product and to generate consistent sales volumes through ever increasing acceptance Vs promise made.
Positioning needs through analysis of market dynamics such as pricing, target customers, gap in current offerings, and competitors brand rollout matrix. This enables you to position brand with edge and quickly make a market acceptance by filling the gap with better offerings. The distinctive point can be anything from price to place to even packet size. That’s’ how you create a unique brand.
Look at I phone and Samsung and how these leading brands have positioning themselves. Apple stays on its chosen route of innovation and premium offerings with elite touch while Samsung touches upon look and feel of its devices along with equal if not better features and usability. The competition among these two players bring out the best for customers, which in turn acts as motivational factors for companies focused on innovative product offerings.
Understand your customers:
Running a business for everyone is not a Brand building activity as long as you are not a supermarket or marketplace for all. To launch a brand with a vision of lasting consumer loyalty ask for understanding your customers needs to begin with.
You can’t just carry out a massive campaign to make everyone buy your product. Rather you should add value to focused group who feel they own a brand which fulfils with their needs and ambition. Aligning these two ownership factors along with market fit forces like price and product drives brand and make them appealing to target customers.
Choosing your target audience is entirely based on strengths of your product and offerings which are beneficial and placed with unique features. Target audience can be determined by age group, income level, existing product users, education etc... it all depends on your product variants and elements which shall appeal to the selected community.
Create a 50-100 word solid and direct elevator pitch. Which contains your purpose with its features and value add you are offering. A precise and simple elevator pitch help people across hierarchy to align with the brand internally and creates unified appeal to customers.
For Example: DW APP: Learning delight Elevator pitch is below:
“DW App is a place to learn and upgrade your knowledge, crafted with the focus on students and professionals. It helps place its users above competition and take progressive decisions. You learn about Marketing, PowerPoint, Finance and Career resources here which add value at every level of personal and professional growth.”
This should include:
- Introduction line with three to five key words / phrases
- Energetic and create immediate interest
- Tempting people to know more about your brand
- This not a sales pitch should be focused on initiating discussions
This promotes Brand Consistence when used with equal energy at various forums from exhibitions to client meetings.
Craft your story:
Now you are done with most of the prior checks and necessary touch points to craft your brand. This includes coming up with brand style statement, brand guidelines for designing your collateral, giving voice to your brand, telling your brand story and offering the entire aspects as one unique experience.
The brand story must touch upon your entire value chain from procurement to employees to customers and create a unified message which create experience and passion among all its stakeholders. Make this as priority at the early stage and craft a story which has ingredients to last for long and carry a consistence brand message with its surroundings.
A not so unique product with huge advertising and promotion lands up is dust sooner or later. Same way great product without effective and focused promotion shall die a natural death.
Promotion excites everyone and drives the team. Same time its crucial while choosing a medium of promotion based on your product or service. For example, we all know the great and innovative companies of the world Google, Facebook etc... never really carry out huge advertising campaigns on Television and print media. Reason behind the product is great and the chosen mediums are human campaigns like Influencer marketing. One the other hand equally innovative companies like Samsung rely on huge marketing spends traditional and social media including. It all depends on what product or service you are offering and the possible ROI on each medium of communication you choose to reach the target audience and maximise ROI.
Once you select the right medium for you, start with sample group in one city and study the outcomes. Objective is to analyse whether the brand message delivered has been consumed by target customers the same way as desired. Keep doing small experiments before you are sure of the outcomes and its pursuance. This help build and manage large scale campaigns which are well tested and carry no fear of brand misconception.
Through the Journey:
Innovate to personalize as much as possible. Its important to analyse brand outcomes at regular intervals it made easier and vibrant with the use of technology to gauge customers reactions to brands. Through AIM (Artificial intelligence in Marketing) tools coupled with traditional on ground feedback help better understand emerging consumer preferences from time to time if implemented in a systematic way. All the ongoing exercise add value to better product offerings focused on maximising consumer satisfaction through constant innovation. Through this journey start personalizing products with SBU’s which can be bundled as one product basket with multiple touchpoints. Carefully imbibed with each other to enhance consumer value and create brand loyalty.
Take brand message down the line:
Finally, all the efforts put in to build a sustainable brand needs to be sustainable and consistent through its journey. From your Inhouse designing to webpage to collaterals to packaging. Train every stakeholder to align themselves with your brand vision and unique selling points.
How to Value your Brand
Brand plays a role in any business success. Brand values that are relative could be of values that are significant in deciding the purchase. Brands increase customer willingness to take the danger of buying products if they're convinced that it is from a reliable source and they trust the maker. Together with a brand name symbol or a logo help individual to recognize the item. It is because of this that the brand is registered. It becomes the property of the company once enrolled. The trade mark is a very precious asset of a business and businesses spend precious resources in legal fights to defend themselves when opponents make confusing symbols and trademarks Consumer decision which makes is made easier when the customer is knowledgeable about the brand since the customer develops trust and faith in these brands A fantastic brand title prolongs the life of the item available for many years.
It help the business get a market share if the brand of the company is well known. Further, the business reduce the time and advertising expenditure and can produce products. It makes the company and provides a right for your company beneficiary of the results that the brand could have caused. It's essential that organizations work hard to create strong brands and nurture them carefully. Brands thus created generate revenue for a number decades in the shape of sales and have some subjective name associated with them because of the fantastic will generated by them in the marketplace. For a number of reasons, the brands must be valued like every other asset of the company. In case the firm were to go for sale the purchase price of the shares will naturally be determined by that the brand image and that the value associated with it.
Measuring Brand Equity
Assuring increase and long-term growth of shareholder value depend on the business. Improving brand equity should be an integral target for management and employees alike. Conventional accounting practice address the issue of quantifying the value of intangibles, for example, but for measuring brand equity, these methods are flawed. The advantages of measuring brand equity signature from management and strategy to marketing, financing, and the department. Brand equity is a factor when assessing returns on brand portfolio, advertising drives, or brand performance management functionality. Brand value is key when evaluating a company for the purposes of M&A or in the event of ownership disputes, licensing lawsuits, partnership conflicts, and licensing agreements.
Is based on superior pricing, a method designed to figure out the value that was current which the brand could be expected to produce to additional links in the worth chain along the years, and for your organization. The value brand creates is the premium revenues minus the upkeep costs of the brand, capitalized depending on the risk of the new minus the speed of growth. The premium will be divided between the merchant, the brand owner, and Coca Cola selling the brand new. The quantity of danger, greater the value the brand will maintain. The model's methodology measures the brand equity in 3 phases: financial forecast - identifying revenues in the model or service that come from the company's intangible assets, and build an estimate of future revenues originating in the intangible assets during the next six years, the use of branding - identifying the percentage of revenues from the intangible assets which arise from the new alone, and new strength - to figure out the net current worth of the brand's revenues, a deduction representing the risk profile.
The Tefen model, unlike also the Interbrand model, can measure more than just also the new equity of companies: it may also measure the brand equity of products. This is particularly significant in markets like FMCG, where firms have developed into Houses of brands. Leading companies such as P&G and Unilever should measure the value of each brand separately, since the consumer is usually unaware of the corporate brand. Much has been written about new management, but a thorough investigation utilizing the Tefen Globes Giza model shows which a business must invest its efforts on 3 primary fronts to squeeze the maximum out of its brand: volume, premium, and also branding expenditure. Correct management on the 3 fronts will maximize the brand's financial potential for the business, thus creating value for the business and the consumer.
Brand acquisition could be defined as obtaining or commanding an existing brand. The custom of brand acquisition helps a company to emphasize itself in a well-established marketplace and taking control over the performance of the procedures, which builds the brand. A brand pertains to an item to a firm's ownership. This gives an edge to the company acquiring merchandise or a company with events like advertising, so people can talk for a length of time. This might help to be released as the owner of the brand and in addition highlight their presence. A brand can be acquired by A company in several ways obtaining the business brand name or obtaining the possession of the company.
Obtaining the possession of the business earns all the assets associated with that brand including the name, logo, management team, distribution system etc. Business ownership falls under this class, when a business purchases another brand including the assets that are tangible. Another sort of brand acquisition acquires just the brand components like name, logo in addition to other intellectual rights or assets such as the technical spec and details, market knowledge etc. Not all the resources are acquired by a business in this class, but ones that were critical. Brand acquisition might be profitable for a software development business for its portfolio expansion or provide growth opportunities in the new industry scenario.
Numerous parameters need to be studied before implementing any brand acquisition strategy. Some parameters like: Market configuration, need to be studied before approaching to acquire a newest name or business. Study for industry structure and its implications on company development and progress probability should be analysed earlier. Market concentration, helps a company identify the focus of the industry trend on the firm they would like to acquire like if industry is really interested to cope with the firm owning the brand. Market patterns should suit of the development possibility of the company. Competition is that parameter that helps a firm to identify its possibilities of survival with their implementation system and its management. Domain knowledge or experience helps a company to rapidly understand and adapt to of the dynamics of the current profile of the newest.
Things to focus when Acquiring Brand?
Demand and Supply:
Current Demand and supply of products in the market brigs out two possible brand expansion strategies one can apply. Wither it should be internal expansion or through external acquisition.
First, wither there is already enough supply in the market and wither the market has huge entry barriers. In such a scenario building an internal brand needs quick scalability to spread and compete. Which is again uncertain to gain market share and may result is creating an intense computation and ultimately result in lower pricing and struggle for profit margins. In markets with enough supply its advisable not to enter with uncertainty without significant room for spontaneous market growth.
Second, building a brand or expansion with brand acquisition or external brand building is favourable in saturated markets. External brand building is beneficial as it will not force price decrease as supply stays constant with consolidation. In market consolidation phase where make or buy decisions bring out positive trends favouring acquisition rather than building one. In many grown-up product categories acquisition may sometime is the only option for expansion where growth is directly correlated with possible acquisitions. In well-established product categories it’s a huge cost factor to go out and build new brand from scratch its takes both time and money without much product differentiation on table for consumers to get associate with. Competition level along with market opportunity determines market entry strategy internal or external. In relatively low competition with room for differentiated product offerings based on consumption drivers like price, technology and trend offer opportunity for internal brand building.
In growing markets and segments acquisition decisions as expansion strategy is tricky. On the one hand you have a rapidly growing market which one wish to enter either through acquisitions or though building a new brand for the category. In both the cases getting a market share and catching up with changing consumer behaviours are key as almost all growing markets are influenced by change in consumers preferences or addition of new consumers because of income level, changing life style, new technology among many.
We can’t rule out an established organisation entreating a grown-up market which is still growing and hence offers great value for existing companies to expand the brand reach and acquire relative market share, and then look for acquisitions. Which is a mix of build or acquire strategy which is more suitable in growing markets. You build an internal brand for some time align it with your other product portfolio, learn the game and then scout for acquisitions to get dominant market share.
Moreover, for new entrants to make a move in growing markets is only internal. Finding GAP and focus on innovation is key to succeed. Building a brand in anticipation of getting acquired is a risky proposition especially in growing markets, where target companies again based on synergies and not based on standalone offerings.
Brand creation or acquisition both business habits are directly correlated with management experience in the given activity. If the organisation is grown based on acquisitions in the past and has history of success in bringing turnaround to acquired companies. For example, ThyssenKrupp which has grown based on serious of acquisitions and consolidated its position in the E&E Market.
There are organisation focused on R&D and products offerings are based on intense research and innovation. These are the companies where internal brand expansion is most favourable to grow as research capabilities often met market requirements or gaps in the current offerings.
Which side management experience and strengths lies determines the right expansion strategy under this important organisation factor.
Organisations with more diversified portfolio have more diversified and capable management hierarchy. Such companies are better placed to focus on external expansion as and when product extension opens up new markets or opportunities to strengthen and intensify product offerings in current geographies. This is true most of the times when it comes to FMCG companies who generally have large portfolio of products and on constant integration through new line of products and focused on gaining larger market share in existing markets. Global majors in FMCG often use inorganic growth to enter new markets as they are well equipped with portfolio offerings. Grown up or growing regional player is obvious choice for external expansion.
Debt or Equity determines internal or external expansion. That is firm’s capacity to fund its expansion based on available fund-raising options. The firm with high leverage ratio has little scope for raising debt and a company with low leverage ratio or cash rich firms are acquisition ready.
Financial freedom and flexibility impacts organisations route towards brand expansion. A low debt company can focus on aggressive acquisitions based on internal accruals and push for large acquisitions. High debt-ridden companies need to rely upon internal expansion or brand creation and shall focus on integrating with existing offerings to maximise customer satisfaction.
One needs to draw financial implications when taking a brand building or brand acquisition decision. The decision which add value greater than financial burden is certainly the viable option. Although most of us predict future growth and take risk of financial leverage more often than not these prove to be true and subject to market slowdown and external factors which may change the predictions and put organisation under tremendous financial pressure with hurried expansions or in many cases chased acquisitions.
Why acquire an Existing Brand?
Quick access to market and expansion.
Financial Viability when acquired a profit-making brand.
Extended sales network, where it can push its existing products.
Cost related to sales team and point of sales can me clubbed.
Buying brand which is build of R&D capabilities and offers enormous scope for backward integration for existing portfolio add value.
Why Build A Brand from Scratch?
If the market is still at nascent stage and offers huge opportunities for growth for differentiated products.
If the existing brands are focused of specific target groups and the product has not been taken to every door, for reasons such as elite products. Which offer great opportunity to be offered to masses at low cost. Chinese cell phone makers are classic example of this.
If the organisation is cash rich and has clear drawn brand vison and future growth plan, brand creating can hep differentiate it.
Building brand from scratch strategy comes with advantages like choosing its set of vendors and setting its own brand vison which can be aligned with existing products to offer extended versions and value adds. This reduced the cost and makes focus clear in due course of action.
In both the cases the Brand building strategies intend to offer value proposition to offerings and building loyal base of customers who return are ready to pay higher price for brand reliability, Brand is a promise well made with differentiation and kept alive through its journey to enhance customer experience the brand values associated with the organisation. Being a part of customers life and associate itself as integral part of focus customers is ultimate goal of any brand building exercise, if done with vigour can fetch long term benefits.