Managing brands for value creation

Introduction

Coca-Cola, Microsoft, IBM, Intel, Nokia, Dell, and GE are some of the most powerful brands on the planet. With estimated brand values between US$50 billion and $100 billion each, they account for more than 25 percent of the total value of the companies that own them. These brands command margins significantly above their industry average — massively outperforming their rivals.

So why are some companies so successful at leveraging brands, while others achieve far more modest returns on their branding budgets?

To find out, Strategy& and the brand consulting firm Wolff Olins carried out research among marketing executives across Europe. It shows that over 90 percent of companies believe their brand is a key element of their success — twice as many as five years ago. Yet less than 20 percent put the management of their brand at the heart of their business systems and capabilities. This appears to be significant in explaining superior brand performance.

What differentiates the companies that are most effective at leveraging their brands is not how much they spend on advertising and other brand promotions,¹ but whether they are brand-guided. Brand-guided companies actively use the brand to drive business decisions and manage the company. These companies occur across all industries.

Our study² identified 10 key areas where successful brand-guided companies excel. A company that focus on these areas can become brand-guided and thus make a significant difference to the bottom line.

¹Our analysis, for example, shows that Coca-Cola, Microsoft, IBM, GE, Intel, and Nokia all achieve impressive brand values of $50 billion to $100 billion with comparatively low budgets.

²Strategy& and Wolff Olins European survey among marketing and sales officers, August 2004.