The Brand Bubble in strategy + business
June 24, 2009
We were big fans of last year's The Brand Bubble: The Looming Crisis in Brand Value and How to Avoid It, by John Gerzema and Ed Lebar—so much so that it took home the 800-CEO-READ Business Book Award in the Advertising & Marketing category. We also published a manifesto from Mr. Gerzema over at ChangeThis about How Business Speculation in the Consumer Marketplace Threatens Our Economy.
Well, the issue has certainly not resolved itself, and John and Ed are still sounding the alarm—most recently in the latest issue of strategy + business with an article simply titled The Trouble with Brands. (You may have to subscribe to read this, but it won't cost you anything.) Their basic argument is:
This overall mismatch between consumer attitudes toward brands and the market values of the universe of companies that produce and own them is, we believe, a recipe for disaster at two levels. At the macroeconomic level, it implies that the stock prices of most consumer companies are overstated: A "brand bubble" is implied in their stock prices, and once it deflates—or worse, pops—it could further drive down valuation multiples and stock prices around the world. Meanwhile, for leaders of consumer-related corporations, the mismatch points to a serious, continuing problem in brand management.There's much more to it than that, though, and the outlook doesn't have to be so dire for your company. Gerzema and Lebar have done extensive research on the issue and layed out "a five-step framework for companies that wish to build an irresistible brand." Those steps are:
- Perform an "energy audit" on your brand.
- Make your brand an organizing principle for the business.
- Create an energized value chain.
- Become an energy-driven enterprise.
- Create a loop of constant reinvention.
To learn more about each step, and much more, read the entire article.