The document discusses strategies for using brand equity to drive sustainable growth. It defines brand equity as the perceived value of a brand's image attributes. It then presents the Brand Value Equation, which calculates brand value based on product/service benefits, channel benefits, brand equity, and costs. The equation shows that brand equity is a powerful lever for competitive advantage. However, brands face threats of losing relevance, so strategies like branded sponsorships and social programs are needed to create energy and remain relevant. Crucially, internal brand-building must establish a brand's promise and values before external initiatives. Research shows "storydoing" companies that live their brand story outperform those only telling it.

1. CREATIVE SOLUTIONS
Using Brand Equity to
Drive Sustainable Growth

2. CREATIVE Solutions
Using Brand Equity to
Drive Sustainable Growth
“In today’s hypercompetitive marketplace, brand equity is the only element of the
Brand Value Equation that can be used for long-term competitive advantage.
Competitors can beat you on price, they can usually duplicate or exceed any of
your product/service performance advantages and they can normally successfully
compete in your channels. Your only true defensible asset is your brand equity.” i
– William Neal and Ron Strauss, co-authors of Value Creation: The Power of Brand Equity
Continued
A colleague recently asked me a two-part question:
“What is brand equity and how do you measure
it?” I answered the first part of this question by
defining brand equity as the perceived value of a
brand’s image attributes, such as trust, self-image
reinforcement and social responsibility. Expressing
this another way, I also explained that brand equity
essentially connects the dots between what a brand
stands for and how this translates financially in the
form of “goodwill” on a firm’s balance sheet. This line
entry can represent anywhere from 30% to 60% and
more of a firm’s total asset value. As John Stewart,
former CEO at Quaker, once stated, “If this business
were split up, I would give you all the land and
bricks and mortar, and I would take the brands and
trademarks, and I would fare better than you.” ii
Answering the second part of this question was a
bit more challenging. I went on to state that there
is no universal way to measure brand equity and
that most existing models are exceedingly complex.
Young & Rubicam’s BrandAsset Valuator, for example,
has been measuring brand health since 1993 and
uses four key constructs: differentiation, relevance,
esteem and perception. These constructs are
calculated based on over 50 individual perception
measures using a survey that queries approximately
500,000 consumers in 49 countries covering 38,000
brands. By comparison, Interbrand, a division of
Omnicom, uses a very different model that merges
three separate analyses: financial analysis, market
analysis and brand analysis. The latter involves
subjective scoring based on seven different
measures – brand leadership, marketplace longevity,
market growth and stability, global reach, long-term
trends, consistency and support, and trademark
protection.
Fortunately, I recently stumbled across Value
Creation: The Power of Brand Equity, by William Neal
and Ron Strauss. This book proposes a much simpler
model for defining and measuring brand equity. I
wish I had known about this earlier when I tried to
answer my colleague’s question. As the title suggests,
this approach vividly illustrates how brand equity can
be used as a powerful strategic tool for creating long-term
economic value. The two authors have named
their approach the “Brand Value Equation.” iii
The Brand Value Equation
“Brand Value = (Product Benefits +
Service Benefits + Channel Benefits +
Brand Equity) – Costs” iv
“The intangible benefits covered under Brand Equity
in the Value Equation are all communicated to the
customer and the consumer by the brand name. It is
the brand promise – what the customer/consumer
believes the brand stands for. It has been described
as an implied contract between the producer and
the user… Brand equity encompasses a gestalt of
intrinsic values, or benefits, that complement the
tangible benefits delivered by the particular product
or service. These intrinsic equities may include such
things as the image imparted to the purchaser, trust,
communication consistency and quality, long-term
reputation for reliability, customer support,
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3. Using Brand Equity to Drive Sustainable Growth 3
Price
brand innovation, social responsibility, previous
experiences with the brand, and so forth.” v
The authors point out the following strategic
implications of the Brand Value Equation:
• “Value drives choice – Brands that have high
perceived value are usually included in a buyer’s
consideration set and the brand that has the
highest total brand value ultimately wins.
Furthermore, if a brand’s combined tangible and
intangible equities are consistently higher than
other brands in a given category, that brand usually
enjoys the highest market share and highest
customer loyalty in terms of repurchase and
recommendation.
• “It provides a strategic framework for successfully
competing in the marketplace – By deriving the
utility (value) of different performance levels for
each individual attribute as perceived by customers
for your brand, as well as for the each competing
brand in your product/services category, you can
determine your strengths and weaknesses for any
group of customers or prospects. This process will
pinpoint where you should invest in improving
perceived value for each market segment in which
you compete.
• “It presents corporate management with four
separate levers that can be manipulated to improve
brand value – price, product/service performance,
channel performance and brand equity. Analysis of
the importance of weights coupled with a realistic
competitive assessment indicates where you can
get the most increase in comparable brand value
for a given investment in a brand’s performance.
Any change in attribute performance can be priced
out, allowing a rigorous cost-benefit analysis to be
undertaken.
• “It allows you to better understand the role and
contribution of brand equity in determining
total brand value. Furthermore, the Brand Value
Equation provides management with a quantitative
measurement of brand equity. vi
Thanks to William Neal and Ron Strauss for their
brilliant work, the stage is set. We can now focus
attention on the need for and on key strategies
that can be pursued using brand equity to drive
competitive advantage and sustainable growth. The
need has never been more acute and its importance
will only continue to escalate.
The Need
“A new breed of competitors has arrived: digital
disruptors. These companies and individuals
embrace digital tools and platforms to get closer
to customers and engage them more deeply.
These competitors can come from anywhere and,
unopposed, they will steal your customers and
disrupt your business.” vii
- Josh Bernoff, SVP Idea Development, Forrester Research
In today’s turbulent marketplace, the biggest
challenge facing most businesses is the ability
to remain relevant. Digital disruption happens at
lightning speed. It has been estimated that most
companies must now reinvent their business models
on average about every six years or risk irrelevancy.
And “in the face of these market dynamics, firms
run the risk of losing relevance as the category or
subcategory in which they compete gets redefined
and , as a result, the firm’s brand becomes relevant to
a shrinking number of customers.“ viii
There are two ways that brands can lose relevance.
One route, according to David A. Aaker in his book
titled Market Relevance: Making Competitors
Irrelevant is to “lose category or subcategory
relevance. Customers simply no longer want to buy
what you are making, even though your offering
might still be of high quality and the customers who
remain love it and your firm as much as ever. If a
brand is attached to a category or subcategory that
is fading in relationship to one that is emerging, the
brand’s relevance and sales will decline.
Continued
Brand
Value choice
product
service
benefits
channel
benefits
brand
equity
Brand Value Equation
(Source: Value Creation: the Power of Brand Equity, by William Neal and Ron Strauss)
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4. Using Brand Equity to Drive Sustainable Growth 4
“The second route is to lose energy relevance, to lose
energy and the visibility that goes with it. If brands
with energy are available, why consider one that is
tired and has nothing new or interesting to offer?
Without energy the brand may become locked in the
past and suitable for an older generation. Or it may
lack the visibility to be considered, it may simply fade
into background noise. ix
Key Strategies
According to Mr. Aaker, for brands at risk of losing
category or subcategory relevance, there are
essentially four response strategies that can be
pursued: “stick to your knitting, repositioning,
gaining parity and leapfrogging.” x These strategies
tend to focus more on the offering than on brand
equity.
“For brands with potential energy-driven relevance
issues, creating energy becomes a critical strategic
imperative...There are two ways to create brand
energy – energize the business or create branded
energizers” xi
“The best way to energize a business is by improving
the offering through innovation. Apple, Nintendo,
Yamaha, Toyota and Virgin, for example, introduce a
continuous flow of innovations that create interest
and visibility… However, that route isn’t always open.
In many cases, successful innovation is elusive even
with motivated efforts, talented people, creative
processes and healthy budgets. Further, some
businesses compete in product categories that are
either mature or boring – or both. So the need then
is to look beyond the offering for ways to make the
brand interesting, involving, dynamic, enthusiastic,
and even a topic of conversation.” xii
“A branded energizer can include a branded product,
promotion, sponsorship, symbol, program or other
entity that by association significantly enhances the
target brand over an extended period of time.” xiii
Branded sponsorships and branded social programs
are two often pursued strategies. Examples of each
follow below.
• Branded sponsorship: “Although Valvoline motor
oil is a rather utilitarian product, when it comes
part of the NASCAR scene through sponsorship
everything changes… Valvoline has become
closely associated with the racing experience…
One study found that 60% of NASCAR fans said
they trusted sponsors’ products (as compared to
30% of NFL fans), and more than 40% switch brands
when a company becomes a sponsor.” xiv
• Branded social program: “Branded social
programs can pay off by helping establish a
customer relationship based on trust, interest and
respect. However, they can also provide energy by
generating interest, even passion, tangible results
and opportunities for customer involvement. The
Avon Breast Cancer Crusade and its signature Avon
Walk for Breast Cancer have raised over $650 million
for the fight against breast cancer. That interest
and energy could never have been created by
Avon products alone, however new and different
they might be. And the Walk is branded as Avon
complete with a logo.” xv
While the above strategies and examples focus
externally on ways to leverage a company’s brand
equity attributes, it is important to remember
that brands are built from the inside-out. Internal
brand-building lays the foundation for successful
external execution to follow. Companies must clearly
articulate their brand promise and values so they
are understood and embraced by their employees,
inculcating them deeply into the fabric of the
culture, while empowering employees to deliver
authentic branded service encounters. This requires
a continuing focus and unwavering commitment.
There are no magic bullets.
Zappos does this
exceedingly well.
The real secret
behind Zappos’
success formula is
its unique culture and “Family Core Values” which lay
the foundation for its “Powered by Service” platform.
Its first value is to deliver WOW customer service
– exceed expectations and generate customer
loyalty. Additional values encourage employees to
drive change, be creative and open-minded, pursue
growth, build open and honest relationships, build
a family spirit, be passionate and humble, and create
fun and even a little weirdness.
According to Mr. Aaker, it took many years of hard
work, determination, and even forgoing short-term
financial gains to achieve its long-term vision. But
Continued
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5. Using Brand Equity to Drive Sustainable Growth 5
Zappos relentless commitment to its strategy clearly
paid off. “Zappos exceeded $1B in sales in 2008 and
was sold to Amazon in 2009 for $1.2B... Access to
Amazon’s technology and infrastructure now gives
Zappos greater advantage in terms of increased
efficiency and the capability to deliver even better
customer performance in terms of in-stock, fast,
efficient order fulfillment.” xvi
Zappos is not alone. Other companies, such as
Target, Disney, Starbuck’s, American Express, Apple,
JetBlue and IBM also place great emphasis on
internal branding. Storydoing.com, managed by
CO:COLLECTIVE, is a public project whose mission is
to delve into the performance differences between
storydoing companies (that use their core story as
an organizing principle to actually live the brand)
and storytelling companies (that simply convey their
brand story through marketing communications).
The above seven companies were selected by
CO:COLLECTIVE as the top storydoing companies
in their respective industries from a pool of 42
publically traded companies (six companies each in
seven different industries).
“The six attributes of storydoing companies used as
the criteria include: (1) You have a story; (2) the story
defines an ambition beyond commercial aspiration;
(3) the story is understood and cared about by
the entire company; (4) the story is being used
to drive action throughout the company; (5) you
have identified a few iconic transformative actions
to focus on; and (6) people outside the company
are engaging and participating. The analysis so far
suggests that storydoing companies outperform
their storytelling peers in a number of ways.” xvii
Summary
To summarize, four key take-aways can be derived
from our analysis:
• Brand equity works in conjunction with the other
three Brand Value Equation triggers – product/
service benefits, channel benefits and price – to
create total brand value and is arguably the most
powerful lever for driving competitive advantage
and sustainable growth.
• The threat of brand irrelevancy challenges most
businesses today and new strategies to create
energy and remain relevant must continually be
pursued. Branded sponsorships, branded social
programs and other branded energizers that
leverage a firm’s brand equity attributes offer
excellent alternatives, especially in those situations
where substantial innovation isn’t feasible.
• However, internal brand-building lays the
foundation. An organization’s brand promise and
core values must be clearly articulated, understood
and embraced internally before external initiatives
that leverage brand equity should be pursued.
• Research strongly supports the premise that
storydoing companies who use their core story as
an organizing principle to mobilize activities (vs.
just telling their brand story) pays off by driving
superior financial results.
About Quad/Graphics
Creative Solutions
Quad/Graphics Creative Solutions is a full-service
brand communications firm that helps
organizations build strong brands and deliver
relevant communication across multiple channels,
including traditional print (i.e., catalog, publication,
Continued
Annualized Revenue Growth
(2007-2011)
12% 10.4%
10%
8%
6%
4%
2%
0%
Storytelling
Companies
Storydoing
Companies
6.1%
Annualized Operating Income
Storytelling
Companies
Storydoing
Companies
7.1%
16.1%
18%
16%
12%
10%
8%
6%
4%
2%
0%
(2007-2011)
14%
Annualized Share Price Growth
(2007-2011)
6% 5.6%
4%
2%
0%
- 2%
- 4%
- 6%
Storytelling
Companies
Storydoing
Companies
- 4.4%
Storytelling
Companies
Storydoing
Companies
2.7%
1%
0%
Media Spend as % of
Annual Revenue
(2007-2011)
3%
2.5%
2%
1.5%
1%
.5%
(Source: Storydoing™ by co:collective.)
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6. Using Brand Equity to Drive Sustainable Growth 6
direct mail and collateral) and digital media (i.e., web,
mobile and tablet devices, video, search marketing
and social media). We provide solutions that are
equal parts strategy, award-winning creative and
process-driven production. Those solutions come to
life through our team of over 50 creatives who have
the knowledge and skills to help you grow both your
brand and your business. As part of Quad/Graphics
Media Solutions, we can put a broad range of
talent and technologies to work for you, giving you
creative, workflow and digital media solutions that
resonate with your audience and directly impact your
bottom line. We’re good for your brand. We’re good
for your business.
About the Author
R. Jay Olson is a senior brand marketing strategist.
Jay’s specialties include: Brand Positioning
Development, Brand Portfolio Strategy, Integrated
Digital and Traditional Marketing Communications,
Internal Branding, Thought Leadership, Social Media,
Inbound Marketing, Consumer Insights, Market
Research and Marketing Performance Measurement.
His diverse background spans brand strategy
and marketing leadership roles at Quad/Graphics
Creative Solutions, Phoenix Marketing Group, Marcus
Restaurants, Muer Seafood Restaurants and the
Ralston Purina Company. Jay is a graduate of San Jose
State University and is an honorary faculty member
at Michigan State University School of Hospitality
Business.
Jay has been a guest presenter at leading
organizations, including the American Marketing
Association-Milwaukee Chapter, the Wisconsin
Direct Marketing Association, AFS 2010 Marketing
Selling of Castings Conference, Michigan State
University School of Hospitality Business, and the
National Restaurant Association Annual Marketing
Conference. Recent speaking topics have included:
“The Transformational Power of Branding,”
“Transforming Your Website into a Powerful Strategic
Weapon” and “Measure What Matters Most.”
i. Value Creation: The Power of Brand Equity, by William Neal and Ron Strauss, published by SOUTH-WESTERN CENGAGE Learning,
copyright © 2008 by Texere, page 131
ii. “Brand Valuation: The financial evaluation of brands,” by Interbrand Brandchannel, Brandpapers
iii. Ditto i
iv. Ditto i, page 127
v. Ditto i, page 127
vi. Ditto i, page 130-131
vii. Digital Disruption: Unleashing the Next Wave of Innovation, James McQuivey, Forrester Research, published by Amazon Publishing,
copyright 2013 Forrester Research Inc., Introduction
viii. Brand Relevance – Making Competitors Irrelevant, David A. Aaker, published by Jossey-Bass, copyright © 2011 by John Wiley Sons, First
Edition, page 297
ix. Ditto viii, page 301
x. Ditto viii, page 304
xi. Ditto viii, page 312
xii. Ditto viii, page 312
xiii. Ditto viii, page 314
xiv. Ditto viii, page 316
xv. Ditto viii, page 318
xvi. Ditto viii, page 93
xvii. Storydoing™ (http://storydoing.com), managed by co:collective, copyright ©2013
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