1. Brand purpose
Brands associated with a ‘higher purpose’ - beyond functional product benefits - have competitive advantage. Many developed initiatives are connecting the brand with relevant social initiatives. Driving factors included changing customer values, often connected with generational lift. Please, look at the attached chart from Global BrandZ:
In the region we can see a lot of examples of local icons with a positioning that reflects their brand purpose very clearly:
Corona – capture a lot of equities from its unique positioning in the beer category, and also is very associated as a Mexican and Latam brand. Very good link with the country place brand and very authentic in all over the world.
Natura – Brazilian brand with a clear purpose, associated with CSR Social responsibility and with high levels of differentials.
Inka Cola – Peruvian soft drink owned by Coca-cola, with very good quality of brand equities, part of Peruvian culture.
Havaianas – Brazilian sandal brand, with a very clear brand purpose.
Aguila – Colombian beer, with a very clear brand positioning.
2. Customer Centric brands
Regardless of the category, consumers have little problem in nding products and services that work well and are good enough. However, good enough doesn’t stand out from the competition. It certainly doesn’t command a premium price or keep customers returning for more. It is not enough to ask, does the product and service perform well? The key questions are: How does it make customer feel? Does the customer feel just ok? What would it take to make the customer delighted? In the following chart we can see the importance of Innovation for creating competitive advantage and increase in brand value (%) for brands (from Global BrandZ™ database).
Latin American brands face a difficult economic environment, the local brands need to overcome the customers' expectations, shifting their business model to meet consumer needs and demands in a more relevant and disruptive way.
Brands such as Skol, Telcel, Televisa, Falabella and Bimbo are very good examples of Customer centric brands. For example, in the case of Skol – most valuable Latin American brand – who innovates in communications, events and packaging. Another example is in the Brazilian retail: Raia Drogasil (drugstore) and Renner (retail) are examples of brands that have innovated to become a customer centric brand. The drugstore chain implemented beauty consulting services in their branches. On the other hand, the retail company used Google’s virtual reality glasses, a low- cost portable cardboard device, during the launch event of its 2015 collection. These actions have created emotional relations with the with customers, strengthening the equities of these local brands. One evidence of these successful initiatives is the market capitalization of these companies, with both values increasing 71% and 33% from December 2015 to June 2016, respectively, against a 18% increase of the stock exchange index in the period.
3. Reputation brings and destroys value
As Waren Buffet said:
“If you lose dollars for the firm I will be understanding. If you lose reputation for the firm, I will be ruthless.”
Warren Buffett, BIG/MRS conference 2014
Corporate reputation and trust has become an important asset of brands, and helps companies to deal with crisis moments. Trust is an extremely important attribute that is totally correlated to shareholder value. In the chart we show the importance of social responsibility in brand value (%).
In Latin American a lot of very important conglomerates suffer some reputation issues, that affects shareholder values such as Carlos Slims’ companies, BTG, Petrobras, Vale. In the region this facts impacted a lot the brand value of a lot of corporations. The same happened to Financial Institutions industry as a whole. In the past, they used to be very important in the region, now almost all Financial Institutions dropped tremendously in brand value as a consequence of a perception of risk in the industry as whole. Some good news came from Mexicans Cemex and Bimbo and Chilean Copec.