Balancing Short-Term Profits and Long-Term Brand Equity

July 27, 2008

Overview

A recent industry conference, Brandworks University, focused on the balancing act between driving short-term profits and building long-term brand equity.

In late May/early June 2008, ANA polled members of its marketing and media committees to get their thoughts on this topic. There were 125 responses.

Survey Results

Generating immediate sales and profits versus investing in the long term is the fight tougher today?

There has been this age-old fight between "generating immediate sales and profits" and "investing in the long term." Is the fight tougher today than it was, say, 5-10 years ago?

Yes, it's tougher now............................................................................................73%
No, it's not tougher now.........................................................................................5%
It's about the same...............................................................................................22%

Why it's tougher now

For those that answered, "Yes, it's tougher now," representative responses are:

  • Wall Street profit pressures - "quarterly pressures are overwhelming longer-term decisions."
  • Many more consumer options for share of voice, time, and interest. And more media/marketing
  • options than ever before.
  • Speed of marketplace - "technology has sped everything up; our entire culture is need it now, so naturally marketing is migrating in that direction as well."
  • Higher turnover rates in senior and middle management.
  • Downsizing.
  • Shorter product life cycles.
  • Economic environment is tougher, including increased fuel costs and credit crunch.

Senior management importance of generating immediate sales and profits

Please rate the importance your company's senior management gives to generating immediate sales and profits.

Extremely Important..................................................................................50%
Very Important............................................................................................46%
Somewhat Important..................................................................................3%
Not Too Important.......................................................................................2%
Not At All Important......................................................................................0%

Senior management importance of investing in the long term

Please rate the importance your company's senior management gives to investing in the long term.

Extremely Important.................................................................................19%
Very Important...........................................................................................41%
Somewhat Important...............................................................................36%
Not Too Important.......................................................................................4%
Not At All Important.....................................................................................0%

Category ranking - effectively balancing short and long term

Please rate the categories below on their ability to effectively balance generating immediate sales and profits and investing in the long term.

From best to worst (5-point scale: 5 = extremely effective; 1 = not at all effective)

Pharmaceutical..............................................................................................3.48
Technology/telecommunications...............................................................3.31
Financial services/insurance......................................................................3.29
Consumer packaged goods.......................................................................3.26
Tourism, travel & hospitality........................................................................3.24
Professional sports......................................................................................3.22
Nonprofit.........................................................................................................3.18
Consumer durables.....................................................................................3.15
Media & entertainment.................................................................................3.02
Retail...............................................................................................................2.85
Automotive......................................................................................................2.71

Metrics

Which of the following metrics are employed by your company?

Lifetime value of a customer......................................................................68%

Word-of-mouth influence.............................................................................37%

Net promoter score.......................................................................................34%

To read complete survey results download the PDF version.

 

Source

"Balancing Short-Term Profits and Long-Term Brand Equity." ANA Marketing Committee; ANA Media Committee, 2008.