In Part I of our publication, we introduced you to some actionable tips by Kantar that can help you strengthen your brand equity. Why is this such an important topic for us marketers? Because the greater the equity, the more desirable the brand is amongst consumers, retailers and employees; the more seamlessly it can fence off competitors; and the easier it is to command a premium price and protect its margins.
Curious to discover the rest of the key takeaways from Kantar’s guide and webinar? We’ve got you covered:
- How can you prove marketing adds value to your brand? It’s not always clear where value is coming from. There are disputes escalating among marketers on what exactly to measure regarding marketing effectiveness, thus creating a dilemma. Some focus on branding, while others entirely on sales – for them, cashing in is their ultimate goal. However, one thing is certain: marketing creates business value.
According to Kantar, value creation is the most important job in any business, and high-quality marketing can be a key differentiator in driving brand value growth. We could look at a marketer as a value engineer; their job is to create value by meeting people’s needs. The greatest benefit for brands? With an outstanding marketing touch, people will buy more, at a higher price and this will have a knock-on effect on the business’s profit margins.
The solution? Kantar has found that perceptions can drive behaviour and that behaviour drives sales. Is your marketing effective? The following power metrics help marketers answer this all-important question:
- Demand Power. Based purely on perceptions of the brand, it measures consumer demand and correlates with market share. High Demand Power brands capture 9 times higher volume share.
- Pricing Power. A brand’s ability to justify a price premium relative to the category average, based purely on consumers’ perception of the brand. Pricing Power is a reflection of price sensitivity and elasticity: the more you have, the less willing a consumer will be to switch to a substitute at a lower price. Kantar data has revealed that people are happy to pay double for brands that have high Pricing Power compared with those lacking it.
- Future Power. The probability that the brand will grow value share in the next 12 months, purely based on consumers’ current perceptions of the brand. High scoring brands are 4 times more likely to grow value share than brands with low Future Power.
- Activation Power. It’s about converting consumers’ predisposition into brand choice. Brands need to be easy to mind, but they also need to be easy to find. A brand with a stronger shelf presence has a higher likelihood of getting picked. Activation Power is the practical application of a brand’s physical connections and availability. Strong brands that activate well accelerate their growth 2.5x more.
- Brand loyalty: Is it cheaper to get new customers or to keep the existing ones? According to Mary Kyriakidi, many in our industry believe in the so-called “brand polygamy” and advocate that by solely getting new customers, growth will come. But on the other hand, that growth will surely come from retaining your customers, especially those ones that will account for quite a large proportion of the sales and value. “Think of loyalty more as an open marriage, very few people are exclusively loyal to one brand”, Sarah Carter and Les Binet advise in their ‘How not to plan: 66 ways to screw it up’ book. “Nope, loyalty hasn’t disappeared, you’ve got competitors now”, Byron Sharp explains in this WFA Better Marketing Pod, labelling the famous leak as merely infrequent buying.
In his TED talk ‘The riddle of experience vs. memory’, Daniel Kahneman explains that “we don’t actually choose between experiences, we choose between memories of experiences.” What does this mean for brands? Experiences turn into memories which form the various associations (both positive and negative) that consumers have for each brand. It’s what we call brand image – a step above salience. Two recent Kantar studies of 7,000 brands in almost 500 projects emphatically prove that experience plays a consequential role in getting a brand chosen, also that consumers are willing to pay a premium for experiences that will delight them. Separately, they analysed the performance of more than 3,900 brands from our Kantar BrandZ global brand equity database (that covers 58 categories and 21 countries) in order to decipher what triggers people’s decisions. Kantar discovered that experience influences repeat purchase and that brands that maximise retention yield a +7% growth. Because a good experience entices repeat sales.
The solution? Kantar has found that the acquisition vs. retention dilemma sits on the periphery of things. What’s most important is to win ground in the mind of every consumer. As Mary Kyriakidi put it: The question to ask is not whether to target heavy or light/ no buyers, but rather: ‘how can I make my brand the preferred choice among all category buyers?’
- How should marketers stand up to recession? We have been witnessing an economic downturn with inflation that some marketers are not fully equipped to face. Just because inflation is here, it doesn’t mean that the opportunity to sell at a premium price point has gone away. It means that brands need to work harder to justify their price points, but those premiums that they are used to continue to be paid by consumers. Of course, consumers aren’t care-free, they feel the pressure and as a result, marketers do, too. According to Kantar Global Issues Barometer, 68% of consumers say the increased cost of living and other issues of concern are having an impact on their big life plans, and 19% of people have already traded down brands or some products.
As a result, marketers are “tempted” to offer big discounts, reduce their products (the so-called “shrinkflation”), reduce their advertising and lose that equity that they want to achieve. Thus, they enter the so-called “spiral of doom”:
The solution? According to Kantar, marketers should avoid these temptations and instead follow a 3-step plan based on empirical data:
- Keep calm and carry on advertising. Kantar advises that marketers continue to invest in their brand. Marketing investment is like a tanker machine. The forward inertia is your brand’s equity. You can turn off the engine for a while and inertia will keep the ship moving forward. As it slows down, additional power is required to return to its former speed. That additional power in marketing terms is your additional marketing investment.
- Keep calm and pursue the market share you want. Evidence confirms that media spend plays a crucial role in gaining and losing market share. Brands with a share of voice (SoV) greater than their market share (SoM) tend to grow. Conversely, brands with a SoV smaller than their SoM tend to decline. Analysis of the IPA DataBank by Les Binet and Peter Field suggests the growth rate of brands over time is proportional to the difference between SoV and SoM. This is usually called extra share of voice (eSoV).
- Keep calm and price appropriately in inflationary times. According to Kantar, profit is not a dirty word, not even in inflationary times. Great marketing leads to great profit. The more a brand is perceived as different, in addition to the belief that it stands for something, the more valued it is. Even bargain hunters operate in that space, too – they are willing to pay 14% more for the brands they single out as meaningfully different.
To sum it up, in Mary Kyriakidi’s opinion, by focusing on your brand as a value producing asset, you align your interests to those of the consumers. Because consumer choice will always tilt towards brands that are meaningfully different, both now and in the future.
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