For the last decade marketing professor Bryon Sharp and others have championed mental and physical availability as the best way to drive brand growth, generating sales penetration through “meaningless distinctiveness”.
And our Kantar BrandZ analysis illustrates that enabling a brand to come easily to mind (what we call ’Salience’) and making a brand easy to find are important foundations for growth.
But we believe this is a misleading model for growth because it’s missing several vital parts.
So, I revealed to the audience at Cannes that we've looked at what creates breakthrough value growth for brands from two empirical angles. Both come to a simple conclusion: it's time to rethink, by learning from what breakthrough brands – those that have grown most rapidly over the past few years – do differently.
The science of success
We partnered with Oxford Saïd Business School to build a model to predict ’abnormal’ share price growth and to study the Kantar BrandZ variables driving that growth. We examined growth patterns among over 800+ brands from multiple categories over a 13-year period.
The model predicted share price outcomes with 99.995% accuracy. This accuracy was only achieved by the addition of consumer brand equity data to the historic financial performance of those companies.
This work showed two things. Firstly, the brand perception with the largest contribution to the model is a brand’s Difference (Corporate Responsibility came in third). Secondly, the strength of the link between growth and Difference and Responsibility has been increasing, while the role of Salience in brand growth has been declining.
This evidence sharply contradicts Byron Sharp’s assertion that difference doesn’t exist and doesn’t matter. It does exist, and it’s the thing that matters most.
Which factors make the difference?
We undertook additional Kantar BrandZ analysis to identify ’breakthrough’ brands to examine what sets them apart. Brands in the top quartile for growth and / or new brands that entered the Kantar BrandZ Top 100 Most Valuable Global Brands over the past few years.
We discovered that breakthrough brands aren’t all tech brands, small brands or new brands. Any brand can be a breakthrough brand and achieve market-beating share price growth. Global examples of breakthrough brands include KFC, Chipotle, Lululemon, Tesla, Aldi, Uniqlo, TikTok and Airbnb as well as Kantar BrandZ’s No1 brand Apple.
Breakthrough brands go beyond tech
What makes these brands different?
In a word: Difference. They are seen – and experienced – as being very different to other brands, even other brands in the Kantar BrandZ Global Top 100.
Difference is the rocket fuel powering their extraordinary growth. In fact, the fastest-growing brands in the Global Top 100 are 14 index points more Different than the laggards, and their growth comes despite them being, on average, less Salient than slow-growth brands.
Difference discriminates top 100 leaders from laggards
Source: Kantar BrandZ
How do these breakthrough brands create Difference? They have a stronger red thread of innovation, better products and service experiences, they’re seen as being responsible and having great communications.
This adds up to a perception among consumers – both emotionally and rationally - of strong differentiation. These brands outrank other strong brands when it comes to ’shaking things up’ and ’leading the way’. They’ve a different mindset that’s more challenging and disruptive even when they are not challengers.
And they do this in a way that goes beyond being ‘meaninglessly distinctive’ as Byron puts it.
Crunch time – how to be different
Our analysis shows distinctiveness accounts for under 30% of difference. The vast majority – over 70% - is made from other factors like product experience, service design or being perceived a responsible brand as well as communications.
These differentiate through stimulating emotions in a way that both extrinsically and intrinsically meets our needs – far from being meaningless, they are inherently ‘meaningful’.
These factors connect to create a strongly differentiated ‘whole-brand’ experience that strengthens impressions of a brand beyond consideration and purchase – and continues after purchase. These brands achieve what we call mental and physical connectivity.
How difference makes the difference: Pricing Power
Kantar BrandZ analysis shows that while Salience drives volume sales, Difference is key to driving margin.
Difference is worth paying more for
Source: Kantar BrandZ
In fact, difference is 2.5 times more important in driving Pricing Power than Demand Power.
Difference is 2.5 times more important for growing margin
Source: Kantar BrandZ
In fact when applied meaningfully, Difference accounts for an incredible 94% of Pricing Power – the attitudes that mean consumers are willing to pay the price a brand charges. And this creates a huge commercial growth advantage.
This Pricing Power advantage flows directly to the bottom line: McKinsey reports that a 1% increase in price improves operating profits by 8%. That is three times the boost to profits generated by a 1% increase in volume sales.
But there’s even more. Meaningful Difference radically strengthens the pipeline for future sales too, building a protective cashflow moat around a brand, from where profits can be more deeply and consistently reinvested back into the business, even in recessionary times.
The brand value chain brings it all together.
Mental and Physical Connectivity at work: the brand value growth chain
Source: Kantar BrandZ
- Any brand can be a breakthrough brand.
- It’s Difference that makes the difference – applied meaningfully, it’s the fast-track to much profitable margin, to future sales and market-beating share price growth.
- Difference is driven by factors including innovation, product and service experience, having a responsible reputation as well as great advertising. These factors not only drive pricing power before during and after purchase, they also strengthen the sales pipeline.
- The time has come for a new brand value chain growth model that includes Pricing Power – a model that’s especially relevant in times of turbulence, inflation and recession.
Read more inspiration from Cannes Lions 2022 below and get in touch to find out more about our analysis and breakthrough brand growth.