October 14, 2015

The world is changing, businesses and brands need to change with it

Laurence Evans

Reputation Leaders

1/ We live in a world of unprecedented change

Our globally connected world is changing 10 times faster and at 300 times the scale of the industrial revolution.

It is a world that is increasingly more connected, urban, mobile, digital and uncertain than ever before.  And the Internet, the infrastructure of our new ecosystem, is underpinning it.

We have gone from 2.8 million Internet users in 1990 to 3.2 billion users in 2015, a thousand fold increase. In other words, approaching half of the world’s population is now able to instantly communicate, trade or otherwise interact.

That is an unprecedented change.

 

2/ Brands remain very valuable to companies

But equally important is what is not changing. And that is the power of brands.

In this world of instant global communication, brands have never been more important to companies. And today consumers don’t separate corporate and consumer brands – they are intertwined.

We looked at the 10 most valuable brands according to Interbrand.  The overarching finding was clear: brands continue to play a very important part in market valuations.

We found that the commercial value of the world’s top 10 most valuable brands in 2015 is more than a quarter (27%) of the company’s market cap.

How has that changed in the last decade?

Despite changes in the companies involved, with the rise of tech brands like Apple, Google, Samsung and the relative decline of FMCG brands like Coca-Cola and McDonald’s, we found the same finding – a decade ago the top 10 brands were worth 27% on average of parent company’s market cap.

So while the world in which brands exist has changed, the value of brands has not.

 

3/ The power of peer to peer connection

But there are new brands on the block, more specifically new types of brands.

According to Burson-Marsteller’s annual ‘Crisis Survey’, the biggest threat for companies is the entrance of a disruptive competitor such as Uber, Airbnb or Deliveroo into their marketplace. They serve as peer to peer connectors and are disrupting a variety of traditional, asset-heavy businesses.

They are made possible by the interconnectedness of the world – we’ll have 50 billion connected devices by 2020 – and the trust we place in people like ourselves.

The Edelman Trust Barometer tells us that 63% of informed publics globally trust people like themselves for information about a company up from 47% in 2009.  Only four in 10 trust CEO’s to give them credible information.

But it takes a certain type of consumer to trust a peer to peer network more than a traditional company.

 

4/ Generation Digital Natives

Gen Zs are currently 5 to 19 years old.  They have never known a world without Apple [1976] or Google [1998]; they are the first wholly digital generation.

This is a generation that doesn’t just want, but demands short, snappy, visual communications.
They are always on, multi-tasking, and if you manage to get their attention you’ll have it for an average of 8 seconds. That means you need to act fast.

So the brands of the future will be nimble. They’ll appreciate this group’s independence, individuality and desire for personalisation.

But most importantly they’ll play to the Gen Z desire for positive emotion. And I believe that the strongest way to engage emotions is through purpose.

 

5/ The Power of Purpose Driven Brands

Why is purpose important?

It’s important because 83% of consumers would switch brands if a different brand of similar quality supported a good cause.

It’s important because 72% of consumers are more likely to recommend a brand that supports a good cause than one that doesn’t.

And it’s important because the new generations are addicted to positive emotion: when they buy something they don’t just want to feel like they are being good to themselves, but being good to the world.

Some have already realised this and are pushing the purpose agenda forward. Take Patagonia, the environmental activist clothing company as an example. Their CEO recently affirmed “every time I have made a decision that is best for the planet, I have made money”.

But for me, the kingmakers in this court are companies like Unilever.

I’ve had the fortune of working on a numbers of social purpose projects with Unilever and their brands, including Dove Real Beauty (now a decade old and still winning Cannes awards and the world’s largest educator of girls self-esteem) and Persil Dirt is Good.

What I’ve learnt is that purpose succeeds best when brands with purpose are supported by companies with purpose. It succeeds when the purpose of the company is aligned with the purpose of the brand.

Case Studies

  • CVS wants to become a bigger player in health and removing tobacco products aligns with that direction. They have sacrificed short-term revenue for long-term brand appreciation.
  • Intel stopped using conflict minerals in its chips. That means that not only does it and its employees feel better about their supply chain, but all of the end users who buy an “Intel Inside” product.
  • H&M and other retailers stopped selling angora wool (from the Angora rabbit) because of animal cruelty issues in production.
  • Tom’s Shoes famously help someone in need for every product purchased. They help provide shoes, sight, water, and safer birth services to those that need it.
  • PepsiCo partnered with the Inter-American Development Bank to spur social and economic growth in 26 Latin American and Caribbean countries. The inaugural project created a sustainable market for sunflowers while providing loans to Mexican farmers to help get them started. PepsiCo committed to purchasing 100% of the crop.
  • Proctor & Gamble redesigned their manufacturing process and designed their new facilities to reduce water wastage – across R&D, engineering and manufacturing teams. It’s not just good for business, but good for society.

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