Branding evolved from the focus on the visual design, logos, symbols, colours and fonts to a broader concept, where strategy plays a fundamental role. Brands became the drivers of differentiation and reputation and a key action tool. Brands are essential for establishing relations between companies and their stakeholders. They generate links and create connections, which enable companies to obtain support, trust and cooperation of their stakeholders and thus create value and become the cornerstones of the business strategy.

1. Insights
Strategy documents
I14/2012
Marca
The Role of the Brand in
Differentiating Companies
in the New Economy of
the 21st Century
Branding evolved from the focus on the visual design, logos, symbols,
colours and fonts to a broader concept, where strategy plays a
fundamental role. Brands became the drivers of differentiation and
reputation and a key action tool.
Brands are essential for establishing relations are competing on the field of strategy – something
between companies and their stakeholders. expressed by Interbrand’s tagline “Brands have the
They generate links and create connections, power to change the world”.
which enable companies to obtain support, trust
and cooperation of their stakeholders and thus Brands have the power to
create value and become the cornerstones of the change the world
business strategy. Often we underestimate the power of the brands
to drive behaviours and to a large extent create
However, there are different kinds of brands apart contexts and conditions in which people live and
from those associated with business (product and act afterwards. This is because brands, above all,
corporate brands): personal brands, city brands, are culture, says Ángel Alloza, CEO of Corporate
country brands, etc. In all these cases, brand Excellence – Centre for Reputation Leadership,
management should be strategy-driven. and it is the identity of the brands that becomes the
starting point for the vision and values which then
Borja Borrero, Executive Creative Director of are projected by companies to the society.
Interbrand Spain says that initially, branding was
almost exclusively focused on design (a small part But even in these moments it is possible to see how
of what in reality is a brand). The idea was that brands facilitate the development of social values.
the visual aspect played a key role and frequently Social values can be expressed and extended by
was not linked to the strategic dimensions of the means of brands, and when it is done, companies
business. According to Borrero, currently brands achieve better understanding of what is expected of
This document was prepared by Corporate Excellence and contains references, among other sources, to the statements made by Borja
Borrero (Executive Creative Director of Interbrand) and Ángel Alloza (CEO of Corporate Excellence-Centre for Reputation Institute)
during the Branding Days event organised by the University of Complutense in Madrid, on January 17 and 18, 2012.

2. The Role of the brands and thus respond to these expectations Brand from Business
the Brand in in a more effective manner, thus improving the
Differentiating
Companies in the reputation of these brands. Total Business
New Economy of Delivery
the 21st Century That’s why branding is not a static discipline. It is
an ever-changing field that adjusts to the changes
in values, lifestyles, behaviours and demands of the
stakeholders, enabling this combination of tangible
Brand
and intangible attributes symbolized by names and Idea
registered symbols – one of the definitions of the
brand – when they are properly managed – to create
value and have a social impact.
Another function of branding is to tell stories about Brand
brands, or if you will, create their stories through Communication
communicating with the audiences in the medium
Source: The Brand Gym, 2010.
and long run, attracting followers and ensuring the
consistency of experience delivered by the branded
product. All elements have to tell the same story as suggested by Interbrand, which has a special
and explain the same idea. evaluation methodology. This is due to the fact
that the value of intangibles is increasing because
“A brand The importance of brand clarity products and services turn into commodities, and
is described For many companies a brand is still nothing more there are few opportunities for differentiation.
than a logo, as was suggested in the beginning of this
through text. The word brand is associated with something Another element that increases the value of the
what is said almost exclusively visible and tangible. But a brand is the number of fans or “evangelists” that it
has – a concept that goes beyond traditional loyalty
brand is much more than this, it goes far beyond
by people the tangible qualities. The idea of branding is to – as well as the kind of activities designed to promote
about it, transform the brand into something much more or defend the brand, depending on the situation.
meaningful than just a logo.
because Brands of the Future
brands are The identity of a brand is not a claim or a slogan, it is The brands that understand branding as a proactive
the heart of the brand, the promise of an experience, rather than a reactive activity will drive the future,
evaluated something different from others, something unique because branding is no longer governed by the
by what and special. The identity goes beyond the logo – it cyclical model, where the objective was absolute
is the DNA, the content. Values help to reinforce consistency. Now it is a continuous process, where
they exactly this idea and are the basis that holds the the objective is relevant consistency.
say and, value of the brand.
The new model that governs the brands is based on
especially, Harley Davidson is about liberty – the story that a progressive focus and the following features:
by what this brand tells is all about this idea. BMW is about
pleasure, the pleasure of driving. Apple is about 1. A change that creates the need: anticipate what
they do” intelligent simplicity and intuition, it is a brand the people want.
with sex appeal. Ikea is about reinvention, where 2. A dialogue and a connection that encourages
each client becomes a designer. Volvo is about people to take part in the experience.
security – security drives everything it does and the 3. An open and living expression that at the same
way it is done. Whereas Danone is about health and time always tells the same story.
care about people. 4. An expression of continued evolution in order
to stay relevant.
This is what in practice is the idea of the brand.
Ultimately, it is the storyline that defines the Finally, branding no longer aims to ensure that
behaviour and communication of the brand, brands change continuously with their stakeholders.
that makes it clearly identifiable and valuable in The aim is to involve the stakeholders in the process
the perception of its stakeholders, thus leading of creating value.
to sustainable differentiation from the rest of
the competitors. Integrated and Reputational
Vision of the Brand
On the other hand, the differential of the economic According to Angel Alloza, brands require a
value of a brand compared to other brands serves multifunctional and integrated vision, because they
as a tool that allows one to measure its robustness are assessed by what they say and, above all, by what
and health on the market. Branding increases they do. The founder of Amazon Jeff Bezos agrees
the average market value of a company by 38%, that a brand describes itself through the words of
Insights 2

3. The Role of Interbrand Methodology
the Brand in
Differentiating
Companies in the
New Economy of
the 21st Century
Operating Profits –
Taxes =
=$
NOPAT – Economic Profit x
WACC = Branded Earnings x
Role of Brand =
Brand Strength
Discount Rate
ECONOMIC PROFIT BRANDED EARNINGS BRAND VALUE
Source: Interbrand, 2012.
the people. A brand is what is seen (the logo, the Conclusions: from Consumers to Users
colours, the fonts, the design and graphics) and The brand emerged as a product associated with
“Brands what cannot be seen (the ideas, the personality, the logo, based on the marketing and advertising
are no the values, the positioning, the processes, the strategy and aimed at consumers, and then evolved
communications, the quality and the talent). into an idea designed to transmit trust, passion,
longer the pride of sharing the values and aimed at clients,
property of Thus, the two most important elements in a brand employees, providers and other stakeholders and
are alignment and engagement or, in other words, applied to products, services, companies, persons,
companies, commitment of its talent (its professionals) to the places or groups.
developed values of the brand, how they align with these
values and encourage other stakeholders to align Currently, surprisingly, brands are turning into
for with them. The brands are expressed by means verbs used by stakeholders. Here are some examples
consumers. of the five senses and in the way consistent with suggested by Meg Whitman, the former President of
their stakeholders (a very important function eBay: to google a word, to skype with a friend or to
Instead, called the brand guardianship), but this starts with photoshop a picture. This is because now brands are
they are a the robustness of its internal experience and its functioning in a different way: they are used to share
external promise. images, exchange objects, get in touch with friends,
property broaden the knowledge or search for information.
of users Finally, the reputation of a brand starts with its
identity, which is closely linked to the experience of The search – in the new digital economy – is
developed the employees. Along with the Greek philosopher exactly what makes the difference in the world of
to address Socrates, who said that “the way to gain a good commodities, the world of the 21st century. This is
reputation is to endeavour to be what you desire a world, where brands are no longer the property of
their to appear”, we suggest that it is a contrast between companies, manufacturers or advertisers developed
specific what one wants to be, what is expected from one and for consumers and other stakeholders. Instead,
what is actually achievable. According to Alloza, they are the property of those people who use
needs” the best way for a brand to gain a good reputation the products, and are developed to address their
with time is to avoid empty promises. specific needs.
Insights 3

4. ©2012, Corporate Excellence - Centre for Reputation Leadership
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of strong brands, with good reputation and able to compete in the global market. Its mission is to be the driver which leads and consolidates
the professional management of reputation as a strategic resource that guides and creates value for companies throughout the world.
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