Optimising value in shrinking markets

Ruchi Gunewardene elaborates on what it takes to build strong brands during these difficult times

As businesses struggle to cope with shrinking markets, brand managers need to consider all the factors that could be used to withstand the vagaries of these uncertain times by minimising investments and reducing costs.

The most valuable brands on the Sri Lanka 100 index and those at the top of the table are also among the strongest – and the stronger the brand, the greater the ability to impact positively on brand value.

Therefore, brand managers should focus on brand strength – a controllable factor – to offset external shocks that impact their categories and are beyond their control.

What is brand strength?

Strong brands are better placed to work hard for businesses by providing price or volume premiums, improving margins, increasing revenue through loyal and new customers, and saving on scarce marketing investments.

The Brand Strength Index (BSI) used by Brand Finance is a comprehensive dashboard that calculates this brand strength. It comprises three pillars – viz. investment, equity and performance.

Each component in this chain has a logical link to the other. Brand investment is expected to result in creating brand equity with customers, employees and other stakeholders, which in turn is likely to lead to better business results in the form of revenue, higher margins and volumes, and so on.

The first pillar of investment looks at all the tools and mechanisms that are used to promote brands. These include the amount of investments and marketing spend, level of social media engagement, market share and the reach or distribution that brands are working towards to access consumers.

Separately, the brand management processes should also provide a good framework for strategy and developing plans.

The second pillar – brand equity – focusses on what stakeholders think and feel about brands. The level of empathy, engagement, trust and belief is vital to establishing loyalty, repeat purchases and building customer advocates who recommend brands to others.

And finally, performance captures how that equity is driving marketing and financial outcomes, which include the growth of customers, revenue and margins.

A brand that invests in effective strategies should drive better brand equity; and as its perception among stakeholders improves, this will translate into stronger financial performance. Such is the benefit of a strong brand.

How should brand strength be built?

It is possible to analyse the rate at which brand investments are converted into brand equity and the rate at which that equity translates into financial performance, which could then be benchmarked with competitor performance, providing the financial data is available. This sets out areas of strength and weaknesses to focus on.

Apart from such analyses, three important elements are needed to build a strong brand. They are the processes used for brand management, brand positioning and performance tracking.

In Brand Finance’s annual review of the Most Loved Brands, we find a disproportionately high number of multinational brands every year. Unilever brands dominate the table with 15 brands being listed.

This year for example, Sunlight is the Most Loved Brand. Our analysis has established that the single most important factor for this is the standardised brand management system, leading to consistent long-term investments. While global brand management templates are used by multinationals, many local companies do not use them.

In using positioning to build brand strength, brand managers must begin by understanding what they view as opportunities for their brands to represent and establish consumer value propositions that flow seamlessly across their organisations.

For instance, Dialog’s ‘The Future. Today.’ is a promise to deliver the latest technology to customers and is driven by ongoing investments, long-term marketing initiatives, and employee engagement around creating new products and services. A more recent example is Keells’ ‘freshness’ proposition.

It is no coincidence that both these brands are doing exceedingly well on the Brand Finance Sri Lanka 100.

For performance, there needs to be continuous monitoring in terms of both marketing and financial indicators. This goes beyond market research to evaluating how competitors are performing against the three pillars of investment, equity and performance, and building a brand matrix that tracks the main key performance indicators (KPIs) driving brand value.


Companies should begin by optimising their brand management systems and strengthening the processes used.

Adopt a fact-based approach to establish a differentiated positioning and value proposition.

Understand the pillars and conversion across the chain while benchmarking performance with competitors, and developing strategies to increase customer engagement.

Continuous performance tracking that includes marketing and financial measures, to bridge the gap between marketing and finance.