Monday, May 16, 2011
Purpose helps Stengel’s Best Brands outperform their peers
With the furor over the BrandZ Top 100, it is easy to lose sight of some of the other interesting projects going on at Millward Brown.
My colleagues Mario Simon, Benoit Garbe and Eric Tsytsylin at Millward Brown Optimor have been working on Jim Stengel’s Best Brands Study. The study identifies the brands that have grown in value the most in the decade up to 2010, and are identified on the basis of having both strong financial performance and a strong attitudinal bond with their consumers.
So rather than calculating which brands are the most valuable in the last year, as the BrandZ Top 100 does, the Best Brand portfolio looks at those brands that have grown both financial and attitudinal equity the most over the 10 years ending in 2010.
With the launch of the 2011 BrandZ Top 100 Most Valuable Global Brand ranking last week, I thought it would be interesting to check in and see whether or not the brands identified as Best Brands in 2010 had continued to outperform their peers.
Of the 50 brands identified in Stengel’s Best Brands Study, 24 are included in this year’s BrandZ Top 100. These include Apple, this year’s Most Valuable Global Brand, Coca-Cola, Louis Vuitton and Petrobras, the Brazilian oil company. Another 26 are fast growing, but smaller brands like Method household cleaners, Snow beer and the Discovery Channel, are in categories not covered by the BrandZ ranking.
A quick comparison of the 24 Best Brands that feature in the BrandZ Top 100 against the remaining 76 brands in the Top 100, suggests that these 24 Best Brands have indeed continued to grow value faster than their peers.
On average, the 24 Best Brands are worth over twice as much as the remaining 76 brands in the BrandZ Top 100. Compared to 2010, the value of these 24 Best Brands has grown at a rate almost twice that of the other Top 100 brands (no mean performance considering the Top 100 are la crème de la crème in the world of brands). And the average Brand Momentum score, which is based on a combination of financial and attitudinal loyalty metrics, suggests that these 24 Best Brands are well positioned for future earnings growth.
Since we first calculated the BrandZ Top 100 in 2006, both technology and luxury brands have grown significantly. Although luxury was hit by the recession, this year’s BrandZ results show the category is bouncing back fast with a 19 percent increase in value. Mobile technology and internet brands have become central to our lives, and luxury brands have found renewed growth in the developing economies.
Thinking that the performance of the Best Brands in the Top 100 might be unduly influenced by the high presence of brands in the technology and luxury categories, I redid the analysis without them. Although this leaves us with only 13 Best Brands, this makes the comparison even more compelling. These more “traditional” Best Brands grew just as fast as technology and luxury brands, over three times as fast as their other Top 100 peers, and are even better poised to grow in future than the overall set.
All of which leads to the question, what makes a Best Brand a best brand? How can they outperform the most valuable brands in the world? Jim’s book on the topic, Grow: How Ideals Power Growth and Profit at the World's Greatest Companies, is due out in December 2011, but one of the theses central to the book is that successful brands are imbued with “purpose.” Brands that openly express an ideal or meaningful purpose create employee and customer loyalty that allows them to flourish and grow even during a recession.
This entry was posted on Monday, May 16, 2011
and is filed under Research.
You can leave a response.