Brand as value generator

Members of the CMA Brand Council have prepared a 4-part blog series on the topic of “brand as a value generator.” This series will explore how brand marketing goes beyond simply building a branded identity; it plays a crucial role in driving long-term demand and competitive financial business results. The series will discuss how a strong brand can act as an asset for premium pricing, generate customer loyalty and advocacy, and impact hiring and talent retention. This is the first of four blogs. Read on to discover more about the multifaceted role of branding in creating consumer and financial value.

It is a challenging time for businesses.

Consumers have access to an endless choice of products and services, and creating a strong brand has become more important than ever. But what is the true role of a brand in creating value for businesses?

Brand marketing is about driving long-term demand, not just about building a brand. In today's fast-paced digital world, it's easy to assume that marketing is only about leveraging media and digital tools to sell products in digital platforms. The challenge and opportunity for business leaders is to reappraise marketing as a critical strategic function that drives business growth and success.

The perception of marketing

An inaccurate concept of what marketing is has permeated the industry. Below are several forces that are distorting its perception:

1. The increasing drive for short-term results

Short-term results are a business necessity. However, this should not overshadow the strategic importance of marketing in building long-term brand value and creating sustainable competitive advantages.

The single-minded focus on short-term results has increased because of practices like zero-based budgeting and the financial-led mandates to do more with less. Cost cutting does not grow businesses. Evidence shows that companies that invest in brand building and long-term marketing strategies tend to outperform their peers in terms of revenue growth and profitability in the long run. While sales-driven ads deliver few long-term effects, brand advertising achieves both. A recent article from Mark Ritson in Marketing Week explores in detail the effects of The Long and the Short of It (TLATSOI), the work of authors Peter Field and Les Binet. 

2. The “tactification” of marketing

Marketing is at times misunderstood as digital ads and sales conversion activities. While it is a positive that digital promotions have become mainstream, the role of marketing is not to execute these tactics.

Digital media is measurable with metrics like Click Through Rates and impressions, however these metrics are not indicative of business results. They may make promotion activity feel more tangible, but they only point to short-term tactical conversion and do not enable long-term brand value building. In this sense, they are disconnected from real marketing and business metrics.

The expansion of Marketing Mix Modelling can enable a broader perspective of the impact of multiple marketing touchpoints. Its broader adoption in the industry can help improve the long-term effectiveness of strategic and tactical elements.

3. Growth of tactical A/B testing

While A/B testing is a practical tool to optimize tactical messaging, it is replacing the strategic value of finding consumer insights that can lead to higher brand value.

Marketing is about understanding consumer needs and behaviours, developing unique value propositions, creating differentiated positioning in the marketplace, and augmenting the perceived value of a brand in the minds of current and potential customers.

4. Emergence of ecommerce

Digital sales tactics are critical to ecommerce; these activities are being mislabeled as marketing.

5. The explosion of AI

Having access to data and AI tools is critical to success, however, using them without defining a strategy is becoming more common.

Reappraising marketing

These forces are creating a shift in the focus of marketing as a practice – from strategic, long-term brand building to a short-term driver of sales results.

Progressively, marketing has been minimized to tactical actions to create immediate sales, pushing aside the long-term strategic function of building and leveraging consumer brand value that enables pricing, higher margins and business results.

The key question for consideration is:

How can business leaders reappraise marketing as a strategic function that creates perceived value, enables long-term demand and creates a competitive advantage?

The first step is understanding that building a brand has a much more far-reaching impact than making a product or designing a service.

Brand marketing is about creating a shortcut to understand the value that consumers want to pay a premium for. This value builds over time and enables long-term financial results. It’s about converting the connection with customers, beyond selling products or services.

Building a high perceived value predisposes consumers to consider and prefer a brand before they make a purchase decision. In this way, a brand acts as a shortcut to communicate a high perceived value and build that perception in the consumer’s mind over time. Without consistently building the perception of high value, the brand is forced to compete on price.

The value built up in the consumer’s mind materializes as high margin sales when the consumer is so connected with the brand that they bypass substitutes and price considerations. This is the moment when trust and familiarity become critical in making purchases less functional, and more emotional. This is why brand building support is critical to preserving brand equity.

So, what can we do as marketers?

Reappraising marketing as value generation is about changing our mindset as marketers. It's about creating a unique brand identity, leveraging trust and loyalty, getting customers to become brand advocates, and building value with fact-driven storytelling.

When tactical actions become the lion’s share of a marketing plan, brand storytelling is forgotten; there is no room for it. This has major implications on the brand’s value and performance. Tactical tools are great for immediate conversion, but they do little to build the storytelling that adds value for the brand’s future.

It’s about creating a strategic marketing culture. This involves leveraging a brand promise to guide a positive overall company culture that embodies a brand's values and mission, and fostering a sense of community. A strong brand culture can help attract and retain top talent and create a loyal customer base that identifies with the brand on a personal level.

Marketers should strive to build a strong emotional connection with customers through effective storytelling and a positive brand culture.

The role of training

Training plays a critical role in reappraising marketing as a value generator. Strategy skills and knowledge are vital, as well as developing and executing effective campaigns. Beyond staying technologically current, marketing training programs need to foster a culture of placing value on strategic thinking, insights, customer-centricity, innovation and profitability. By investing in marketing training, companies can develop the business skills to enhance their competitive edge, augment brand value, increase demand and drive high-profit sales over time.

Final thoughts

Marketing is essential for driving demand in the long-term by building and leveraging brand value – and a mindset change will enable this long-term demand creation.

Stay tuned for Part 2 of this blog series, which will dive into the concept of brand as an asset for premium pricing.