How to build brands

Interbrand publishes the 100 “Best Global Brands” each year. The top 10 brands for 2012 are Coca Cola, Apple, IBM, Google, Microsoft, GE, McDonald’s, Intel, Samsung and Toyota. / Courtesy of Interbrand

By Kim Bo-eun

One of the biggest dilemmas companies face is how much they should spend on building their brands. The problem stems from the fact that they do not recognize the sources of brand value.

“Every product, every experience and every piece of communication — all of these things are building it, but most companies don’t look at it like that,” said Interbrand Global CEO Jez Frampton.

“But once you start to recognize what it is that actually builds the value of the brand, then it makes it a lot easier to make investments in the right areas. Every company in the world needs to get better at that,” he said.

The CEO said under-investment in understanding the power of their brands is a problem most companies have.

According to Frampton, Coca-Cola, which is No.1 on Interbrand’s latest global league table, is worth $100 to $115 billion as a company, and 75 percent of its value comes from the brand. Its fixed assets are worth $7 to $8 billion, but its brand is worth $77 billion.

He pointed out that the company is constantly spending on reevaluating and depreciating its fixed assets and therefore should be spending 10 times more just in understanding how its brand works.

Elements in strong brand

There are several crucial elements in a strong brand. The Interbrand CEO said that for most great brands, the story comes from within.

“For example, Apple which ranked second in our Best Global Brands table last year, has a strong belief that man cannot be subservient to machines,” he said.

“Some of these things are stories about companies and you need to connect it to why the companies exist.”

According to Frampton, one of Interbrand’s measures of brand strength is authenticity, which is the degree to which the brand feels true to its values.

He said the starting point for any company’s brand proposition is being honest about its business.

He added that in building a brand, a company tries to achieve something true and motivating for people inside the business and at the same time something that connects to the wants and needs of those outside the business.

“That’s the art, trying to find that thing that actually balances the needs of the inside and needs of the outside.”

Another measure of brand strength is differentiation, or how a company stands out from its competitors.

“One of the big mistakes that a lot of companies make is trying to create a brand that appeals to everybody. What you need to do is be clear about where your market place is and talk to them.”

To express a brand in a compelling way, companies need to create a consistent connection among all of the different expressions of a business, the touch points, he said.

“For example, if it’s a car company, it isn’t just the vehicle, it’s the staff, the dealership, communications, the way they deal with you, take you through the processes of buying, owning, servicing and so on.”

“When you start buying a car, you might go on the Internet and be looking at YouTube videos, blogs, trying to find out what people think or might be looking at the company’s website. After you go through the process of purchasing a car and driving one, all these things have to connect together,” he said.

Frampton pointed out that digitalization is increasingly becoming more important. It has changed how brands interact with their consumers. Now, he said consumers can instantly get information online, even when they’re in a store.

Digitalization

About five years ago, Frampton went to buy a new fridge at a very big, well-known store in Britain. While there, he typed the product number of a Samsung model onto the Google search engine on his mobile phone, and straight away found out where he could get the model cheaper.

“At that point, I realized my behavior had changed quite significantly in the way that I buy things. From a company’s point of view, it’s not really about creating apps but about understanding that change in behavior,” he said.

According to the CEO, building a brand is about looking into how people buy, how to interrupt the purchasing process to influence their choice, how to maintain loyalty, how customers experience an organization as a whole and how digitalization helps bring all this together.

However, he advises that companies should look at brand building from a holistic point of view.

“Historically, a lot of companies have built websites here, apps there, in-store experiences there, all unconnected. But now they have to stand back and look at the whole thing, asking whether you are using digital as part of your whole brand experience.”