WHY THERE'S MONEY IN MEANINGFULNESS

  • by Paul Frampton, CEO, Havas Media
  • Jul 01, 2013
  • 0 comments

Meaningful Brands, Havas Media Group’s metric of brand strength is the first global analysis to connect human well-being with brands at a business level. It measures the benefits brands bring to our lives and clearly shows how the successful brands of today are those who understand a growing consumer expectation that they should enhance lives on an individual and community basis.

The key finding for companies is that The Meaningful Brands Index (MBi) outperforms the stock markets by 120%, an outperformance on par with the top hedge funds. This is the first time that anyone has been able to demonstrate, in hard financial terms, how the relationship between people and brands can benefit from measuring, communicating and delivering increased well-being.

The research is unique in both scale (covering 700 brands, 130,000 consumers, 23 countries) and scope. It measures the impact of the brand’s product benefits alongside its impact on 12 different areas of well-being both at a collective and personal level for a full view of its effect on our quality of life.

Meaningfulness is a new way of thinking about value creation; one that generates real value for people, and in turn, for businesses. In these times of economic change and uncertainty, our research shows that companies need to refocus on well-being to start creating stable financial value.

The MBi measures the usual corporate product benefits such as quality, safety, ethics, price, labelling, innovation and usefulness. But the really clever part is that it also looks at collective benefits such as those to our community, environment, workplace and economy, in addition to our more human, personal areas of well-being. This last category includes factors such as health, happiness, connection with others, how the brand inspires us to improve the world, how it makes our lives easier and how it helps us improve intellectually or save money.

The study pulls together all three areas on a global scale so that we can gain a full picture of how a brand impacts on our well-being and quality of life. It then balances all this against stock market performance to show statistically that performance pays.

To do this we created a portfolio of the top 24 companies within the Meaningful Brands index, which house the top meaningful brands as defined in our study. The companies chosen are all public companies, quoted in its national stock market. Each company in the portfolio was given an equal weighting and the weekly close price data, adjusted by splits, provided by Thomson One in USD (with the current exchange rate).

We then compared the evolution of the portfolio with an equity global stock index, the Stoxx 1800 Global. The STOXX Global 1800 Index provides a broad yet liquid representation of the world's most developed markets with a fixed number of 1,800 components.

The results show very clearly that the selected portfolio of Meaningful Brands outperform the stock market. Although the correlation does not imply causation, there is undoubtedly a stronger performance and value creation by this portfolio than the market.

Google led the global rankings, followed by Samsung, Microsoft, Nestle and Sony as the top five meaningful brands of 2013 followed by IKEA, Dove, Nike, Wal-Mart, DANONE, Philips and P&G.

Brands gaining momentum in 2013 include Nike ranked globally as number seven, Mercedes Benz and Adidas both ranked globally as number 11 and Dove which comes in globally at number six. Meanwhile, brands which continue to flourish according to the Meaningful Brand Index include Wal-Mart, Microsoft, P&G and Samsung, among others. This clearly demonstrates that brands with higher MBi scores build stronger brands, gaining stronger brand equity, greater preference, loyalty and emotional attachment.

Meaningful Brands and their performance against the stock markets show that the demand for companies to go beyond their traditional marketing and business parameters and add to our well-being and quality of life is an essential requirement to the long-term success of a company.

On other levels, managing costs and resources in a more sustainable way can present immediate benefits both as a short-term measure of reducing wastage within the company, and a long-term cultural shift to operate in a more considered manner. We would therefore argue that understanding the importance of creating meaningful relationships between brands and people, as well as encouraging and enabling employees to take part in practices that add value to their lives, will, in the short, medium and long-term, enhance financial performance.

 

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