Europe's Brand-Oriented Companies Almost Twice As Successful

Strategic brand management can dramatically increase corporate success, according to a study by Booz Allen Hamilton and branding experts Wolff Olins. In the banking sector, brand guided companies are achieving a 19% return on equity, compared to 8% at other companies. The Booz Allen-Wolff Olins study is based on interviews with leading marketing and sales executives at Europe's Top 500 companies.

The Brand Focus Goes Right To the Top

Ninety percent of the companies surveyed are convinced that brand orientation is a key factor in their success — a two-fold increase compared to five years ago. "However, only 18% of companies currently place brand management at the heart of their activities and have a clear understanding of the brand across the entire organization," said Booz Allen Vice President Gregor Harter. "This small group of companies is proving to be exceptionally successful."

The study places companies into one of three categories:

• At Brand Agnostic companies, management assumes that brand only makes a modest contribution to corporate success, focusing instead on factors such as costs and optimizing processes.



• Emerging Brand Companies are on the threshold of full-brand orientation. These companies recognize the growing importance of brand's contribution to value and have already begun to embed it into their corporate strategy.



• Brand Guided Companies already are rigorously implementing brand to achieve corporate success. The study revealed a clear correlation among brand guidance, the application of sophisticated marketing techniques, and corporate success.

Companies with a strong brand orientation more frequently measure the key ratios that enable them to manage their marketing performance. For example, 45% regularly calculate their share of their customer's total spend, compared to 24% of the other companies surveyed. Sixty-four percent of brand-guided companies regularly examine whether its brand position allows any degree of price flexibility, compared to only 20% of Brand-Agnostic or Emerging Brand companies.

The study also revealed another common trait shared by brand guided companies. Senior management — as opposed to the marketing department — determines brand management, which is closely tied to developing strategy and organization.

CMOs Play a Key Role

Marketing managers at Brand Agnostic and Emerging Brand companies are not exploiting their full potential and are not playing (or are unable to play) a key role in the sustained improvement of their company's performance, according to the study. These companies fail to scrutinize their activities using a clear return on investment (ROI) perspective. Instead they rely on unbridled creativity and innovation for their company's success and reject ROI methods, such as multivariable regression models to measure consumption levels triggered through a new advertisement.

According to the study, this failure to obtain adequate measurement is connected with the shorter tenure of marketing managers, compared to their colleagues working in other areas. During the average CEO's tenure, he or she may oversee more than four Chief Marketing Officers.

Booz Allen's Gregor Harter, Alex Koster, Dr. Michael Peterson, and Michael Stomberg are the authors of "Managing Brands for Value Creation."