Brand Contribution: Metrics Deep-Dive
by Ellis Malovany
There are some brands that punch well above their financial weight in the BrandZ™rankings by focusing on making meaningful connections with consumers, being seen as different in their category, and ensuring through their communications that those differences are well understood.
Why is Brand Contribution Important?
Brand Contribution is the BrandZ™ metric that assesses the extent to which brand alone, independent of financial or market factors, drives purchasing volume and enables a brand to command a price premium.
The elements that make up brand contribution are particularly hard for competitors to replicate. Brands with high scores for brand contribution tend to be resilient to challenges in the market and outperform their competitors when it comes to value growth. For brands with high brand contribution scores, consumers are predisposed to choose it over its rivals and are more likely to be willing to pay a premium for it.
Nando’s and Castle are the only South African brands in the ranking with a five in Brand Contribution. Only six brands have scores above three. Other than Nedbank scoring a three, South Africa’s powerful Big Four banks along with most of South Africa’s Top 30 brands have quite weak scores of just one or two, indicating inherent brand vulnerability and a lack of brand resiliency.
To put this in a global context, Brand Contribution scores for most brands in other countries typically feature higher scores of four or five, illustrating brand weakness in South Africa. This correlates with innovation and emotional gaps along with comparatively smaller value contributions to their respective brands. Since 2006, global brands with high scores of four to five on Brand Contribution have grown their brand significantly and continue to demonstrate resilience to challenging market conditions. Brand building efforts would greatly help brands improve value; focusing on the elements that drive Meaningful Difference is critical.
With an economy in South Africa that is expected to improve, these few high scoring local brands are well insulated from global competitors, though DStv’s resilience will certainly be tested by global giants like Netflix and Amazon as better economic times and a decline in data costs will enable these foreign competitors to gain a foothold.
Risks of Low Brand Contribution
Brand Contribution is more than just an element of financial performance, it amplifies the financial strength of a brand. Woolworths and DStv have the same Brand Contribution score, but the former has nearly double the brand value, and DStv has demonstrated resilience to competitive threats in a highly competitive environment. Without a strong performance in Brand Contribution, brands like DStv might not have even made the Top 30 ranking.
Beyond these five brands, Nedbank is the lone brand in the Top 30 with a three and the remaining 24 brands all show brand contributions of two or below. Nine brands including Top 10 brand MTN, scored just a one in this category, indicating brand weakness in one or both of the two core attributes. These brands will find it difficult to easily increase purchase volume, and generally will not have a strong ability to command a price premium.
In an underdeveloped economy, price discounting can be a common tactic to drive short-term sales. However, in the long run, brands that rely on discounting often are exposed and their lack of resiliency may create a risk to sustained growth and competitiveness.
Brand Building To Improve Brand Contribution
Brand Contribution correlates with a brand’s value and equity. Brands that withstand competitive threats do so on the basis of delivering value. Long-term resiliency is supported by pricing models with healthier margins stemming from the brand’s ability to command a premium.
Brands can improve the potential for increased volume and command a premium by:
- focusing on improving brand equity and delivering to consumers the key elements that deliver loyalty and value;
- clearly communicating the brand’s purpose and differentiation which is also a core part of Meaningful Difference;
- promoting saliency, i.e. how quickly a brand comes to mind when consumers think about the category. This comes from positive brand experiences which can be delivered both in-store and online.