Communications in Organization

Concept & Types of Organizations with Reference to the Behavioral Theory
People function in society as individuals and in organized groups, such as family, clan, school, community, professional associations, trade unions, etc.
Organization, according to one of the meanings given in the Oxford Dictionary, is an organized body of people; an organized system.
Just like an organism (a living being, an individual animal or plant), it is an individual entity functioning as a unit. Examples: Telikom, Microsoft, Netscape, The National, Pepsi, Coca-Cola, the Government, the military, the air force, the navy, etc.
Just like an organ (a distinct part of an animal or plant body, adapted for a particular function, i.e., digestive organs) in the larger body of human society, every organization carries out a specific function - be it educational, business, government or religious. To make our analogy more vivid, individuals are like single cells in the body of human society, whereas organizations are like organs with their specific functions.
The Behavioral Theory identifies four levels of communication in the human society, or four main types of communication networks:

• Intrapersonal
• Interpersonal
• Group interaction and
• Cultural.

Communication in organizations may occur on all four levels.
Communication in Business Organizations
Business organizations are established to achieve a specific purpose, such as the production of some goods or services. Effective communication is vital for the coordinated functioning of any organization.
There are the two main contexts in which organizational communication may be viewed: internal and external communication.
Internal communication involves all communication networks within the organization, i.e. between the various levels of the hierarchy, departments, branches, or individuals.
The main internal communication channels include:

• Written - memos, reports, forms, notice boards, house magazines, manuals
• Oral - interviews, consultations, formal and informal meetings, grapevine.
• Telecommunications - telephones, intercoms, private lines, fax, computers, email, etc.

External organizational communication entails all communication by the organization with the general public, or other public or business organizations. External communication purposes vary from public relations and image-building to governmental, educational, environmental, etc.
The channels of external communication include the mass media, advertising, letters, company reports, open days, local/community participation, sponsorship, trade fairs and exhibitions, conferences, etc.
Internal communication in all organizations has formal and informal channels of communication.
Levels of Business Communication: There are four levels of communication in organizations:

1. intrapersonal (communication with yourself)
2. interpersonal (communication to a superior or subordinate)
3. one to many (making a speech)
4. many to one (a committee making a presentation to company president, etc.)

Functions of Communication in a Business Organization
The major functions of communication in a business organization include communication for

• Information - passing information between people working in the same organization and between the organization and others
• Control - communication (written, oral, or even nonverbal) is also used as part of management control for the planning of operations, evaluating performance, directing and motivating staff.
• Motivation - The difficulty is for the managers to find a balance between control and motivation and efficiency. Too much control may reduce initiative and actually lead to a lower productivity with less response to what the customer wants and more emphasis on what the workers think the management wants

Increased Volume and Complexity of Communication in Organizations
We know how complex the process of communication is between two parties (See Lecture 1). The complexity of internal communication systems and information flow increases with the growth of the administrative and clerical functions and the size of organizations. In a small organization with perhaps only 6 or 7 staff, all in one room, communication is simple and straightforward, with people talking face to face to one another. There is no need to send innumerable memos or use the telephone.
As soon as the organization expands, so does the communication system. More written communication is needed, more specialized information is needed, even the same information will need to be communicated in different ways to different groups.
Advances in telecommunications technology have significantly expanded our options for communicating, but they have not solved the communication problem at work. It has always been difficult to get the right information to the right people at the right time - and it still is. In fact, one can make a persuasive case that the rate of change and the rapid growth of information are making this age-old challenge more difficult than ever.
In view of the large volume and increased complexity of communication within organizations, the need arises to effectively select, control, and direct the flow of vital information.
This is achieved with the help of formal organizational structure.
Organizational Structure & Lines of Communication
Business organizations consist of people who work together to achieve common goals (at least in theory! :). Organizations are the system by which individuals cooperate, so that there can be specialization of functions and skills for greater efficiency. This specialization of functions forms the basis of organizational structure. All organizations, as we know, have formal and informal structure.
The formal structure is deliberately developed to regulate and direct the flow of information and to control other aspects of organizational hierarchy and set-up. In order to select, restrict, direct, and control the flow of communication within the formal organization structure, the traditional organizations employ the sequential model of communication that emphasizes up and down hierarchal communication. Most frequently we designate communication to superiors as upward/vertical communication, messages to subordinates as downward/vertical communication, and communication to those on our level as lateral/horizontal communication. Diagonal communication occurs when there is communication between lower and higher levels of hierarchy, but both in different lines of authority (for example, between senior members of academic staff and junior Bursary officers, etc.). Most traditional organizations also have a policy of communication (protocol) dictating the etiquette (formal standards/rules of correct and polite behavior within the organization) designed to ensure effective communication within the organization.
Informal structures/networks, based on personal relationships, will not appear on any organization chart, but can have as much or more impact on the functioning of the organization as the formal communication system.
For example, here are some of the positive aspects of the informal network:

• It may speed up the communication process: when an employee in one department needs help to complete a task or solve a problem, members of the informal network in other sections can use their authority or power to assist. This avoids the delay of ‘going through the right channels.’
• It may create a conducive working atmosphere, again leading to higher productivity: If the needs and goals of formal management coincide with those of the informal organization, in other words, if staff are well motivated, then the atmosphere of trust between the management and employees will lead to higher productivity.
• It helps to diffuse tensions: Job satisfaction is also related to social environment. The informal network allows employees to ‘let off steam’ with other colleagues, thus diffusing potentially destructive conflicts.
• It provides feedback to the management: If management are sensitive to the ‘grapevine,’ they can obtain information on how employees feel about the organization, the management, and the work.

Some of the possible negative effects of the informal organization:

• It may cause conflict within the formal structure: when the goals of the informal organization differ from those of the formal structure, conflict occurs. If the formal channels of communication are ineffective, rumor and gossip (‘grapevine’) spread like wild fire and may disrupt the work process. Individual perceptions distort information. Rumor is the unsupported or untrue part of the informal communication and is therefore of great disadvantage to the organization.
• The informal organization will tend to resist change: organizational restructuring (downsizing, etc.) that are perceived to threaten the existing structure, will be opposed effectively by a well- formed informal organization.

Every organization has a constantly changing informal communication network that involves the link between individuals and groups outside the formal lines of authority and communication. To deal with it effectively, management should recognize its existence and try to influence its direction. It will do so by being aware of the rumors, replacing rumors with fact, and creating conditions that support the goals of both groups.
Classification of Organizational Structures: Despite the wide diversity of organizational structures, we can classify them according to the following criteria:

• The extent of complexity
• The level of formalization
• The degree of centralization.

The greater the number of individual job functions/titles in an organization, the more complex the structure. The more sections, departments, or divisions in the organization, the more complex a company becomes because there are more levels between the least powerful and senior management.
Complexity: Organizational structures may be tall or flat, depending on the number of levels of management.
Tall structures are typical of large public sector corporations; they are also still found in some large companies. Tall structures are put in place when the management wants to centralize all decision-making and retain control over the whole of the organization.
Flat structures exist in those organizations which have very few levels of management, so that there may be only one or two levels in the hierarchy.
The number of levels, that is, whether the organization is tall or flat, directly affects communication within an organization. The effectiveness of communication will depend on how well managed the organization is, and on the extent of horizontal links.
Formalization: The more an organization determines the job specifications of its employees, the more formalized it is. Low formalization in a job means that the employee has a high degree of independence and discretion in the job. In other words, it means a high degree of control over work. Conversely, high formalization means little control or independence, therefore little power.
Centralization: The communication effectiveness of an organization will also depend on the extent of the centralization of decision-making in the company. Organizations with tall structures tend to be highly centralized: all major decisions there require the approval of top management. This means that middle management is unable to make important decisions and must therefore use memos, short reports, and submissions to request a decision.
Thus, there is an undeniable link between the organizational and communication structure of any concern. This is not the place for a detailed analysis of the link between an organization’s structure and its overall efficiency; however, structure does have a major effect on the communication that takes place. Traditional organizations, operating in a more or less stable environment, tend to be more structured and make greater use of organizational charts, protocol, policies, and job descriptions. Modern organizations, operating in a very dynamic environment, may have no organizational charts, job descriptions, or standing plans; they are highly flexible. The structured organization is called mechanistic, and the flexible structure, organic.
Mechanistic structures:

• are static, rigid, vertically oriented, pyramid shaped
• use rules, policies, procedures
• decision-making is limited to top management
• authority is based on position
• have elaborate control system and
• rigid communication channels.

Mechanistic structures are best used when

• goals are well known and long lasting
• there is a stable, reasonably simple environment
• technology is simple and well understood
• work force appreciates routine, structure, and low levels of ambiguity.

Organic structures:

• are fluid, dynamic, ever changing
• horizontally oriented
• flat
• decision-making takes place at all levels
• changing authority patterns
• authority based on expertise
• collaboration
• informal routes of communication based on current needs.

They are best used when

• tasks are uncertain
• environment is complex and ever changing
• technology is complex and constantly changing
• workforce is creative and innovative.

Communication in a “Network” Organization: Facing New Realities. Leadership (management) has generally been considered the province of the CEO (Central Executive Officers), or at best, a few people at the top of the organizational hierarchy. “Command and control” leadership/management carried many organizations to very high levels of financial performance during periods when competition was not so great and things did not change very fast - but its time has passed. It is becoming clear that no small group at the top can provide the leadership needed for an entire organization of any size in the information age. The demands on the total organization are too great for a few people at the top to call all the shots.
Today, better-informed customers, rapid change, and fierce competition from global competitors demand empowered employees exercising leadership at every level of the organization. This is not possible without a radical restructuring of the traditional sequential model of organizational communication. As mentioned earlier, there have been three pervasive patterns that will no longer work in knowledge-based organizations:

1. the primary flow of information was vertical - within departmental walls that were often impermeable,
2. information was hoarded and used as a source of power over others, and
3. people at the top often withheld crucial strategic information from those lower in the organization in the belief they couldn’t handle it.

The restrictive and regulatory function of the traditional sequential model of communication is no longer effective in ensuring the timely delivery of the right kind of information to the right people at all levels of the modern organization. Because vertical communication is bound by hierarchy and function, communication is constrained, lacking integration across function. The sequential model restricts innovation and prevents organizations from making effective use of information resources. A new, concurrent communication model is evolving - it is goal oriented and emphasizes an interactive process that supports simultaneous and spontaneous communication. Since communication is a critical element in organizational design, a new type of ‘network’ organization is evolving, with formal and informal interactive communication structures at all units and levels. As the environment becomes more dynamic, the general trend is for organizations to move from the mechanistic structure to organic structure in order to remain competitive.
Channels of Communication and Networking. Types of Networks. When we communicate with those above us, below us, or around us, we are establishing communication networks. These may be formal channels or informal channels.
Within the organization, there are usually four types of networks:

• Wheel: a wheel network exists when there is a supervisor with a number of subordinates reporting directly without consultation or links with each other.
• Chain, in a chain communication network information is passed sequentially to the next employee above or below in the line of authority.
• Circle, the circle is a three level hierarchy with the lowest level of employees communicating with each other and directly with the person on the next level. That level then reports directly to the higher level. Communication also occurs downwards between the levels.
• Star, or the all channel network, is more an ideal than a reality, every member of the organization is able to communicate directly as an equal with every other member. Some committees are examples of all channel (star) networks.

The most structured is the wheel; the least structured is the star, where opportunities for feedback are greatest and morale is usually the highest.
Communication Media in Business Communication
Both formal and informal channels of communication may employ four major media of communication.

• face-to-face communication (formal meetings, interviews, informal contact, the grapevine),
• oral communication (the telephone, the intercom or public address system),
• written communication (letters, memos, reports, forms, notice boards, bulletins, newsletters, organizational manuals, etc.),
• visual communication (charts, films, slides, photos, etc.).

Principles of Business Communication
There are eleven principles of business communication.

1. Conciseness. Most business people are very busy (time is money!). The wordy letter is usually put aside, for its very wordiness makes comprehension difficult.
2. Completeness. Your communication must contain all necessary information. Having to request information that should have been included will probably antagonize the recipient of the communication.
3. Courtesy.
4. Correctness. Everyone has a tendency to focus on errors. To many people, errors in spelling, price quotations, sentence structure, and the like are a reflection of organizational inefficiency.
5. Clarity. All ambiguity should be avoided.
6. Logical Organization. It is one of the keys to all effective communication.
7. Attractiveness. All business communication should ‘look good’. Appearance is also important in face-to-face communication.
8. Natural tone. The tone of business communication should be friendly, natural, and sincere. Hackneyed, archaic, and obsolete words, phrases and expressions should be avoided.
9. Tact. Controversial expressions that might antagonize or embarrass the ‘receiver’ should be avoided. At times it is necessary to convey unpleasant ideas, but the choice of words used to accomplish that objective should permit the ‘receiver’ to save face and accept the idea.
10. Positive tone. A positive tone almost invariably evokes a positive reaction. In almost every situation, it is more desirable to make a positive statement. On rare occasions you may wish to convey a negative idea or problem. However, you should almost always follow immediately with an offer of a positive solution.
11. ‘Receiver’ orientation. An effective communicator must be sensitive to the reactions and anticipated responses of the ‘receiver(s)’.

Introduction to Business Communication

The focus on the principles and conventions of business communication will also help us improve our basic interpersonal communication skills, such as reading, writing, listening, and speaking. The all-important role of analytical thinking as the underlying factor in any form of effective communication will be highlighted.

Definition of Communication. Communication is a complex process often involving reading, writing, speaking and listening. It may be verbal and non-verbal (or a mixture of both), and it uses a variety of media (language, mass media, digital technology, etc.). Broadly speaking, communication is a transfer and reconstruction of information. More specifically, we may define communication as the transmission and reception of ideas, feelings and attitudes — verbal and non-verbal — that produce a response.

Brand Dynamics

Introduction
With the understanding of measures on the first two dimensions, that is, differentiation and relevance, this lecture continues with the discussion on measures of variants of the remaining two dimensions, esteem and knowledge.

On the dimension of esteem
Customer loyalty: This shows how consistent customers are in buying your brand, how long they have been buying and how long they may buy? This measure should tell you the number of customers that you would have lost had you not had the branding strategies. This also tells you that the customers who did not leave your brand are loyal customers.
You ask your customers what other brands they considered before finally deciding to stick to your brand. You can find out the competitive brands that entered your customers’ decision-set. The next question should clarify why they stuck to your brand after considering competition and then discarding it.

Tips for Successful Brand Management

The internet has changed the way that companies present themselves to the masses, whether or not they actually have web properties to manage. Every time a company does something bad it seems to find its way online. Managing perception among internet users is nearly impossible because once something gets out, it has a tendency to spread like wildfire.

Letting Followers Do the Talking

Generating regular content for web properties is difficult. Coming up with new things to say on a consistent basis is harder than it looks. Rather than force out updates, the following that a web property garners can do all the talking. Word-of-mouth advertising is one of the most effective ways to promote a company. Good or bad, let them say what they have to say. Positive feedback in this arena can do more for a business than pretty much anything.

Branding in the Age of Information and Internet

The Emerging Millennial Consumers and Ways of Reaching out to Them
With the advent of the internet and the coming of Web 2.0 and mobile driven browsing, marketers all over the world are realizing and recognizing the importance of using the online medium for branding their products. The new generation of consumers and especially the Millennials or those born after the late 1970s and especially those born in the 1990s and later have a propensity to transact online which means that marketers and companies do need to brand their products in the virtual world if they are to target this demographic. Further, with the advent of Smartphones and their widespread usage by the Millennials, branding of products online and in the mobile world is no longer a luxury but a necessity owing to the changing shopping habits of the emerging consumers. This is the reason why many brands are being marketed aggressively in the online realm so that they do not miss this consumer base. For instance, brands like Nike, Adidas, Coke, Pepsi, and GAP that have long had a significant outdoor and print media driven branding strategy have now jumped into the online branding effort as a means of reaching out to this consumer base.

Brand Management Challenges

Last few decades have changed our world beyond recognition. There has been unprecedented progress in all spheres of life. Technology and scientific advancement has played major role affecting all parts of the economy, politics as well as markets. With globalization and opening of markets we see a sea of changing in the way business is conducted and organizations are structured. Global and open markets have changed the structure of consumer economy. The financial mechanisms that aid in trade and consumer buying too have impacted the consumer’s buying habits. Online trading and buying, online payments, mobile banking etc have empowered the customers to make their choices and buying decisions at their discretion.

Marketer’s job has always been very challenging, but the complexities that they face in the market today are different from the earlier times. With markets opening up the competition from ‘Me Too’ brands have increased considerably. Brands face competition from local brands as well as foreign brands and generic products as well.

Marketing Career Option

Sales and Marketing career is highly rewarding both in terms of rewards as well as knowledge and experience. There are many facets to marketing and selling apart from having to focus only on selling the product. Those who have a flare for meeting people and selling products or services will find it rewarding to build a sales plan, identify sales lead, build a pipeline of prospects and converting them as sales. To such salesmen, the sales figures and every new customer account counts. Then there are those who enjoy building marketing strategies, growing the brand and using their creative skills into building effective communication and advertising plans.

Building brands and delivering value to the customers is one of the most interesting jobs that you can enjoy in marketing. Think of all the brands that come to your mind. We associate products with the image of the brand or the logo. Take the case of cosmetics; you will immediately recall some of the well known global brands like Loreal, Olay, Nivea etc. Think of laptops and the logos of IBM and Dell flash in your mind’s eyes.

Apple and Microsoft brands are known to even little children today. Aren’t we all very familiar with the brand logos of Wallmart, Ikea, Tesco, Home Depot and Target etc?. Think of banking and you will immediately recall HSBC, Citibank and Standard chartered or Bank of America etc that you are familiar with. Which airline comes to your mind when you think of planning your travel? You will naturally remember British Airways, Luftansa and Singapore airlines etc logos of which have been etched in your memories.

There is more to brands than just the visual image or the logos. Yes it is true that the logo is perhaps the most important identity of the brand and communicates with the customer. However ask the marketing and branding specialists and they will tell you a whole lot about branding.

Powerful brands build a lot of value to the Company apart from the core value that it delivers in terms of the product or service. Though marketers focus on building the brand and associating it with the product line, the successful brands yield recognition as well as the value proposition to the Organization as well.

Successful brands help to establish a relationship with the customer. Customer can be loyal to a particular brand for their lifetime. It is not uncommon to find people using Kelloggs at home all the time or banking with Citibank because they have been associated with the brands for a long time.

In building a brand and delivering a value proposition through the brand, it is not only the marketing who are involved, but the entire Organization too. When the people have begun to relate to the brand and the Organization through the brand, it becomes imperative that the Organization focus on delivering incremental value consistently through the brand. This then becomes a continuous process. Over a period of time, the brand value and promise including the characteristics, the visual logo as well as the product offering needs to be changed keeping in line with the markets as well as the Organizational strategy for growth and direction.

At all times, the brand image should be relevant to the current times and yet futuristic as well. As the brand communicates to the customer, it becomes a powerful tool that needs to be managed consciously by the Organization.

Brand Architecture

Brand architecture is the structure of brands within an organizational entity. It is the way in which the brands within a company’s portfolio are related to, and differentiated from, one another. The architecture should define the different leagues of branding within the organization; how the corporate brand and sub-brands relate to and support each other; and how the sub-brands reflect or reinforce the core purpose of the corporate brand to which they belong. Often, decisions about Brand Architecture are concerned with how to manage a parent brand, and a family of sub-brands - Managing brand architecture to maximize shareholder value can often include using brand valuation model techniques.

Brand Categories

Every marketing management student would have heard the story about origin of branding, that it was initially used to identify and isolate a particular stock of cattle in the west. From the Wild West, branding as a concept has grown and changed beyond its original purpose. Today brands have become the common tool for us to differentiate and recall various products and services.

Branding in the current times is not limited to products and services alone. In fact you will find every type of organization and business stream using brand as a tool for differentiation, recall and identity. The fact that the brand identity that includes the visual logo also comprises of and represents a particular set of characteristics, values and the core culture of the brand owner. Branding is today used for a lot many purposes other than just to offer products and services to the consumers.

Brand Portfolio

Introduction
Due to limitations of line and brand extensions, companies have to go for a portfolio of brands. Portfolios offer advantages. At the same time, they also are not without disadvantages. The lecture discusses both.

Brand portfolio and segmentation
Every market can be segmented by product, customer expectation, or the type of customers. A chain of hotels may like to have its presence in different segments of the hotel market by having three-, four-, and five-star hotels. Its presence in three different segments addresses different needs of customers within those segments.
Customers in the three-star segment are economy-oriented audience interested in neat accommodation with no frills at affordable pricing in a middle class area of town.

Brand Extension

Introduction
With an understanding developed on positioning, this lecture takes us into the area of brand extension. Although loosely used, the term brand extension comprises of two sub areas - line extension and brand extension. The latter is generally used in all situations of extensions, diversifications, or stretch. We have to draw a distinction between the two for a clear understanding of the concepts.

Concept of positioning clarifies that not one position can satisfy all the varying needs within the category. Different needs have to be identified toward their fulfillment. To keep up with the evolution you have to evolve new points of difference. Different needs refer to different segments and every product has its variants to address to those segmental needs. This holds true for consumer consumables as well as consumer durables. Regular and mild cigarettes, regular and fruit yogurt, regular and high fiber cereals, regular and low cholesterol margarine, and economy and executive models in cars are all examples of product variants in different segments and categories.
To let the market know that you have something different to offer, you must differentiate between the existing offering and the new entry. For the new entry meant to address a different need, you must create a different image reflecting the new promise and must have an evolved contract in place. You do that in either of the two ways:

Brand Equity and Customer Equity

Brand Equity is the value and strength of the Brand that decides its worth. It can also be defined as the differential impact of brand knowledge on consumers response to the Brand Marketing. Brand Equity exists as a function of consumer choice in the market place. The concept of Brand Equity comes into existence when consumer makes a choice of a product or a service. It occurs when the consumer is familiar with the brand and holds some favourable positive strong and distinctive brand associations in the memory.

Brand Equity can be determined by measuring:

Brand Contract

The concept of brand contract revolves around brand’s ability to always stay up to the expectations of consumers. Owing to the associations developed with the brands of their choice, consumers do not want to see those brands deviate from the strong impressions and image they have about those brands.
What consumers expect of brands is a positive change and development in relation to changing technologies, environment, and any other factors that may have a bearing on consumer behavior. To continually remain in favor of consumers, brands uphold consumers’ franchise by remaining up-to-date. This is the only way for brands to remain relevant.
For brands staying contemporary means bringing about innovations and living up to consumers’ likes and expectations. This further means engaging into a “contract”. In other words, brands must respect the contract, attract customers and assume all implications, which they do through fulfilling the promises.
Brands make promises with the customers by providing benefits and developing associations. Any deviations - lowering of quality, non-availability of brands at the point of customers’ choice, or not keeping pace with changing technologies - amount to not keeping the promise and hence in customers’ perception breaching the “contract”. The contract, as such, is not legal; it is purely economic and emotional in nature.

Brand Value and its Measurement

Branding has emerged as a corporate strategy in the recent times. All business organizations in all sectors have embraced the strategy of building their identity through their corporate brands besides the product related brands. Branding is definitely a marketing strategy. However the strategy of investing into brand building and managing the reputation of the corporate brand goes beyond marketing. Branding is considered to be a strategy that is driven and managed by the CEO or the organization along with the senior management as well as marketing heads. Over the recent years, we see new concepts of brand value, brand power and brand equity etc. being coined and measured.

If marketing professionals found it difficult to justify and obtain sanctions for the brand promotional activity, today they no longer need to worry. Brand value and expenses towards brand building have become an accepted part of the balance sheet. Capitalizing the brand value and the expenses towards meeting the brand promotion are budgeted and accounted for in the balance sheets and in many cases the ROI of a brand is also calculated to reflect the brand value status over time.

Brand management has gained prominence in recent times. The fact that we have global brands that have been well established for over fifty years goes on to prove the fact that brands certainly have the power to make or break in the markets. Goodyear, Coco Cola, Gillette, Nestle, Kelloggs, Schweppes, Brooke bond etc have been around for a very long time and have gained certain brand power to drive growth through brand reputation and relationship with the consumers.

Marketers have realized the growing power of brands and have begun to nurture the brand image and cultivate value through brand ambassadors. Most of the lifestyle and luxury brands globally and locally have well known actors and sports persons etc as brand ambassadors. Through the persona of the brand ambassadors, the marketers derive the power to connect with the consumers and build brand loyalty. Realizing the brand power also calls for working on the product quality and continuous modification both in the product as well as in the promotion of brand ambassadors. Building and growing strong brand at a global level calls for the entire organization to be brand oriented. The best example of building and realizing strong brand power and unleashing the brand value is Apple. If you think that the entire world outside is an Apple fan, you are right. But the entire organization within also worship their brand too. All of the strategies, decisions as well as day to day business decisions at all levels are directed towards promotion of and strengthening of the apple brand. The entire organization believes in the brand and all business processes are driven to build the brand and deliver superior customer experience through the brand. Apple as a global brand is perhaps the best example of a successful corporate brand.

As much as the corporate strategy has got to account for the branding strategy, the marketing has also to ensure that they work on the different aspects of the brand packaging, design, etc and keep working on the brand so that it is consistent with the changing times, markets, consumer expectations and taste etc.

The brands have their own value. The market leadership and profitability of a certain product or business is realized through the brand value. Growing the brand power and using the brand value as a driver to increase profitability as well as the market calls for expert management of branding. Maintaining the leadership of a brand calls for strategic planning in the long term perspective.

Brand Value Measurement
Brands have a certain value in the market as well as in the balance sheets of the organization that owns the brand. This is a matter that has been agreed upon by the industry. The accounting of the brand value and the methodology for calculation of the brand value is widely debated. When organizations pay a huge premium or goodwill to acquire a brand, it becomes a strategic decision. However accounting for the premium paid is a matter that is discussed and debated by many in the industry.

No doubt accountants would like to assign a tangible value to every asset owned by the company and brand value paid to acquire a particular brand and the business is also considered to be an asset. One of the systems followed by UK based business organizations is that they capitalize the entire value paid for acquiring the business and the same is depreciated over a period of time.

Interbrand, the branding company has proposed a different method of accounting for the brand value. This method as well as the other methods that are proposed by industry experts take into account the future sales potential of the brand as well as its current market share to arrive at a definitive figure in terms of brand equity or brand power.

Accordingly one of the models followed by the industry accounts for the net profit earned by the brand in the last three consecutive years in terms of value. To this, is added a score that is derived out of measuring certain key factors associated with the brand like brand leadership, market share, trend, loyalty etc. Certain weight age is given to each of the factors and the total score is then converted into a certain value with the help of a multiple that is again derived out of a market study conducted for that particular sector.

Similarly there are several other models and methods that have been proposed by experts in the industry. All of the models use a combination of qualitative and quantitative factors to arrive at a measurable value in terms of Brand Equity. Some of the well known models are Brand Equity Index, Consumer Brand Equity Brand Asset by Longman Moran and Leo Burnett, Conversion Model Equity Monitor etc. The factors included in the above vary from Quality of the brand to Customer attitude, perception, market share, price band, durability etc.

A reasonable model to measure brand equity becomes essential not only for the accountants but for the business Organization that is looking out to buy a brand. Valuation of a brand and fixing the right price or premium for the brand needs a proven methodology and model that can guide the decision making. It is also true that one model cannot satisfy the finance and accounts personnel as well as the business managers, for each one’s perceptions and purpose of evaluation is different. When brands are key to the growth and business strategy of the Organizations, the decision makers would definitely need proven and strong models to guide them for decision making. Besides the models they would need to analyze the brand equity from many other points of view of product portfolio, growth potential of the brand to see if a particular brand is the right choice for them. If there exists a strategic synergy between the brand and the buyer’s business needs, then the brand value is likely to change and the buyer might find that he is required to pay a premium over and above the perceived brand value. At what price does it make sense to acquire the brand is a decision that is critical to the buyer. Brand value models can certainly aid him in this decision making process.

Brand Vision

Purpose of brand vision
To earn the right level of profitability, you have to leverage your brand rightly. It is here that we start treating brand as an asset and manage that asset by having a vision.
Vision fulfills three basic purposes

• Consensus among management
• Commits company to research
• Mandates telling all stakeholders