It was the late 1970s when magazines, tabloids and dailies across the globe – as if acting conspiratorially – bombarded the world with articles peddling the importance of brands. Brands were suddenly looked upon as a sure shot way, by companies, to get through the growing competition and rampant product proliferation. These intangible assets all at once achieved fame and were purported to be the lethal weapons that could bring unrivaled powers to a firm’s arsenal. Many, in fact, lived up to what was being expected out of them. For instance, brands such as Google, McDonald’s, WalMart, et al, have today virtually become the synonyms for their respective industries, thanks to their brand strength and to investments that went in to create such brands.
But, despite their glory run that continues till date, it’s quite interesting, if not ironic, to note there have been critics (for instance, Canadian author Naomi Klein’s No Logo and American investigative journalist Eric Schlosser’s Fast Food Nation) that have challenged the sensibility of brand orientation on several occasions. They have not only questioned the mighty existence of brands, but at times have argued upon that the concept of brands is just another marketing gimmick and nothing else. Be that as it may, do brands now really matter to shareholders, the owners of corporations? 4Ps B&M cut across the industry to dig up expert opinions – and ran into a deluge.
“A brand is arguably the single most important intangible asset that has great potential in terms of opportunity growth for any company. But as far as investors are concerned, they only consider brands when it comes to choose between two companies that are equal in size and provide equal returns. Else brands really don’t matter to them,” says Alok Bharadwaj, Sr. VP, Canon to 4Ps B&M. Research, though, doesn’t support that line of thought. While a strong brand in a company’s portfolio not only guarantees an excellent return on its share, it also helps in minimising the investment risk. The presence of brands has been seen to definitely enhance investors’ confidence on the company, which in turn stimulates and encourages further investment. A research done by the London based brand consultancy FutureBrand (part of the Interpublic Group of Companies) in 2003 on FTSE (FTSE calculates over 120,000 end of day and real-time indices covering more than 80 countries and all major asset classes) proved that companies with strongly branded portfolios consistently outperform their weakly branded counterparts (see chart). Even Brand Finance’s Global Intangible Finance Tracker across 53 national stock markets covering more than 37,000 companies shows that brands add to a third of the world’s wealth. Unni Krishnan, MD, Brand Finance India communicates a similar view to us. As per him, strong brands impact both the demand and supply curves to add value to the business, which in turn significantly adds to the shareholders wealth.
For more articles, Click on IIPM Article.
Source : IIPM Editorial, 2010.
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
IIPM B-School Detail
IIPM makes business education truly global
IIPM’s Management Consulting Arm - Planman Consulting
Arindam Chaudhuri (IIPM Dean) – ‘Every human being is a diamond’
Arindam Chaudhuri – Everything is not in our hands
Planman Technologies – IT Solutions at your finger tips
Arindam Chaudhuri's Portfolio - he is at his candid best by Society Magazine
IIPM ranked No 1 B-School in India
domain-b.com : IIPM ranked ahead of IIMs
IIPM: Management Education India
Prof. Rajita Chaudhuri's Website