Question

What are the approaches adopted by L’Oreal in conducting a brand audit? (give two examples with explanation)

Answer 1

What is Brand Audit?

A brand audit is a comprehensive examination of a brand, involving activities to assess the health of a brand, uncover its sources of equity, and suggest ways to improve and leverage that equity. Brand audits are qualitative snapshots of the current position of your brand in terms of the perception of the relevant target audience. They can be performed on the internal and external audiences of your brand in order to determine the effectiveness of the branding activities of the organization. In the case of this research report, only an external audit was performed to determine the perception of the brand in the consumers’ minds. Brand Audit is performed on a regular basis so that the organization can, if necessary, reposition its brand strategy and adapt the value proposition, as well as its brand position, to the target audience.

The approaches adopted by L’Oreal in conducting a brand audit are:

1. Internal Perspectives of Brand Audit

(a) Brand Strategy

The brand strategy is a map of how the brand is to be expressed by an organization. It is aconceptual plan providing guidelines - for both client management and creative professionals –that is aligned with business strategy in order to drive all brand applications, from identity and packaging, to advertising, in a strategically aligned manner. Essentially, the brand strategy ishow you are conceiving, creating and positioning your brand in the marketplace to achievedifferentiation, relevance and resonance. The efforts of brand strategy are aimedat increasing brand strength (e.g. market share, leadership, share price), therefore, one can see that brand strategy is an integral part of the business strategy.

(b) Brand Expression

In brief, the brand expression is the ‘look’ and ‘feel’ of your brand. It is how your brand is expressed (not only visually) and is the core concept of the brand strategy from which all the internal brand elements (e.g. identity, personality etc.) are developed and executed.

(c) Brand Essence

Brand essence, also known as the brand mantra, is the combination of the essential values or aspects of a brand condensed into a central core concept. It can be seen as the enduring ‘brand DNA’ . Essentially, this part of the brand is what allows the consumer to identify which category this brand is in. It has a much narrower focus than the brand positioning. An example would be Nike’s brand essence which is ‘Genuine Athletic Performance’, or Volvo’s brand essence which is ‘Safety’.

(d) Brand Promise

Brand promise, on the other hand, includes the functional and emotional advantages and values pledged to the user. This is in essence why the consumer buys into the brand. Staying with thesame brand, Nike’s brand promise is ‘Maximising Personal Performance’. Nike wants theconsumer to believe that no matter what activity he / she engages in, Nike has the most suitableand most superior product to suit their needs.

(e) Brand Positioning

This is the process of improving and ensuring strong positive associations between what the consumer thinks / feels about the brand (their attitude / perception of the brand) and the desired brand image; in other words, creating a strong link between the two. Brand positioning is moreclearly defined as the process of placing your brand in the minds of the consumer relative to competitors through highlighting points of differentiation (POD). POD include attributes orbenefits that consumers strongly associate with a brand, positively evaluate, and believe thatthey cannot find to the same extent with a competitive brand. It further explains that these brand associations can be broadly classified in terms of eitherfunctional, performance-related considerations (e.g. the level of active-ingredients present in aformulation) or abstract, imagery-related considerations (e.g. the fact that French cosmeticshave a high prestige association). It is best to have differentiating attributes that are unique andwhich cannot easily be copied, such as superior and effective sales personnel who are able toengage consumers and cater for their needs. To rely on excellent R&D, equipment or low pricesin order to create a sustainable differentiation is, to say the least, naive.

2. External Perspective of Brand Audit

(a) Brand Knowledge

The ability for brands to influence and persuade consumers to purchase a product or service belonging to this brand, is dependent on the brand knowledgethat they have of it. Brand knowledge consists of brand awareness and brand image and is amajor driver of brand equity. The brand knowledge a consumer has could have been obtained through advertising, brand design and identity consistency, previous brand experiences and brand building strategies. As with the creation and maintenance of the brand

identity, the efforts of achieving brand awareness begin internally and are controlled by thecompany; this is the information which the organization sends out to the consumers. The brandimage on the other hand is created externally; these are the perceptions, attitudes andassociations that consumers have formed of the brand through the brand identity elements,advertising campaigns, and community programmes, past experiences, word-of-mouth etc.

(b) Brand Awareness

Brand awareness is an important driver of brand equity. Research by Brand forward has found that top-of-mind or first recall awareness is the most important brand equity measure. Possible activities to increase brand awareness include wide-spreadadvertising in which repetition of the logo and slogan becomes ubiquitous (e.g. Nike’s tagline is‘Just do it’), publicity, sponsorship of community activities (e.g. sponsoring a sports tournament),brand extensions as well as increasing the number of distribution channels. An important consideration here is the degree of consistency of the brand identity across all forms of brand communication. The more distinct, unique and consistent the marketing and promotion of thebrand communication, the easier it will be for consumers to be aware of the brand, recognizeand recall it amongst competitors.

(c) Brand Image

It has been argued that brand awareness is only one part of the equation in order to become asuccessful brand and ensure brand equity. The other part is the brand image. Brand image is defined as the perceptions about a brand as reflected by the brand associations (nodes) held in consumer memory. This is how the consumer has decipheredeach cue associated with the brand as well as the actions carried out on behalf of the brand. Inessence, the result of brand identity is interpreted by the consumer according to how theyperceive it, and hence an image is formed in memory. This is the reality for the brand; perception is everything. In terms of the associative network model, an image is only formed if abrand node is already present (which is created through brand awareness). Once this iscreated, brand associations (also nodes) are linked to the brand node, and hence a perceptionis formed. Brand images are therefore important because consumers use these mentalrepresentations (associations) to distinguish one brand from another and as the basis for their purchasing behaviours.

Unlike the brand identity which is a desirable image of the future of the organization, the brandimage is the real perception, at present, of the brand based on the past. Apart from the desired positive associations and consistency brought about by the brand identity, the brand imageneeds to be regularly checked and updated (if need be) in order to be appropriate for thecurrent times and to fit the value system and image as desired by the target audience. This iswhere a brand audit becomes a valuable activity to perform in order to determine what thecurrent image is of the brand as perceived by the target audience.

A positive brand image can be created by efforts of the marketing department which are aimedat creating strong, favourable and unique brand associations in memory. Withregards to strength, brand identity consistency is an important factor, as well as the relevance ofthe marketing message to the consumer. Favourable brand associations pertain to convincingthe consumer that the benefits and attributes delivered by the brand are relevant and can solvetheir problems, and satisfy their needs and wants. Unique brand associations can be related toproduct or non-product related attributes and benefits, and communicate to the consumer whatthis brand has that others do not have; essentially, this is the reason why consumers should buythis brand rather than that of a competing brand.

(d) Brand equity

Brand equity is based on the image consumers have of the brand, and the more favourable thisimage, the more likely they are to pay a price premium for the brand, the more likely they are torecommend it to friends, the more likely they are to remain loyal if it is out of stock, the more likely they are to take the time to search for it, and the more likely they are to purchase other products / services related to the brand name. Take note that all ofthese factors are related to the brand name and it is these types of characteristics whichcontribute to a positive brand equity. Brand equity is the capacity of a brand to generate (positive) or breakdown (negative) value.The most important element hereof is the consumers’ perception of the brand and the attentiona brand receives from them.

(e) Brand Architecture

Brand Architecture is the phrase coined to articulate the linkages and relationships between brands so as to optimize the organization’s efforts . There are nine branding strategies that an organization can choose to use. A summary of the description, advantages or disadvantages. There is no one architecture that is more favourable than theothers and some organizations may even choose to operate under a hybrid brand architecture (e.g. The L’Oréal Group).

They all have their advantages and disadvantages, and it is up to theorganization itself to decide what exactly it is they are trying to achieve. In terms of thecosmetics market, a ‘branded house’ (source or umbrella brand architecture) strategy works farbetter and is valued at seven to eight times the profits, whilst a ‘house of brands’ (endorsing orproduct brand architecture) is valued at six times the profits. Garnieroperates under a branded house in which it makes use of the same creative platform, and canleverage off one name and one philosophy. Hence it has a consistent brand identity.