Price conscious consumers will pay 14% more for brands that they think are worth it, Kantar BrandZ Most Valuable UK Brands 2022 report shows, as its findings underline the demands of marketers this year.
Vodafone has claimed the top spot as the UK’s most valuable brand for the fifth year in a row, as collectively, the UK’s leading 75 brands are now worth $282.9 billion, up by 1% year-on-year.
However, marketing innovation will be key to avoid inflation slowdown, said Kantar, as its research shows signs of stagnation for UK brands. Globally, the 100 most valuable brands grew by 23% in 2022, suggesting UK brands are falling behind in the face of challenging market conditions.
“Last year UK brands were recovering from the impact of COVID-19, but that bounceback is now stuttering as inflation takes hold,” commented Dom Boyd, Managing Director of Kantar Insights UK.
“We need to see marketing teams manoeuvring to increase value and market share. This is definitely not the time for businesses to be hunkering down or pulling back from campaigns.”
Critical for brands to prove their worth
“Already in sectors like grocery we are tracking a swing to own label products,” continued Boyd. “We know that if brands lose customers to own-label, those shoppers are very difficult to win back when economic conditions improve. It’s therefore critical for brands to prove that they are worth spending money on and that invariably means innovating.”
Crucially, marketers should be championing the powerful role branding has to play in pricing strategy Boyd explained. He said: “Businesses often think that inflation means a race to the bottom, but we know that what matters to consumers when inflation bites is not the lowest price, but which brand offers best value.”
Vodafone tops brand value ranking
Vodafone has grown customer numbers across Europe, helping to secure its place at the head of the ranking. It added 149,000 new mobile contract customers in the UK this year. Its performance was also boosted by expanding digital sales which now make up one third of its UK business.
Vodafone is followed by HSBC and Shell, who have both bucked the wider trend to raise their brand value by more than 10%. Barclays has also entered the top 10 for the first time as it increased its brand value by 6%.
Digital brands triumph with innovation
While the retail sector has had mixed results this year, newcomer to the Kantar BrandZ ranking, Pets at Home, is an example of a business which has proved the value of its service to consumers.
After benefiting from the rise in pet ownership during the pandemic, Boyd explained how it maintained this growth: “It has also invested in delivering a personalised, digital experience for shoppers through its VIP programme and app. This has helped it demonstrate to consumers that it’s a brand worth paying a premium for, pushing the business into the top 75 for the first time.”
The financial services sector also offers some valuable innovation lessons for marketers, with notable performances from brands who are proactively adapting to meet changing consumer needs.
“NatWest is a fantastic case in point, which has grown brand value by 19% year-on-year. It has responded with gusto to challenger banks and renewed its focus on purpose, for example through its investment in small businesses, as well as delivering a seamless digital experience. 60% of its customers now only interact with the bank digitally,” added Boyd.
The research found that one in four brands in the UK top 75 are charging a higher price than perceptions of their brands can justify, suggesting that more work is needed to make sure pricing and brand strategy are aligned. Without this, these brands risk being cut by consumers as inflation sets in.
“There’s a real sense that the recovery we’ve seen in the UK over the past few years is at risk. Brands have got to identify how they can stand out from the crowd and be more different in consumers’ minds if they want to avoid being cut from tightening household budgets. Difference doesn’t just underpin demand – it’s brands’ secret weapon in strengthening pricing margins,” Boyd concluded.