Saturday, June 24, 2017

Why Do We Need a Brand Strategy?

With the dawn, during the mid 1990s, of the Age of Intellectual Capital, came the realization that the real wealth in the modern enterprise is located in the intangible assets of that enterprise and not in the “traditional (tangible) assets” such as real estate, plant, equipment, inventory, cash, and the like.

To understand the importance of these intangible assets, we need only look at the market capitalization of many of today’s most successful corporations, or at the prices paid well beyond conventional assets in recent mergers and acquisitions.

Consider Microsoft. In 2000, with a market capitalization of over $423 billion, Microsoft reported revenues of only $23 billion! If we check its balance sheet, and add its stated conventional assets of $52 billion to its annual revenues, we are still left with $348 billion worth of market cap of unspecified value?

What accounts for this $348 billion? Experts agree this represents Microsoft’s intangible assets or “Intellectual Capital.” These days, on average, the intangible assets in many successful organizations are worth more than their traditional assets plus annual revenues.

A simple index of all the elements of Intellectual Capital, is “the Brand.” The Brand has become the distillation, as Brand Equity, of most intangible assets and the Intellectual Capital wealth that an enterprise has created over time.

Considering this, we can see why “the Brand” has moved to the center of corporate strategy. Increasingly, it is becoming one of the most valuable assets in the enterprise. Furthermore, it is a primary strategic asset as regards both competitive strategy and sustainable competitive advantage.

If this seems like an overstatement, consider the fact that all enterprises, from commodities to consumer packaged goods, possess, often unrecognized and entirely unleveraged, a brand or brands which are either accumulating or losing Brand Equity with the wisdom of each organizational act.

Whether it is “merely” the name of the enterprise, a product, a service, a house mark or a subbrand, we are all operating under an identity, which is de facto the brand or brands of the enterprise.

As we realize this largely unrecognized role of “the Brand,” our paradigm shifts, and the Brand, which we thought was, at best, the concern of the VP of Marketing, now understood as Brand Equity, becomes the ongoing concern of the CEO and the entire executive team.

If the Brand is the central Intellectual Capital asset, then a Brand Strategy is essential to managing that asset effectively. In other words, if we do not know what the enterprise stands for; and if we are not driving what it stands for into the minds of the consumers, customers, employees, and other stakeholders; and, if what it stands for isn’t a unique, well-articulated, and ownable “position” – then we haven’t yet really positioned the enterprise. In the absence of such a unique position, we are not either leveraging our Brand Equities into new wealth or commanding an orchestrated, sustainable, competitive advantage upon which to build reliable long-term success.

Consider that your Brand may be your most valuable corporate asset, and the asset you can most uniquely and powerfully leverage into a sustainable competitive advantage.

Copyright © 2001 • KLM, Inc. • All Rights Reserved

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