In marketing, if you have a good disagreement, you fall head over heels. Often such controversies escalate into good old street fights, watched by marketers around the world from their social media windows. , undermines marketing itself as a business tenet.

This article celebrates where we are in unity. That marketing creates business value. To make this adamant, we stress-tested the Meaningfully Different Framework (MDf) and re-evaluated a hypothesis we first proved 15 years ago. Our new validation provides incontrovertible data for defending against upcoming marketing budget cuts.

We all agree: the role of marketing is to create value

Creating value is the most important job in any business. Marketers will agree that quality marketing can be a key differentiator in driving brand value growth. You can think of marketers as value engineers. Her job is to create value by meeting people’s needs. What’s the biggest benefit for brands? Good marketing practices encourage people to buy more products at higher prices, which has a knock-on effect on the profit margins of the business. A McKinsey study of S&P 1500 companies estimates that raising prices by 1% over her could allow companies to earn an additional 8%.

Prominent thought leaders in marketing have banded together on investing in consistent branding, not stopping advertising when financial hardships begin, and avoiding promotions that only give the illusion of increased sales. and provide advice.

In fact, it’s the toughest times for the strongest brands to actively add value to their brands. cause? To help maintain customer price awareness and price positioning when consumer decision-making becomes difficult.

So it comes as a surprise that Coca-Cola, whose brand value is currently up 12% year-over-year, announced that it is spending even more on marketing to create more brands, according to Kantar’s BrandZ Global report. It’s not what you should do. That surplus investment in marketing was fueled by their intent to raise prices.

What We Agree: Recognition Matters

As Jeremy Bullmore and Stephen King argued decades ago when choosing between product A and product B, “Most knives cut, but people pay more for some knives.” I am happy to pay and I have never been cheated”. They want more than that, and that extra intangible aspect is the perceived value of the product.

Modern branding, which has evolved from the cattle markings of yesteryear, involves creating a brand in the mind of the consumer. This is in contrast to the tangible product itself, which is created in a factory. The value we create through this kind of spiritual connection is not only possible, but has the added benefit of being greener. Rory Sutherland, vice chairman of the Ogilvy & Mather group, wittyly remarks, “It takes a lot less carbon to make something that’s 3x bigger and 10x faster, for example.” .

So awareness drives action, and that action drives sales. Recently, however, there has been a lot of discussion about the opposite. In other words, sales have a big impact on perception. Depending on which side of the dilemma they stand on, marketers are challenged to decide whether to spend their budgets on convincing consumers or focus instead on expanding their reach. Professor Koen Pauwels shines a light on the conundrum of where to invest your marketing budget, proving both theories to be true.

About measurements…I agree to disagree

Most marketers agree that measuring marketing effectiveness is important, and there is evidence that its importance is growing within businesses. However, “what to measure” is still a matter of debate.

First, good news. Despite the persistent dichotomy between digital and ‘normal’ marketers, almost two-thirds of marketers interviewed as part of the Media Reactions 2022 study said their ROI measurement had a mix of short elements of both. says. Long-term and long-term metrics – sales and brand growth. It’s promising!

But our research also repeatedly points to persistent data gaps. He 42% of marketers believe they need access to data they don’t currently have. This data suggests that the role of marketing remains a binary. 14% of marketers want to expand their performance marketing capabilities, but the same number question the business’ over-reliance on her ROI as a measure of success. This was the finding of Marketing Week’s Language of Effectiveness survey.

Yet the most alarming thing the survey uncovered relates to how marketers define success. This is deeply rooted in the misconception that advertising is a major (or only) part of a marketer’s job. Nearly three-quarters (73%) of brand marketers do not believe that increased brand equity is evidence of marketing effectiveness. Instead, he prioritizes short-term gains, such as winning communications his campaign. Ha.

Quantifying marketing value

For the past 20 years, Kantar has argued that a brand shouldn’t just be famous, it should stand for something meaningful and different. Marketers need to think beyond barbaric traits and beyond mental and physical availability. Doing this multiplies the rewards: increased sales, higher profit margins, increased efficiency, and more, now and in the future.

What these benefits have in common is the brand’s added value, or marketing performance. But how do you measure marketing impact?

Measure marketing impact using four key performance indicators

Over the last nine months, we’ve been busy testing hypotheses and re-examining our Meaningfully Different framework. We reviewed key metrics and used new data to shake up what we knew about their impact on brands. Used to measure what is meaningful, different and salient metrics can be combined to help measure and forecast potential sales, future growth, and pricing. These are called power metrics.

1. Demand Force: Measuring consumer demand and correlating it with market share based purely on brand perception.

Our testing shows that if you do this right, your brand can gain 9x more volume share than weaker brands.

Demand Power: High Demand Power brands gain 9x volume share

Source: Kantar’s 2022 MDf Validation

2. Pricing Power: A brand’s ability to justify a price premium relative to the category average based solely on consumer perceptions of the brand.

Pricing power reflects price sensitivity and elasticity. In other words, the more things consumers have, the less likely they are to switch to cheaper alternatives. Our data shows that people are 70 percent more willing to pay for brands with high pricing power than brands without pricing power.

Pricing power: Brands with high pricing power pay 70pp more

Source: Kantar’s 2022 MDf Validation

3. Future Power: The probability that the brand will increase its value share over the next 12 months.

Again, this is purely based on current consumer perceptions of brands. Brands with high future power are four times more likely to grow their value share than brands with low future power.

Future power: High-scoring brands are four times more likely to grow their value share

Source: Kantar’s 2022 MDf Validation

4. Activation power. Finally, her fourth power is translating consumer predisposition into brand choice.

Your brand should be easy to remember, but it should also be easy to find. Brands with a strong store presence are more likely to be selected. On the other hand, out-of-stock brands quickly lose buyers. Some people never get it back. Activation Power is a practical application of branded physical connectivity and availability.

Initial validation of Activation Power reveals that it has the potential to drive brand growth. Strong (Demand Power), often activated (Activation Power) brands grow 2.5x faster than brands with weak Activation Power.

These four headline metrics complement the amalgamation of metrics and other behavioral measures (e.g. POS data) to help marketers answer the all-important question, “Is my marketing effective?” To do.

The four power indicators serve as confirmation that you’re injecting value into your brand, that you can maintain and raise your prices, and that your future cash flow is good.

The value of marketing in the face of consumer cuts

As we move from a fun period of deflation to uncertain inflation, some find solace in brand stories that flouted all the rules in a similar era. “It was right after the financial crisis,” a marketer would say, “despite the recession in the years that followed, people were still queuing outside Apple stores.”

This is true, but it’s also a very rosy paradigm. Apple cases are the gold standard of value for consumers to aim for, but they fail to provide a blueprint for success for all other brands. Instead, a strong marketing team should focus on what it takes to create brand value. The need to continue to deliver value to the brand awareness monster allows us to maintain our price position and even defend higher prices during difficult economic times.

As expected, the Global Issues Barometer survey conducted by Kantar in September showed that consumers plan to cut spending. Unsurprisingly, they gave us a long list, but the items were clustered in three ways: buying fewer items, not buying certain categories of products entirely, and buying brands. downgrade the

People try to save money carefully, but irrational spending habits remain around us. Some brands explain more clearly and loudly about the value they offer to their customers, provide a compelling reason to continue, and even justify their splurge. Litson summarizes this consumer choice as follows:

So far, we’ve read the theory of value and seen its practical application in newly validated metrics. All that remains is to track your brand against them. Understanding the brand value your marketing efforts bring to your consumers and your business is essential to nurturing and leveraging a strong brand.

The next stop in our modern marketing dilemma series is loyalty. The importance (if any) of a loyalty-first strategy, the increased prominence (if any) of loyalty schemes and rewards programs in a brand’s toolkit to weather the cost of living crisis. Subscribe to our newsletter so you don’t miss the next article in the series. Please contact us for more information.