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How bright sparks can create difference

How bright sparks can create difference

Delivering difference in such a fast-changing environment as this requires brands to make a serious commitment to innovation.

Innovation is one of the best ways a brand can set itself apart from everything else in the category, and ensure they keep pace with evolving consumer needs and preferences.

So, what exactly is “innovation”, especially if you’re not in the business of technology?

When we say “innovation”, we don’t just mean releasing new products or variants, or communicating in ways that mark a departure from the norms for their category, although that can all be a key part of it. We also mean brands should innovate in ways linked to what they promise and what they deliver – whether that relates to customer service, policies or ethical behaviour.

Meaningful, powerful innovation is about staying relevant to existing audiences and appealing to new ones over the long term. It’s about leading a category and offering something fresh and creative – being brave in undertaking something new, and then being bold enough to shout about it, so that the innovation is recognized by consumers.

There are three aspects of innovation, and strength in any or – ideally – all of them can help boost a brand’s reputation for innovation.

They are:

1 Disruption 

2 Creativity 

3 Leading the way

To be successful in these areas takes commitment and confidence, and that takes an innovative mindset – not just smart products and on-trend policies.

The impact of innovation on brand value growth is clear from this year’s Top 75 ranking. The least innovative brands among them lost 13.5 percent of their value in the space of 12 months. In contrast, the most innovative still lost value, but fell only half as far, dropping 6.1 percent of their brand value.

The fastest-growing brands in the UK are powered by innovation. The two food delivery giants Deliveroo and JustEat are both highly innovative, and the fastest-riser in the 2020 ranking, Ocado (up 16 places in the Top 75 with brand value growth of 63.3 percent) is also a leading innovator. See below for more on Ocado.

What’s essential for brands to appreciate is that any brand in any category has the potential to be innovative. It might come more naturally to a brand in a sexy, fast-changing category such as social media, fintech or e-commerce, but anyone can do it, if they have the right mindset and commitment.

Gordon’s gin, for instance, has been around for 250 years with what is essentially one product, but it remains one of the most valuable UK brands (making its BrandZ debut in 70th place this year) and its brand value grew 14.1 percent this year. Why? Innovation.

The brand happily finds itself in a category that has more than doubled its UK shopper base in the past few years, but that category growth is partly of Gordon’s own making. Flavoured gins are responsible for a large reason for the growing appetite for gin – now the nation’s favourite spirit – and Gordon’s Pink Gin, launched in 2017, brought in a whole new group of buyers to the category and the brand.

Gordon’s commitment to innovation has revitalised the brand’s equity in the UK. Its BrandZ innovation score has grown by 8.6 percent since 2017 and it is seen as highly disruptive and as a leader in the category. It is 25 index points more Meaningful and 8 points more Different.

Another product-based innovator is Kit-Kat, which is among the Top 10 fastest risers in the UK this year thanks to a new premium offering that lends itself to gifting and more indulgent moments than a standard bar of chocolate. The new “Senses” range is attracting a younger and more affluent shopper and helping Kit-Kat feel different from other confectionary brands.

What these brands have done is not only deliver innovation, but also communicate effectively about what they’ve been doing in order to change consumer perceptions. Innovation that isn’t noticed and appreciated by consumers is in many ways wasted; it must be coupled with strong communication.

Lacklustre performance on world stage

These shining examples of innovation are the exception in the UK among a crop of brands that on the whole compare poorly to the rest of the world on innovation. This is not new; we have been saying it in these UK reports for several years and little has happened. That must change.

The online supermarket Ocado is the fastest-growing brand in the Top 75 this year, posting a 63.3 percent gain in brand value. It is perceived to be highly creative and to be shaking things up in the retail world.

Yes, it has benefited to some extent from a COVID-induced surge in demand for online grocery shopping. But, like most retailers, it was unable to capitalise on this sudden demand in the first weeks of lockdown, and had to restrict access to its website to existing customers.

But the real reason Ocado has done so well this year is that it was on track to do well anyway. The brand had a highly differentiated proposition that was already gathering momentum. In 2019, its brand value grew by 35 percent. Ocado’s unique offer is defined by its online capabilities and creative and somewhat rebellious personality.

So, when e-commerce’s share of UK grocery shot up from 8 percent in January this year to 13 percent at the end of May – making the past 12 years’ growth in just 18 weeks – Ocado was primed for success.

Ocado will need to stay alert, however, with Amazon in July announcing that its Fresh grocery delivery service was being ramped up and made available to Prime subscribers without the previous additional monthly fee. The service offers delivery within two hours to 300 postcodes in and around London, and it is expected to be rolled out nationally later this year as Amazon seeks to become a major player in UK grocery.

Ocado                                 113

All other grocery retailers            98

Nothing flaky about this

Greggs does not currently have the financial clout to make the UK Top 75, but it provides some valuable lessons to brands on growth through differentiation and innovation. Its success in recent years has been driven by product innovation that has helped it clearly stand out in the market. The brand has also nurtured a relationship with consumers and staff founded on strong trust credentials.

A highly successful and creative launch for its vegan sausage roll in 2019 was followed by the vegan steak bake in January 2020, with both launches generating huge PR and buzz on social media platforms.

Coffee has been another strong growth area for Greggs; in fact, Kantar research in 2018 found that sandwich outlets such as Greggs and Pret a Manger were growing their coffee sales faster than traditional coffee shops (up 5.1 percent compared to 4.5 percent). Another sign of Greggs moving with the times and riding the wave of evolving consumption habits.

Following the boost in sales and profits driven by the vegan sausage roll, Greggs announced it would give 25,000 employees a bonus of up to £300 each, totalling £7m. It is a trusted brand, perceived to be inclusive, open and honest and caring for customers.

Such a strong brand has not made Greggs immune to financial suffering; in July it announced a first-half loss of over £65 million and when branches were allowed to reopen, it was with a limited menu featuring only bestsellers, to streamline production due to dampened demand.

But its brand strength means it is well-placed for recovery provided there is timely decision-making about how to prioritise investment in such a fast-changing environment.

Here’s how the BrandZ numbers stack up for Greggs – making another compelling argument for difference through innovation.

Innovation scores

2015: 101

2019: 110

Difference scores

2015: 107

2019: 115

Consumer trust: 117

Treats employees well: 108

Generous: 117

(The average score of all brands on these measures is 100)