Brand Meaning in a Volatile World
Meaningful associations drive brand value growth
And instant recognition sustains value
Brands are operating in an increasingly volatile and complex environment. The development of brand ecosystems and the blurring of categories—even the distinction between business and consumer—is stressing value growth and the organization of brands by category, as many brands no longer fit into only one, narrowly-defined space.
This volatility sits in the wider context of global insecurity and uncertainty produced by multiple factors, including troubling geopolitics, the threat of climate change, and evolving social values, with change accelerated by technology. Borrowing an acronym that described conditions after the Cold War, brands are in a period termed VUCA: Volatile, Uncertain, Complex, and Ambiguous.
The impact is clear in the BrandZ™ Global Top 100 results. The number of newcomer brands joining the ranking annually has averaged seven over the past four years and was as low two in 2016. This year, nine new brands joined the ranking, and, reflecting geopolitical changes, six of the newcomers were Asian brands—four from China and two from India.
Volatility in the ranking is also evident in the average number of ranks brands that have moved up or down. In the 2019 BrandZ™ Global Top 100, brands shifted an average of 9.6 ranks, around double the number from just two year ago, almost equaling the shift in 2012, when brands still were recovering from the global financial crisis.
The North Star for navigating through this volatile period is Meaning. BrandZ™ analysis revealed that being Meaningful is the most discriminating characteristic of brands that are growing. Meaningful (filling functional, emotional, or social needs in relevant ways) is one of the three components of brand equity, along with Difference (being unlike competitors, setting trends) and Salience (coming quickly to mind during consideration).
Instant recognition sustains current brand value
All brands ranked in the BrandZ™ Global Top 100 are super Salient, scoring an average of 129 in Salience on an index where 100 is average. Overall, the Top 100 score higher in Salience than in Meaningful or Difference.
Similarly, the Global Top 50 score significantly higher in Salience than brands in the bottom half of the ranking. Being seen as Different is also vital. Brands in the bottom half of the Top 100 ranking attain a strong average Difference score of 118. But brands in the top half of the ranking average an even stronger 129 in Difference.
When brands are able to effectively combine strong Salience and Difference, they trigger a virtuous circle. Their large size enables the most valuable brands to remind people why they are Different and to sustain their Salience with retail presence and media investment. Difference with Salience leads to instant recognition by consumers. That recognition reminds people why they choose these brands, which sustains their market penetration and sales, increasing the brand’s Salience and closing the virtuous circle.
It is a circle, rather than a spiral, which would illustrate value growth, because in a volatile market, with so many new brands appearing, Salience and Difference go only so far. Salience is important to sustain current brand value but will not necessarily produce faster brand value growth.
Being Meaningful drives value growth
Salience alone would be fine if the world were not changing. Because of volatility, the determinative factor for increasing value is ensuring the brand has the widest possible set of positive brand associations that are Meaningful to consumers. Brands that are growing in value are seen as more Meaningful than brands where value is stable or declining. The car category, for example, is under pressure because of factors like climate change and technology (the shift to electric cars) and changing social values (the shift to sharing vs. ownership). In this context, some brands with long heritage continue to be Salient. But Salience does not stop them from declining in value as they struggle to be Meaningful today.
The key questions for brands are: what is meaning, and how is it created in today’s volatile marketplace? Meaning is having a broad and deep set of mental associations for the brand. The associations relate to innate consumer needs. Brand value is created as these associations are activated. Each source of meaning can trigger a short-hand reminder for consumers, enabling them to make fast and easy brand choices. A consumer who wants to find something with minimum effort may make the simplest choice because it “meets my needs.” Or the shopper may select a product because it is the easiest to buy and has the best user experience.
Each association interlocks the consumer with the brand. Other associations could be choosing a brand because of affection for it or because it makes purchasers feel good about themselves. This list of associations is not exhaustive. But more is better. The influence of the association varies by person and even by occasion for the same person. These associations cumulatively build meaning for the brand.
Among the trigger points that most characterize the faster growing brands are Fair Prices and Innovation. Most relevant in volatile times, newcomer brands scored the highest in each of these dimensions. Newcomers are tapping into the market volatility—and pushing established brands to do more.
To sustain value brands needs to achieve Salience and instant recognition. The BrandZ™ Global Top 100 brands excel because their scale enables them to expand their retail presence and invest in media exposure. But the world of brands is becoming more volatile. With more newcomers entering the Global Top 100, just sustaining value will not be sufficient. In the 2019 BrandZ™ Global Top 100, the brand ranking No. 100 has a value of $13.4 billion, 217 percent greater than in 2006, when the brand value threshold for ranking in the Global Top 100 was around $4 billion. Established brands that do not grow value will drop in the ranking or drop out of the ranking.
Already enjoying the advantage of consumer recognition, established brands need build on that recognition by continuously making themselves relevant and Meaningful. Meaningful brands are those that anticipate evolving consumer needs, that reset expectations of what a brand can deliver in a category, and that redefine themselves as their categories change around them. Brands are networks of mental associations: so, the brands that have associations rooted in a category are typically constrained, while those whose associations are broader and whose business operates in an ecosystem, win the battle for consumer relevance and affinity.