The underlying logic of brand potential driving growth

In today's highly competitive business environment, brand potential has become a key factor in driving corporate growth. This article explores the connotation and source of brand potential and how to evaluate and improve the brand's market competitiveness through a self-assessment model of brand power.

A super brand means super repeat purchases.

What kind of brand potential and brand power can generate super repurchase, such a high repurchase rate of old customers and conversion rate of new customers? Today, let’s take a brief analysis.

1. Brand Potential

Brand potential is a competitive indicator that reflects the energy state of a brand in market competition. This energy creates competitive advantages in many aspects such as consumer awareness, market competition, and talent attraction.

Brand potential usually includes the following aspects:

First, it can gain more customer choices in market competition.

Second, the product has a higher premium rate or faster turnover rate.

Third, the brand can obtain more diversified category extension capabilities.

2. Brand Potential Decoding

The large retail industry, represented by the clothing and food industries, has faced tremendous survival pressure in recent years. Many brands have stopped growing. On the one hand, the traffic cost of performance advertising has increased dramatically, and on the other hand, brand investment has not produced ideal marketing pull, and they are caught in a dilemma.

So how do we decode the brand potential of the retail industry? We provide an underlying logic.

We roughly divide the big retail brands into four categories: life proposal brands, manufacturing retail brands, retail collection store brands and commercial religious brands. Among them, the manufacturing retail brands and retail collection store brands account for more than 80%-90%.

In essence: brand potential comes from three dimensions: brand driven, retail driven, and customer driven.

1. Brand-driven potential

We divide it into six types: brand power driven, product power driven, life scenario driven, design concept driven, manufacturing production brand, and factory white label.

Brand drive focuses on the demand side, either solving pain points (functional needs), or generating preferences (emotional needs), or adapting to scenarios (scenario-based needs), or attracting concepts (personalized needs), etc.

2. Retail-driven potential

We are divided into six types: channel coverage driven, wholesale group purchase driven, trend quick response driven, warehouse sales driven, channel own brand, and supply chain white label.

Retail drive is to exert efforts on the channel side, either with a large number of directly-operated outlets (high density of outlets), or excellent distribution capabilities (able to promote and manage), or high-quality and quick response to trends (market responsiveness), or warehousing and sales advantages (logistics distribution capabilities), etc.

3. Customer-driven potential

We are divided into six types: niche circle brands, popular national brands, cross-category brands, internet celebrity brands, customer direct sales brands, and private domain brands.

Customer-driven means exerting efforts on the client side, either focusing on niche circles (precise audiences), or popularizing them among the general public (economy of scale), or expanding product categories (single-customer economy), or playing with traffic (Internet celebrity hits), etc.

Basically, by comparing them, we can find out whether our brand has potential energy? Where does the brand potential energy mainly come from? Can the brand potential energy sustainably promote the repurchase rate of old customers and the conversion rate of new customers?

I won’t go into details here.

3. Self-assessment of brand power

Here, we give another brand power self-test model.

It is not difficult to see that brand power = the ability to lead public issues + the ability to perceive customer value + the ability to form customer preferences + the ability to set product premiums + the ability to reduce traffic costs + the ability to reduce capital costs

If all the above six capabilities are fully utilized, we can say that this is definitely a super brand.

On the other hand, if the brand power is maintained by large marketing investments, the pressure for sustainable development is still huge;

If the product is very powerful but the sales are very poor or the performance growth is slow, it means that the brand infrastructure is not well built;

If the products and brands are homogeneous, then the strategic breakthrough capability is weak.

4. New smile curve

The smile curve was proposed by Acer Group founder Stan Shih. It vividly shows the high and low distribution of added value in the industrial chain.

Today, we propose a new smile curve. If performance growth is only achieved by increasing sales area and improving sales efficiency in a single dimension, then we say it is driven by the retail industry. Its commercial value is low-dimensional.

Here, we see that 80%-90% of large retail is manufacturing retail (the other is manufacturing wholesale) + retail collection stores (the other is retail specialty stores). Competition is fierce and crowded.

• If we can improve both the sales per square meter and the sales per product, then we can upgrade from a manufacturing retail brand to a lifestyle brand. A lifestyle brand means that in addition to its commercial value, can the brand influence the public's lifestyle and habits, or even culture?
• If the sales per square meter and sales per customer are improved in both dimensions, then we will upgrade from a retail store brand to a commercial religious brand. A commercial religious brand refers to whether the brand has strong organizational and mobilization capabilities in terms of customer behavior and customer mentality.
• If the three-dimensional effects of floor space efficiency, product efficiency and customer efficiency are improved, then congratulations, a super brand that is highly desirable but elusive has been born.

V. Summary

In traditional brand power, we look at key indicators such as brand awareness, brand reputation, brand loyalty, brand association, etc. These indicators are still valid, but they are more limited to the marketing scope.

If we look at modern brand power from a business perspective, the most important indicator we focus on is the repurchase rate. We can even conclude that a super brand is a super repurchase rate.

Repurchase rate is the North Star indicator of brand power. With repurchase rate as the core, we can divide brand power into two levels:

The first level is the brand strategy level. We can choose a relatively better business model and strategic combination from the three dimensions of brand drive, retail drive, and customer drive to build core capabilities and thus comprehensively enhance brand potential.

The second level is the brand management level. We can improve digital management capabilities from the three dimensions of floor space efficiency, product efficiency, and customer efficiency, reorganize the internal organizational structure, optimize the business philosophy, and implement brand power into actual performance.

Finally, let's review this formula:

Brand power = ability to lead public issues + ability to perceive customer value + ability to form customer preferences + ability to set product premiums + ability to reduce traffic costs + ability to reduce capital costs