How to Drive Profits through Your Brand

The more loved the brand, the more powerful the brand and in turn the higher growth and profit it can generate.

Brand LeadershipA beloved brand can use the connection with their consumers as a source of power. The tighter the connection to consumers, the more loved the brand. As a brand becomes more loved, it becomes more powerful, and is able to wield that power onto all aspects of the market. A Beloved Brand can entice consumers to keep coming back, it can fight off competitors to win with key targets, it can generate earned media easier, it can challenge suppliers to come back with lower costs and it leverage its positional power to gain preferential treatment with real estate owners, government or tour operators. Even employees would rather work for a powerful beloved brand than an indifferent brand.

Brands move along a “LOVE CURVE” going from Indifferent to Like It to Love It, and then they’ll make it their Brand For Life. The farther along the curve, the more connected to the brand.

The “Brand Love Curve” can be linked to the Brand Funnel which becomes the underlying scoreboard. You can use the funnel to map out the buying process for the consumer, identifying both strategy and tactics to move them along the funnel towards being more loved. Used properly, the Power of the Brand can help drive the P&L with four important levers: driving increased price, lowering costs, increasing share, creating new markets. As a result, a powerful connected brand is much more efficient. And that efficiency can leverage the P&L to invest back in the brand’s connectivity and drive Profit and over the long run create value for the Brand.

As a Brand Leader looks to how to drive their Brand through the P&L, here are the four ways the Brand Leader can drive profits:

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1. Using price as a weapon to drive Brand Value. It can be a price change, up or down, or it could be trying to get consumers to trade up or down.

  • Price Increase: You can do a price increase if the market or brand allows you. It likely has to be based on passing along cost increases. Factors that help are whether you are a healthy brand or it’s a healthy market as well as the power of your brand vs competition and channel.
  • Price Decrease: Used when fighting off competitor, if you need to react to a sluggish economy or channel pressure. Another reason to decrease price is if you have a competitive advantage around cost, whether that’s manufacturing, materials or distribution.

There are watch outs for price changes. It’s difficult to execute especially if it has to go through retailers. You need to understand power relationships–how powerful are the retailers. Many times, price changes are scrutinized so badly by retailers that you must have proof of why you are doing it. It’s likely your Competitors will (over) react. So your assumptions you used to go with the price increase will change right after. And finally, it’s not easy to change back.

  • Trading Up: If you have In a range of products, sometimes it can be beneficial to get consumers to trade up. Can you carve out a meaningful difference to create a second tier that goes beyond your current brand? Does your brand image/ratings allow it?
  • Trading Down: Risky, but you see unserved market, with minimal damage to image/reputation of the brand. In a tough economy, it might be better to create a value set of products rather than lower the price on your main products.

Beloved Brands seem more capable at driving profits through pricing, but they also are careful to ensure the premium does not become excessive to create backlash. There are a few watch outs around trying to trade up or down: Premium skus, can feel orphaned at retail world—on the shelf or missing ads or displays. Managing multiple price levels can be difficult—what to support, price differences etc. For all the effort you go to, make sure your margins stay consistently strong through the trading up or down. Be careful that you don’t lose focus on your core business. Can’t be all things to everyone. The final concern is what does it do your Brand’s image, especially risky when trading downward.

2. Managing cost as a weapon to enhance the Brand’s Value. It can be either your cost of goods or the potential selling costs.

  • Cost of Goods Decreases: You are able to use the power of your brand to drive power over your suppliers, you find cheaper potential raw materials, process improvement or find off-shore manufacturing.
  • Cost of Goods Increases: Make sure that you manage the COGs as they increase. Watch out for suppliers trying to pass along costs. But realize that with new technology, investing in brand’s improved image, going after premium markets, offering new benefit or a format change, that cost of good increases could be a reality.

The watch outs with managing costs: with cuts, make sure the product change is not significantly noticeable. You should understand any potential impact in the eyes of your consumer on your brand’s performance and image. Can the P&L cover these costs, either increased sales or efficiency elsewhere. Managing your margin % is crucial to the long-term success of your brand.

  • Selling Cost Decrease: To counter changes in the P&L (price, volume or cost), it’s very tempting to look to short-term P&L management or look at changes in go-to-market model. Where a brand stands on the product life cycle or how loved the brand is can really impact the selling costs. Even though we think that Beloved Brands have endless spending, they actually likely have a lower investment to sales ratio.
  • Selling Cost Increase: When you’re in Investment mode, defensive position trying to hold share against an aggressive competitor or when you see a proven payback in higher sales–with corresponding margins.

Always be in an ROI mindset: Manage your marketing costs as though every DOLLAR has to efficiently drive sales. Realize that short-term cuts can carry longer term impact. Competitive reaction can influence the impact of investment stance–like a price change, your competitor might over-react to your increases in spending.

3. Externally, the Share and volume game are traditional tools for brand. Either stealing other users or get current users to use more.

  • Offensive Share Gains: Use it when you have a significant Competitive Advantage or you see untapped needs in the market. Or opportunistic, use first mover advantage on new technology.
  • Defensive Share Stance: Hold the fort until you can catch up on technology, maintain profitability, loyal base of followers needs protecting.

Be careful when trying to gain share. A Beloved Brand has a drawing power where it does gain share without having to use attack modes. Attacking competitors can be difficult. It could just become a spend escalation with both brands just going at it. After a share war that’s not based on a substantive reasoning (eg. technology change), there might end up with no winners, just losers. Many times, the channel will try to play one competitor against another for their own gain. Watch out what consumers you target in a competitive battle: some may just come in because of the lower price and go back to their usual brand.

  • Get Current Users to Use More: When there is an opportunity to turn loyal users into creating a potential routine. Changing behaviours is more difficult than enticing trial. It’s a good strategy to use, when your there’s real benefit to your consumer using more. It’s hard to just get them to use more without a real reason.

There has to be a real benefit connected to using more or it might look hollow/shallow. Driving routines is a challenge. Even with “life saving” medicines, the biggest issue is compliance. Find something in their current life to help either ground it or latch onto. When I worked on Listerine, people only used mouthwash 20-30 times a year compared to 700+ brushing occasions. So we focused on connecting rinsing with Listerine to the twice daily brushing routine.

4. Increase the Size of the Market by Finding New Users or Creating New Uses.

  • Find New Users: When there is an untapped or under-served need. There could be a significant changing demographic that impacts your base. Or you are able to translate/transfer your reputation to a new user group. There should be something within your product/brand that helps fuel the brand post trial. Trial without repeat, means you’ll get the spike but then bust. Substantial investment required. Don’t let it distract from protecting the base loyal users.
  • Create New Uses: Format Line Extensions that take your experience or name elsewhere. Able to leverage same benefit in convenient “on the go” offering. Make sure current brand is in order before you divert attention, funding and focus on expansion area. Investment needed, could divert from spend on base business. Be careful because the legendary stories (Arm and Hammer) don’t come along as much as we hope.

Beloved Brands drive strong sales growth, which helps the P&L work harder and more efficiently.

  1. Higher volume helps you exert pressure on costs. That could be supply costs, operations costs, distribution over even media costs.
  2. Get More for Less From the Trade. You can begin exerting power over the sales channels to your advantage–trimming variable trade costs with retailers while demanding more display, prime real estate, coop advertising and more control over pricing. ROI on trade programs.
  3. Smarter More Efficient Management: manage your inventories, meet customer expectations, control pricing and drive cheaper costs.
  4. Growth means you start outgrowing any fixed costs. This includes start-up costs, sales force, product plants or R&D costs.
  5. Lower Cost of Capital: More certainty means lower risk and you can re-invest, knowing the ROI will be quicker and stronger.

You should be looking at your business through the lens of your brand. Yes, the brand promise sets up how the external community views your brand whether that’s consumers, customers or key influencers. It’s the consistency in delivering the promise that connects consumers with your brand, both emotionally and rationally, letting it become a part of their lives. But equally so, brand becomes an internal beacon to help guide behaviour, decisions, action, structure and the formation of a culture. You should drive your growth and profitability through your brand, with a focus on driving share, enhancing price while managing costs and finding new markets.

Most marketers will tell you that branding is about positioning. I think positioning is a means to driving growth and making money.

 

To view a copy of How to drive Profits into your Brand, click below:

 

I run the Brand Leadership Learning Center with programs on this very subject as well as a variety of others that are all designed to make better Brand Leaders.  Click on any of the topics below:

To join the Brand Leadership Learning Center Facebook page, click below:

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If you or team has any interest in a training program, please contact me at graham.robertson@beloved-brands.com

About Graham Robertson: I’m a marketer at heart, who loves everything about brands.  My background includes 20 years of CPG marketing at companies such as Johnson and Johnson, Pfizer Consumer, General Mills and Coke. The reason why I started Beloved Brands Inc. is to help brands realize their full potential value by generating more love for the brand.   I only do two things:  1) Make Brands Better or 2) Make Brand Leaders Better.  I have a reputation as someone who can find growth where others can’t, whether that’s on a turnaround, re-positioning, new launch or a sustaining high growth.  And I love to make Brand Leaders better by sharing my knowledge. My promise to you is that I will get your brand and your team in a better position for future growth.  To read more about Beloved Brands Inc., visit http://beloved-brands.com/inc/   or visit my Slideshare site at http://www.slideshare.net/GrahamRobertson/presentations where you can find numerous presentations on How to be a Great Brand Leader.  Feel free to add me on Linked In at http://www.linkedin.com/in/grahamrobertson1  or on follow me on Twitter at @GrayRobertson1

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