Transcript of: What Makes a Good Brand?
Ed: Hello, everyone.
In this series of videos, we’re talking about marketing, shareholder value, and what makes a good company. And we can’t talk about marketing without, at some point, talking about branding.
And Malcolm has got rich experience in the branding arena. He’s been involved with a great company called Brand Finance, which actually does brand valuations.
Many of his books cover the subject. So it would be really good, Malcolm, just to get your thoughts on this.
And, as ever, I’ve got a very simple (simple being short) very short question for you, which is: What makes, in your experience, a good brand?
Malcolm: Perhaps of all the questions you’ve asked, maybe this is the easiest for the simple reason that there is so much manifestation of excellent branding around us in our everyday lives that you don’t need a degree in marketing to begin to understand what makes a successful brand.
Successful brands endure
What I will do is just draw your attention to – sadly he’s not with us anymore. He died a few years ago – but a guy called Laurie Young, and he wrote this article in Market Leader in Quarter Two, 2011, and it was called “Products die but brands live forever.”
And there were hundreds and hundreds and hundreds of brands. And it’s most extraordinary when you look at some of the brands and how old they are.
For example, Stella Artois was around in 1336, would you believe?
And even something like Coca-Cola is 150 years old, and I think it’s still successful and you get Gillette about 120 years old and so on and so forth.
But you know, I’ll tell you what the components in my view are of a successful brand. But I think you have to try and nail the jelly to the wall, if you’ll excuse the expression, in terms of what we think a brand is.
The brand is not just the logo
The simplest manifestation of the brand is, of course, the logo, and the world is awash with logos, and most of them are as useful as a bird-of-prey with a squint.
And it amazes me. Nobody gives a toss about your logo.
I reckon there are probably 15 or 20 logos in the world that any normal human being would actually recognize.
I’m not saying logos aren’t important for signage and things like that, but I was highly amused when I see Chief Executives coming in.
And the first thing a new Chief Executive tends to do is to start messing about with a logo. It costs a fortune and nobody gives a damn about the thing anyway.
So it’s not a logo unless that logo, like the famous brands unless that logo creates shareholder value.
The intangible value can be much higher than the tangible value
The second level of a brand is that sort of larger bundle of associated intellectual property rights. Like for example, Guinness, their recipe, and Mercedes, their engineering processes.
That’s the second very important element of branding. But the third one, which is really what most branding is about, is about the holistic company or organizational brand.
And what’s interesting, and not a lot of people realize this. But if you look at balance sheets today in the United Kingdom, about 65% of all corporate value is not tangible assets. It’s in intangible assets.
And in America, it’s about 73% of all corporate value is in intangible assets. And it’s those intangible assets that make money from an organization, not offices and lorries and factories.
I mean, for example, when Nestlè bought Rowntrees, the last thing they wanted was a factory in York. What they wanted was the brands and all those wonderful things that come with it.
[Editor’s note: Rowntrees now claims to be “vegan-friendly.” ]
And you’ve heard me quote this before, but I will quote it again. Procter and Gamble paid £31 billion to buy Gillette, and, you know, Ed, they only got £4 billion worth of tangible assets.
Now, Procter and Gamble aren’t stupid. Now that throws some light on the importance of intangible assets and brands.
Because everything a company does, if you think about it, manifests itself – well, everything a company does – from R&D to after-sales service, manifests itself in the offer that you make to the customer. That offer has a name on it, which, of course, is the brand.
So what is a successful brand? I’ll just draw it to a close now. And I’ve just made a shortlist here.
Trust is key
First of all, successful brands build trust. We do trust them. They’ve been around – many, many brands as I’ve already said – have been around for years and years and years.
They have a price-quality trade-off, offer consistently superior value, make the brand famous, easy to recognize, and that brings in advertising and all that kind of stuff.
They also make it easy to buy, which of course is distribution, logistics, and what have you. In other words, they get their basics right.
Now there’s more to it than that, obviously. But that’s where I’m going to draw this to a close and say most of the brands that have been around for years and years and years We trust them, we love them and we pay good money to buy them. So long live powerful brands.
Thank you for asking me this question about brands because I’m quite passionate about brands, Ed.
Ed: That was very good of you, Malcolm.
And actually, as you’re making your closing comments there, Malcolm, I was thinking the same thing about the Malcolm McDonald brand. It’s trusted, people love it and they’re prepared to pay good money for it as well. So thank you very much for your time with us today.
Again, I’m sure there are really good nuggets there that people will find really helpful in their own businesses.
So thank you again, Malcolm, truly wonderful having you with me and talking about this. We have ended up having a lot of these conversations in cars and trains and planes.
But actually, it’s really good, it is really good to schedule some time and actually, focus on it and have a proper conversation.
That’s really good and thank you, Malcolm. And you enjoy the rest of the sunshine that we’re having here in the UK at the moment.
Malcolm: My pleasure, Ed
- What Makes a Good Brand? - October 1, 2021
- How Does a Good Market Strategy Help to Create a Good Company? - September 24, 2021
- How does a Good Market Strategy Improves Shareholder Value? - September 17, 2021