Best Practices – Study Finds Brand Strategy Paid Lip Service.

For all the hype over brand’s importance as a key differentiator in an increasingly competitive marketplace, a new study indicates that its influence has yet to expand outside the marketing department — limiting its potential to drive business growth.

The 2002 Best Practices Study conducted and released by Prophet, a consulting firm specializing in brand and business strategy, found that the concept of brand strategy is too often paid only lip service. Of the 90 global corporations surveyed, only a small majority (53%) has a long-term brand strategy (LTBS) in place, and of that number, only 40% are “very” satisfied with it.

“Interestingly, findings indicate that ‘best practices’ in branding — as evidenced by a strong brand that firmly correlates to strong financial performance — aren’t being as widely practiced as one would think,” said Michael Dunn, Chief Executive of Prophet.

“It tells us that business needs to do more to ‘operationalize’ the brand — to make it more of an organization-wide driver of business decisions — if they expect to reap the full extent of its top- and bottom-line benefits,” he added.

That can’t come, however, unless senior management leads the way and embraces brand’s role as a strategic imperative, according to Dunn. And the study shows that has yet to occur: 62% of respondents cited lack of senior management support as the most pressing threat to brand’s long-term success, manifested by lack of funding (68%); lack of understanding of what brand stands for (45%); and insufficient long-term financial rewards for brand successes (32%).

Dunn also noted that convincing senior management of the link between brand strength and financial results can’t be achieved unless the appropriate measurement tools are in place. Only 35% of the responding firms said they measure brand value/equity, despite such findings as Total Research’s EquiTrend study showing that businesses with the largest gains in brand equity realized an average return on investment of 30%, whereas those with the largest losses in brand equity saw their ROI average negative 10%.

In line with the philosophy that brand is the representation of a product’s or service’s relationship with customers, respondents to the Prophet study also ranked the customer’s product/usage experience and initiatives to support relationship-building interactions as keys to building brand strength (89% and 53%, respectively). However, the majority of respondent firms put their brand investment into marketing, again highlighting the disparity between theory and practice.

Interestingly, respondents whose senior management teams were ranked as having the strongest commitment to brand building attributed more of their brand strength to investments made into human resources and training (52% versus 22% among those whose senior management had little commitment to brand).

To view executive summary of study CLICK below (Adobe Acrobat reader required):
http://www.prophet.com/knowledge/whitepapers/downloads/2002BestPracticesStudy.pdf

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