News

Value of the brand

Posted: March 20, 2014

“Y“YOUR GREATEST ASSET IS NOT ALWAYS FOUND ON YOUR BALANCE SHEET”

When looking at your company’s balance sheet, you should be able to tell whether your company is doing well financially or not. The balance sheet gives you insight into the assets the company has, which tell you whether your business has the ability to grow and whether it can make it through the tough times.

There is an asset that has a lot of potential to add to the revenues of the business, this asset helps companies generate revenue and subsequently contribute significantly to a company’s future growth, if nurtured well. This asset is called the “brand”.

The brand was first known in the USA, as marking cattle with a burn so as to identify the owner. Today, the brand has been defined as a promise kept. It is a bundle of attributes that if managed well, create a perception and meet or exceed the promise made to the customer.

This is an intangible asset that has proven to generate sustainable revenue for the companies that have built powerful brands. Take Apple for example, Forbes listed them as the top brand in the world worth, 104 billion dollars (USD). Closer to home, MTN the mobile South African giant was valued by Brand Finance as the most admired African brand, valued at $4,65 billion (USD). These brands are making sustainable returns for their shareholders and are well managed across all touch points, in most instances offering more than the consumer expects.

As a marketing professional, I have learnt the importance of managing the customers’ perception of their product or company, because the perception they have, forms their reality. Whether the reality is your company’s internal truth or not, the “truth” is – what the consumer or customer thinks about you, is truth to them and this “truth” needs to be managed, if the company is looking to secure future revenues for its business.

I have come to correlate brands to reputation management. Having a positive reputation is built over time (through strategic and tactical means), and it is a very valuable intangible asset – you cannot see it, you cannot touch it but it is so important to manage and protect – like you would your favourite outfit. I recently read an interesting article that stated how no one really knows the value of reputation better than the person who had a good reputation and then lost it, or a business that tarnished its brand through unethical practices or in many instances not living up to what the company said it would.

The brand is a promise kept and that creates the positive reputation a company needs to develop and maintain credibility and trust. No one wants to hear that this products does this and that and when you come home it isn’t quite so. Now we know that people talk, they tell each other about their experiences with your company or product and normally if I trust my friend’s judgment, there are a few things I would not mind getting recommendations on. The more referrals I get because of my good name, the more my product will be in high demand, leading to increase in sales, and many a time demanding a premium.

There are benefits to managing brands. We know now that they are the assets that in many cases are not found on many a company’s balance sheet. I am tempted to agree with Scott Donaton (CEO, Ensemble) who basically said, “The power of the brand is closely aligned with business outcomes. More than that it is a leading driver of profit and margin. Looked at that way, brand is a lot more interesting to the CFO”. If managing the brand positively, could mean driving the profits and margins up, surely we will need to pay more attention to brands and the management thereof.

The brand and its reputation are thus important to keep a very close eye on. It could be the one asset used to catapult the business from Good to Great.

Manage the brand (reputation), and seek innovative ways to leverage the brand for business growth!

Cornerstone Joe Public Consultants (Pty) Ltd is a strategic brand and communications strategy firm, offering services especially in the areas of brand and communications strategy development and execution. Email: info@cornerstone.com.na