A sizable and growing customer segment is looking for organic and natural products, and as a result, packaged food companies are facing a brand relevance problem. One company that has done well in this difficult and changing environment is General Mills.

The General Mills Acquisition Strategy

There is a lot to like about their acquisition strategy. Take major General Mills acquisition, Annie’s, bought in 2014 for just under one billion dollars: Annie’s makes Mac & Cheese, snacks, dressings and frozen food all under the organic and natural labels. The brand is fast-growing, authentic and high quality with an expanding product footprint. The purchase provides General Mills with another growth platform in the healthy eating arena. And there were important acquisitions even before the purchase of Annie’s.

“These acquisitions provided not only new growth platforms but an injection of knowledge and passion around organic and natural.”

Back in 1999, General Mills acquired Small Planet Foods, owners of Cascadian, which is a maker of organic frozen fruits and vegetables and Muir Glenn, the maker of canned organic tomato products. In 2008, Larabar, a fruit and nut-based energy bar that has become a player in the healthy end of a growth segment, was purchased. And in 2012, General Mills bought the “Food Should Taste Good” line of snacks, also marketed as organic and natural. These acquisitions provided not only new growth platforms but an injection of knowledge and passion around organic and natural.

How General Mills’ Acquisitions Power Relevance

Brand relevance is a measure of how integral a brand is to people’s lives— the more relevant the brand, the more equity, presence, and importance the brand has. General Mills took a unique approach to boosting relevance by recognizing new customer demands— in this case, the demand for healthy foods— and acquiring other brands that offer innovative, healthy products across different areas of customers’ lives.

Annie’s in particular is credited with providing leadership in product innovation and distribution. Several of the long-held General Mills brands joined the effort. Fiber One had been a leader in the fiber race for years – first in cereals, then in snacks – and is currently on a growth surge. If fiber is your concern, Fiber One will be preferred.

Nature Valley connects to the core health segment not only through its products but also because of its support of the national parks. The Nature Valley Trail View provides 360-degree views of 400 miles of national park trails across the country. Yoplait Greek 100 also has a lot of healthy characteristics and is one of GM’s current winners.

General Mills has also made product changes that have been responsive to the healthy eating trend as well. In 2004, it changed its cereal line to whole grains and reduced sugar levels sharply in kid’s cereals. Yoplait also reduced the amount of sugar in its products.

In 2011, General Mills begin to source eggs from cage-free sources. It was an early leader in gluten-free products, long before gluten-free became trendy. By adding gluten-free options to top-selling brands such as Cheerios, General Mills now has 600 products that are gluten-free. And of course, they have Betty Crocker to lend her credibility to their effort to improve food choices.

A Different Route: Kellogg’s Approach with Kashi

In contrast to General Mills, Kellogg’s, only a bit smaller in sales than General Mills, has gone a different route. Kellogg’s bought Kashi in 2000, its “healthy” entrée into the market, but it’s performing badly because it lacks the organic and natural focus of the brands that are competing for the knowable, health-conscious segment.

Rather, Kashi emphasizes whole grains, high protein and fiber, which is not enough today. It has experienced difficulty in connecting with the target segment, as exemplified by their response to a grocer who posted to social media accounts that Kashi uses genetically modified organisms (GMOs) despite their claim to be natural. Kashi replied that the FDA does not regulate the use of the word “natural.” And while this may be true, most people imply that natural means that processed food has no artificial ingredients, pesticides or GMOs. In part because of the decline of Kashi sales, Kellogg saw its earnings per share in 2014 decline sharply. In contrast, the earnings per share at General Mills continued a healthy increase year by year that it has enjoyed for the last five years.

On May 3, 2013, Uniqlo became the exclusive, multi-year sponsor of the New York Museum of Modern Art’s Friday night program, which offers free admission in the evenings. Almost a year later in March of 2014, Uniqlo launched SPRZ NY (Surprise New York) in partnership with MoMA.

Under SPRZ NY, Uniqlo puts artwork inspired by top contemporary artists such as Andy Warhol, Jean-Michel Basquiat, and Keith Haring on some 200 items that will sell from $6 to $50. Some of the artists, including Ryan McGinness, will personally design clothing items based on their works hanging in the museum. It’s “the place where art and clothing meet.” The sponsorship is designed to showcase the huge signature 5th Avenue Uniqlo store that is located around the corner from MoMA.

“The place where art and clothing meet.”

The store redesigned the second floor so it looks and feels like a museum, with framed pieces of art-stimulated clothing on the wall. A Starbucks was added that provided more destination appeal and energy. A one-year anniversary of the launch saw a month of special events such as an Art of Discovery scavenger hunt in the museum, a design your own t-shirt program for kids, and a special New York art tour featuring secret locations.

The partnership works for four reasons:

It provides a brand image lift. The association and the programs provide a lift to the Uniqlo image of representing quality, innovation and contemporary fashion that works in everyday living. The art provides self-expressive benefits to some and a sense of being contemporary and fashionable without being trendy to others. It gives energy to the brand, the store and the store experience. Just think of having unique designs attached to interesting and visible artists. The MoMA connection is not possible to duplicate; it’s the ultimate characteristic of an exclusive sponsorship.

It energizes the flagship store. It provides a spotlight on the flagship store and by extension the Uniqlo effort in US major cities, which also offer many of the MoMA-inspired clothing items. It gives the Uniqlo 5th Avenue store a burst of energy and differentiation. Both are highly sought after and hard to attain for retailers, especially prime competitors like Zara and H&M. The fact that the store is around the corner from the MoMA cements the relationship.

It’s dynamic. The sponsorship was not simply an association based on paying more money than others, but it was alive, active and anything but static. Each year, Uniqlo not only sticks with the sponsorship but leverages it in new and creative ways. And all along, Uniqlo stuck to the core features of the MoMA and the SPRZ concept of creating surprising experiences.

It links back tightly to the Uniqlo brand. Free Fridays are labeled as Uniqlo Free Friday Nights. SPRZ NY clothing is featured in the Uniqlo 5th Avenue store and is available elsewhere. Except for the MoMA store, the only place that clothing appears is within Uniqlo. It fits Uniqlo, a brand with an emphasis on contemporary fashion for everyday living, on innovation and on having a distinctive in-store experience.

Who wants to spend time with someone who is so boring that he’s described as having no personality? Maybe it’s better to be a jerk because at least you’ll be interesting. Having a personality is equally helpful to brands, especially in the digital age.

Not all brands have, or even should have a strong, distinctive personality, but those brands that do have a significant advantage in terms of standing out from the crowd, having an on-brand message, and supporting a relationship with customers. Personality is an important dimension of brand equity because, like the human personality, it is both differentiating and enduring.

Enhancing Self-Expression Benefits

People express their own or idealized selves in part by the brands that they buy and use, especially when the brands are socially visible and have a personality. Such a brand is a badge that tells others what you value and how you live, and, more importantly, reaffirms to yourself what is important in your life.

Using an Apple computer expresses for some a non-corporate, creative self, based in part on the perception that the Apple brand’s personality is irreverent, creative and young, and challenges convention. The use of Betty Crocker expresses the home/mother/nurturing side of some of its users because “Betty Crocker-as-person” is a mother figure: a traditional, small-town, all-American person who cares about cooking and about her family. Wearing the Nike brand reflects “Nike-as-person”: someone who is exciting, provocative, spirited, cool, innovative and aggressive, and into health and fitness. Being a Patagonia fan expresses a passion for the environment and for sustainability. Being a Dove user reaffirms a belief in real inner beauty.

Providing the Basis for a Relationship

A brand personality can help build an understanding among the brand’s company and can communicate internally, about a brand-customer relationship that can suggest programs and be the basis of brand loyalty.

For example, consider the following relationship metaphors: A well-liked and respected family member—a warm, sentimental, family-oriented, traditional personality—would match brands like Hallmark, Hershey’s, John Deere and Campbell’s. A person whom you respect as a teacher, minister or business leader—someone who is accomplished, talented and competent—is like IBM or The Wall Street Journal. A companion for an outdoor adventure—an athletic, rugged and outdoorsy personality—is like Nike or The North Face.

A stimulating companion—an interesting personality with incredible stories—is like the Dos Equis beer spokesman, “the most interesting man in the world.” A “brand-as-person” who has a passion for healthy, organic foods is reflected by the Whole Foods Market personality.

Representing a Functional Benefit

A brand personality also can be a vehicle for representing and cueing functional benefits and brand attributes. It can be easier to create a personality that implies a functional benefit than to communicate that functional benefit directly. Further, it’s harder to attack a personality than a functional benefit.

The Harley personality is a rugged, macho, America-loving, freedom-seeking person who is willing to break out from confining society norms of dress and behavior, which suggests that Harley motorcycles are powerful and have substance. Meanwhile, MetLife has used the Peanuts characters to create a personality of being warm, approachable and humorous, a highly desired but hard-to-achieve personality for an insurance company.

“People express their own or idealized selves in part by the brands that they buy and use.”

The Energizer rabbit is an energetic, upbeat, indefatigable personality who never runs out of energy—just as the battery runs longer than others. Wells Fargo, as represented by the stagecoach, reflects an independent, cowboy type who delivers reliably. Although competitors may actually deliver superior reliability and safety of assets, because of the stagecoach, Wells wins the battle of perception.

Guiding Brand-Building Programs

Tactically, the brand personality concept and vocabulary communicate to those who must implement the brand-building effort. As a practical matter, decisions need to be made about the communications package, including advertising, packaging, promotions, events, customer touchpoints, digital programs and more. If the brand is specified only in terms of attribute associations, little guidance is provided.

To say that TaylorMade golf equipment is of high quality with an innovative design does not give much direction. However, to say that “TaylorMade-as-person” is a demanding professional conveys much more. A brand personality statement provides depth and texture, making it more feasible to keep the communication and other brand-building efforts on strategy.

One retail chain created a mythical “brand-as-person” with a home setting, a family, interests, opinions and activities. The company gave that person a name. Let’s call her Sue. Then whenever a product, communication or operation initiative was proposed, the criterion was: Would Sue do it? The concept led to easier and better decisions.

Helping to Understand the Customer

The brand personality metaphor can help a manager gain an in-depth understanding of consumer perceptions of the brand. Instead of asking about attribute perceptions, which can be both boring and intrusive, asking people to describe a brand personality often is involving and can result in more accurate and richer insights into feelings and relationships. The arrogant and powerful personality ascribed to Microsoft, for example, provides a deeper understanding of the nature of the relationship between Microsoft and its customers. Or the personality construct might be a better entry into understanding the calm emotion associated with Celestial Seasonings tea than a discussion of attributes.

A variant is to ask what a “brand-as-person” might say to you. In a credit card study, one segment who perceived the brand as being dignified, sophisticated, educated, a world traveler and confident believed that the card would say things like, “My job is to help you get accepted,” and, “You have good taste.”

A second intimidated segment perceived the card to be sophisticated and classy but snobbish, aloof and condescending, and believed that the card would make comments like, “I am so well-known and established that I can do what I want,” and, “If I were going to dinner, I would not include you.” The perceived attitude of the brand toward the customer was a big insight into where an important customer segment was coming from.

Providing Energy

When developing a brand vision, there frequently comes a point at which someone asks: Does the brand contain any energy? And if not, how is it going to communicate and succeed or even be relevant in today’s environment? A brand personality often is a good way to introduce energy into a vision.

A strong brand personality, such as those surrounding Mercedes, Muji or American Express, can provide energy by adding interest and involvement. It effectively amplifies brand perception and experiences. All airlines seem very similar until the energy created by the personality profiles of brands like Singapore, Southwest and Virgin are considered. Think of the energy surrounding the personality of the AXE brand, which is obsessed with being successful with attractive women.

“Don’t Think of an Elephant!,” by UC Berkeley linguist Goerge Lakoff, is important to every brand strategist. One of its most powerful points is that it explains how, within a political setting, Republicans so often win policy arguments. The answer is in the framing. Republicans are just very good at it.

Lakoff’s insights directly apply to branding. Framing dictates the discussion and the decision. It affects how we see the world, how we process information, whether that information is distorted, how we interpret it, what behavior occurs, and whether attitude and behavior change is even possible.

It matters whether the frame is tax relief (taxes are an affliction and heroes remove them), paying your share (just as you pay dues at a club, you should pay for education, libraries, roads etc.), or investing for the future (building infrastructure or educating will help future generations).

It matters if the frame is pro-abortion or even partial-birth abortion (who is for abortion?) vs pro-choice (who wouldn’t want choice?). It matters if you think of climate change (climate has a nice connotation, so what if weather changes?) vs global warming (which suggests a real danger).

It matters if you think of patient protection or affordable care (both of which are widely supported) or Obamacare (which suggests Obama and the government are overreaching).

Framing is about choosing language that fits your worldview. Some implications for brand strategists: Pay attention to framing subcategories rather than brands. Notice what people are buying and why. Move from positioning the brand and engaging in “my brand is better than your brand” marketing to framing the subcategory (or category) and thereby changing the way people perceive, discuss and feel about your brand.

Importantly, this changes which brands are relevant. So instead of how a brand is perceived, we consider how a person looks at brands and decisions regarding subcategories like compact hybrids, rental cars, organic milk, online banking or urgent care centers. Be disciplined and persistent in using the language and symbols that represent your frame. Some people are locked into a frame, but many are susceptible to alternative frames and will gravitate to the one that is simply used the most.

When opponents or competitors start using your frame, the battle is over. When Democrats start using terms like tax relief, abortion rights, climate change and Obamacare they have lost the fight. Frustratingly, even an attempt to negate a frame actually strengthens it.

When people are told to not think of an elephant, they can’t get the image out of their minds. When Richard Nixon said he was “not a crook” what emerged was a reaffirmation that he was a crook. So it is necessary to be disciplined to consistently use the language of your frame and never accept the alternative. Know that facts don’t really matter.

“It is a myth that people are rational and that some well-presented facts will change their frame-anchored view.”

What is the worst thing you can say about a person? High up on my list would be that someone has no personality. Who wants to spend time with someone so boring? I’d rather hang out with a jerk. At least then it would be interesting. The same reasoning applies to brands.

Not all brands have a personality, or at least a strong, distinctive personality. But the brands that do have a significant advantage in terms of standing out, communicating an on-brand message and supporting customer relationships. Personality is an important dimension of brand equity because, like human personality, it is both differentiating and enduring.

1. A brand personality can enhance self-expression benefits

People express themselves in part by the brands that they buy, especially when the brand is socially visible. For some, using a MacBook expresses a non-corporate, creative self, based in part on the perception that Apple-as-a-person is unpretentious and irreverent, and somewhat quirky in a good way.

Using Betty Crocker products and recipes expresses the home/mother/nurturing side of some of its users because Betty Crocker-as-a-person is a mother figure, a traditional, small-town, all-American person who cares about cooking and about her family. Wearing Nike shoes, clothing and accessories represents an active lifestyle personality for many, since Nike-as-a-person is exciting, spirited, cool, innovative, and into health and fitness.

2. A brand personality can provide the basis for a relationship

A brand personality can help lead to brand loyalty. For example, consider the following relationship metaphors:

• A weekend companion: Pepsi might be better than Coke if perceived as a fun, energetic, social person.
• A well-liked and respected family member: A warm, sentimental, family oriented, traditional personality like that of Hallmark, Kodak and even Coke can stay with you while growing up.
• A teacher, minister or business leader: Brands like IBM or the Wall Street Journal can represent accomplished, talented, and competent people you trust.
• An outdoor adventurer: REI, Nike or The North Face can represent your most athletic, rugged and outdoorsy friends.

3. A brand personality can represent a functional benefit

A brand personality can also represent functional benefits and brand attributes. It can be easier to create a personality that implies a functional benefit than to convincingly communicate that a functional benefit exists. Further, it is harder to attack a personality than a functional benefit. Consider:

Harley-Davidson as a rugged, macho, America-loving, freedom-seeking person who is willing to break out from confining society norms of dress and behavior. This suggests that the Harley motorcycle is powerful and has substance.

Hallmark as a sincere, sentimental, warm, genuine, wholesome, person, both competent and imaginative. This says so much about Hallmark’s offerings.

Wells Fargo, as represented by the stagecoach, reflects an independent, cowboy who delivers reliably. Although competitors may actually deliver superior reliability and safety of assets, because of the stagecoach, Wells Fargo can win the perception battle.

The Energizer rabbit is an energetic, upbeat, indefatigable personality who never runs out of energy—just as the battery runs longer than others.

4. A brand personality can guide brand building programs

As a practical matter, decisions need to be made about brand communications packages including advertising, physical packaging, promotions, events, customer touchpoints, digital programs and more. If the brand is specified only in terms of attribute associations, little guidance is provided.

“It’s almost impossible to copy a personality.”

To say that TaylorMade golf equipment is of high quality with an innovative design doesn’t give much direction to the communications team. However, to say that TaylorMade-as-a-person is a demanding professional who expects the best from his or her equipment conveys much more. A brand personality statement provides depth and texture, making it more feasible to keep the communication effort on-strategy.

5. A brand personality can help understand the customer

The brand personality metaphor can also help a manager gain an in-depth understanding of consumer perceptions of the brand. Instead of asking about attribute perceptions, which can be both boring and intrusive, asking people to describe a brand personality is often involving and can result in more accurate and richer insights into feelings and relationships.

The arrogant and powerful personality ascribed to Microsoft, for example, provides a deeper understanding about the nature of the relationship between Microsoft and its customers.

6. A brand personality can provide energy

A strong brand personality such as those surrounding Mercedes, Muji, or American Express can provide energy by adding interest and involvement; it effectively amplifies brand perception and experiences. All airlines seem similar until you consider the energy created by the personality profiles of brands like Singapore, Southwest, and Virgin.

A brand personality can provide a vehicle to express a person’s self, represent relationships, communicate attributes, guide brand–building, understand the customer and contribute energy. It can also provide a sustainable point of differentiation – it’s almost impossible to copy a personality.

The biggest threat facing most brands today is the loss of relevance because the category or subcategory they are serving is declining. If a group of customers wants a battery-powered car, it doesn’t matter how much they love your hybrid brand. It will not be relevant.

A newspaper can have the best news coverage and editorial staff, but if readers are diverted to cable news or blogs, relevance declines. If a customer becomes health-conscious, loyalty to a high-calorie beer goes out the window. The threat emerges when customers are no longer buying what the brand is perceived to be selling. New categories or subcategories emerge as competitor innovations create “must-haves.”

“The ultimate tragedy is to achieve brilliance in achieving differentiation, win the preference battle, create a better-than-ever offering with incremental innovations, and build a powerful brand…only to have that effort wasted because of a relevance problem.”

So, how does a brand stay relevant?

Gain Parity

The goal is to create an option that competes with a competitor’s “must-have” that is close enough in performance so that your brand is no longer excluded. Over the last few years, several fast-food brands introduced menus items like salads and fruit smoothies designed to be “good enough” so that their brand is no longer excluded by the healthy-eating segment. Others have developed breakfast items for those that have gone elsewhere for that important meal of the day. McDonald’s, facing a threat from Starbucks to their breakfast and other off-hours business, introduced the McCafe sub-brand that created for many customers a point of parity with Starbucks in respect to coffee quality. McDonald’s got close enough to escape being excluded.

One challenge facing the parity strategy is that your brand may be perceived to lack credibility in the new area. Gaining visibility may be difficult because your parity addition may not be very newsworthy. It might be difficult to actually deliver on the promise given the fact that the culture, assets and skills of the operation were not designed to support the parity initiative. But you have to work against these challenges.

Leapfrog the Innovation

Instead of being satisfied with being relegated to a parity product, a brand could also attempt to take over the new category or subcategory. Or at least, they could attempt to become a significant player with a substantial or transformational innovation, leapfrogging the competitor. Nike+ products allow a runner to hear their music while they track their workout.

The Adidas miCoach also provides a way to monitor workouts, but it also provides an active forum, the ability to create a unique program, and even contact trainers to design customized programs.

Cisco has faced a gap in their product lines many times that they filled with an acquisition. Then they add Cisco-driven synergy and systems benefits to that acquisition, creating a leapfrog result. The leapfrog strategy represents a formidable challenge because substantial or transformational innovation is necessary. Getting established in a marketplace in which a competitor likely has scale and momentum will be difficult. But again – worth trying.

Reposition

Sometimes you must modify and reposition your brand so that its value proposition becomes more relevant given the market dynamics. Madonna has transformed throughout the years to maintain her relevance. L.L. Bean, originally built on a heritage of hunting, fishing and camping, repositioned to a broader outdoor brand relevant to the interests of outdoor enthusiasts such as hikers, mountain bikers, cross-country skiers and water-sports enthusiasts. The outdoors was still treated with the same sense of awe, respect and adventure – but from a different perspective.

The challenge here is to have enough substance to earn credibility in the new position and to implement the rebranding strategy well. Madonna and L.L. Bean had to live and breathe their reposition efforts in order to see the benefits.

Stick to What You’re Good At

Sometimes, instead of working to adapt it’s better to keep pursuing your original strategy with your original value proposition – but just do it better by continuously improving and creating brand energy. The safety razor, for example, was threatened in the 30s by the electric shaver with its compelling benefits. However, an incredible stream of innovations from Gillette allowed it to beat back the new category and enjoy robust growth.

In-N-Out Burger, a chain in the western United States that has developed intense loyalty with a menu of burgers, fries and shakes, has made no effort to adjust to the healthy trend. They simply continue to deliver the same menu with uncompromising quality, consistency and service under the assumption that worthwhile segments will either ignore the healthy trend altogether or at least indulge periodically. The risk of the stick-to-your-knitting strategy is that the new category or subcategory might be based on such a strong trend or such a compelling set of benefits that avoiding it might prove futile and even disastrous.

Every person has a brand, represented by a name and face. This brand has a host of associations. The brand will influence all relationships and affect how a person is perceived and/or respected. Your personal brand can be actively managed with discipline and consistency over time, or it can be allowed to drift. There is a huge payoff to employing the active management option and large risks to the alternative. Here is a road map to getting control of your personal brand:

Assess Your Target Audience

Describe the group with who you would like to have the right impression of you. Who would want to spend time with you? Who might admire you? Who do you want to respect you? For example, you may want a professional audience, a family audience and a friend audience. You might pick out a few representative people in each segment to provide focus and clarity. It may be useful, at least at the outset, to focus on one or two segments that are the most important or in need of the most attention.

The ultimate brand visions will have a lot of overlap, but there might be a visual element that occurs in one and not the other. For example, in the co-worker context, mentorship may be a goal where it isn’t in other contexts. Some vision elements may be interpreted differently in different concepts. Creative enthusiasm in a professional setting might be about innovation, whereas in a family context it might be about your willingness to participate in adventurous activities.

Appraise Your Image

Be brutal with yourself. What are your positives? Why are you respected? Why do some like to be with you? What are your negatives? Why do you lack respect from some? Why are some not attracted to you? What annoys people about you? What do people think of you in terms of personality, likability, appearance, skills, possessions, and the people you associate with? After you have a draft of your image in your head, you might ask for input from others to see what you are missing. Such input is often an eye-opener—both positively and negatively.

Make a List

Now that you know how you are perceived, think about how you would like to be perceived. It can involve elements like being stimulating, well-versed, interested in politics or movies, a trendy dresser, clean-cut, humorous, kind, thoughtful, friendly, adventurous, calm in crises, competitive, competent, creative, gets-the-job-done, outdoorsy, environmentally conscious, or whatever is important to you and those you care about. When your name comes up, what characteristics would you like people to come to mind?

Convert that list into personal brand vision concepts

Evaluate the elements on the list. Delete or downgrade those that will not impress your target audience or that you might not be able to realistically deliver. Then group the remaining characteristics into six to twelve concepts. After eliminating redundancy, the grouping should represent different perspectives or dimensions of concepts that you feel are important to be associated with you.

“Your personal brand can be actively managed with discipline and consistency over time.”

Prioritize the elements

Two to four of the most important elements should comprise your core vision. They should be the most important drivers of relationships. The remaining will consist of things you need to do to avoid messing up relationships, but they won’t be key drivers that will make a difference in building them.

Identify what you need to work on

Create programs to develop or nurture yourself or your interaction pattern so that you deliver. Maybe one of your elements is positivity. Your program could involve daily positive behavior goals. Or maybe you’d like to be more empathetic and kind. You might need to develop the habit of performing small acts of kindness. You need to be able to deliver on your brand vision, and that might require changes in substance and not just perceptions.

Develop a communication plan

How can you communicate your brand vision, particularly for those elements that you now deliver but do not get credit for? This might be difficult, and it will take some time to shift perceptions. Some suggestions:

• Consider role models: Who inside and outside your professional or social circle has been successful at achieving the brand vision you aspire to? How did that person get there?
• Consciously change your activities, your appearance, your companions and your interaction patterns. Be consistent and persistent.
• Develop visible programs to represent the new you. If you are trying to lose weight, get involved in a charity, or become less rigid – let people know! Accountability is key.

Many CMOs are challenged with the question, “Where is the quantitative proof that brand investments pay off?” Put simply, return on brand investment is the measure of your brand’s performance, gauged by the strategic movement and growth of your brand.  Determining ROI is difficult, as looking at your people, IT and organizational culture do not provide the kinds of quantitative evidence you need in this case. Thus, organizations must find other ways to measure ROI.

How to Determine Return on Brand Investment

To help brands accurately determine if their investments were justified, Robert Jacobson and I conducted two studies in which the impact of brand equity on stock return was measured using time series models. The first database included nine high-tech firms such as Apple, Dell, HP, Microsoft and Oracle.

Quarterly data over 8 years provided 250 observations. Brand equity was based on an attitude measurement (percent having a positive view minus the percent having a negative one). The model compares the impact on stock return on two variables: changes in accounting ROI during a prior period, and changes in brand equity also during a prior period.

We know that accounting ROI impacts stock return from finance research and observation of the stock market. The impact of brand equity on stock return was shown to be about 70% of the impact of accounting ROI.

The second database included 34 firms such as AMR, AT&T, Citicorp, Exxon, Hershey and Ford. Brand equity was based on an annual survey of consumers who evaluated each brand along an 11-point perceived quality scale. There were 102 data points.

Using a similar time series model, it was found that brand equity had nearly the same impact as accounting ROI (23 vs. 25). When added to the model, advertising impact was insignificant and did not change the results (though it could have impacted indirectly by enhancing brand equity). So, we can rather definitively say that, on average, brand equity matters. It improves brand value through impact of stock return for brands.

Calculating Brand Value

We suspect that brands driving sales for a business within a firm should be similarly impactful on profit streams going forward. Second, the efforts to evaluate a brand provide evidence that brands have asset value. A brand value is obtained by:

“Value of a Business X Percent of That Value Due to Brand = Brand Value”

A knowledgeable team estimates the percent of value due to brand subjectively. They reflect on how much of the business value is due to the brand versus intangible and tangible assets. This estimate, even with a team of knowledgeable people, will be rather crude but it does provide an indicator of a brand’s asset value. It also provides a perspective on brand value that frames the quantitative discussion.

The Impact of Branding on Sales & Margins

What would happen to sales and margin if the brand were lost or degraded? The answer is usually quite sobering. The percent of a business assigned to a brand ranges from:

• Around 10% to 15% for brands like GE, Accenture, Caterpillar, and Chevrolet
• 40% to 50% for brands like Google, Nike and Disney
• Over 60% for brands like Jack Daniel’s, Coca-Cola and Burberry

Even 15% can generate a huge value. While these estimates are less than precise, they are instructive and provide evidence that, on average, brands matter. They also provide a frame of reference.

ROI of Branding Example: Toyota Corolla and Chevrolet Prizm

A nine-year experiment was conducted that proved very informative. From 1989 to 1997, a car was made in the MUMMI automobile plant in Fremont California that was marketed as the Toyota Corolla and the Chevrolet Prizm (or GEO Prizm for part of the time). This car had virtually the same design and was made in the same plant by the same people. It should therefore have the same price, sales and ratings of owners and experts. But it didn’t.

The Corolla brand was priced 10% higher, depreciated less over time, and had much higher sales than the Prizm. Most remarkable of all, consumers and experts both gave it higher ratings. A defect for the Corolla was excused as “one of those things” but a defect from the Prizm confirmed what was expected from a new Chevrolet compact car.

The only real difference between the two cars was the brand. Toyota Corolla was introduced in 1968 into the U.S. and had long been one of the leading brands in the marketplace. The Prizm was a new brand. Further, Toyota had a higher reputation for innovation and quality than Chevrolet. As a result, Toyota Corolla had higher awareness and credibility (the elements of relevance) plus higher perceptions of quality and features. These brand equity elements explain much of the differences in price and sales.