Brands can be a company’s most valuable intangible assets. Our research has indicated that companies with strong brands earn up to 5 percentage points higher total return to shareholders than their industry counterparts.

While part of this return is attributable to better current performance, the rest reflects the expectation that a powerful brand will be successfully expanded into new channels, geographies, and businesses. Yet most companies fail to capture as much as 25 percent of potential incremental growth because they do not leverage the full equity of existing brands.

Companies can seize the opportunity to build on existing brand assets by developing distinctive and highly relevant customer-focused benefit platforms, both rational and emotional. Superior returns come when companies continually enhance and expand on their brand promise, and customers feel that brands deliver consistently on their promise at key customer touchpoints.

Strong Brands, Integrated Solutions
McKinsey works with companies to build shareholder value by strengthening their brands. We help our clients identify how they can best invest their brand-building resources for profitable growth. We develop integrated branding solutions firmly grounded in customer needs and objectives as well as in the company’s overall business strategy.

McKinsey’s branding professionals – including experienced practitioners from the world’s top marketing agencies – bring McKinsey’s fact-based analytical approach, social psychology expertise, and the intuitive judgment that comes from immersion in the creative process.

We provide end-to-end branding capabilities across three core areas that have proven effective in increasing brand revenue and reducing brand-related costs:

• Brand strategy. Through our work with clients, we have identified the key elements that distinguish the brand strategies of successful companies. We develop effective strategies that are based on superior customer insights with a clear understanding of future economics, and we work with clients to build an organization’s ability to deliver on the brand promise. The brand strategies we develop for our clients integrate these elements in order to maximize revenue and profitability Exhibit 1.

• Marketing spending efficiency and effectiveness. Current marketing spend levels are unsustainable, and CEOs are demanding more for less. However, spending must be restructured so that cuts do not negatively impact brand performance and long-term brand equity. McKinsey believes that doing more with less requires new approaches that manage spending as both a cost and an investment. McKinsey has helped clients realize revenue growth between 10 and 15 percent and cost reduction between 15 and 25 percent by applying five critical marketing spending levers Exhibit 2.

• Branding portfolio optimization. Classic brand management is destroying value by failing to take into account the level of overall portfolio performance. Given that 75 percent of Fortune 1000 companies manage more than 100 brands, it has become critical to actively manage inherently complex brand portfolios in order to maximize performance. Our work with clients has shown that optimizing a brand portfolio can increase earnings growth by 10 to 20 percent. We have developed an approach to help our clients to more effectively manage portfolios and capture this value Exhibit 3.