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ProfitBrand: How to Increase the Profitability, Accountability and Sustainability of Brands
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Sales rank 1,447,996
Customers rating (based on 5 reviews)
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ProfitBrand offers a comprehensive metrics-based approach to branding that allows companies to directly link branding activities with bottom-line results, align the organization–including marketing–with common benchmarks and ensure that customers buy not once, but again and again and again. ProfitBrand also illustrates how to do business on customer terms - the one competitive differentiator that cannot be duplicated in today's customer economy.
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| Publisher | Kogan Page | | Release date | 09/2005 | | Availability | | | Edition | Hardcover |
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 Brand Analytics Made Easy
I think this is simply the best, and most practical book on how to effectively evaluate a brand strategy. While there is a lot to digest, the information and recommendations are spot on. Get a copy!
 A 'must-read' 'profit analysis' book by every organisations
I chanced upon Nick Wreden's "ProfitBrand" due to these interesting terms on this brand book cover - `profitability, accountability and sustainability'. This book, which uses metrics-based approach to branding, is a must read book for every organization that's looking at how branding investment can be measured. Nick's belief in "experiential experience" is so spot on in today's competitive world. "ProfitBrand's" examples on how to measure the "profitability of each customer" should in fact be one of the key analyses for any business. Well written with impressive international examples, "ProfitBrand" deals with issues many branding books don't touch, like pricing. It even gives a devastating critique of positioning theory. Nick's "ProfitBrand" should be read by CEOs and even entrepreneurs and not just those with marketing or branding responsibilities.
Valuable lessons for Asian firms looking to compete globally
Why do up to 80% of products fail to become brands despite the US$1.5 billion spent on marketing annually? A primary reason is that companies are still following the `immutable laws' of the post-war mass economy when competition was limited, media conduits to consumers were few, and leisure pursuits were confined to visiting the cinema, a bowling alley or a night market.
During the time from 1945-1995, few leisure distractions meant traditional marketing strategies -- such as TV, print and outdoor advertising -- were enough to build a brand. As recently as the 1970's, many Asian capitals only had one or two TV channels, few billboards and a handful of domestic magazines, it was easy to reach consumers.
But today's buyers are overwhelmed with data, information and choices. For instance, Malaysian households receive up to 100 TV channels, 24 hours a day. Supermarkets carry 5,000 to 10,000 SKUs; the number of titles distributed by the average magazine wholesaler has more than quadrupled in 10 years; there are more than 20 commercial radio stations broadcasting up to 20 minutes of commercials every hour; and billboards jostle for attention at every junction. Such a barrage of messages does not include more than 40 billion web pages and 20 million blogs on the Internet. How can a consumer's mind process so much data? Obviously it can't. In fact it shuts much of it out which accounts for the high failure rate.
Many new products also fail to become brands because companies focus on customer acquisition, not retention. Most companies invest the largest chunk of their marketing budgets on acquisition strategies. Wouldn't it make more sense to focus more on retention, where a company has a 50% chance of selling to an existing customer, rather than acquisition, where a company has only a 5-15% chance of making a sale?
Nick Wreden, tackles these challenging developments in the world of branding in his thought-provoking and award-winning book, `ProfitBrand: How to Increase the Profitability, Accountability and Sustainability of Brands'. The book also spends a great deal of time on the million-dollar marketing question: accountability. Personally, I can't remember ever having seen the inclusion of the word `accountability' in the same sentence as `marketing'!
So what do companies need to do to avoid wasting resources on strategies that apply to the post world war two mass economy that no longer exists?
`A brand is not built by acquiring customers; it is built by keeping them,' says Wreden. `Most competitive product advantages can be duplicated. The one advantage that cannot be duplicated is a customer relationship.'
He adds that the primary branding goal is not market share or even sales growth, but profitability growth. In almost all cases, such profitability growth is created by forming, nurturing and leveraging relationships with customers. It is also the key to brand sustainability.
According to Wreden, successful brands today - or `ProfitBrands' - share six characteristics: attention; transactional excellence; trust; loyalty; advocacy and, most importantly, profitability.
Successful brands also deliver emotional, experiential and/or emotional value. Emotional value results from relationship depth, value and length. Experiential value is based on customer-centric processes, personalization, immediacy, quality and satisfaction. Economic value results from providing greater return to customers than they paid at purchase.
Companies should not underestimate the importance of customer profitability. It is well known that 20% of customers generate 80% of profits. According to Wreden, less known, but equally true, is that about 15% of a firm's customers are unprofitable. Differentiating high-profit, low-profit and unprofitable customers requires knowing customer equity. Customer equity, or the lifetime value of a customer, is the most important brand measurement. This value results from past, current and future profitability as well as from intangible benefits. Customer equity incorporates the loyalty to buy again and again, the faith to recommend and the willingness to forgive inevitable mistakes.
Customer equity advantages include improved profitability, increased accountability, segmentation insights, more efficient operations, increased advocacy and other benefits.
Wreden believes that the company that focuses strongly on profitable customers will succeed. All customers are not created equal, states Wreden. To focus acquisition and retention branding efforts on the most desirable customers, customer-equity based segmentation is required. This process involves identifying and ranking profitable segments, segmenting services based on relative profitability, and reshaping acquisition and retention branding around attractive customer segments.
Higher prices, supported by differentiated value, is the best way to increase customer profitability. Pricing, services, offerings and sales tactics must differ for loyal, convenience-driven, price-sensitive and value-sensitive segments.
Knowledge about customer equity must be leveraged with customer planning (also called sales planning). Customer planning applies finite sales and marketing resources toward where it can generate the greatest return in customer profitability, thus helping to ensure sales as well as marketing accountability.
One key tactic in customer planning is seeking to increase brand penetration. Brand penetration consists of customer penetration (`share-of-wallet'), product penetration (increased or extended usage) and account penetration (more buyers). These strategies must be coupled with customer recovery and winback efforts.
As Asian economies open up and top executives feel the impact of increased domestic and foreign competition, companies that thrive will need to move to a metrics-based approach to branding. Profitable companies such as Tesco, Hong Leong Bank and Swire are already linking branding initiatives to customer profitability via multiple measurements. Why would anyone want to spend money to acquire a customer without being sure what that customer generates in revenue and profits?
As competition intensifies, becomes more ruthless and consumers are more knowledgeable and have more options, any Chairman, CEO or senior executive who wishes to develop a brand capable of withstanding the onslaught of domestic and foreign competition or make the transition from local company to global organization, or simply wants to develop a brand of choice for domestic consumers, must change the corporate strategy to focus on profitability growth, not just sales or market share growth.
Wreden outlines clearly, the need to ensure greater accountability, especially for marketing, by knowing what every marketing investment - and marketing manager - delivers in terms of profitability. He states, what we all know but chose to ignore - that resources are too scarce to spend chasing ephemeral goals like "awareness".
Asian brand owners should know that all the awareness in the world doesn't mean a thing unless it translates into a profitable sale.
After reading Nick's book, and as a brand consultant advising Asian companies on how to build brands, my take away from this book is that with such high failure rates, Asian brands cannot afford to waste valuable resources on strategies that focus on "image" and "awareness," to build their brands. What they need to focus on is developing profitable relationships with customers. It won't be as exciting as `cool' commercials or huge billboards, but it'll be more profitable.
Very Good Book, Particularly Strong on Success Measurement
I read ProfitBrand as part of an efort of familiarizing myself with branding methods and procedures before hiring a marketing company to outsource all marketing activities to. ProfitBrand was particularly helpful for many reasons. First of all the book starts clearly by giving a little bit of background on branding methods in different 'ages' where branding was known. This served to show how until today many companies still use outdated techniques to promote their brand whereas there are much more effective methods today.
The second strength of this book is that it clearly outlines multiple methods for measuring the effectiveness of the branding process. This is the distinguishing factor of this book: it promotes accountability through empirical measurement in order to help management accurately measure the performance of the branding effort
The third point is that the book focuses on how to leverage the power of the brand to turn brand power into the ultimate measure of performance: profit; hence the title 'ProfitBrand'.
Overall the book is well-written, ideas are clearly laid out and the concept is quite enticing for anybody seeking to understand how to make the most out of their brand. I gave it 4 out of 5 not because of any particular fault with the book but because I reserve the 5/5 rating for only exceptional books such as Jack Welch's Winning and Jim Collins' Good to Great. I recommend this book as a second helping after reading a good introduction to the concept of branding such as 'Brand Simple'.
An Accessible and Valuable Book on Branding
Nick Wreden offers an exhaustively researched but very engaging book on branding that goes a step beyond the traditional books of this kind. Rather than just rehashing what most business professionals already know about the importance of building a strong brand, Wreden explores how businesses can place more measurement and accountability to their branding efforts. He brings in groups you may not have thought about before, such as supply chain and manufacturing organizations, and how they also play a key role in strengthening a brand...with an excellent example of how K-Mart failed to leverage its supply chain capabilities. This is a must-read for not only marketing, PR, sales and financial managers, but also others in the organization who have a stake in the brand. Wreden shows just how many stakeholders can help build the brand.
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