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THE VALUE
OF VALUE
MICHAEL K. SUSSMAN,
PH.D.,
GLOBAL DIRECTOR OF
ANALYTIC INSIGHTS,
Y&R ADVERTISING
The past few years have been tough
for both businesses and consumers.
An unstable housing market, the
collapse of financial institutions,
rising oil prices, a volatile Wall Street
and high unemployment have all
contributed to a more cautious and
frugal consumer.
As a result, brands have had to
rethink how they market themselves
in order to address changing
customer attitudes and behaviors.
After many years and billions
of dollars spent on marketing
efforts to build brand equity,
brand managers across categories
have been forced to refocus
their efforts on emphasizing the
value of their brands. Brands are
aggressively competing for share of
tighter wallets, using discounting,
couponing, rebates and promotions
to help drive short-term sales. While
this can clearly hurt businesses’
margins, it may also have a
dangerous long-term consequence…
the erosion of brand equity.
We know from Y&R’s BrandAsset®
Valuator (BAV®) model that healthy
brand equity starts with Brand
Strength, which is comprised of
Differentiation and Relevance.
Brands that are able to stand out in
meaningful ways are able to generate
deeper loyalty, pricing power and
market share and, ultimately, drive
stock prices.
The problem arises when we
look at the relationship between
perceptions of Value and Brand
Strength. Looking at our BAV
brandscape data comprised of
thousands of brands, we saw that
perceptions of Good Value were
highly related to brand Relevance.
But offsetting this, we found a
negative relationship between
Value and Differentiation. The more
value-centric a brand becomes, the
less it is able to Differentiate itself.
Two decades of brand equity data
demonstrate that Differentiation is
the component of Brand that is the
most difficult to build and the most
challenging to maintain. It is also
the dimension of brand that has the
greatest influence on consumers’
emotional commitment and
advocacy. As marketers focus more
and more on the Value component
in their brand equations, they may in
fact be eroding the overall equity of
their brands.
Therein lies the paradox. How
can Brand Managers maintain and
grow market share in an environment
where Value is essential, without
denigrating their brands’ equity and
long-term worth?
“It takes 20 years to build a
reputation and five minutes to ruin
it. If you think about that, you’ll do
things differently.” – Warren Buffett
Digging into a wealth of BAV brand
data across over 200 categories, we
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