Leaving Brand Equity on the Table

October 27, 2008

Another stimulus package has been proposed, this time endorsed by federal chairman Bob Bernanke. It is doubtful at best to imagine that this will be the fix-all to the current financial woes that have shaken the financial industry to its very foundations. Especially considering the damage has spread across multiple other industries, from retail to personal care products, as the credit markets struggle to unfreeze.

The question that still remains, is how will this effect companies in the short-term, verses the long-term? Depending on the terms of the proposed stimulus package, companies could benefit from the boost of income, but would then be left to their respective devices to ensure that the stimulus package would plug all the financial leaks that have sprung up over the past few quarters.

As commercial banks are either merged, bought outright, or bankrupted, the financial industry playing field is changing drastically. Considerable amounts of brand equity are being shifted around or lost. It is crucial that those companies acquiring others carefully evaluate the assets, tangible and intangible of both companies.
It is vital for companies to trim the financial fat, while simultaneously shoring up their brand foundation. The financial side of a company’s revenue only accounts for approximately 80% of the whole pie. The other 20% is generally referred to as “unexplained”.

CoreBrand has managed to explain a portion of that 20%. On average, 5 – 7 % of the entire pie can be attributed to the corporate brand. Companies like Coca-Cola can attribute about 20 % of their pie to corporate branding, while companies in the electrical utilities industry can attribute between 0 – 3 % of their pie to corporate branding. The financial industry on average can expect to attribute 4 – 5 % to corporate branding.

By strengthening the corporate brand in an unsure economy, companies can better maintain investor confidence, and consumer loyalty, while the stock market rollerocoasters from day to day, and stimulus packages and financial bailouts occur monthly at this rate.

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