Audit of a brand - fashion or real need?
in the conditions of the Russian market when only units from the domestic Companies are anxious with growth of own capitalization, for a top - managers actual become a brand assessment only in that measure in which the brand helps the enterprise to earn money, and answers a question of whether it is worth investing in it additional resources. The vast majority a top - managers is known what is a brand and for what it is necessary, but momentary results to them, sometimes, it is much more important. At the choice of object of investment in the conditions of limitation of resources, in most cases they give preference to purchase of the new equipment, but not investments into development of a brand in any way. The reason of such choice - misunderstanding of the main issue at a brand assessment - in what measure it will affect end financial result of the Company and in what degree of investment into a brand will increase its profit.
I very often should hear: “Audit financially - economic activity of the enterprise - it is clear, but audit of a brand is something from area irreal“. And, unfortunately, not only heads who got used to work by the intuitive principle “perhaps“ so think. Perhaps will carry by, perhaps will carry, perhaps we will slip. Such distrustfulness and in speeches of heads who already tasted fruits of rational branding, could be already convinced that competent investments in advance of a trademark bring them essential dividends is heard. For the time being the intuition of the head can hold firm or its brand afloat, more precisely, on raid. But business with thought only of today, most often, is unpromising. Unless it is possible to imagine a situation when, preparing the vessel for big swimming, the captain does not take with himself saving means. In business such saving means is also audit of a brand. And what is it? First of all, this comprehensive and systematic investigation of the assets which are available for a brand (notable and imperceptible) for the purpose of receiving idea of its competitiveness, understanding of sources of formation of the capital of a brand and the most exact definition of ways and ways of accumulation of this capital. As a result of this work it has to be clear to the owner or the managing director of a brand on what elements of branding it is necessary to work urgently over what - a bit later and what are strong competitive advantages of a brand already now. Here the list of cases when audit of a brand is strongly recommended to be booked:
1. When at the Company the sales volume decreases for a long time that, naturally, leads to a gain competitors of new segments of the market. In this case, we very often face that the owner of a brand reacts to a negative tendency of development of the Company not at once. Every time it calms itself(himself) thought that tomorrow everything will change, tomorrow again its production or services will be demanded on “hurrah“. And the longer it consoles itself(himself), the it will be more difficult to correct a situation. At the minimum budget today, tomorrow on reanimation of a brand it should lay out the sum a hundred times big.
2. After merger of other Company when its products join in the general product line of the absorbed Company. In this case, also not to do without serious market researches. With their help there are answers to the following questions:
1. Whether increase “bonus“ (highly - qualitative products) the cost of the brand associated with a product line.
2. Whether reduce “economic“ (low - qualitative products) the cost of the brand associated with a product line.
Besides, audit of a brand helps to answer the practical questions concerning a brand - managers: - what pluses and minuses of inclusion in a brand of products for the “lower“ segments of the market?
- what consequences of inclusion in a brand of products for the “top“ segments of the market?
- in what conditions the “top“ and “lower“ products have to be included in the existing brand?
- when similar products have to be on sale separately from the main brand?
3. At completion of large-scale campaign for advance of a brand, for the purpose of an assessment of its efficiency. At the same time degree of recognition both a brand, and advertizing appeals is defined, and also the brand is tested. For definition of degree of recognition and tendencies of its change carrying out three waves of research is recommended. The first wave (it is carried out prior to campaign) is a test indicator concerning which progress or failures of a brand will be measured. It is expedient to conduct the second research somewhere after 2kh months of campaign of advance of a brand. It will allow to notice failures in campaign at an early stage and in time to eliminate them. And, at last, the last wave is carried out upon termination of campaign for advance. The difference in indicators between the first and last waves, actually also reflects degree of efficiency of campaign for advance of a brand. It is necessary to understand as testing of a brand as tracking of data on shipments of a brand, change of market shares and other indicators of success of a brand, and definition of image indicators of a brand, its compliance to the chosen target audience, and degree of probability of commission by the consumer of secondary purchase. All this will allow to answer the most important question - as the advance strategy chosen by us works?
4. Before rebranding, including, when repositioning of the existing brand. Tasks which are set usually for rebranding: - strengthening of a brand (that is growth of loyalty of consumers); - differentiation of a brand (strengthening of its uniqueness); - increase in TsA of a brand (involvement of new consumers). Need of rebranding, that is change of an image is defined, in - the first, by the current situation in the Company and therefore it is necessary to carry out the serious analysis of a situation in collective. Perhaps, a problem only in illiterate personnel, or in incorrect price policy. And these errors can be eliminated, without resorting to serious changes in ideology of advance, in contact of a brand with the consumer. But, most often, rebranding is dictated by an urgent need of change of ideas, slogans, messages and the most advertizing strategy of advance. In this case, full audit of a brand by results of which effective rebranding is carried out is necessary.
5. At an entry into the new markets or at removal of new products with use of the existing brand. In this case the main attention is paid to researches of the market to which the brand, and to behavior of competitors in this market will be brought. Researches of the market include: - studying of motives of behavior of consumers; - analysis of market conditions; - the analysis of “niche“ of the market, i.e. sphere of activity in which the Company has the greatest opportunities for realization of the comparative advantages; - the analysis of the most effective ways of advance of goods in the market, forms and sales channels; - analysis of a tendency of the change in price; - analysis of efficiency of an advertizing campaign.
From the point of view of the competition, it is necessary: - to analyse a situation in branch and geographical segments of sales; - to study real and potential competitors, to estimate volumes of their sales, the income, a financial position; - to analyse policy of the prices of competitors, a possibility of increase in a market share; - to give the main characteristics of properties of goods of competitors, a level of quality and design, the reasons for which goods of competitors are acquired; - to compare strong and weaknesses of the firm and competitors.
6. By preparation for new projects of strategic development which possibility of realization decides by the cost of the existing brand (for example, partnership on the foreign company)
7. When owners of the Company plan sale of the existing brand or separate direction of business.
In these cases audit is carried out for the purpose of definition of a contribution of a brand to the cost of the Company in a money equivalent. From the point of view of marketing specialists, the essence of cost of a brand is a strategic loyalty to this brand of target group of consumers. Only then the brand really something costs when with a big share of confidence it is possible to assume that else within long years this brand and a product which it represents will have loyal buyers. And even at the termination of any advertizing support, faithful buyers will be ready to buy it. Thus, the most great value of a brand are the loyal buyers bringing to business money. As it was already noted, from the point of view of the owner of a brand, the most clear indicator of its efficiency is the brand contribution assessment directly in sales to the company. This characteristic allows to estimate, the brand contribution to the general current success of sales of the company and as far as it is steady is how big. In fact, in this case it is possible to speak about quantitative measurement of influence of force of a brand for sales to the company.
Proceeding from it, and estimates of a contribution of a brand are various. In case of a brand assessment for business purchase and sale the main task is determination of ability of a brand to make additional profit.
I will not stop in detail on the description of the most known approaches to a brand assessment but only I will give about them summary. One of them is the method of the discounted cash flows developed in 1989 by the Interbrand company, the world leader in the field of a brand assessment. The method of estimation of cost of a brand on the discounted cash flows is based on the direct forecast of future receipts generated by brand. It should be noted that with use of this method the most known rating of global brands is formed. In the last rating published in the summer of 2010, first place in it is won by Coca - Cola whose brand is estimated at 65,324 billion dollars, the second place of Microsoft with the cost of a brand of 58,709 billion, and Google takes only the 20th place with 17,837 billion dollars. Other approach in an assessment of a brand is used by the known research company Millward Brown Optimor. She estimates brands not only on the basis of present and future profit, but also considers the relation to brands from hundreds of thousands of consumers. The rating of the most expensive brands of the world of BrandZ Top - 100 by a technique of Millward Brown Optimor, published in the Financial Times newspaper, headed a brand the Internet - the Google companies, worth 100,039 billion dollars. And, brand cost in a year increased for 16 percent. On the second place in the list there is a Microsoft co brand worth 76,249 billion dollars. And only Coca - Cola which brand cost experts of Millward Brown Optimor estimated at 67,625 billion dollars is on the third place. The highest growth rate from all brands, in opinion the Interbrand company, showed a brand the Internet - the Google companies: in a year the cost of a brand grew by 44 percent.
According to experts of Millward Brown Optimor of the fastest on increase in growth rate there was a BlackBerry company. The cost of its brand in a year increased by 100%. Apparently from the given examples, distinctions in methodologies give an essential difference in a brand assessment.
Not to be limited to estimates of foreign brands, I will provide table 7 of the most successful Russian brands:
The Cost of $ One Billion Branch
of Beeline brand 7,552 Telecommunications
of MTS 6,115 Telecommunications
Baltic 2,560 Beer and soft drinks
Green brand 1,188 Alcoholic beverage
Lukoil 1,040 Oil processing
Prostokvashino 0,790 Dairy
From the submitted table is visible that by a technique of the Interbrand company which has the minimum threshold of an entrance to the TOP - 100 is made by 3,026 billion, two Russian companies could enter: Beeline with brand cost 7,552 billion, and MTS with the cost of a brand of 6,115 billion. By a technique of Millward Brown Optimor, with a threshold of an entrance to 6,394 billion, only Beeline. Besides, at all I do not want to call into question or to subject to critical analysis a technique of an assessment of such known company as Interbrand, but even the superficial analysis can reveal some divergences between tabular data and real increase in cost of the majority of the Russian brands. But I provided this table not for the purpose of the deep analysis and once again to remind the Russian businessmen that investments into development of a brand conduct to long-term prospects with significant increase in capitalization of the Company. And in time the booked audit will allow its owner to reveal strong and weaknesses of a brand that will provide elaboration of rational and effective strategy of its advance. And in this case, a look from outside and involvement of specialists in branding will be as it is impossible by the way.