1. Consider Your Brand And Business
When trying to pick a location, always consider the nature of your brand and the message you are trying to convey. For example, if you have a high-end boutique, it wouldn’t be wise to place it in a rural area or college town. It needs to be in an upscale area where the general population can afford your products. On the other hand, a fast-food establishment would probably do well in a college town. Experiment with pop up shops until you find the perfect spot.
2. Keep Safety In Mind
Find a safe location for your business. Every business owner must strive to operate a business where they feel protected. Your business is doomed if the employees and customers do not feel safe, and your assets may also be at risk. Avoid areas that frequently experience burglary and theft.
3. Follow The Demand
Having your business be in demand is important, but you shouldn’t place yourself at the centre of the competition. Ideally, you want a location with some demand for your products or services that isn’t already saturated with competitors. You will want to choose a location where there is high demand for your product or service. This can be determined by research and market analysis. Look at demographic data and trends to see where people are moving and what they are looking for. If you can find an underserved market, you may have found a great location for your business.
Another way to find areas of high demand is to look for businesses like yours that are doing well. If you can find a successful business in a location that is similar to the one you are considering, there will likely be high demand for your product or service as well.
You also need to consider the competition when choosing a business location. It is important to find an area that is not already saturated with businesses like yours. This can be difficult, but it is important to consider if you want your business to be successful. Once you have considered the demand for your product or service, you can begin to narrow down your search for the perfect business location.
4. Consider Your Suppliers And Vendors
Find a location that makes connecting with your suppliers and vendors easy. If they are very far from you, there may be delays in your regular tasks. You may also have constant issues with your inventory levels. When exploring your options, settle for a site that puts you close to raw goods.
5. Stay On Budget
Settle for a business location that fits your budget. In addition to the rent, think of location-specific expenses as well. Most locations come with hidden costs such as renovations, taxes, economic incentives, and minimum wage requirements. If you are running a mobile business, you still need to consider the cost of vehicle licensing and permits.
Conclusion
Location is a critical consideration when starting a business. Keeping the above factors in mind will ensure you settle for the perfect location. Do not commit to anything before doing your research. Speak with other business owners and find out what your target clients want. Compare a few options and make sure you settle for the perfect fit. If you get the location wrong, nothing else you do matters. A well-informed location strategy can fuel your success. It can streamline all your other operations.
New research has revealed that people are increasingly less willing to follow the money to big economic and urban centers and are instead choosing to live, work and invest in places that give them better quality of life - and in turn the money is following them. Here Enshalla Anderson, Chief Strategy Officer at FutureBrand North America, provides her thoughts on the changing economic landscape.
This recalibration of global economies and workforces has come to light in our latest Country Brand Index, which re-orders the World Bank’s top ranking 75 countries (in terms of GDP) by how well they’re perceived against an alternative set of factors, such as value system, business potential, environmental friendliness, culture and tourism.
In the index, ‘quality of life’ was the attribute that averaged the highest in the top 10 countries, and averaged lowest in the bottom 10. In line with this are the findings that people are placing increasing importance on tolerance and environmental factors in the choices that they make about where they work, live, and visit. This is set to radically change how countries and companies organize themselves to attract talent, tourism and investment.
In the meantime, the so-called Fourth Industrial Revolution, defined by the arrival of substantial technological change, has transformed our day-to-day reality. Individuals now have more freedom to choose where they live and how they work, and they’re exercising that choice. The arrival of 5G marks a tipping point in all of this this and as telco companies roll out 5G services, we’re likely to see a spreading out of the intellectual capital across the country, instead of being isolated to the key economic hubs.
Meanwhile, we’ve observed businesses with aspirations for global growth actively avoid expanding in the expected international locations and instead set-up in relatively obscure or peripheral locations. They’re looking ahead and taking advantage of this diversifying workforce – tapping new talent, creating new opportunities for people who don’t want to live in the big cities and desire to work remotely, and benefitting from favorable tax rates and perks from regional governments along the way.
The groundswell of environmentalism is also fuelling this shifting balance of power. People are finally beginning to look beyond their household and increasingly making more personal choices of scale and import based on environmental impact and concern. This often means prioritizing ways of living and working that are less harmful to the environment, and in turn better for people’s physical and emotional wellbeing. It can also mean choosing an employer because of their stance on sustainability. By necessity, big corporates, and in turn governments, are having to prioritize facilitating this shift if they want to attract and retain the best talent.
Most recently, New Zealand (ranked no.11 in the index) has been one of the major examples of the big rebalance in power that’s taking place. Prime Minister Jacinda Ardern’s national budget balances goals that encourage the well-being of citizens (such as tackling mental health, child poverty, inequality and the environment) with traditional measures such as productivity and economic growth. Her rapid response to gun control following the Christchurch attack also asserted a genuine and urgent focus on safety and wellbeing that has set a new precedent and benchmark for other governments around the world.
There’s a growing opportunity for countries like New Zealand, and also smaller nations and cities, to compete with bigger counterparts who have more economic might than them on attributes like quality of life, tolerance and environmental concerts to attract greater tourism, trade and investment. It also serves as a warning sign for countries such as China, US and UK, who’ve scored lower in some or all of these crucial measurements, that if they don’t follow suit they’ll have to rely on doubling-down on economic might and power, which citizens, tourists and investors alike are growing increasingly less attracted to as a sole measure of country strength.
Marketing is of great importance to any sector, but each industry has its own pitfalls and problems it needs to avoid when it comes to developing its marketing campaign. If you’re already running a FinTech business, or are planning on starting one, there’s a few obstacles you need to be aware of in order to market your brand effectively.
Below Where the Trade Buys provides the following guide to help you navigate effectively through the world of marketing.
Social media avoidance
Social media can seem like a difficult arena to step into — it’s huge, the competition is astounding, and your customers can speak to you directly, in front of a massive audience. In fact, many sectors have fallen foul to ignoring and avoiding social media. According to Incisive Edge, banks were a prime example of this, citing a report from Carlisle and Gallagher Consulting Group that revealed 87% of consumers perceived social media usage by banks as being dull, irritating, or unhelpful.
But social media is where your audience is, and it’s where many spend a large amount of time. Securion Pay noted that an effective marketing campaign needs to consider Millennials, of who 84% have smartphones and 78% are on them for more than two hours every day. Embrace this and establish a strong presence on social media! Just make sure you have an effective plan for each channel — content for Twitter might not work as well on say, LinkedIn.
Also, social media is a great way to build a rapport with your customer base. Even in the event you get negative feedback, the way you deal with it will be seen just as much as the original comment. You can turn a negative into a positive: show ownership of the feedback and resolve it quickly. If you ignore it, the chances are the unhappy consumer will feel stung that you have ignored their attempt to reach out to your directly and give you a chance to respond. They will turn to other websites to tell other people of this experience. As social media and customer services expert, Jay Baers says: “A lack of response is a response. It’s a response that says, ‘We don’t care about you very much’.”
Saying too much, too soon
Do you have big news? Great! But before you rush off to tell the world, take a moment to pause. Would the news be better used slowly? Incisive Edge advises FinTech companies to consider an embargo if you’re heading to a trade show soon.
Basically, you can still create a press release about your exciting news or innovation plans, but don’t release it immediately. Place an embargo on it, so that your press sources can’t publish the news until a certain date, such as the trade show or another effective date for your company. This not only stirs up a sense of excitement, but it also lets the journalists and content writers have more time to write an engaging and detailed piece.
Ignoring offline
You may feel that as a primarily online company, your marketing strategy needs to have an online focus too. But the world of offline marketing is still going strong, and it’s a great way to build your brand and get it noticed.
For example, Delineo reported on some highly effective FinTech marketing campaigns, including offline print marketing. In the report, a robo-advisory firm was shown to have created a brilliant offline campaign that saw printed adverts placed through the underground tube network. People don’t have great signal on their phones at underground stations, so tend to notice and read printed adverts more!
As a start up, you might not have enough in your marketing budget to pull off such a wide-spread campaign but consider the use of printed media elsewhere. Are you headed to a trade show or exhibition soon? Seek out a provider of PVC banners and get your brand and goals printed up for your stand! Banners are a great tool at exhibitions and tend to be more effective than digital ads at these events, with customers recalling the brand from a banner long after the show has ended.
Ads with poor language use
You should be making use of both online and offline media in your marketing strategy, but you’ll need to make it as powerful as possible. There’s no use having a well-placed digital advert or a beautifully designed banner if the language used is dull and uninspiring.
Often overlooked, the use of language is a complex skill that can make or break your intended message. There’s a reason why so many people study language at high academic levels!
Consider the intended outcome of your marketing. What are you trying to tell the customer? At a basic level, new technology is designed to solve a problem, so tell your audience this. Words like “innovative”, “cutting-edge”, “rapid”, and “simple” can help address technology woes such as slow loading apps or complicated processes. After all, FinTech is a disruptive innovation — tell the world how it’s shaking up the banking and financial sector.
It’s important for your business to stand out for the right reasons. FinTech is a fast-growing sector, so it’s vital that you keep ahead of the game. Keep your marketing strategy strong and wide-reaching with these campaign tips.
Sources: https://www.callboxinc.com/b2b-marketing-and-strategy/fintech-marketing-strategy-tips/ https://blog.incisive-edge.com/blog/6-fintech-marketing-strategy-tips https://www.delineo.com/culture/4-fantastic-fintech-marketing-campaigns/ https://securionpay.com/blog/6-marketing-trends-fintech-industry/ http://www.brightnorth.co.uk/whitepapers/Image_Quality_and_eCommerce.pdf https://skift.com/2016/05/13/why-the-tourist-brochure-is-still-surviving-in-the-hotel-lobby/ https://www.forbes.com/sites/rogerdooley/2015/09/16/paper-vs-digital/#7de095dc33c3 https://www.pinterest.co.uk/pin/307300374549933402/ https://www.ama.org/partners/content/Pages/6-dos-and-donts-of-promotional-product-marketing.aspx https://expandedramblings.com/index.php/tripadvisor-statistics/ https://www.prnewswire.com/news-releases/print-ads-in-newspapers-and-magazines-are-the-most-trusted-advertising-channel-when-consumers-are-making-a-purchase-decision-300424912.html https://www.forbes.com/sites/matthunckler/2017/02/01/jay-baers-top-3-tips-for-acing-customer-service-in-the-age-of-social-media/#1cbbd1764a08 https://www.forbes.com/sites/rogerdooley/2015/09/16/paper-vs-digital/#31d49c533c34 https://blog.techdept.co.uk/2014/12/marketing-technology-words-marketers-need-to-know/
Finance Monthly connected with Colin McDonough, Director of 50 Words LLC to hear about his company and the crisis communications challenges that they help their clients with.
Can you tell us a bit about the work that you do with your firm 50 Words? What are the clients that you work with and what’s your overall goal for the company?
We are a full-service marketing, public relations and crisis communications firm. Although we have customers across many industries, we focus on financial services and professional services firms. This includes bank-owned and independent financial services providers such as asset-based lenders and factors, investment banking firms, financial advisory and turnaround firms and other professional services firms such as accounting and legal service providers. Our clients vary from start-ups through to Fortune 500 companies.
Our goal is to act as an extension of our clients’ marketing and communications departments if they have them. If not, we step into that role as their dedicated team. So, our services vary greatly from client to client. For some, we guide them through strategic planning and for others, it’s all about execution of an existing plan. On any given day, the professionals in our firm could be hard at work designing or updating websites, developing and posting content for social media or digital marketing campaigns, crafting communications such as press releases or helping guide a client through a crisis communications situation such as a criminal matter, downsizing of a labour force or other unforeseen situation.
What are the typical crisis communications challenges that you assist with? What’s the best way of handling one?
Some examples of crisis communications situations we have worked through with clients include criminal matters, bankruptcy and downsizing of a labour forces, labour issues including strike, closing of business unit, sale of business unit, failed merger/joint venture and failed product launch.
The practice of crisis communications management is much different today due to a 24/7 news cycle along with a plethora of individuals on social media platforms reporting news. Brand value can be destroyed in minutes when a crisis hits.
The best approach for any company is to have a tested crisis communications team and process in place before a crisis happens. But sadly, this is not the case for most firms, especially middle market or smaller businesses who don’t want to spend the time or money for this to happen.
Firms need to have a plan and process in place, identify members and roles, select and train key spokesperson(s), control access to all communication points including the website and social media platforms, and build a relationship with a PR expert so he/she is knowledgeable about your firm before a crisis happens. Firms don’t have 24 hours to react when a crisis hits, they have minutes. If I could give one piece of advice to management teams, it would be to invest in media monitoring software.
What differentiates 50 Words from its competitors?
Two things. Firstly, our focus on financial services firms and professional services firms, many in the turnaround and restructuring space. A common complaint in any organization about the agencies they deal with is that they don’t understand the nuances of their sector. Our principals have over 25 years’ experience in the sector, so there isn’t a learning curve when they hire our firm. We network in the same industries as our clients so we understand the industry and market dynamics they face. Secondly, we offer a complete solution for our clients. Companies today are juggling multiple agencies to meet all their marketing and PR needs. That doesn’t work for small and middle market businesses who don’t have supply chain or internal resources to manage multiple vendors. We are that single source that our clients need. If we don’t have what they need, which is rare, we bring in a partner to meet their needs.
Rapid technological change is changing the business landscape and businesses have to adapt or will be left behind. While this change impacts all business functions, marketing and communications are particularly affected. The capabilities and competencies required for marketing and PR professionals are evolving and firms often can’t afford to have large teams in house to meet their growing needs. They should build a network of go-to technological savvy marketing and PR professionals to supplement their existing staff.
Website: http://www.50words.com/
How much is your brand worth? Donald Trump values his personal brand at more than $3billion.
Shweta Jhajharia of The London Coaching Group defines a business’s brand equity as comprising all the associations, emotions, and experiences that come to mind when a consumer is exposed to the brand: basically, what kind of bond is there between you and your customers? The stronger that bond is, the higher your brand equity. Here Jhajharia suggests four ways you can ensure your business is focused on the right sort of brand equity development.
While being knee-deep in international intrigue and political controversy aren’t problems most business leaders have to deal with, the fragility of brand equity is something that all entrepreneurs need to be aware of.
And what does strong brand equity get you? Someone camping on the tarmac overnight, sipping coffee from a thermos, although dreaming of a Bacardi and coke, while using a biro to write a reminder on a post-it note that the new hoover they’re queuing for is actually a Dyson.
But remember, brands becoming an integral part of the shoppers’ lexicon is an occasional side-effect of success, not the aim; James Dyson won’t care if you call his vacuum cleaners hoovers, but he’ll be quite pleased if every time you see a dustbag-free cleaner you think Dyson.
Your communications, your product performance, your customer service, even your brand name can strengthen or degrade your brand equity.
- Quality Products and Services
This is the backbone of your whole brand. It is vital that you’re able to deliver a quality product to your consumers if you want repeat purchases and good word of mouth.
Unfortunately, businesses in every industry make the mistake of releasing products for the sake of appearing to be innovative. Releasing a product that hasn’t been fully tested and doesn’t match the performance expectations of consumers (yes, I’m looking at you Windows Vista), can erode brand equity.
Insist that any product or service you bring to market delivers something new for your business’ portfolio; it shouldn’t be there just to pad out your catalogue.
- Competitive Analysis
A strong brand is a brand that can adapt to market shifts. To be such a brand, keep an eye on industry trends and your competitors’ activities; basically, don’t be Blockbuster.
An effective way for brands to build their brand equity is to target a niche: meet a specific need that no one else is currently satisfying. This radiates both innovative thinking and great understanding of your consumers, and being admired and respected is the hallmark of strong brand equity.
- Consistent Brand Image
When you understand the market and your place within it, you need to communicate that to consumers in a consistent and engaging manner.
Your products and your pricing are hugely important, but so too are other aspects of your business. From your brand name and straplines to your social media activity, every part of your business that comes into contact with customers and potential customers must be refined to ensure it is highly targeted. For some, a comparison website helped them decide between Sky and Virgin Media, but others will have had their choices influenced by Idris Elba’s manly charisma or by David Tennant’s kooky charm.
Establish your brand image from the start, and model your business accordingly. If you operate in the premium sector of your industry, be classy. If your product or service is about putting a smile of people’s faces, be fun: everyone wants their car to be well-made, but there’s a reason Vorsprung Durch Technik helped sell Audis not Minis.
Be congruent, and be consistent. Consumers know what they like, and they like what they know. Be in control of what they know.
- Listen to Customers
Brand equity resides in the minds of your customers. Listen to them.
Remember this?
Coca-Cola: Here’s New Coke.
Consumers: Meh!
Coca-Cola: Sorry about that. Anyone for Classic Coke?
Well done for listening and remedying that faux pas, but that could have been avoided by asking consumers of the world’s most popular soda if they actually wanted it to taste different.
Ensure that your consumers are given channels to give their feedback. This will help you understand strengths and weaknesses of your brand as well as the opportunities for growth (and changes to avoid).
Understanding brand equity, and how to develop it, is important, whatever stage your business is at. You must be able to create a positive image in your consumers’ minds if they are to become repeat customers, or become a part of your referral strategy. Achieve this, and your brand will strengthen and you’ll see real growth.
Oh, and try not to be impeached.
Here Jamie Diaferia and Benjamin Thiele-Long of Infinite Global provide Finance Monthly with expert insight on the growing needs of branding and why the right balance of considerations will allow your business’ brand to thrive among the competition.
Last month, Brand Finance published its Global 500 report which saw Lego regain its position as the world’s most powerful brand. But while it’s hard to refute that the ultimate and overriding purpose of building a powerful brand is to make money -- after all the business of business is business -- it raises the question: Why do some brands fare better than others in establishing their brand strength in the market?
Whatever sector a company works in it needs a unique reason to exist, something to set itself apart from competitors. The skill is in how it communicates this reason, and history has given us examples of brands that have failed and those that have succeeded against the odds. When we talk about ‘brand’, we must go beyond the look and feel of the product or offering that a company provides. Instead, brand sits more with the idea of reputation and how this is leveraged to make a company successful.
Firstly, there’s a question to be asked: What is the purpose of a strong brand? For a commercial brand the starting point must always be ‘to make money’. However, when you look at companies like Google, Apple and Walmart, these are companies that are regarded as doing more than simply generating a profit -- they also attract customers, build loyalty and motivate staff.
The enduring strength of Lego’s brand is without doubt linked to both its simplicity and the breadth of its appeal which spans generations and genders, treasured by households for its ability to inspire creativity and nostalgia. What is most interesting about Brand Finance’s research, however, is that Lego scores highly on a wide variety of Brand Strength Index (BSI) measurements including; familiarity, loyalty, promotion, marketing investment, staff satisfaction, price premium and corporate reputation.
The matrix of factors that contribute to the BSI are worth exploring further, as they demonstrate that brand power is not dictated by the size of the organisation but factors such as loyalty and staff satisfaction, which are far more difficult to control and measure.
It’s also interesting to see that brand power is not unique to any particular sector. The top 10 most powerful brands according to Brand Finance’s research, all of which achieve a AAA+ rating on the BSI, spread across a range of sectors including banking, tech, media and professional services. So, it appears that brand strength relies on much more than just generating a large customer following.
Building brand power relies on leadership placing equal importance and resource on internal and external factors and audiences. Lego’s bounce back from near bankruptcy in the early 2000’s is largely attributed to the appointment of Jørgen Vig Knudstorp, a former McKinsey consultant and the first person outside the founding family to run the company when he was appointed CEO in 2004.
Knudstorp was able to stem the bleeding by selling off peripheral businesses such as theme parks and video games, and discontinuing unpopular ranges in turn ensuring that all products were compatible with the core offering both in their look and mechanical compatibility.
Rather than accrediting his revised strategy for Lego’s return to form, Knudstorp attributes the company’s ongoing success to its employees and customers. When asked about turning Lego around, he points out that employee engagement serves as the foundation of the company’s reward system, while customer loyalty gives Lego the chance to serve multiple generations of family members. Prior to the turnaround, Knudstorp noted that Lego had taken this loyalty for granted by stretching the brand too thin. Instead, he wanted Lego to be an irreplaceable but also irresistible brand for children.
The balance, achieved perfectly within Lego, was in rewarding financial value creation with having creative and engaged employees. In Knudstorp’s words, creating a culture where at the end of each year he could stand in front of everyone and say, “thank you for doing all of the things I never asked you to do”.
How is this done? It’s not about control where people are simply doing what they are told, because that simply creates bureaucracy. Instead, it’s about communicating to stakeholders, both internal and external, the reason for doing things, the context. Creating clarity of culture and strategic choice in turn gives clarity of purpose, i.e. Why do I want to do a good job?
Brands can spend a fortune on communicating their message and values to customers, in the hope it brings them to their doors. The value of selling a brand promise, rather than simply the product, to consumers has long been understood. Increasingly, there is equal importance in the approach of ‘internal marketing’ – communicating brand values to employees.
It’s a very simple premise: Employees, whether working for a consumer brand or a professional services company, are more likely to get fired up and remain engaged if they feel they are doing something that’s actually worthwhile. Steve Jobs, for example, was renowned for being less concerned about making a profit than ‘thinking differently’, yet Apple became the most profitable company in history.
In a recent TED talk, Simon Sinek argues that the most successful companies have products, cultures, and marketing strategies that all stem from their raison d'être. This is why companies like Apple and Tesla have grown into such powerhouse names – consumers and employees alike know exactly why the company does what it does (and in the way it does), because it helps both audiences meet the human craving for authenticity, purpose and meaning. In this same way Lego’s focus on core values and its alignment of commerce and culture enabled the toy manufacturer to put all the pieces together again.
Every year, Brand Finance, a leading brand evaluation and strategy consultancy rounds up a list of the world’s top tier brands, ranking the Global 500 in terms of power and value, and outraging media globally. Just a few weeks ago, the 2017 ranking announced a new record from Apple Inc. for brand value, Twitter as the fastest growing brand, and Lego as the most powerful, but like other, Finance Monthly wanted to know why.
Here we hear from David Haigh, CEO of Brand Finance and the face behind the Global 500 rankings, who gives us the scoop on exactly why the brick building giant is a marketing champion.
Our announcement last week that Lego is the world’s most powerful brand created quite a media stir. However, it is useful for those with a financial mind to move beyond the headlines, to understand what such a powerful brand can do for the financial performance of a business and how to emulate its success.
Brand power (also known as brand strength) is the part of our analysis most directly and easily influenced by those responsible for marketing and brand management. In order to determine the strength of a brand we have developed the Brand Strength Index (BSI). We analyse marketing investment, brand equity (the goodwill accumulated with customers, staff and other stakeholders) and finally the impact of those on business performance. Lego scores highly on a wide variety of BSI metrics such familiarity, loyalty, promotion, marketing investment, staff satisfaction, price premium and corporate reputation.
The building blocks for Lego’s brand strength have always been present. Its appeal spans generations; as well as the creative freedom it gives children, the brand taps into the nostalgia of adults. It has generally avoided gendered marketing. By appealing to boys and girls equally Lego maximises the size of its target demographic. That approach also pleases parents, as concerns mount over the effect toys may have on the outlook and ambitions of children, and girls in particular.
However, this strong foundation did not stop the firm from reaching a point of near bankruptcy in the early 2000s. An overextended product range and problems with stock control had led the company to a nadir, where both brand equity and in particular financial performance had been heavily compromised.
The downward spiral was arrested following the appointment of ex-consultant Jørgen Vig Knudstorp, who discontinued unpopular lines and ensured that all products were compatible with the core range, both visually and mechanically, helping to reverse the dilution of the brand. A clear brand architecture was established with the bright red Lego square clearly endorsing all lines. Since then a decade of repeated marketing and financial successes have transformed Lego’s fortunes.
The release of the Lego Movie in 2014 provided the final push required to make it not just a very powerful brand, but the world’s most powerful brand in 2015. The film was both a critical and commercial success (it was the top grossing film of 2014 in the UK and Ireland), providing not just immediate revenue but also an unrivalled marketing tool. The first sequel, the Lego Batman Movie will be released on February 9th. Its predicted impact has helped Lego regain its top position, lost to Disney in 2016. Further releases are planned for September 2017, March 2018 and 2019, which will continue to build the brand for years to come.
Brand strength should not be viewed in isolation however, rather the brand must be examined in the context of the business in which it operates. For that reason, as part of our analysis of brands we look at the value as well as the strength of the brand. Having calculated the BSI score, we then determine a range of possible royalty rates for brands in that industry sector by reviewing comparable licensing agreements sourced from an extensive online database. The brand strength score is applied to the royalty rate range to arrive at a specific royalty rate for the brand. For example, if the royalty rate range in a brand’s sector is 1-5% and a brand has a brand strength score of 80 out of 100, then an appropriate royalty rate for the use of this brand in the given sector will be 4.2%. The royalty rate is then applied to historic and forecast revenue data to determine the revenues for which the brand is responsible. Brand revenues are then discounted post tax to a net present value which to determine the brand value.
Knowing the value of a brand helps to maximise financial returns in a number of ways. Most fundamentally, it provides a true picture of the value of a business. Internally generated intangible assets are generally omitted from company accounts, which means that they are often overlooked, leaving businesses undervalued. Brand valuations can therefore help entrepreneurs to achieve a fair price for their business, rather than selling themselves short. Similarly, a comprehensive view of a brand valuation can help defend against hostile takeover. This was in fact how the very first brand valuation, back in 1988, was used. For an acquiring organisation, brand value should be a critical concern too, it can help to identify value propositions but equally, identifying a sub-par brand should be a point of due diligence. Finally, when franchising or licensing, a brand valuation is essential leverage to set the optimum price, as Lego will know from its panoply of media licensing deals.
A valuation of the transferrable brand asset therefore has key uses. However, Brand Finance also conducts detailed assessment of a brand’s overall financial value to a business, beyond the value of the asset that could be theoretically transferred. Knowing the total ‘brand contribution’ value and the drivers behind it allows you to determine where marketing focus is urgently required, where it will generate the greatest return on investment and where it should be abandoned altogether in favour of a rebrand.
Brands affect a variety of stakeholders however, not just customers. Blue-chip employers are able to pay lower wages and attract applicants in greater numbers due to their brand prestige and the endorsement effect for alumni. Strategic partnerships are easier to form, regulators are more easily persuaded and media influencers, though fickle, are more likely to cover and promote well-known, respected brands. Even hard-headed financial audiences such as investors & debt providers are influenced by the power of a brand to the financial advantage of the controlling organisation. Trust is, naturally, a hugely important consideration for lenders and so their relationship with a brand is critical.
The same applies to investors, however of even greater interest to them is recent research showing that investment in the most heavily branded organisations (those where brand value accounts for the highest proportion of enterprise value) can nearly double returns from the market as a whole.
How can the average brand hope to emulate Lego? The firm has clearly been at pains to rebuild and preserve the strength of its brand. This can be achieved with an ultra-conservative approach, one which brands such as Ferrari have employed in the past, however that leads to missed opportunities for credible brand extension that could generate huge returns. In contrast, Lego has invested heavily in research, providing a thorough understanding of what underpins brand strength, so that commercial opportunities can be pursued without compromising the brand.
In truth, it can take years to accumulate the brand equity required to create, maintain and leverage a brand of such strength. However, with so much financial value underpinned by brands, even the slightest change to strategy or marketing investment can yield (or cost) millions.
