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RETAIL/F&B Last modified on September 3, 2019

The Power of Brands

Interbrand strategy consultant, Jan Glanzmann, considers the value and transformative power of a strong brand, which he believes have grown from nice-to-have to must have assets.

I am often asked what I consider to be a company’s biggest single asset, and in many cases, it is the brand.

The brand value of one of the world’s best-known companies, Apple, is estimated to be $2.1 billion and this is just one example, albeit a market leading one, of the power of a brand.

However, brands being the biggest single asset of a company, doesn’t only apply to the B2C market as a growing number of B2B companies are discovering.

Unfortunately, this tenet is often neglected or ignored when it comes to B2B brands. A risk, which can limit the growth of B2B companies’ financial business value.

This also applies for a broad variety of brands across the travel value chain and thus also the aerospace industry, which is still driven by the forces of engineering and sales when it comes to growing companies’ business.

The definition of various brand values in the industry – worth multiple millions or even billions – brought new arguments to the table. Those arguments indicate that there are great reasons to add a third force for growth: brand(s) as business assets.

While the present financial value of a brand – a static number – might be one reason to redefine the priority of actively managing a companies’ brand, the even more important one should be its future growth potential.

Like in many other industries, the value of brands in the aerospace sector – including airports – is expected to further accelerate their growth in the future.

There are two key indicators that substantiate this assumption: rising traffic demand driven by globalisation – global passenger numbers have soared by 130% in the last 15 years according to Statista data – and the expansion of former aerospace focused companies into new business fields.

With regards the latter, one example of such a development is Airbus, which in 2017 launched an on-demand helicopter booking platform called ‘Voom’ to directly engage with passengers.

Brands2

Another example is Munich Airport, which recently announced the creation of an innovation and collaboration campus (LabCampus).

However, expanding an airport into real estate, retail or entertainment businesses is not only an operative challenge, but also challenging from a brand perspective.

Indeed, several studies conducted as part of Interbrand’s annual Best Global Brands ranking show that the influence of subjectivity and emotionality in the purchase decision– referred to as ‘Role of Brand’ – increase across those businesses up to an industry average of 45%.

This suggests that when it comes to business transformation, a brand is a must-have rather than nice-to-have asset.

The increasing importance of brands in the airport business illustrates that neglecting an active and profound management asset can cause serious damage to the growth of a business.

In contrast, conscious management of the brand can unlock long-term growth potential. A strong brand, for instance, offers “enhanced value” by influencing customer orientation, trust and the desire to achieve the company’s purpose.

This in turn drives customers’ choice, loyalty and willingness to pay a price premium. Consequently, this pays off in revenue growth, profit margin, risk migration and thus financial value.

While these mechanics apply for every market that relies on subjectively influenced purchase decisions, the increasing role of brands in the aerospace and airport industry unlocks additional potential.

Brand valuation methodology

1. Financial Analysis

Measures the overall financial return to an organisation’s investors or its economic profit. Economic profit is the after-tax operating profit of the brand, minus a charge for the capital used to generate the brand’s revenue and margins.

2. Role of Brand

Measures the portion of the purchase decision attributable to the brand as opposed to other factors (for example, purchase drivers such as price, convenience, or product features). The Role of Brand Index (RBI) quantifies this as a percentage.

3. Brand Strength

Brand Strength measures the ability of the brand to create loyalty and, therefore, sustainable demand and profit into the future. Brand Strength analysis is based on an evaluation across 10 factors that Interbrand believes constitute a strong brand.

It is a playground to shift customer expectations, force internal engagement, achieve a monopoly position and so transform and shape of the whole industry.

The aerospace companies which understand and address the relevance of brands in the purchasing decisions of their customers, will be able to create momentum by influencing their behaviour and building loyalty. An added benefit is also usually fully committed and engaged staff.

This makes the near future an exciting time for brand activists in the industry as it means that airport management teams have the opportunity to step up and take brave brand decisions for the sake of their gateway’s success.

Success, however, is certainly not a given thing, and no matter how brave some decision might be, they will ultimately fall short of their target if they fail to improve the brand’s strength.

This rule applies to the success of professional brand management in general. Thus, it is indispensable to understand what exactly makes a strong brand and how to measure the progress of building and achieving it.

Based in the nature of intangible assets, the management and measurement of a brand’s strength is multi-dimensional and therefore linked to high theoretical and practical complexity.

Dissolving this complexity requires clarity about and focus on what is essential. For this purpose, Interbrand developed 10 Brand Strength factors (see list above) which inform and guide the management, growth and measurement of brands as valuable intangible business assets.

Strong brands start from within – having clarity about the brand, commitment towards it, the right tools and processes to manage it and, finally, the flexibility to react to changing market demands.

With such a well attuned brand management in place, a company is able to optimise the external brand experience of customers to perfection – ensuring consistency across all touchpoints, being omnipresent to the customer and engaging on a constant basis.

Finally, the brand experience drives customer’s brand perception, which is centred around the following questions: Does the brand feel authentic and credible? Is it relevant to the needs and wishes of customers? And finally, is it sufficiently recognisable and distinctive towards competition?

Improving brand strength starts with a data-based assessment of the status quo and the definition of clear objectives where to improve. It is essential to keep in mind that it is difficult to improve across all 10 Brand Strength factors at the same time, especially with a limited budget.

Therefore, the right strategic focus is indispensable, and the main goal is to close the gap between the assessed status quo and the defined objectives. The good news is there is a wide range of brand management, marketing and communication tools and techniques at hand.

Facing this wide range requires confidence of those responsible to select the right actions to improve. Applying data science – for example through brand related business case modelling – can ensure making the right decision that has the expected impact on both, brand and business.

In conclusion, a profound understanding and management of the importance of brands to business today and in the future will enable companies in the industry to elevate their business growth to new altitudes – no matter if it is ‘just’ about managing a brand right or ‘even’ by making brave brand moves that will transform the whole industry.

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