Every organisation should be wrapping their brand in strategy.
This sounds like a nice hook, but what does it really mean and how do you apply this concept?
In last month’s article, why a CMO is a CFO’s greatest ally, I discussed how everything you do as an organisation impacts brand and customer experience, highlighting how brand is not only a marketing problem, but the problem of an entire organisation.
I discussed how drivers of brand equity: awareness, value, relevant differentiation, emotional connection, preference, recommendation and information efficiency, should create a framework to drive each organisational decision throughout each department that creates visibility and measurability.
In this article, I demonstrate how this theory works by highlighting a real case study through the lens of one brand equity driver: ‘relevant differentiation.’
Relevant differentiation: standing out from the crowd
A client had approximately $10 million in turnover as a fresh fruit and non-fruit salad processor.
Their production was predominately manually based, whereas most larger competitors used extrusion machines. The value of hand mixing was that it used less physical force than machines and didn’t bruise the fruit and vegetables as much as extrusion machines did. Therefore, the client produced a higher quality product than the extrusion system creating a significant level of relevant differentiation.
The business problem:
Major grocery stores offered approximately $3-4 million dollars for the client to supply their product to their stores. The client’s manual system couldn’t cope with the volume that was required.
Looking at the problem through a traditional business model
The client first looked at their business problem through a traditional lens – that is, they tried to solve the problem by looking it as a production/operational issue only. The client considered buying the same extrusion equipment as their competitors as it appeared the most relevant approach to the problem.
Looking at a $3-4 million-dollar sales opportunity, from a traditional ROI perspective, this appeared to be a great idea. Should he forget his point of difference and take the money?
Looking at the problem through brand
What made the client’s brand unique was their significantly differentiation relevance. This is what the market was interested in proven without doubt by the success of the company to date, consumer and retailer feedback.
I got the client to take a step back. By taking a step back, the client took a holistic approach and decided to stick to his brand and its differentiation advantage.
He said no to the initial $3-4 million sales and instead, put focus into Research and Development –investing one million dollars.
The client invested these funds and innovated equipment that could replicate hand movement and could match the gentle movements to the original product at the 80th percentile compared with his current non-machine environment.
So, although there was a slight deterioration of his product he still had a significant differentiation than his competitors, while being able to produce at the volume required.
The outcome of wrapping brand in strategy
- The client could produce and retain their point of difference and create extra volume, taking on the $3-4 million which was always going to be there if his differentiation was sustained
- The client was able to gain Extra income revenue from licensing his Intellectual Property (IP) licensing on his machines. Due to the perishability of salad reaching other states, instead of setting up major plants around the continent he instead set up IP licensing with all major processes to license the equipment he developed.
- They reduced input costs by 30 percent because of the joint alliances built with other processors. They could ride on the tail of their packaging and other input purchases.
Learnings for a CFO
Sometimes ROI is not as obvious as you think it is.
This case study clearly shows that by wrapping brand in strategy, brand can create different decisions, that produce ROI outcomes that may not be obvious at first pass.
As a CFO looking on, the traditional model – looking it as a production problem – may have looked like an obvious ROI position. However, relevant differentiation was the most important thing. When committed to brand integrity, you can clearly see if the client had gone to extrusion process, it was. I believe a strategy that could have created significantly more competitive pressure.
Had the decision taken the route of chasing short-term revenue streams it would have been at the brand’s long-term detriment. If the client had gone down the extrusion path, they would have become mainstream and invested in a strategy that was working against their point of difference by entering a low margin product category and being no different to anyone else.
By wrapping brand around the strategy, channeling decisions becomes a brand consideration– everyone’ Needs to consider decisions in this context.
Company connection with brand is what ties everything together. As the case study highlights, if you stick to brand, you can find a way to keep it going. However, if you look at business through a traditional business model, you will think in silos and risk the integrity of the brand or at very least diminish its strength.
Under the traditional business models, there is no synergy between CFOs and CMOs and this stems from a long history of pigeon holing branding into being a marketing issue. It’s time for the CFO to change this, by wrapping brand around strategy and ensuring every department creates commitment to the brand, to produce better outcomes and better ROI.
As a CFO, you should have a key influence over the extent to which strategy discussions incorporate a branding filter. This is only one of the many examples of how such a focus drives better ROI.
When branding is applied in this holistic way it makes the commercial measurability much more tangible.
Marc Makrid is the CEO of Marc Makrid & Associates. Marc has extensive experience in advising on brand strategy at the board level to a national-based and diverse client base. His roles include Chairman of Campion Education, FP Agriculture & Angelakis Seafood as well as a Board Director of Seeley International and ECH.
Marc can be contacted at email@example.com