Brand Integrity – the Foundation Stone of Brand Equity

By Brian Moore, Global Retail Consultant and CEO of EMR-NAMNEWS

If we define brand integrity as constantly meeting, or even exceeding, consumer expectations in terms of their experience of the brand, then it becomes obvious that anything that interferes with, or dilutes, that experience undermines any investment made in building this fragile relationship between a product and its user. In practice, a failure to meet consumer expectation actually dilutes any value being built up in the brand.

Given the cost and difficulty of punching through overwhelming media noise to present a new brand idea to a consumer already distracted by more inviting or urgent messages, tempting them into product trial, and even making a first purchase, the high cost of reaching square one means that a supplier or retailer makes no profit on the first sale.

Ideally, if the consumer’s first experience exceeds expectations, then the cost of inducing them to try a second time – note we are still in trial mode – will probably be less. However, if brand delivery vs. expectation is consistently over-achieved, then the cost of securing a third purchase will be even less, hopefully…

As you know, this is the essence of the FMCG model, and can obviously be applied to supplier and retailer brands. Everything hinges on a consumer being able to take for granted that what it says on the tin will exceed expectations in practice.

It should be kept in mind that the 2008 global financial crisis was a massive shock to consumer belief in ‘the system’ – think politicians, bankers, and the City – and resulted in unprecedented pressures on supplier and retailer profitability.

In the case of suppliers, with net margins in supply going down to 3% or less in a world where a 10% margin was always regarded as a minimum requirement in building and maintaining brand equity, something had to give.

At the same time, retailers that were previously achieving net margins of 5%+ are having to cope with trading margins of 2% or even 1.5%, in a business model that is saddled with massive over-lapping of me-too brand and private label assortments, and large space redundancy, serving consumers that are buying on price, smaller, closer and more often, with price wars the only way forward…

To cope with the pressure on prices, especially the restraints on managing rising costs via price increases, some suppliers and retailers resorted to reducing or debasing tin contents in order to disguise shelf-price increases. Even a casual glance at the consumer press will yield copious examples…

It was in this environment that an even savvier consumer emerged, determined never again to outsource their brand decision-making to brand owners or retailers and willing to settle for nothing less than demonstrable value for money, in a search for brand solutions.

In practice, s/he arrives at a shop on a visit that is less about shopping and more about validating a choice already made ‘online’, probably in an Amazonian environment of infinite range, coupled with seamless and price-efficient fulfilment, impatient at any brick & mortar compromises on these standards and expectations.

In addition, the savvy consumer is now equipped with price and product comparison tools that give them unprecedented access to ‘perfect knowledge’ of the market, the basis for truly objective purchasing…

Having purchased a brand that exceeds expectations, a satisfied consumer then has the e-means of telling one friend. However, in a double whammy for brand owners and retailers, a disappointed consumer can use the same tools to tell 10 friends…

Given these new realities, it follows that any short-changing of the consumer does material damage to a brand’s integrity, and can negate years of investment.

If brand equity is an asset that yields predictable revenue streams in terms of sales and profits, reduces marketing costs and builds trade leverage, then any breach of brand integrity effectively writes down the value of that asset, and with it, the share price.

Thus, all the work involved in building and maintaining a brand-contract with a ‘loyal’ consumer is placed in jeopardy by decisions taken to risk all that for the sake of meeting next month’s sales target…

See KamTip: The Four Pillars of Brand Integrity

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