Brand Makeover: Refresh or Rebrand?

A brand can never be a static entity. Changes in external environment, including but not limited to competition, as well as shift in consumer behaviour make it imperative for companies to keep revisiting the brand, in particular, its strength and relevance in time and day. The change however, can sometimes be from within as well. A firm may choose to change its vision and mission, re-look at its portfolio or expand in different market(s) and consumer segment(s). Obviously, an existing brand (and its associated attributes like identity, essence and promise) may fall short of meeting the expectations of the changing world in and around.

Evolution of the Coca Cola Visual Identity over the years

There are multiple ways in which a brand can be made-over to represent its new-found vision and aspiration. This post looks at two such makeover strategies in particular - Rebranding and Brand Refresh, also because these are probably the most misunderstood and incorrectly interchanged terms.

To understand the two terms clearly, let’s take a short caselet.

There are three brands – Air, Earth and Water. All the three brands cater to young audience between ages 18-35 years and are about 10 years old now. Air and Earth are facing some troubles in their sales cycles as well as customer retention and loyalty scores.

Executives from ‘Air’ found out that their Target Group (TG) isn’t able to relate to the brand anymore. The TG has attributed this disconnect to its visual identity (Logo, theme, colour, design). The target audience claimed that the brand didn’t convey a youthful personality and hence has resulted in eroded association and attachment of the customers towards the brand. It felt that the brand has not kept up with time and has remained stagnant in terms of its expression and what it stands for. Conclusion- The brand isn’t preferred by its TG  for its loss of appeal.  

‘Earth’s executive had a worse reckoning with their TG. The customers claimed that they do not associate with the brand anymore and it is for their parents instead. They further added that the competitor has climbed up the ladder in terms of customer understanding, offerings, communication, engagement and even futuristic concepts for them. On the other hand, ‘Earth' is still stuck with the same Brand Identity and older form of communications. 

Conclusion- The brand is ‘there’, but ‘not there’ for its TG ("Not for me").

‘Water’, was in a different boat altogether. Having done well in existing target market for its products, it now aims to appeal to a much larger segment albeit with a different set of products under its current brand. However, it understands that its current brand identity and messaging will not be able to appeal to multiple segments effectively. So, the brand needs to be acceptable to multiple markets and segments.

Hence, what ‘Air’ needs is a facelift. A visual identity make-up which will make it more appealing to its target audience. The values and vision does not change, but the focus is only on cosmetic changes that would make the brand more appealing and relevant to the TG. ‘Air’ needs a Brand Refresh.

Britannia (2018)

However, it is not necessary that only those companies, which face issues as mentioned above go for Brand Refresh. Brand Refresh is often used as a routine strategy by some companies just to maintain a new visual identity that gives them a contemporary status in the target audience to avoid brand fatigue.

Godrej (2008)

Some of the examples of Brand Refresh globally are Google, Verizon, and Starbucks. Back home, Britannia, Godrej, Star TV and HUL have adopted a simple Brand Refresh strategy. While there may have been associated communication for their brand refresh launch, these were mostly cosmetic changes to be contemporary. 

‘Earth’ and ‘Water’ have bigger problem and opportunity respectively at their hands though. They requires much more than a cosmetic retouching, something which is deeper and affects the core and values of the brand. The change would attempt to make the brand relevant, not just by its visual identity, but with its newly framed (or communicated) brand promise and even culture to the customers. These brands will see a structural change in how they look at the customers, what the brand will stand for and what does it intend to be for its customers. ‘Earth’ and ‘Water’ need Rebranding.

India Post (2008)

Rebranding can occur with or without any name, design or logo change (unlike Brand Refresh). Some of the examples of Rebranding globally are Old Spice (in 2010), Apple (post 1997 when Steve Jobs took over) and Walmart (From “"Always Low Prices," to "Save Money. Live Better" in 2007).  In India, companies like Airtel (To tap a larger audience through their internet services), Hero (Post split from Honda in 2011), India Post (“Giving wings to your dreams” campaign trying to tap youth) and Incredible India(Show India in a different light) have taken the Rebranding route for their respective brands.

An interesting perspective on Rebranding is presented by the 2018 winner of REBRAND  GLOBAL 100 AWARDS, Brand Bhutan. The video shows how a tiny hillock nation is trying to rebrand itself for its products and services, a shift from its earlier branding of a scenic and spiritual country. This way, one unified, overarching country brand has been  developed for Bhutan. Click for more details on the Rebranding campaign -  Brand Bhutan.
  

Finally, Rebranding and Brand Refresh are brand makeover strategies but should not be confused as being one and the same. Brand Refresh is a cosmetic change which essentially deals with the look and feel of the visual identity of a brand. It does not look at structural and architectural changes of the brand and does not affect its brand promise (at least not explicitly). Rebranding on the other hand is much deeper. A Rebranding strategy cannot be undertaken without making structural changes to the brand. It also leads to subtle changes in brand promise and brand identity, which are propagated down to the target audience through cues and messages, implicit as well as explicit.

In the next post, we'd look at what are the other brand makeover strategies and when to use which one?

Brand Valuation by Royalty Relief Method

Top-10 Most Valuable Brands

BrandFinance released it Global Brand Value report in February 2018. Some of the highlights from the reports are –

• At US$150.8 billion in Brand Value, Amazon is the world’s most valuable brand ahead of Apple and Google in the report
• Apple’s diversification challenges are taking a toll on its Brand Value
• Technology brands rule the roost with all Top-5 brands in Brand Value table are from technology sectors
• The growth of Chinese brands has been phenomenal. Since 2008, China’s share of global brand value has increased from 3% to 15%, growing to US$911.5 billion in 2018

This posts’s focus is to de-mystify the approach adopted by BrandFinance to come to the Brand Value figures of the brands in question.

The approach, also known as ‘Relief from Royalty’ is based on a notion.

Imagine that a brand holding company (For example, Nestle) owns the brand (Maggi) and decides to license the brand to a different operating company (ABC Food Products). This means that Nestle decides, not to sell the brand Maggi itself but to license ABC Food Products to sell the brand. So, ABC Food products will be able to use all the elements related to brand Maggi and generate revenue out of the sale of Maggi.

Now, obviously in return Nestle would expect a revenue stream from ABC Food Products. This revenue stream would be called as ‘Royalty’ which ABC Food Products will pay to Nestle for using brand Maggi for its own profits. This Royalty value is notional, as the value of brand is more conceptual than actual cash-flow at that time (since the revenue will only start coming in future and that too cannot be accurately estimated).

This notional price paid by ABC Food Products (called, the operating company) to Nestle (called, the brand company) is expressed as ‘Royalty Rate’.

Since the revenue made by ABC Food Products by selling brand Maggi is going to be realized only in future, the estimated revenue stream for future must be calculated and should eventually be expressed in its present value form. This is because the value of the brand (Maggi) is to be estimated at present. To find the present value of revenue stream/cash-flow in future, the Net Present Value (NPV) method is used after estimating the future revenue stream or cash flow.

The Net Present Value (NPV), thus found based on all forecasted royalties, represents the value of the brand to the business.

Step by Step Process given by BrandFinance for calculation under Royalty Relief method.

• Obtain Brand specific Financial data
• Annual Revenue, Annual Profits and Profitability (Ex. For Maggi)

• Estimate the demand of the product category and individual Brands including your own Brand as well as the competitor Brands
• Demand Estimation for Instant Noodles, and individual demand estimation for Maggi, Sunfeast Yippi, Top-Ramen and Patanjali noodles
• Estimate the future cash-flow or revenue stream for the brand based on the financial data and category and brand demand
• Future Revenue and profits estimation for the brand
• Let’s say this comes to $ 20 bn (Absolute value, without considering the year of realization).                 

•  Establish the notional Royalty Rate for each brand
• Royalty Rate = (Brand Strength Index) x (Royalty Range)
• Brand Strength Index – A score on a scale of 1-100 based on:
• Marketing Investment – Investment towards brand building in terms of advertising etc.
• Stakeholder Equity – Brand Perception among various stakeholders including the Brand owners, marketing managers, company employees, channel partners and most importantly the customers
• Business Performance – Financial measures representing the status of the brand in terms of price strength, sales volume and trade leverage
• Hypothetically, let’s say this comes to 80.
• Royalty Range – A range of percentage value for a given industry/segment (For Ex. Instant noodles segment) which represents what is importance of a brand for a customer in that industry
• Premium and Luxury (luxury watches, expensive jewelry etc) segments have a high brand importance for customers and hence have a higher Royalty Range
• Commoditised or low-risk segments (steel, staple food products etc.) have lower brand importance due to minimum differentiation and hence lower Royalty Range
• Hypothetically, let’s say this comes to 20%.
• Hence, Royalty Rate = 80 x 20% = 16% (This is Royalty Rate that represents that this percentage of sales for the Brand comes due to its Brand Name)
• Calculate the notional future royalty income stream for each brand.
• Based on the Royalty Rate Calculated, arrive at a revenue portion which is realized due to the brand value 
• Based on Future Cashflow and Royalty Rate, this comes to  $ 3.2 bn (Check table below)

                                         

Estimated Future Cash-flows in $ bn with and without Royalty Rates

• Discount this future Royalty stream to arrive at a Net Present Value (NPV)
• NPV is calculated based on the discounted rate (assumed 6%). In this case, the NPV is calculated $ 2.38 bn

• This is adjudged as the Brand Value of the brand, in our example, for  Maggi.
• Brand Value of Maggi comes to $ 2.38 bn (Based on hypothetical figures taken for Future Sales, Royalty Range and Brand Strength Index, for understanding purpose only)

Clearly, Royalty Relief technique is not only one of the easier techniques for Brand Valuation, it is also a good estimate of brand value since it takes into consideration, the brand’s strength, its financial performance, competitor standing and also its future revenue estimates. Brand strength also brings in the factors like how much the company is spending on the brand building efforts, what is the equity or engagement of the stakeholders with the brand and the actual business performance.

While, this approach does not take into consideration the influence of competitor brands in the future sales and the effectiveness of the marketing spends for brand building, which may have an adverse effect on the calculation of Brand Value, Royalty Relief is still, a simple to understand as well as implement method, to calculate Brand Value for any given brand.

Cheers,

Amazon - An Innovation Powerhouse!

An annoying interstitial ad forced me to post it on my facebook page as a sign of protest. It is funny how social network makes you feel as if you are actually powerful. I will save a detailed note on this psychological e-phenomenon for future, but I must say that the ad did what it was supposed to do. Discounting the fact that I didn’t end up buying the colourful bagpacks, the ad did manage to attract my attention. It also made me promote it (unwittingly!) to my 500+ internet buddies on facebook.

 

The brand that was advertising vociferously on my daily news website was Amazon. Huh.

Amazon is everywhere these days. It has slowly and steadily, and with a lot of patience and innovation, built a strong-fundamental based business model in India. Many were wondering for the first few months after Amazon made its way into India about Amazon's quiet game plan. The firework that one would expect from the big daddy of online retail was far from visible.

All this while, Amazon was investing in the foundation stone of this to-be e-tailing giant of India. This has helped Amazon India to build for itself an environment and capability to roll out mind-boggling innovative ideas that has kept its customers delighted and rivals on toes so far.

Amazon demonstrated aptly the approach to build a business in a new market by challenging set rivals and even beat them on their own turf. The long experience in its home country and deep pockets though adds to its advantage, none should be taken away from Amazon for being super agile and incessantly innovative.

I wrote some time back on Amazon’s bipolar approach on improving its delivery performance to enhance customer delight. At one end, Amazon had started experimenting parcel deliveries through drones while on other hand, in India it sealed an alliance with India Post to help it deliver parcels in far-flung areas.

Very recently, Amazon introduced a fresh gust of innovative ideas that varies from category expansion to new services and from vendor empanelment to channel expansion.

Back in US, Amazon turned heads last week by inking a $ 300mn-three years deal with HBO to let Amazon Prime members watch old HBO shows. Within no time after giving its customer the HBO delight, it announced launch of the prima-pantry service for its prime members. The service allowed the prime members to shop from more than 2,000 products to fill a four-cubic foot box with up to 45 pounds of goods. The package can then be shipped at very nominal cost to the customers.

These simple innovations have not only added to the product lines it can sell but have also created benchmark for serviceability and customer responsiveness in this rapidly growing industry.

Here in India, Amazon has opened up a bottle of innovations which, with the gush these innovations are ejecting, seems to have been there ‘under-construction’ for some time now.

After collaborating with India post to deliver its parcels in 19,000 pin-codes across country through its Colosseum -like network of 140,000 Post-offices, Amazon has put into action its plan to make it easy for sellers.

Amazon, this week launched two initiatives for sellers to facilitate an accelerated and hassle-free experience. The US-based firm launched the Self Service Registration (SSR) and Amazon Easy Ship for sellers. Amazon SSR enables sellers irrespective of their size, location and size of catalogue, to self-register on the Amazon marketplace and start selling within a day without any third party intervention, making the process quick, easy and transparent.

With Amazon Easy Ship, the seller has to pack the shipment and confirm to Amazon that they are ready to ship. Amazon Logistics collects the shipment and ensures that the product is delivered to customers in 2-4 days.

Jeff Bezos is known to be the driving force of Amazon's
customer first culture and a true admirer of innovation at work

These two services have taken the e-commerce game to a different level in India. A response from the bigger rivals(so far!) Flipkart and Snapdeal is soon expected as the e-commerce industry matures in terms of technology and operational set-up.

The big question is, how Amazon has been able to pop-out one innovation after other, even faster than the TV soaps’ episode run?

The answer is fairly simple – Getting the basic rights and employing Long-term thinking in a new market.

Amazon didn’t rush to lure customers as soon as it entered in Indian market. Instead, it took its time in getting the fundamentals right. It built the logistics network, warehouses and built up a large selection of products that is now bringing in customers for them.

In a recent interview, Amit Deshpande GM of Amazon India said that its strong back-end infrastructure is helping it scale up fast. He further added on that when they decide on areas of focus, they always work backwards from the customer. Selection, delivery experience, logistics, payments and website experience are areas they are super-focused on.

Amazon has been scintillating in terms of its growth, and more importantly in its systematic business approach in terms of all modules of a business organization – Strategy, Marketing, Supply chain, Human Resource development and above all, Innovation.

Truely, Amazon is an innovation powerhouse!

Learnings from famous marketing failures - 'New Coke' Blunder by Coca-Cola

In the 1970s, Coke’s chief rival, Pepsi-cola which had very recently positioned itself as a youth brand successfully, introduced the Pepsi Challenge.This challenge tested consumers' taste preference while being blindfolded.To utter dismay of Coca-Cola, most of those who participated in this challenge preferred Pepsi’s sweeter formula over Coca-cola's longstanding taste.  

  
                               


When Roberto Goizueta became chairman in 1981, Coke’s numero uno status was being seriously threatened, not just by the rival Pepsi-Cola but also by its owned brands like Fanta and Sprite. Americans had started to view coca-cola as a stout but slow and historic company and this was not doing any favour to the company. This opinion was largely created by the youth branding which Pepsi assumed and a seemingly feeble response from coca-cola to the pepsi's rising popularity.

Under tremendous pressure to act and stop this landslide, Coca-Cola committed the first mistake.Coca-Cola concluded that the problem was primarily due to the product and not product's perception. They started to believe that consumer preferences have changed and now sweeter is better.

Coca-Cola worked on a new formula and based on 200,000 taste tests which largely favoured the new formula over the old coke as well as the rival drink Pepsi-cola, Executives at Coca-cola were sure that it was time to turn the tides in their favour by introducing the new formula for coke. Thus, New coke was introduced.

Second mistake was to shut the production of the old coke altogether and hence the only coke offering from Coca-cola was the new coke.

When its customer found out that the new coke is a changed formula and hence a different taste and the legendary Coca-cola which by then had found its association with american culture and history was killed by the Coca-cola executives, things went berserk. A large population of US boycotted the new coke. Large number of hate messages and letters were received by the company. This decision since then is known as 'the biggest marketing blunder of all time'.

Coca-Cola went into damage control mode. Starting with a public apology and the famous "We have heard you" comment by the the Chairman, Roberto Goizueta. Eventually, Coca-cola had to bring back the old formula while the drink was branded as the "Classic coke".

As a result of this, the loyalty to the old coke (Now, classic coke) increased even more than the old coke and Coke was back to number one with reasonable lead.

Learnings from the marketing failure of New Coke -

• Product perception is as important as product itself
• Never underestimate the emotions attached to a brand
• Imitating your competitors can never be a long-term strategy
• Save your market research from any possible biases
• Have courage to accept your mistake and correct it

Cheers,

How advertiser funded films are going to change the marketing spectrum in India?

Branding and entertainment have traditionally been woven together by a simpler concept of product placement where a product is placed on the screen making it a part of the set-up in order to strike the audience with the brand and its usage by the movie/ programme’s characters.

A few years back when Adidas decided to finance the ‘Goal’ movie trilogy with about $100 million investment, it was more than just a product placement. The financial risk was high due to the huge investment while it also gave Adidas the freedom to try and convey its message and brand personality to its audience in more number of ways than what a product placement would have offered.

Such productions where the whole programme or a movie is financed by a brand or a company whose primary objective is to put across its brand communication to its audience in a way which is more entertaining and assertive than the traditional advertising are known as advertiser funded programmes (AFP) and advertiser funded films (AFF). Some people also choose to call this practice Brand entertainment since a brand wrapped in a programme or film entertains the audience.It essentially is a step further by marketers from the product placement concept in the entertainment domain for communicating with its customers.

Simply put, AFFs and AFPs are content that allows brands to forge a deeper relationship with production houses via a funding model either in full or in part. Once executed, the advertiser’s investment is employed into producing the content while the advertiser earns a great degree of ownership over the content as well as its use as a wider communication platform for its brand/product/message.

Watch a short video by Schuyler Moore on how AFFs can be the future of marketing. Click here

Outside India, AFPs and AFFs have been regularly used as marketing and communication tools. The term soap opera was so called because the original soap operas were funded and produced by soap companies such as P&G. Some of the recent examples are short films by BMW, Castrol edge, TBA by Vodafone etc. P&G and Walmart have already announced their interest and entry into this newer advertising platform.

Click the below links to watch the video clips.

BMW funded short film - Hire

Castrol funded documentary film on Cristiano Ronalo

AFPs have been common in Indian marketing context as well, though AFF is a newer concept for India. Some of the examples of AFPs in India are - Cadbury Bournvita Confidence Champion, IDBIs Sawaal India ka, L’Oreal Elite Model Look ’06 etc, MTV Panasonic face of beauty (Watch video clip) etc.

Read more on IDBIs Sawaal India ka

AFFs prospects doesn’t look bleak either with the numero uno car company of India, Maruti Suzuki having tested the AFF waters very recently by partly funding the bollywood release “Mere Dad ki Maruti” produced by Y-Films, a subsidiary of Yash Raj Films. The producers wanted to make an advertising funded movie and with the of the movie based on family car, they pitches it to multiple auto companies in the country and Maruti turned out to be the most favoured partner with highest bid. 

Maruti Suzuki invested around Rs 6 crores in the movie which had a total budget of Rs 10 crores. As for the returns for the auto major, the movie has already earned more than Rs 8 crore and apart from having its brand name in the film title, it also managed to hog the spotlight throughout the two hours as Maruti is the main protagonist of the film. From Maruti 800 to the Swift and finally the Ertiga, the story weaves in both loyalty and aspiration towards the brand. A common feedback from the movie audience was that the movie was a fun-filled 2 hour Maruti advertisement.

 Marketers’ biggest challenge these days is to secure brand-space in their customers’ minds and with customers trying harder than ever to keep traditional advertising away, the challenge has only become more daunting. Hence, newer platforms for communication must be continuously looked upon. Advertiser funded programmes (AFP) and advertiser funded films (AFF) are such innovative planks to base marketing communications on.

AFPs and AFFs can be the new flag-bearers for Indian marketing rumble but how quickly and in what spectrum they evolve, it is yet to be seen.

Cheers,