Boards often found wanting over branding

Henri Eliot

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A company’s marketing and brand efforts are crucial to survival and growth.

But, in my experience, boards are not often equipped for a sustained analysis and appraisal of brands and their markets. In part, this is because of the tidal wave of governance, regulatory and compliance issues that challenge every board and can often take precedence.

Largely, this is because firms do not see marketing as a core driver of growth across the business but rather as a service function.

Should marketing and brand value appear on the board agenda and be subjected to the same rigorous scrutiny a board applied to many other complex and testing issues affecting the firm’s performance?

It often appears only when the annual business plan is reviewed or when a major campaign is about to be launched.

Marketing issues are critical to boardroom deliberations. If customers are the source of revenue and shareholder value, then capturing customer preference though winning brand and marketing strategies lies with directors, as custodians of corporate strategy.

It follows, then, that the role of the board is to evaluate the quality of the thinking and planning that has gone into brand and marketing strategies, because the strategy must have the goal of delivering profitable, sustainable growth.

Furthermore, as market dynamics change regularly, the board needs to be equipped to monitor the effects and adjust accordingly. This is not to second-guess management or be involved in the detail. It is simply to consistently and regularly ask the right questions, have an understanding of, and confidence in, what to look for in the answers and steer a fact-based debate and review of the marketing investment.

What is it about brands that boards need to understand?

A brand is the critical connecting point between a business, its customers and other stakeholders, including staff. It should go without saying that it is not a logo or memorable slogan, although these may encapsulate its familiarity. Its role is far broader and deeper.

While brands and branding are recognised as critically important issues, and regularly appear on most board agendas, it remains vital to ask if the brand is as rigorously and thoroughly assessed as the key financial measures and indicators.

Some questions a board could be asking would include:

1. We own several brands. Which should we be leading with? Has enough thought been given to our brand architecture and specifically the role of the corporate brand versus sub-brands?

2. What are the key measures used by our management to understand our brand’s strengths and weaknesses in the context of our current competition? Are we getting objective assessments from distribution and trade partners?

3. How are we assessing competitor claims and activities that encroach on our brand territory? How are we tracking brand-switching behaviours?

4. With a range of services from separate business units and different advertising messages reaching the same customer, how are we ensuring each message is reflecting our brand values and not sending conflicting signals? Do we have an established set of brand guidelines for all communications and how are we managing the message process?

So much is written about risk, with its dominant focus in governance discussions. Yet a failed performance in the marketplace and the consequent effect on earnings, cashflow, reputation, and investor confidence can be the greatest risk of all. If marketing awareness in its widest context is not pivotal in boardroom discussions, who will be accountable for any significant marketing investment failures that stem from under-informed directors?

For example, it would be interesting to know how many boards have marketing and brand value on their agenda. Did Telecom New Zealand think about the damage to its “XT mobile” brand when the network failed several times in 2010? In the end, it quietly rebranded to the “smart phone network”, I believe at a high cost to shareholders and customers.

Henri Eliot is chief executive of Board Dynamics, a consultancy company which provides strategic advice to directors and boards throughout New Zealand and Australia

Click on above to view Henri Eliot’s column in the Sunday Star Times