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strategy and business
 / Summer 2009 / Issue 55(originally published by Booz & Company)


The Trouble with Brands

Where does this leave those of us who are responsible for marketing and managing brands? How can brands build sustainable long-term value to get back into alignment with Wall Street’s expectations and valuations? The answer is not found in simply redoubling efforts to win back consumer awareness, esteem, and respect. Too much has changed in the world to just return to the old methods of marketing and expect better results.

We contend that conventional marketing continues to operate in a time warp. Most marketers keep striving to build consumer perceptions that drive current sales only for today. They skip along happily, stressing reason over emotion and persuasion over inspiration, still believing that customers can be programmed to form lifelong relationships, and that brands can forever maintain their intangible elixir of attraction and cachet. This manner of marketing pays too much deference to the brand’s existing equities, a reflection of past accomplishments. A reliance on brand equity can create a false sense of security, as though past recognition can generate an endless stream of future profits. Using only historic brand data to plot a course in today’s dynamic market is like driving 90 miles an hour looking out the back window.

The Anatomy of Energized Differentiation
Through our studies, we began noticing that consumers were concentrating their passion, devotion, and purchasing power on an ever-smaller portfolio of brands. We then noticed a correlation between these successful brands and a set of interrelated consumer metrics, that all add up to a more exciting, dynamic, and creative experience — in short, reflecting the brand’s energy. Energy was linked in the data to three main factors. First  was the vision the brand presents to consumers, often originating from the leadership, convictions, and reputation of the company behind the brand. Second was the invention consumers perceive in the brand, through product or service innovation, design, or content. Third was the dynamism consumers feel — how the brand creates a persona, emotion, advocacy, and evangelism among consumers through its marketing and other forms of conversations with them.

Brands that rank high on our energy metrics include Adidas, iPhone, Nike, and Microsoft. The data shows that energy is not a function of brand maturity: Many established brands have as much energy as younger, flashier ones. Both McDonald’s and Walmart, for example, are highly energized. Energy plays a particularly powerful role in commoditized industries where brands usually struggle to build attributes like loyalty. In the airline sector, for example, the highest-energy brands include Southwest, JetBlue, and Virgin Atlantic; those brands have evoked much greater loyalty among consumers than low-energy brands like British Airways and Delta.

As we analyzed 48 different brand attributes in our database to isolate the metrics that capture brand energy, we began to find explanations for the anomaly we had discovered, and a way for brand managers to succeed in today’s changed marketing environment. We now know, and we can demonstrate, that brand energy is what keeps brands constantly moving and that it is critical to maintaining ongoing consumer appeal, loyalty, and success. To show how this works, we need to give you some background on the methodology we use to measure brands. Our BrandAsset Valuator (BAV) — the empirical model we’ve built with our database of consumer survey information — has become well known in marketing venues and is cited in many marketing textbooks. Numerous major marketers rely on the validity of this research methodology and its powers of measurement and prediction.

The BAV is constructed with two categories of metrics. Brand stature captures what a brand has achieved up to the time of this survey. It incorporates such metrics as esteem (consumers’ perceptions of quality and loyalty) and knowledge (consumers’ awareness of and experience with the brand). This reflects the brand’s current position in the market and its current value, and is a lagging indicator: It tends to be affected after the brand has changed.

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  1. Gregor Harter, Edward Landry, and Andrew Tipping, “The New Complete Marketer,” s+b, Autumn 2007: Organizations with strategically focused, broadly responsible CMOs may produce better results than their traditionalist peers.
  2. Leslie H. Moeller and Edward C. Landry, “Measuring Your Way to Market Insight,” s+b, Spring 2009: Marketers can develop their analytical prowess to better understand their customers.
  3. Nick Wreden, “Marketing: By the Numbers,” s+b, Winter 2006: A review of books about marketing’s new accountability.
  4. For more business thought leadership, sign up for s+b’s RSS feed.
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