As an occasional lecturer and presenter for MBA programs, I’ve discussed the concept of “modern marketing” and the elements of successful marketing in an era of unprecedented change. One aspect that remains important is the value of the brand.
While most MBA marketing programs focus on consumer marketing and business-to-consumer (B2C) brands, the dramatic shifts in business-to-business (B2B) and services-related companies deserve attention too. Working for SAP for nearly 11 years and specializing in high-tech marketing for close to three decades, I’ve had a front-row seat watching this unfold over the years.
A brand is more than just your identity in the marketplace
For most of us, doing a Google search is an innate behavior for learning about anything and everything – especially brands we are considering. But did you know that this one action is closely tied to brand value?
By definition, a brand is any combination of words, design, visual concept, or imagery that elicits an emotional response. And all of this is a recipe for differentiation, whether we are talking about the brand of a product or service or a person’s “personal brand.”
Every brand also has intrinsic value. This attribute is quantified on a balance sheet as economic value and represents a company’s “brand equity” in the marketplace and to customers. Companies with more-valued brands do better in terms of sales, market share, and stock performance.
To make demonstrate the two parts of brand value, I like to reach back into my “way-back machine” and pull out a chart from one of the great marketing professors of all time, Phillip Kotler. Though his numbers date back to 2006, the concept is still the same.
Kotler found that the value of a brand is directly related to the market capitalization of a company. In Kotler’s words, “branding strategies, brand performance, and a firm’s business performance are found to be positively correlated with (their) stock increase.”
2015: An era of amazing brand value and growth
So what does this have to do with modern marketing? A lot!
Let’s consider my employer, SAP. The company ranks 24th overall in the recently released BrandZ Top 100 Most Valuable Global Brand, with a brand value of US$38 billion. This status places us in an elite peer group with top B2B and B2C brands including American Express, Apple, Google, IBM, Microsoft, Coca-Cola, PepsiCo, and Nike, among others.
While the value of the SAP brand has increased 5% over the past year, it has also increased an astonishing 299% since Kotler released his study nine years ago. And when I think about my time at SAP and watching this incredible growth, Kotler’s observation makes complete sense. Over the last 15 years, SAP has invested in brand marketing in sporting events, on TV, at airports and conferences, and more. As a result, people can universally recall the SAP name without any assistance.
Why B2B, technology, and services matter
In BrandZ’s list of top 100 valuable global brands, technology-related brands account for nearly half (44%) and consumer brands account for about one-fifth (22%). And if you quickly scan this list, you’ll see many familiar technology names that are associated with solutions implementation, services, and support – such as SAP and our partners IBM, HP, Accenture, and Cisco. Since most of SAP’s revenues are attributed to service and support, it is easy to highlight the important role we play in this amazing growth in brand value.
One final statistic worth mentioning: 92 of the Fortune 100 run SAP. And again, with a quick look at BrandZ’s rankings, we see that the vast majority of brands listed in the top 100 run SAP software. Not only is SAP a tremendous brand success on its own, we are intertwined with the success of these top 100 brand companies. The networked and digital economy these top brands represent is fundamentally tied to SAP. Wow!
So in the era of modern marketing, the value of a brand matters – and so do B2B, services, and solutions matter more than ever. This is truly a great time to be in the high-tech industry!
Fred Isbell is senior marketing director for SAP Services & Support Marketing for Thought Leadership, Demand Management, and Planning for the Worldwide Services & Support Marketing team. A 15-year veteran of SAP, he formerly led SAP Global Services Marketing Field Engagement, the North American SAP Services regional marketing team and SMB Channels Marketing for the SAP Small and Midsize Business team. Prior to SAP, he held a variety of senior solutions, services, and partner marketing roles with Compaq and Digital Equipment Corporation (DEC). Fred is an honors graduate of Yale University with a BA in Economics and Political Science, and has an MBA from Duke University’s Fuqua School of Business, where he was a Fuqua Scholar. A passionate sports and hockey fan/player, he is a MA/USA Hockey advanced patch coach and includes coaching and playing hockey with his three kids among his favorite moments in life.