Recently in the world, the rivalry between a financial manager and a brand manager has gotten stronger. Both believe that exactly their activity is the most important for the company and that they create the basic cost for shareholders. Many known world companies on consultation in the field of branding on a regular basis spend estimation of cost of those brands or other enterprises. However, there is no technique that would be up to the end of the transparent and deprived subjective inserts. We shall try to disassemble the total result – the size of cost of a brand step by step.
Calculations have been led on an example of the companies which met two requirements. First, they had in the free reference ordinary actions, and secondly, really possessed their own brand. It is high time to specify, and that such the brand and how to be convinced, that it is. The first – brand, from my point of view, this phenomenon at which manufacture commercially very specific goods takes place – the same emotion. In the case of a brand, it is a question of manufacture of the goods “emotion” commercially, and those physical goods which are also made by the company – no more than packing, a container for delivery of the goods “emotion” up to the consumer.
The second – manufacture of any brand is shown in the character of placed advertising. When the company advertises not the physical goods and the certain emotional condition of the consumer, it is the objective certificate of conducting works on influence on collective subconscious, and, hence – on the creation of conditions for the occurrence of steady public opinion, which in turn presents physical persons available conclusions concerning “correct” perception of those or other questions of life including concerning consumed. The technique of estimation of the cost of a brand also is based on these two factors. Its core is the following design: “Profitableness of ordinary actions of the company making brand goods is average from two composed – profitableness from the manufacture of the goods “emotion” and profitableness from the manufacture of “packing”. Then to calculate the profit on the manufacture of the goods “emotion” and further discounting it, to receive the value of the cost of a brand, it is necessary to define the structure of the capital of the company: what its part is directed on the manufacture of “emotion” and what – on the manufacture of “packing”, and also is correct to pick up the company-analogue for the definition of parameters of “packing” (Schulz, 2000).
The brand companies can organize the release of new stock papers exclusively under incomes of manufacture of “emotions”, or – “packings”. Such an approach opens new opportunities for the attraction of resources on beneficial terms.
During the tenders in the market to the action the brand the company should concern as to a portfolio consisting of two securities, each of which reflects a condition of two different projects – manufactures of the goods and manufactures of emotions. And each paper will have the features, including the value of some factors. At last, the most important. For economically developed regions, the attraction of investments and the organization of scale investment projects is, as before, a problem, and it is very complex. Probably, they can concentrate the efforts to stimulate the local operating enterprises on the creation of their own brands and, thus, to raise a financial saturation of the regional economy.
It is easier to advertise a separate product already inefficiently. Experts in marketing have taken a great interest in the promotion of a brand of the company. This technology applies for universality – to it address both world giants and players who only are going to win the market. Recently those who did not give the corporate brand enough attention hasten to make up for a lost time.
At the beginning of 2006, Unilever has made the sensational application: representatives of the FMCG-giant have declared that henceforth the company will advance the corporate brand in all countries where it works.
From the beginning of the XX century, the brand model assumed a very chubby branded portfolio in the West, and the trademarks which are let out by one company, in the opinion of the consumer, had no among themselves anything in general. If one product did not justify the expectations of an audience was considered as one of the main advantages of such a model, it did not affect in any way sales of another – each mark had its own reputation. The western model all was good, only to the majority of their adherents. Sooner or later, it became clear that for separately costing brands, they are as though competently untwisted were, all the same, something does not suffice.
Eastern approach to branding was generated in the middle of the last century and, as one would expect, sharply differed from Anglo-American. Within the limits of the east model, the powerful brand of the company-manufacturer was created, and then one behind other brands-umbrellas which destiny entirely depends on trust to the manufacturer were deduced. Japanese Sony, starting new products, never especially troubled itself with the search of creative names for them, and it was simply limited to sub-brands: Sony Walkman, Sony Trinitron, and Sony PlayStation. Another Japanese giant under one brand manages to hold television channel Asahi TV and Asahi Breweries. Korean Samsung, with pleasure, puts the trade mark on all production – from cars up to batteries. Today two models of branding have intertwined, that in the pure state, separately from each other already are a rarity. Japanese Toyota separately advances their premium brand Lexus. And coffee Nescafe and the children’s products Nesquik deduced as sub-brands European Nestle became hardly probable no more recognized than a mark of the manufacturer(Schulz, 2000).
With success, the third model began to supersede classical east and western models, global, and now it confidently wins space around. Instead of preferring the east or western model of branding, experts even more often believe in the promotion of a uniform corporate brand.
The large companies, winning the new markets and territories, bought up local manufacturers, and thus their portfolios expanded to immense sizes, even more often confusing not only consumers but also managers. At it more than once stumbled Heinz, Procter and Gamble, Danone, Unilever. At the beginning of the 90s, P&G began to get rid of “unlucky” marks. In 1999 portfolio on reduction has seriously reflected Unilever and has decided to leave from 1200 marks no more than 400. In 2003 quantity of brands has reduced concern Beiersdorf, and in the past, to year the portfolios have not bad cleaned Danone and Heinz. To cope with a huge portfolio, it is much easier, when above trademarks there is reliable “roof” of a brand-manufacturer, a corporate brand – the convenient tool of management of a portfolio, it does the structure of marks more precisely and unites them under the protection. Many transnational giants understand it, and any more one ten years, Heinz worldwide successfully sells the same canned food and sauces, and Danone and P&G, at the end of advertising rollers of many products not without pride, show trademarks of the company. Unilever till recent times as if hesitated of own name.
From 2001 to 2004 the turn of Unilever fell from 51,5 million to 40 million euro, the net profit of group in II quarter 2005 was reduced to 26 %, and the sales volume has grown all on 1 %. Such figures, apparently, have forced the monster to be disturbed. Besides, personnel rearrangements in the group should cause changes. It is usually hard for the old command to be solved on something revolutionary, for example, to refuse policy that they long time developed together, and new top-manager has coolly made a decision on that as it is necessary to alter.
Control system Unilever turned in vertical and henceforth became isolated on new top-manager. It became obvious that the effect of this event should something be strengthened and widespread to all levels of business of the company. An original and very important result of administrative changes became re-branding a corporate trade mark which since 2005 flaunts already absolutely on all production of Unilever.
The letter “U” cost to the concern $11,2 million – the creators from Wolff Olins have worked with it. The letter made of 24 symbols has turned out, each of which personifies the certain party of activity of the concern. For example, the image of a bee on a trade mark means fruitful creative work; lips, on a plan of designers, should speak the consumer about beauty and taste; a hand – about the need for care; ice-cream – about pleasures; a spiral of DNA – about scientific researches which are spent by the company, etc. As they explain in Unilever, the new trade mark should not only unite the company to make its business more complete but also overcome former stereotypes.
Unilever does not wish anymore to be simply a big company which sells deodorants, soaps and shampoos, now its problem in all markets – evidently to show what philosophy is inherent in people who make all this. “Thus advertising support of our trade marks will not change at all, rollers will not come to an end with demonstration of our trade mark. The Corporate brand is at all that it is necessary to advance by means of direct advertising.
It is obvious that now a little that speaks brand Unilever even to those who every day drinks tea Lipton and washes soap Dove. The company have decided to make enlightenment of consumers gradual, and it will come through PR, sponsorship, charity and as are mysteriously expressed in Unilever, “projects, important for a society”.
The ideology of PR-campaign, not philosophizing crafty, have selected checked up time and not one ten colleagues the concept of a healthy way of life. Buyers will take part in the various actions connected with a healthy feed and fitness, and as though by the way to learn, that all this is organized by “that” company which feeds them with Rama and cleans their apartments with Domestos.
The company is not going to hasten in promotion of a corporate brand – too long it was unknown to the consumer, and now to what to attack its consciousness and to arrange blitzkrieg. Actually, to drive the consumer in a stupor, it is very easy – it is necessary to hang out simply everywhere huge bright posters with our trade mark and each advertising roller of the mark to enrich with long history about the one who has made it (Tyson, 2006).
In 7-10 years, consumers (especially those who are now 15-16) will perfectly understand what companies stand up for brands, and for them, it will be very important to choose “that” manufacturer. And the manufacturer should prove that it is “that. Today it is already not strong enough, untwisted brands. All is very simple. The world promptly varies, and we need to be in time behind it; Unilever does not wish to be such a classical slow monster that nothing changes in the business by years. As he said, becomes more people interested in those, the company is how much socially responsible, how much it is harmless, how much correctly understands the social needs of that country where it works. The consumer has ripened to ask a question: “And who is this Unilever?” Now command Unilever will work on the answer to this question(Schulz, 2000).
It is paradoxical sounds, but now brand Unilever practically costs nothing. Even the international agency Interbrand well-known for the whole world for the unique technique of an estimation of brands to estimate it till now did not find the time. To invest in Unilever and to wait, when buyers will remember this name and will like to it due to feelings, it is necessary five years as a minimum. But the western model of branding, which the company was true many years, all the same, has the advantages.
Absolutely other estimation to brands retailers (sellers) is given in Western Europe. For example, in Great Britain for private marks, 50 % of all sales are necessary on average. In Russia, at different networks, this parameter makes from 5 up to 10 %. In the West, consumers trust in equally high quality of the goods by retailers and foreign manufacturers. More than 80 % interrogated divide this point of view in Northern America, Australia, Germany, the Netherlands, Spain, and Switzerland. Surprising in it is not enough – their national networks-giants and discounters have old history, good reputation and strong market positions(Tyson, 2006).
Also, it is considered that an idea of poor quality directs at us not always the presentable appearance of the goods private labels. And in it we too different from the West. The half of interrogated in Western Europe, Canada, and the USA speak that packing of the goods under marks of trading networks at all does not look cheaply.
Promotion of private mark demands not less, and at times even there are more than efforts in comparison with a brand of the manufacturer. At the same time, advertising to such goods experts is categorically counter-indicative, assured. Active promotion of these goods in shops harms to their popularity. Therefore it is not necessary to advertise it, competently enough to place on shelves.
But the most important as experts consider a mistake of the Russian trading networks – assignment to the goods of the same name, as the name of the shop. In the West, always think out the excellent name, notifying quite often the buyer that marks it is made especially for this or that trading network. If they coincide, consumers perceive them as umbellate brands of a network which always cause mistrust(Schulz, 2000).
A strong brand gives the company possessing it doubtless advantages. But very few people are able to create strong brands now. Not understanding the features of the formation of a strong brand and the difficulties connected with it, the companies often spend unfairly many means, but all the same, do not receive the desired result. Before making a decision on investments, to heads costs as it is necessary to think, whether so the strong brand is necessary to them. And they are having undertaken its creation to place accents in view of specificity of activity of the company.
Once, gym shoes were only gym shoes – cheap footwear which suited for all occasions. And the buyer in those days needed to choose only between sneakers and “high-grade” gym shoes. But since any moment, such manufacturers as Adidas, New Balance, Nike, Puma and Reebok began to do footwear, especially for a run, and then and for other kinds of sports – basketball, tennis, etc. The innovation was necessary to consumers on a shower, and they began to buy different footwear in different cases of life.
Nike has headed the race. It has decided to take a maximum of advantages from the strong brand, and except for sports footwear has started to sell clothes for sports. Having turned to a symbol of the excellent physical form and well-being, the company has gone further away – it became alive propagation of sports style of life. For this purpose, Nike has been involved in advertising the goods of such celebrities as a star of basketball Michael Jordan and golf player Tiger Woods. Getting the goods Nike, buyers as though closely adjoined to a life of sports heroes, became similar to them. Today the company offers stylish, innovative goods and supports their marketing actions, combining traditional advertising from a different sort of non-standard receptions, for example, construction basketball squares in the city centres and free supplying schools with the goods. Simultaneously with it, Nike strengthens the brand, investing in retail trade (opening of shops NikeTown) and sports (sponsorship of the Brazilian soccer team). Each similar step helps the company not only to become closer to the consumer but also to keep the share of the market and the high prices. As a result, Nike’s unprecedented position in the market; is confirmed by the excellent financial parameters of the company.
So, Nike has created that refers to as a strong brand. Achieve similar results and other companies. For example, the brand Coca-Cola costs nearly 70 billion dollars . Strong brands bring enormous profits and besides promise more than strategic opportunities in the future. The dream of a strong brand is cherished by heads of many companies – them to it push or liberalization of the markets (as it occurred in the sector of telecommunications), or necessity to provide growth in conditions of a rigid competition (the financial market). But anyway, to directors, strong brands are necessary, and they are ready to spend millions of dollars for an embodiment of the dream and to allocate necessary internal resources. And it is frequent they do not understand, and that such is at companies Coca-Cola or Nike that is not present at them. Also, do the conclusion: it is just necessary to aspire to perfection(Tyson, 2006).
Actually, in branding, only aspiration to perfection is not enough of one for success. Rather the small number of the companies manages to create rather strong brands though many quite successfully work at enough modest investments in the brand (in the same way not necessarily to be the general director, to make a good career in business). To invest in a brand, it is necessary cautiously. The history of marketing knows many examples when investments of the companies did not bring results – partly on the fault of the companies: they did not understand what it means – to become a brand, especially a strong brand. So, for example, American company Foxy Lettuce in due time did not regret means for advertising, trying to create its own brand of salad. Unfortunately, the salad of the company a little differed from the anonymous grades, which are on sale in grocery shops. As a result, it was not possible neither to win to it a great share of the market, nor to achieve the extra charge to the price for the salad, and the company has soon stopped existence. Heads of the companies before to make a decision on investments, should as it is necessary to think, and whether the strong brand is necessary to them, in fact, large expenses can and not payback.
In the management of brands, heads of the companies should remember three principles. First, the creation of a brand is a long process, and the weighed decisions and the duly, carefully thought over investments here are necessary. Secondly, the answer to a question of where and when to invest partly depends on forces operating in the branch. Thirdly, in one branch, it is impossible to create a brand without powerful marketing(Tyson, 2006).
Already half a century, Christian Dior’s name is a synonym of a fashion. Dior is elegance, feminity and the perfect taste. As a consequence, when the name Dior became a reference to elegance and beauty, masters still continued to accuse of all mortal sins. But couturier strictly adhered to a rule: “it is better to let than you decline on the front page than two lines of praise is given give on last “. And this principle always appeared true. And in 1947, the newspaper sensation could not prove that the new silhouette was bad has drawn attention to a new word in the world of Haute couture, more likely. “Women have felt the true instinct, that I not only wished them to make more beautiful but also happier “, – explained later success couturier. He, having caught a spirit of a society to which the constrained images have bothered – all grace and wished luxury, has let out on a podium of models, clothed in improbably womanly and refined clothes. On change to broad-shouldered woman-soldier Dior has resulted in the romantic woman-flower. The public was in delight from it. All world applauded him standing. It is no wonder that Christian Dior, in 1947 has handed over Oscar. This high distinction till now is awarded to those who have brought basic innovations in the trade. With 1947 for 1957, thinking out two different collections in a year, Dior continued to shock the public. Names of lines cut hearing: “Nimbus “,” Cyclone “,” Vertical “,” Tulip “. They were the images that the public waited for and was afraid. Before each display, spectators trembled. They will bring what changes? Each dress of a collection had the name, the plot of “play” has been set by a theme of a collection and reflected a variety of the world which so valued couturier: theatre, an opera, the literature, flowers, museums, Paris. Sometimes a theme could become its intimate world: secrets, cards(Schulz, 2000).
However, the desire to supervise over the small House of a fashion for the elite contradicted the skill of Dior of the message of the business. After the short meditations, already proved couturier makes a decision to create a department of furs and to open firm “Spirits Dior”. “It is enough to open a bottle that there were all my dresses, and each woman whom I dress reserved the whole loop of desires. Spirits – necessary addition of the person of the woman, is a finishing chord for a dress, is a rose which Lancre signed the pictures”, – explained later Dior. The first opening for the Parisian women of fashion became aroma “Ms. Dior”, they were followed by “The Diorama” and “Diorissimo”.
But also it has not satisfied the fashion designer. Soon the couturier becomes the present – industrialist. His enterprises let out ties, corsets, gloves, bags, jewellery. Simultaneously with commercial success, social recognition comes. In 1950, grateful people awarded Dior with an award of the Honourable legion. The present parade on royal houses of Europe begins. Queen of England invites a celebrity to present the collection in the Embassy of France in London. The same offer acts from governors of Greece. But the deification appears display of models in Palace Blenheim before aristocratic families of Great Britain led by princess Margaret and its visitors – the duke and duchess Malboro.
Shortly before the death, anxious by the future of Haute couture which seemed to Christian Dior the first of all laboratory of ideas, he wrote: “Occurrence of Haute couture can be justified two reasons. First of all, this treasure of diligent handicraftsmen. It advances time. It is absolutely new. It will define tomorrow a fashion of Paris, a fashion of the world. From couturier it will pass in boutiques, then will reach manufacturers of ready-to-wear clothes, and therefrom will grasp show-windows and streets. The press, radio, cinema, the TV will try to accelerate its promotion forward. In some months, the great migration of fashion will come to pass. And then everyone depending on the means “will adapt” or if want, becomes fashionable”.
The perfume Miss Dior was created in 1947 of all for two months New look for a long time there was history, and an aroma which accompanied with a triumphal procession of this style on the world, till now is improbably popular. The author of a perfumery composition is Serge Heftler-Louiche. This tremendous aroma sometimes changed “clothes”: it was presented and in a graceful amphora of its bright-pink colour, and in strict “tweed” suit… In 1949 there was a second female aroma from Dior – Diorama, and in 1953 – the third Dior Eau Fraiche. The design of a bottle is developed for both aromas, Guerry Colas. Dior Eau Fraiche became the first aroma from Dior above, which creation known perfumer Edmon Rudnitska (Edmond Roudnitska) worked. In this aroma, it has combined freshness of citrus and softness powder notes. Before, the note of a lily of the valley was not present at spirits because to receive a natural essence of this flower, any of the ways of the gathering of fragrant substances existing on that moment did not allow. For Diorissimo aroma of a lily of the valley for the first time was artificial is synthesized Edmond Roudnitska. Diorling – one more female aroma – appeared in 1963.
At last, in 1966 there was produced the first aroma for men – Eau Sauvage. Edmond Roudnitska has created a composition with initial notes of a lemon and rosemary, notes of “heart” basil and base notes. The bottle created by Pierre Dinand represents transparent rectangular bottle classical style. This perfume became a favourite for many men and till now enjoys the big popularity.
In 1982 there was a new version – Eau Sauvage Extreme, intended for youth. The bottle created by company Camin is similar to the original but is executed in black colour. In “heart” of aroma now predominated over “base” – a cedar. In 2001 there was Dioressence. It is the noble evening perfume ideally suitable under an evening dress and high hairdressing. The perfumery composition is created by Guy Robert. Initial notes reveal a violet and a pink tree. In the “heart”, the geranium dominates over “base” – cinnamon. The design of a bottle is developed in its own studio, Dior. It also closes a number of classical female aromas, Diorella, produced in 1972.
In 1976 was issued female aroma Dior Dior with notes of narcissus, a lily of the valley and wood. Second man’s perfume Jules appeared in 1980. The same as the predecessor, this aroma made mad success. Unfortunately, it is practically impossible now to find it. Dior’s representation of disarming force of feminity was embodied in several aromas with the shocking name Poison (“poison”). “Poison for women” from Dior is produced already in four variants – Poison (1985), Tendre Poison (1994), Hypnotic Poison (1998) and Pure Poison (2004). The end of 80 and 90th is the “Golden Age” of perfumery Dior. At this particular time, there were such well-known aromas as man’s Fahrenheit (1988), female Dune (1991) and man’s Dune pour Homme (1997), female J’Adore (1999). The mad success of these perfumes has led to the occurrence of various versions. So, in 2001 Fahrenheit Summer was produced, in 2002 – Fahrenheit 0 Degrees, and in 2004 – Fahrenheit Fresh. In 2004 send two versions of aroma J’Adore – J’Adore Anniversaire En Or and J’Adore Summer Fragrance Alcohol-Free. Aroma Dolce Vita (“the Sweet life “, 1995) – the quintessence of happiness which Christian Dior dreamed of presenting all women. He said: “I insist on word “happiness”. It seems, Gigolo Dode somewhere has written: “I would like to become through the products by the supplier of happiness”. Here and I, in the modest activity of the fashion designer, dream of the same… Women, with their correct instinct, should be, have understood: I wished them to make not only it is more beautiful, but also is happier”. In 1998 there was a facilitated version – Eau de Dolce Vita.
In 1995 has appeared female Eau Svelte, and in 2000 – two aromas of series Eau de Dior – Coloressence Energisante and Coloressence Relaxante. Dior is the leader in a segment of aromas for travel retail that is for sale, especially duty-free. The first of them – Remember Me – has appeared in 2000. After that, it has been let out five more such aromas – Forever and Ever (2001), I Love Dior (2002), Chris 1947 (2003), Dior Me, Dior Me Not (2004) and Dior Star (2005). In 2001 a series of man’s aromas Higher. Higher Black began in 2002, and Higher Energy – in 2003. Vanilla Dior Addict (2002) at once it was grown fond to the women loving sweet aromas. For a long time, it was the best seller among all aromas Dior. In 2004 send at once two versions of this perfume – Dior Addict Dior Twist and Dior Addict Eau Fraiche, and soon should appear Dior Addict 2. Till 2004 of man’s aromas at Dior was a little. Probably, the mark has decided to make up for lost time and has let out at once three man’s perfumes – Bois d’Argent Cologne, Cologne Blanche and Eau Noire Cologne. All of them are an addition to a collection of the fashionable clothes Dior Homme Hedi Slimane. It, with its own hand, took part in the creation of perfumery compositions and has thought up the design of bottles.
In conclusion, it is worth saying that the word brand is used very often now. The brand is a wider issue than the trade mark or trade sign. Some goods can not be brand just because they have some name and trade mark which is legally registered. To become brand goods should satisfy the needs of consumers and in addition to do it even better than the competitors do. Brand should have an additional value for the consumer. And at last, what is also important, consumers should be aware of the brand.
Brands can be divided into several categories:
- Corporate brand (when the company and the brand have similar names);
- Family brand (the common name for the group of goods of different categories);
- Range brand (the common name for the group of goods of different categories, directed on the solving of different kinds of problems);
- Individual brands (name only one category of goods but can include several types of goods.
It should be marked that famous brands do not demand to advertise. They gained their consumers and just produced new things without advertising. The only they do – is invite famous people to use their product.
I think that it is a fact that first, a company works for a brand and later brand works for the company.
Brian Millar, Admap, January 2008, Issue 490, pp.12.
Chris Barnham, International Journal of Market Research, Vol. 50, No. 2, 2008, pp.203.
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Clankie Shawn M., Theory of Genericization on Brand Name Change (Studies in Onomastics, V. 6), Edwin Mellen Press (2002).
David Thomson, ESOMAR, Fragrance Conference, Paris, November 2007.
Grant , Brand Innovation Manifesto: How to Build Brands, Redefine Markets and Defy Conventions , Wiley (2006).
Luigi Toiati and Alan Branthwaite, ESOMAR, Fragrance Conference, Paris, 2007.
Leanne Tomasevic, Admap, November 2007, Issue 488, pp.45-48.
Kotler Philip, B2B Brand Management, Springer; 1 edition (2006).
Neil Dawson, Admap, June 2007, Issue 484, pp.42-44.
Robert Passikoff and Kerry O’Connor, ESOMAR, Fragrance Conference, Paris, 2007.
Schulz Majken, The Expressive Organization: Linking Identity, Reputation, and the Corporate Brand (Kindle Edition),Oxford University Press, USA (2000).
Tyson Lois, Critical Theory Today: A User-Friendly Guide, Routledge; 2nd edition (2006).