Companies must have a lasting impact on their brands

Dhe challenges for brands are currently greater than ever. Lawmakers and consumers are increasingly aware of the impact that companies have on the climate and the environment and expect companies to not only focus on their profits, but also to meet their environmental and social responsibilities. At the same time, a weakening economy, rising prices and consumer restraint are leading to high cost and competitive pressure on brands. Managers are therefore increasingly under pressure to reduce costs on the one hand, but on the other hand to promote important investments in the sustainability of the brand. So what to do?

First of all, many companies are increasingly focusing on their core business. As brands find it difficult to respond to increasing regulatory and consumer demands while remaining relevant and profitable, many companies have significantly reduced the number of brands they own to focus on the core brands in their portfolios. In recent years, many large consumer goods manufacturers have sold or discontinued unprofitable or stagnating brands. Nestlé’s brand portfolio, for example, was trimmed from 8,000 to around 2,000. In the future, Unilever would like to concentrate its marketing expenditure on the 30 strongest brands, which make up a total of 70 percent of sales.

However, this also means that companies have to compensate for the loss in sales caused by the disappearance of brands and realize growth with the help of the remaining brands. Where many markets are saturated or even declining, increasing sales volume is becoming increasingly difficult to achieve. Companies must therefore focus on the “Value to Customer” of their brands. This is made up of functional, emotional, symbolic and ethical-social benefits. While sustainability has long been a niche topic for many brands, consumers are attaching more and more importance to dealing with ecological and social issues – and thus also to the ethical and social benefits of products. Nevertheless, the majority of consumers do not yet buy sustainable brands solely because of their sustainability, but because high functional and emotional benefits are combined with sustainability. The functional benefit describes factual and purpose-oriented aspects, such as the number of seats in the car or the storage capacity of a smartphone. The emotional benefit goes beyond this and describes the associations and feelings that a product or service evokes in the customer, such as the suggested feeling of masculinity when shaving (Gilette: “The best in a man”). The core message must therefore be: fun and sustainability are not mutually exclusive. Examples such as Ben & Jerry’s, Katjes, Patagonia, Rügenwalder Mühle, Sodastream, Tesla or Waterdrop clearly show that charging brands with a sustainability-oriented message offers great opportunities to increase brand attractiveness and sales or even achieve higher prices in the long term.