Turns out achieving maximum brand value is simple — it’s just not easy. - radii
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Turns out achieving maximum brand value is simple — it’s just not easy.

A client came to us recently with an interesting question.  His CEO and board of directors had asked, “How do we achieve maximum brand value?”  The temptation was to say “Add a couple of zeroes to your marketing budget and leave it to us,” but we’re professionals, if nothing else, so we decided to look into this.  It turns out we were half right.

Digging around online turned up an interesting 2003 Bain & Company study that evaluated 524 consumer brands across 100 categories.  The brands averaged 3% growth a year from 1997—2001, which was in line with GDP expansion.  The study identified 90 “brand winners,” or companies that posted 10% growth in the same period.

How did they do it?  The study revealed two key drivers of brand value growth—differential investing in innovation and marketing.  Companies that drew at least 10% of their sales from new products were 50% more likely to be a “brand winner,” whether their brands were new or mature.  They were also 60% more likely to spend more on marketing than the category average.  The study’s authors concluded that the way to maximize brand value was to “innovate around your core and shout about it.”

So there it is.  “Innovation” in this sense means something new that actually adds value.  The little mountains on the Coors Light bottle that turn blue when it’s cold?  That doesn’t represent true innovation so much as a cheesy packaging gimmick.  The ability to cut your lead times by up to 50% because you’ve embraced Lean principles of continuous improvement in your manufacturing processes?  That’s genuine innovation (and one that we’re telling our client’s prospects and customers about).

I know.  Hearing your ad agency say “spend more on advertising” is as predictable as hearing the Tobacco Council say “Smoking’s actually really, really good for you.”  But if you’re going to invest money in improving your products or services, you might as well invest a little more to tell your markets about it (chances are the incremental spend in marketing will be a small percentage of your total research and development costs).

Compared to driving genuine innovation, marketing’s easy.  But nothing else yields a comparable return on investment if you want to increase sales.  They’re both essential to selling more.  And in our experience, the more you sell, the more your brand’s worth.

Jay Kirkman
jkirkman@radiiation.com

Jay works on the front end of assignments, developing strategies and creative concepts, and writing copy. A self-described "engineering groupie," he thrives on talking to engineers about their work and using their insights in the content we develop.