During a morning workshop for travel marketing executives, led by marketing guru Professor Don E. Schultz, attendees were asked to jot down their organizations’ brand propositions in 10 or fewer words. After five minutes, some marketers were still fine tuning their brand messages into succinct phrases. Finally, everyone was finished.

"Now, how many people in your organization would write down the same words that you chose?" Schultz asked. "Because that’s the critical ingredient! Not that you can do it, but that others in your organization can do it as well."

Schultz asserts that the hardest thing that an organization can do is to develop its brand value proposition and drive it through the organization. Because managers often think of brands as ethereal concepts, they fail to invest resources to maintain and strengthen them, especially when business slows down. Yet for most every company, the brand is its most valuable asset. Marketers know brands are valuable, but have trouble assessing them in financial terms.

Schultz’s goal during the workshop and in his keynote address, which followed, was to show marketers the importance of giving monetary values to their brands, and returns on brand investments (ROI). Because this is not easily done, Schultz demonstrated newly developed accounting methods that do this.

Schultz, a popular ATME speaker who also spoke at the association’s 1998 conference, literally wrote the book on Integrated Marketing Communications (IMC). This first IMC text was recently updated for publication in 2002. Schultz, who began his career in sales and advertising in the 1960s, is professor (emeritus-in-service) of IMC at Northwestern University’s Medill School of Journalism. He also heads his consulting firm, Agora, Inc. Schultz’s keynote topic, "Marketing and Communication Strategies for a Completely Different Marketplace" was centered on brand building and convincing marketers to think and act like managers.

Once the Internet assumed its position in the marketplace, marketing forever changed, Schultz asserts. The tragic events of September 11 simply catapulted changes in the marketplace that were already underway. The Internet empowered consumers. Through mobile phones, laptops and other electronic devices, consumers can retrieve information anytime and anywhere. Marketers no longer set the terms of when and how to buy. The Internet also made every organization global. Consumers can access information from similar organizations to make comparisons on price, products, and service.

Although consumers are more sophisticated and discriminating than a decade ago, the American Marketing Association’s definition for a brand, created in the 1960s for package goods, is still being taught, Schultz says. AMA defines a brand as "a name, term, sign, symbol or design, or combination of them intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of competitors."

Rather than provide a managerial view of the brand, it presents a tactical view. Schultz prefers Agora’s definition: "The brand is a summary statement to the world of who you are, what you do, and how you do it. It includes mission, products, aspirations, values, promises, and most of all, actualities."

Marketing is not done in a department, it occurs throughout an organization, Schultz points out. The brand can be an experience delivered to the consumer by employees who have never discussed marketing. Nothing diminishes a brand faster than when it promises more than it delivers, he says. "The brand starts inside [the organization] with the people who deliver….It’s what you can deliver, and not what you’d like to be. It does not start outside with customers," Schultz explains.

Old concepts, such as the four Ps — product, price, place and promotion — do not mention the word "customer" or the other P — profit, Schultz notes. Organizations that follow this 1960s concept of marketing, which is designed for outbound communications, need to create interactive communications.

While building a customer relationship, interactive communications also can be used to shift delivery to customers, such as when they purchase travel online, and save distribution costs.

When creating a brand, marketers first need to determine what managers, associates, employees, and affiliates think the brand is. "You must know what [the brand] is today, before you can move it into what it will be tomorrow," Schultz says. The brand must also define its boundaries, since it will not attract or be available to all consumers.

AN ORGANIZATIONAL ASSET
For most companies, their brand is their most valuable asset, especially for service organizations. Marketers need to make a business assessment of the brand. To do this, Schultz suggests marketers build a brand platform that contains:

• Brand position. This defines the brand relative to its competitive set.
• Brand promise. This is the commitment or promise that the brand makes to its customers. Schultz asserts this is the most difficult task for many organizations.
• Brand personality. This defines the appropriate brand behavior at all points of contact.
• Brand value. This is determined by the company’s culture. The brand value must be aligned with the brand personality and the customers’ values.

The brand must signify the differentiating feature(s) of an organization’s service or product. In the travel and tourism industry, which sells dreams, a company’s communications, branding and marketing are not support activities; they drive the organization. Yet marketers do not talk about their responsibilities and accomplishments in terms of revenue drivers, Schultz says.

A MANAGERIAL VIEW OF MARKETING
"We [marketers] talk about outputs, we don’t talk about outcomes. What we need is a more managerial view of how businesses run, how organizations operate. Senior management wants to know how marketing relates to how they run the organization," Schultz says.

Marketers need to understand four basic management principles to change their concepts of their brands.

• The business must grow.

• The most important qualities of the business are its cash flows and shareholder values.

• Management can invest in one or all three.
1) To develop or enhance products or services.
2) To reduce friction in the supply or delivery chain.
3) To expand sales efforts, and perhaps more marketing and branding.

• Management looks at investment measurements. Managers want to know: Will this investment activity increase, accelerate or stabilize cash flows and will it increase stock values?

While marketers know that a strong brand and marketing programs contribute to cash flows and stock values, they seldom discuss the outcomes of their marketing programs as increasing cash flows. Instead, they say the promotions received so many inquiries or hits to a website, Schultz says. Marketers seldom talk about brand equity.

Marketers must know how to separate how marketing generates short-term incremental values or cash flows and how it builds long-term strategic value. "You must get back more for your marketing investment than you put in.… At the same time you must demonstrate how branding can build long-term shareholder value or brand equity," Schultz says.

Many businesses have a maximum output, for example, the number of seats on a plane or beds in a hotel. Marketers need to determine the marginal revenue, which is how much to spend on marketing to drive this up. How much should marketers spend on a promotion or program and how much will that promotion get back over what period of time? Typically, marketers cannot answer those questions, Schultz says. Instead, marketers talk about market share. Schultz says market share has little or no value. "Stop trying to measure marketing, and start measuring marketing activities against what you get back from your customers," he says.

Management often regards marketing expenses as a spigot that can be turned on or off, because they do not see an immediate change in business. If the brand is strong, business will initially continue because of brand momentum. The risk is that three to nine months out, business will slow down as the brand loses strength, Schultz says. "It is more difficult and expensive to recapture the brand’s equity than if brand promotions had continued."

MEASURING BRAND EQUITY
Brand equity is based on:

• Marketing activities, such as promotions and programs.

• Marketplace factors, such as a hurricane or stock market crash, that can effect an organization’s total returns.

Brand equity is what keeps customers coming back or talking about your resort or destination. "It is the residual value that you have created over time that will pay back over time," Schultz says.

To measure brand equity, Schultz uses a marketing mix model where regression analysis is used to determine returns on investment (ROI) for advertising, promotions, sponsorships, or other marketing programs. The British accounting firm, Brand Finance plc, developed this model to provide a value for brands when negotiating mergers and acquisitions. The model uses perceptual measures, performance measures, and customer measures to determine value measures. From this a brand scorecard is created.

This model has three basic steps.

• Retrieve all financial data of the organization, both historic and forecasting.

• Study the brand’s strength by what drives the business.

• Study the organization’s customers or visitors by combining attitudinal data with behavioral data to explain why customers did what they did. This is called Knowledge of Predictor.

Typically marketers project business based on consumer attitudinal data, but people do not always do what they say. By studying the Knowledge of Predictor, some marketers discovered that they were investing in the wrong customer groups.

"The critical ingredient is to understand who are your customers and how much they return on your investment….We spend against what we perceive to be an opportunity, as opposed to spending against what the value is," Schultz says.

Marketers should invest more in customer retention than acquisition. Schultz also points out that in developed countries, demographic data is not as relevant as psychographic information.

After completing these analyses, marketers can say to management, "Here is the full business value of the organization, and there is the branded value. Here is the increase [or decrease] of the brand value from the year before," Schultz says.

When marketers can show the exact financial values of their brands, and what marketing programs can increase the value of their organizations, and by what amounts, then they will be recognized as management leaders, rather than playing supporting roles in their organizations.