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Understanding Brand Energy PDF Print E-mail
Written by Peter Hutton   
04 Jun 2005

Understanding Brand Energy Written by Peter Hutton, BrandEnergy Research

Top level thinking about what business is ultimately about has shifted from profit generation to value creation and value creation for all stakeholders.? Developed economies have shifted from being based predominantly on the manufacture and trading of tangible goods to the creation and delivery of intangible services. The thinking and language of ‘branding’ is still largely tied to consumer products and does not work well for service industries. A more appropriate concept of the brand relates to the experience of products/services/suppliers. ‘Brand energy’ is a concept that fuses the idea of value creation and brand experience across the stakeholder system.

If you view advertising from a brand energy starting point you are likely to develop a quite different understanding of what it does and how it works. Similarly you will see research in a different light. Quantitative research that seeks to evaluate advertising campaigns is seen as unable to provide much insight into how the advertising is affecting the brand and can be misleading in what it implies about the processes at work.

This paper suggests that advertising research works best when put in the context of a clear framework of understanding of how the brand works in its entirety and the way in which advertising is expected to influence it. Advertising ‘evaluation’ research needs to move away from major quantitative tracking surveys applying standard questions and standard methodologies and develop approaches and measures that reflect the way in which each brand actually works and how the advertising is expected to influence that.

I am going to talk about three things.
First I am going to tell you about Brand Energy and why I think it is such an important, revolutionary concept.
Second I am going to talk about why and how it is relevant to advertising.
Third I am going to say why and how research is failing the advertising sector.

Brand Energy
Brand energy is defined as:

‘The energy that flows throughout the system that links businesses and all their stakeholders and which is manifested in the way these stakeholders think, feel and behave towards the business and its products or services’

It is a concept that evolved in my mind over a number of years but really fell into place around 18 months ago.

I should first say that I have spent nearly all my career as a researcher. I was at MORI for nearly thirty years and in that time was responsible for hundreds of projects – projects to do with consumer and b2b marketing, ad tracking, corporate reputation, employee surveys, investor relations, social research, PR surveys and political opinion polls.

At the same time I have always been interested in how surveys are used by decision-makers to improve their decision-making. Indeed, I even wrote book about it in the 1980s .? This lead me to take a particular interest in how individuals, organisations, markets and cultures work and the management frameworks and assumptions which defined the context in which decisions are made on the basis of research.??

During the late 1980s and 1990s there was an increasing questioning by leading businessmen and business academics about what business was really all about.? The old model that saw business as ultimately about generating profit was increasingly seen as limiting its real potential. This had became particularly apparent as post-war Japanese businesses increasingly outshone their American and European counterparts by adopting different models of business that were much more long term and inclusive.?

As part of the various debates there was an increasing shift towards acknowledging the contribution of all the different stakeholders in business performance. Critically, also, the notion that businesses are ultimately about creating value, not generating profit moved to centre stage for the most successful companies. To me this was succinctly summed up by Sir Brian Pitman, then chairman of Lloyds TSB, speaking at a Henley Management Centre conference in 1999 when he said:

“We used to consider ourselves a bank. Then we considered ourselves providers of services. Now we see ourselves as creators of value”

The brilliant thing about the idea that a business is about creating value is that it opens the door for a totally different way of thinking about what you should be doing. The central notion here is not an economic one, it is about creating value in people’s lives; it is only by creating goods and services and working environments that mean something to people that they start undertaking the economic transactions that create economic value.

The great companies have always known this. Marks and Spencer became the gold standard of British retailing for many decades, not by focusing on how to generate maximum profit for its shareholders, but by its founder’s obsession with creating valued products and valued experiences for its customers and staff.

But curiously this was never really acknowledged in books about management and business which tended to focus on one aspect of business at a time – accounting, process management, marketing, people management and so on.

The growth of the business schools in the US in particular did much to change this and question the predominantly accountancy-driven management frames that pervaded the thinking of western boardrooms.

The publication and popularity of Kaplan and Norton’s Balanced Scorecard in 1992 epitomized the enormous desire of business leaders to break out of the functionally based silo mentality that characterized, and still characterizes, most businesses. The idea of the balanced scorecard is that each function whether it is finance, HR, IT, production, marketing or whatever, has a different way of thinking about the business and this can be highly counterproductive as each mind frame competes to dominate. The balanced scorecard was about getting all these functions to agree on a common view of the business and to build an integrated strategy on this. The scorecard is about developing measures so that you can monitor progress towards your end corporate goals.

One of the key underlying drivers of this global change in management thinking has been the massive shift from our economies being largely based on trading tangible goods to being largely based on intangible services. And the value of even the tangible goods are largely now intangible – such is the nature of branding. We cannot even buy loose apples in the supermarket these days which do not have a little branded label stuck on them designed to make us appreciate the value and quality of the product and therefore to be prepared to pay more for it!

Another major shift, which I believe is critical to all our notions of marketing and advertising and the role of research, is a redefinition of the brand. Now I know that if you look into literature you will find 682 different definitions of the ‘brand’, but one thing that struck me as I got increasingly interested in the whole concept of branding and brand management is that if you say ‘brand’ to most people, what flashes through their minds is normally a) a consumer product brand and b) a visual manifestation of that brand. And this idea that brands and branding really have to do with marketing consumer products and that the purpose of marking is to create and sustain the brand in the minds of consumers, is something which really dominates the literature on branding.

Last Updated ( 04 Jun 2005 )
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