Judging the value of brands

Branding is a concept that, although not widely understood, attracts enormous attention.

Large corporations, government agencies, not-for-profit organisations, sporting clubs and many other organisations collectively spend untold millions seeking to promote their brand.

WA Business News’s annual branding survey has highlighted some of the State’s top brands, as judged by executives in the advertising industry.

The top brand was Bunnings, a remarkable success story that has clearly struck a chord with the retailing public.

Bunnings has revolutionised hardware retailing in Australia, providing convenience, choice and value for money.

Its brand encompasses all of those attributes, making it much bigger than any formal advertising or branding campaign.

Interestingly, Bunnings’ parent Wesfarmers also ranked as one of the State’s top brands.

Its high ranking illustrated that advertising and marketing campaigns do not create successful brands.

Wesfarmers is commercially successful, consistently profitable over more than a decade and perceived to be socially responsible.

These are the attributes that contribute to the emergence of a great brand.

Yet it was only a few years ago that Wesfarmers was attracting adverse publicity because Bunnings owned a big woodchip business.

Wesfarmers tried in vain to turn around public opinion before deciding to jettison the problem by selling the woodchip business to its Japanese customers, renaming its remaining forest products business Sotico (which was recently sold to Tasmanian woodchipping company Gunns) and leaving Bunnings as a retail brand.

Western Power, which has had a hard time in the media following the summer power failures, would crave the high brand rating of Wesfarmers.

For many people, however, the logic of brand advertising by monopolists and multinational companies remains a mystery.

If there is little or any direct retail benefit, then why advertise?

The answer lies in the fact that corporate branding has a much wider impact than on retail customers.

It affects the way in which: staff see their employer; suppliers and customers see their business partner; investors see their shares; and government and regulators see the organisation.

A good corporate brand can provide enormous benefit when companies are seeking political backing.

Just think of the support oil giant ChevronTexaco obtained when it needed support for its Gorgon gas project, which has raised the hackles of environmental groups.

Contrast that to Shell’s ill-fated bid for full ownership of Western Australian oil and gas company Woodside.

Corporate governance

Companies with a good track record on corporate governance – such as Wesfarmers – usually find this helps to lift their corporate reputation, i.e. their brand value.

Likewise, governance issues go to the heart of the public’s perception of our elected representatives.

Governments at all levels should have transparent decision making processes that are clearly understood by all people.

The controversy over City of Perth’s new advertising contract (see page 3) suggests there is plenty of room for improvement in some quarters.