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Five ways to build and maintain value

Brand Health vQ

HEALTHY BRANDS —THE VITALITY QUOTIENT (vQ)

Five ways to build and maintain value

Just as many factors contribute to human wellbeing, several also go towards building a healthy brand.

BrandZ™ analysis has identified five key attributes shared by healthy, strong, and, consequently, valuable brands. Each contributes to the extent to which a brand is delivering meaningful difference — a vital contributor to brand value.

Brands that score highly on all five aspects are the most successful: they are “healthy” brands. Those that are low on all five aspects are “frail” and the least successful. Brands with a mix of high and low scores are “OK.”

These five key health indicators can be combined into a single score we call a brand’s Vitality Quotient, or vQ. By this measure, the average score of all brands is 100. Those with a score over 110 — making them at least 10 percent above average — are those we say are healthy overall. A vQ score of 95 indicates 5 percent below average.

Nurturing brand health makes good business sense. A strong vQ score means a brand is meaningfully different, which drives growth in brand value. In fact, brands with a high vQ score of 110 or above grow their brand value significantly more than those with low scores:

The five component parts of vQ are:

  1. Brand Purpose. The brand is perceived to make people’s lives better.
  2. Innovation. The brand is seen as creative, leading the way in its category and/or shaking things up.
  3. Communications. The brand creates powerful and memorable advertising.
  4. Brand Experience. Consumers feel the brand is uniquely able to anticipate and meet their needs as well as deliver a strong experience.
  5. Love. Consumers have a real emotional bond with the brand that helps sustain it until the next innovation.

Healthier brands are more resilient

Brands can look at how they perform on the five individual health indicators to find clues to improving their overall brand health. When one or more of the indicators is flagging, overall brand health can suffer. When healthy, growth can skyrocket.

Brands with a high vQ are more strongly positioned for future value growth

A high vQ score benefits a brand in several ways. Brands with a high vQ have nearly three times the Brand Power, which is an indicator of a brand’s ability to drive sales through deliberate consumer choice. They are also better positioned to be able to justify a premium to feel “worth it” to consumers.

The road to better health

Brand health does not come about by accident, nor is it determined by the category in which a brand operates. It is the result of a concerted focus on investing in these factors, which directly contribute to being meaningfully different in the eyes of consumers and, as a result, a healthy, successful brand.

1. Purpose

Purpose is what a brand sets out to achieve, beyond making money. It is the way a brand makes people’s lives better — not just the practical, functional, and literal things that a product or service does for someone. Having a strong sense of Purpose is increasingly important as confusion and disruption crisscross the world. Brands with Purpose make consumers feel that they are getting the best.

Leading brands in the Top 30 for Purpose

  • Capitec Bank
  • Netcare
  • Flying Fish
  • Pick n Pay
  • Clicks

The brands that rank highly in Purpose are perceived to be making their customers’ lives better. The top brands for this measure show that it is not by any means determined by category. A brand can have a strong sense of Purpose, no matter what it offers to consumers. Whether you’re a light-hearted beer brand or a serious bank, you can still carve out a place for yourself by showing that you care.

Purpose has long been a great predictor of growth in brand value, so it’s no surprise that the top five by this measure are mostly among the most resilient brands this year. Clicks was the only brand to show growth in brand value, while Flying Fish is a fast-growing newcomer and Capitec lost just one percent in a tough climate for banks.

2. Innovation

Innovation may be a mandate for technology brands, but they certainly can’t claim exclusive title to it. Any brand that is seen as doing something new or setting trends for their category will get talked about—and people will try it out. If that initial experience goes well, it can lead to a longer-term relationship.

Leading brands in the Top 30 for Innovation

  •  Nando's
  • Woolworths
  • Capitec Bank
  • Discovery
  • Mr Price

Innovation today is a challenge for many brands in South Africa, so much so that BrandZ™ is not giving an award for this year. The Top 30’s innovation index is among the lowest in the world at just 105 (the highest is the United States at 115). But where we find challenges we also find opportunities. Making even small investments in this area could greatly differentiate a brand. That said, the past few months since the valuation period have shown that South African brands are capable of forging new partnerships and devising new solutions on-the-fly.

The best of the bunch, however, is Nando’s, which has likely been chosen for the extreme amount of creativity that goes into its advertising—as well as the entirely unique experience of the restaurant, which have been compared to a South African version of the Apple Store. Even abroad, the company hews closely to its roots in its home country, featuring SA-inspired design and artwork that produces an experience that is at once different and entirely welcoming.

3. Communications

Communication has two key elements. At a basic level, brands need to advertise sufficiently in the right places to be visible and recognizable to the people they’re trying to reach. But being vocal and announcing a brand’s presence is not enough; brands also need to engage their audience. They need to do great things and then tell people they’re doing them.

Leading brands in the Top 30 for Communications

  • Nando's
  • Vodacom
  • Checkers
  • Pick n Pay
  • Clicks

Nando’s also comes as no surprise as the leading communicator and winner of this year’s BrandZ™ Top 30 Most Valuable South African Brands 2020 award for Best Communications. Often seen as something like the conscience of the nation, it routinely pokes fun at the issues that divide South Africans in order to contrast them with the chicken that doesn’t. A recent ad "#youpeople” poked fun at stereotypes in the country, while “Mzansipoli” put the country’s recent corruption and other problems squarely in its sights. “Pay bribes and sow division in the game that will capture your imagination…and the state,” it deadpans. Communications like these put Nando’s first among a nation whose brands often communicate well.

4. Experience

Brand experience starts long before a person considers buying a product and lasts well beyond the point of purchase. It includes every exposure to an ad, every digital interaction, and every minute someone spends waiting for help at a counter or on the phone, as well as the use of the item purchased. Providing a great brand experience is critical because it cements the relationship between consumers and brands.

Leading brands in the Top 30 for Experience

  • Woolworths
  • Capitec Bank
  • NetCare
  • Flying Fish
  • Nando's

While in general, South African brands struggle with providing a great brand experience, Woolworths is the exception that proves the rule. And it has to. As a higher-end brand in a country struggling through a recession, it needs to prove its value at every turn. Woolworths has consistently focused on friendly cashiers, a constantly improving app, a rewards program linked to vouchers and instant discounts, and a consistent look and feel in every store no matter where you are. As a result, when you walk into a Woolworths store, you almost always have a similar and familiar experience. As a result, it stands out for customer experience not merely in its country but globally, with Kantar’s The CX+2020 Retail Ranking rating its grocery experience the best of any brand in the entire world. Its experience as a clothing store is not too shabby either, ranking 8th in the world.

5. Love

Love in a brand context is the emotional affinity a consumer has for a brand, and it can’t be bought or manufactured. However, brands can create the conditions in which love can flourish. If they invest in innovation, promote a higher purpose, and deliver a consistently great experience, love tends to happen naturally. Love also helps sustain the relationship with a brand during economic downturns and gaps between innovation.



Leading brands in the Top 30 for love

  • Clicks
  • Checkers
  • Pick n Pay
  • Mr Price
  • Woolworths

 

Love is not just a nice to have. It is the deserved outcome of meeting consumer needs in the best way. Love is a metric dominated almost entirely by retailers in South Africa, with this year’s only brand growing in brand value, Clicks, taking the top spot. Among other things, South Africans tend to see their retailers as charging fair prices and providing good value, much more so than in peer countries.

Clicks, in particular, has made major improvements in recent years, among other things significantly increasing its footprint in order to ensure that the store is available whenever and wherever customers need it. The brand is a big advocate for healthy living and provides value by partnering with other big brands for rewards. But almost all of these brands are working hard to stay in their consumers’ hearts and minds (and get products into their hands), so it would not be surprising to see many of them make the top five again next year.