"We've spent $200 million in advertising and $40 million in consulting fees just to keep our nose above water--there has to be a better way!" - Fortune 500 CEO

Brand Innovation Practice 
“The marketing model we all grew up with is obsolete…
we are taking the reinvention of marketing very seriously.”
(Jim Stengel, GMO Proctor & Gamble, October, 2004)

Couldn’t have said it any better ourselves.

Yet, reinventing “marketing” must begin with a thorough analysis of the existing brand stable--too many brands fail to deliver their full potential because they are not subjected to rigorous and periodic review designed to ensure their relevance in a constantly changing competitive and consumer landscape.

Which is why AHPL has created its Brand Innovation Practice, designed from our personal experience managing brands to bring the outside and objective perspective required to achieve the full value from brands--be they corporate brands or product/service brands. Frequently, we hear marketers ask:

  • What is the true value of my brands?
  • How can I make my brands more relevant?
  • How can I measure my progress in improving the return on my brands?

How do I get at the true value of my brands?

(The actual value {or lack thereof} may surprise you.)

There are two kinds of brands: Corporate, and the individual product and service brands that reside underneath the Corporate brands. Too many companies make the mistake of confusing the two types of brands in their attempts to value them and plan accordingly. The first step in creating Brand Innovation must be to understand where the brand really stands at present.

Corporate brands must be assessed on the basis of the shareholder value they return relative to competition. AHPL and its Alliance Partners have developed our proprietary Brand Analysis tool that ranks the top 1000 global corporate brands on the basis of value returned to the company. Even if your company is not amongst the top 1000, we can deploy the same methodology to determine the strength of your corporate brand relative to your direct competition.

Likewise, individual product and service brands must be evaluated on measures beyond short-term sales results. We deploy our Brand Intelligence proprietary tool in order to push past sales analysis and factor in such critical measures as brand preference, brand likability, customer NPV and lifetime valuators in order to develop a true measure of the brand’s strength (or relative weakness).

A major manufacturer of high-end motorized sporting equipment had for decades assumed from anecdotal data that their rate of customer retention and re-purchase was the highest in their industry. As such, virtually no money was allocated to encouraging customer retention. Instead, they valued their product brands (no tracking whatsoever had been done on the corporate brand) solely sales growth over YAG.

By deploying our Brand Intelligence tools (combined with our Customer Profitability Analysis tools), it was discovered that the actual retention and repurchase rates were 1/10th of what had been assumed. This analysis dramatically indicated that their brands were wildly over-valued as the customer NPV was only 10% of the assumed value and has caused a 180 degree turn in how the company measures and spends its marcom budgets between the dual needs of increasing new customer acquisition versus retention. Over a two-year period, this revised strategic approach has driven earnings growth far ahead of competition.

How do I grow the relevance of my brands?

(The key metric baseline from which to develop brand innovation strategies is relevance, not sales)

Most brands--be they corporate or product/service--begin to lose traction long before sales results are affected. Which is why one of AHPL’s core Brand Innovation tools is our Brand Relevance Index. With this tool, we monitor the key measure of brand relevance as an indicator of whether the brand has positive or negative long-term momentum.

By pushing past traditional A&U brand measures and getting to the rational and emotional relevancy of brands, we have found that we are able to correctly predict the dollar-value impact of gains or losses in brand relevancy. Too many brands seek to innovate on the tactical level--packaging, pricing, facings and formulation tweaks. None of these affect relevance.

By understanding the relevancy of brands, we form the basis for understanding how far the brand can be pushed into other areas of growth that would normally not fall within traditional considerations.

Take the case of a major motorsports sanctioning organization who had, over many years, established a very strong brand. However, when the measurement of relevance was analyzed, it was happily discovered that the brand was highly relevant to products and services that had
nothing to do with the actual racing or personalities of the drivers, but had everything to do with providing a brand promise to even those who had no strong affiliation with the sport. Once defined, this relevance index drove a major licensing initiative that has produced literally millions of dollars in incremental revenue from consumers never thought to be in the target set.

Innovating a brand requires a thorough analysis of its relevance.

How do I measure my improvement progress?

(Develop business rules that connect spending strategies with marketplace results)

As Mike Winkler (CMO Hewlett-Packard) put it, “CEO’s think marketing is largely a financial black hole, and ambiguous function of the business having immeasurable results and limited return on investments.”

Which is why AHPL’s proprietary “Closed Loop Analytics” tool is so often deployed as either part of our larger Brand Performance engagements or as a standalone system. With this tool, AHPL can assist its clients in establishing clear-cut relationships between the levels and nature of expenditures and the resulting improvement in brand performance. True brand innovation can only be achieved when thorough benchmarks and measurement systems are in place. With this tool, a holistic analysis of all expenditures against the brand in all types of paid and unpaid media compares spending against results, thus providing the baseline for future brand innovation and testing. This tool quickly develops business rules that govern types of allowable spending which can help guide “go/no-go” decisions for brand innovation.

A major chemical company had come to believe that the ways in which they allocated corporate marketing resources may have been actually stifling brand innovation. They were right. Careful analysis of their sales forecasting, budgeting planning and measurement systems indicated that these activities were taking part without factoring the actual value potential of the brands. In other words, brands were allocated spending simply because they existed, and the ways in which those funds were expended were not tracked as a whole. By deploying our Closed Loop Analytics tool, the Client was able, for the first time, to understand the value of their product brands relative to the expenditure made to support them. As a direct result, several brands had their support dramatically reduced, while others received dramatic increases. Through this first-ever, holistic look at brand valuation and innovation, this company has over-achieved its margin
contributions for three years in a row.

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