Stephen Cheliotis, Chair of the Superbrands and CoolBrands Council UK is a well established name in brand analysis. He’ll be discussing the 2014 “Superbrands Cool List”, recently released, at Technology for Marketing and Advertising event on the 25th of February. We sat down with him to discuss the finer points of what makes a successful brand.
1. What is brand analysis?
What brand analysis constitutes is very much dependant on the type of product you’re talking about. For “superbrands” and very large brands in general, it’s about bringing consumers and experts together to build an idea of what best practice should be moving forward, how to celebrate that brand in an effective way as far as marketing goes and so on.
For brand-owners themselves what I’m essentially doing is evaluating, in a lot more depth, the success of their brand. So its strengths, its weaknesses, how consumers feel about them and what is driving them in that particular marketplace (with a particular emphasis on market trends as a whole), and finally feeding all that back to the brand-owner. After this we start to pose questions like: How they can refine their marketing strategy in the light of all this?
Ultimately the idea underlying the workflow is that brand evaluation and auditing leads to better brand strategy in general, through refined positioning, refined market strategy, a refined tone of voice and so on.
For brands who haven’t articulated their brand well, the idea is often about reiterating what the brand actually is through the sort of research mentioned above. Often this sort of research can be rather difficult, a good example is in how we attempt to work out which emotions are relevant to a particular product (pride in ownership of a brand is particularly common here) and then finding a metric to measure this by, this can often be a headache, but we’ve developed good ways of dealing with it.
So for example, at the moment I’m looking at how entrepreneurialism works in certain businesses and what sort of branding, companies, products and so on best convey this concept in a comprehensible manner.
To paint in broad strokes, it’s about investigation followed by formulation of a strategy.
2. Valuation of most things can be tricky, so how do you approach valuing brands?
I actually just valued a brand for a FTSE200 company. There’s a clear standard in financial terms in how to value a brand: Clear accountancy guidelines methods that financial institutions, accounting bodies and tax bodies accept. Royalty result valuations for example.
There are also other ways to value the brand that you can’t necessarily use for tax purposes, but which as a business owner give you a clear guide as to the potential of the business. For example, net promoter scores. But really what we do with any evaluation is we look at what metrics are relevant for driving success for that brand within that sector.
3. Are there industries where the impact of a brand’s value is more readily felt on their balance sheet, if so, which industries are these and why?
I would argue that brand value plays a role in every market, even in B2B markets where you can leverage concepts like reliability through your branding.
Clearly in certain markets there is a lot more M&A and a lot more acquisitions, FMCG areas for example. Meaning the drinks market, the food industry and those type of categories where huge value is conveyed by branding alone in many cases.
Cosmetics are another area. As an industry, this involves huge conglomerate beauty “houses” that have developed a large, expansive range of products both of their own making and through acquisitions. The status of these houses is enough to attract emerging brands to join their established stable (consider L’Oreal or Estee Lauder for example).
And this ties into the luxury sector too: so fashion, cars, luxury services and hotel groups and so on. Particularly at the premium end. There’s an ongoing consolidation of big groups that snap up interesting, emerging brands, but there’s also emerging brands that carry enough value in of themselves to be interesting to these established groups in the first place.
4. What are some of the biggest emerging brands you expect to see gain more prominence over the coming years, globally speaking?
Firstly let’s talk about there will be more brands coming from East to West. That means more Chinese brands, more Korean brands, more brands from other emerging markets, we’ve already seen this to some extent with the emergence of Samsung, LG and Hyundai in South Korea alongside the likes of Asus in Taiwan. It’s a sort of global rebalancing process, most of the 20th century of course involved brands moving from West to East.
But key to remember here is that most of the emerging brands we’ll see over the next 10 to 15 years haven’t even been born yet, especially as they will be tech-related. You’ll see intermediate brands become increasingly important as marketplaces and supply chains become more elaborate, you can already see some examples of this: confuse.com findaproperty.com – their entire reason for existence is to simplify marketplaces, giving the customer a better deal by cutting people rendered superfluous by new technology out. I mean, consider the success of Just-eat.co.uk, it’s not ground-breaking technology but it makes use of the increasing ease with which these sorts of intermediate networks can be set up in a digital age. Expect these trends to continue.
Domestically I think you’ll continue to see organic brands appreciate in value, particularly those with a transparent supply chain that they can point to as proof of their advertised credentials.
Something I’d say in closing is that although brand value can be huge in terms of the leverage it can give a company, it can just as quickly dissipate. So it’s increasingly becoming a question of “Who will last the distance?” Consider. Facebook and Marks & Spencers as too examples. M&S have a proven reputation as a brand in spite of poor financials as of late and trust is still important. Where Facebook’s recent competition with other emerging forms of social media highlights that the lifecycle of some businesses and their associated brands is more questionable, particularly in the digital space. John Lewis is another great example of a well-established brand that can weather poor results on the strength of its reputation.
So the questions that should be asked are: What underpins the brand ultimately? And if it’s something like excitement and relevance, it’s worth bearing in mind that those things are prone to change. So how do these sorts of brands, like Facebook, try to reinvent themselves in an age of such prolific innovation across the board?