Brands as Assets: The Idea that Transformed Marketing

Sometime in the late 1980s, an explosive idea emerged that brands are assets, have equity and drive overall business strategy and performance. That idea altered perceptions of what marketing does, who does it, and to what end is its purpose. It’s also the focal point of the first chapter of my latest book, Aaker on Branding. It truly transformed marketing, comparable in impact to other transformational ideas that have appeared in the last century such as mass marketing, segmentation and globalization.

When firms adopt this asset view of branding, marketing is no longer perceived as a tactical arm of the business run by middle and lower-level managers (or an outside agency) in order to generate short-term sales for a single brand, offering and organizational unit.

Rather, marketing is seen as:

Strategic and visionary

Marketing contributes to the business strategy through its first-hand knowledge of customer insights and marketplace trends, plus its expertise with respect to segmentation, brand portfolio strategies, the value proposition, growth strategies and global brand strategies.

Being managed by top executives

From a strategic view, the brand is usually managed by people higher in the organization, often the top marketing professionals in the business organization. For marketing-driven organizations, the ultimate brand champion can be the CEO. In any case, marketing now gets a seat at the strategy table becoming a participant at creating and managing the business strategy.

Charged with building brand assets

Shifting the emphasis from tactical measures such as short-term sales to strategic measures of brand equity and other indicators of long-term financial performance is a monumental change. The guiding premise is that strong brands can be the basis of competitive advantage and long-term profitability going forward. A primary brand-building goal will be to build, enhance or leverage brand equity, the major dimensions of which are awareness, associations and loyalty of the customer base.

Leveraging brand assets

When a brand is viewed as an asset, the opportunity will arise to leverage that asset to generate growth. It can be used as a master brand or perhaps as an endorser to support a vertical extension or a strategic entry into another product class by providing awareness, credibility, customer relationships and positive associations. It can also be used to frame a subcategory, thereby rendering competitor brands less relevant.

Managing the brand portfolio

As offerings and brands proliferate, it’s clear that marketing needs to manage the brand family to foster clarity, synergy, energy, relevance and leverage. That means that each brand needs to be assigned well-defined role sets and managed so that they are successful in those roles. The possible brand roles include strategic brands, cash-cow brands, master brands, endorser brands sub-brands and more.

Addressing the organizational silo issues

Nearly all brands span different silo organizations defined by products, markets or countries. Marketing is charged with fostering communication and cooperation across silos without which there can be inefficiencies, lost opportunities to scale effective programs and brand diminution.

The brand-as-asset view has faced resistance for various reasons. The power of short-term financials is overwhelming and pay-off from brand building is difficult to quantify, especially in the short-term. Building brand assets is no easy feat. Nevertheless, the time has come to prioritize brands as assets – its impact on marketing can be transformational.

David Aaker is a best-selling author and Vice Chairman at Prophet, a strategic brand and marketing consultancy. He blogs weekly at www.aakeronbrands.com and can be found on Twitter @DavidAaker.

His next book, Aaker on Branding: 20 Principles That Drive Success is available for pre-ordering now. For a limited time, purchase 25 or more copies of Aaker on Branding and save 42%. Click here for more information.

Photo: Prophet