In times of market slow down and recession the marketing budget is often the first one to be cut, but is it the correct thing to do? It’s often stated that companies who keep an active advertising campaign running come out of the other side the strongest. So, can quality design really help your business during difficult times, and the good times? Several recent studies, including one supported by the British Design Council suggest that it can.
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The Design Council created two new indexes dubbed the ‘Design Index’ and ‘Emerging Index’ using publicly listed companies already in the FTSE index and discovered some interesting findings. To qualify the companies needed to have performed well in a number of design related awards such as D&AD, and the Millennium Products. These ‘design aware’ companies were then separated into two groups based on how many awards they’re won; 63 were placed into the Design Index, and 103 into the Emerging Index which featured companies just starting to utilise good design in the marketing and communications.
The The design aware companies have significantly outperformed the FTSE-100 and FTSE-All Share indices over a ten-year period
The study covered a period of over ten years from 1993 to 2004, a time in which the stock markets experienced a five-year bull market, a three-year bear market and the beginning of the recovery in March 2003. During this period the the ‘design aware’ companies persistently out performed the FTSE 100 and FTSE All Share indices by more that 200%.
‘The Design Index proves that companies which make effective use of design out-perform their peers, and it confirms design to be an integral part of good management.’
Sir George Cox, Chairman, Design Council
As the market recovered from March 2003 to December 2004, the Design Index rose by 43% and the Emerging Index by 74.3%, while the FTSE 100 and All-Share indices grew by 26.2% and 32.1% respectively.
In the ‘recovery’ period of the study – March 2003 to the end of 2004 – the design indices have continued to outperform the two main FTSE indices.
This study has clearly highlighted the importance of design to businesses, after all everything we create has to be designed, there is no escaping the fact that design is of fundamental importance in our day-to-day lives. This research is valuable not just to design agencies such as Betley Whitehorne, but also to clients as it’s a real measure of the ‘value of design’ using the type of language and analysis that the stock market and company boards understand and respond to.
For a more in depth overview of the study, it’s performance, the company selection criteria etc. Download the Design Councils report here.
4 responses so far ↓
1 J B. Fawkes // Sep 14, 2008 at 9:31
This is a very interesting study which I think should be taken seriously by all companies trying to increase turnover. It’s quantifiable proof that good design in beneficial to businesses. I think this can be seen in many small business who have used good design to make a big splash. Consumers are looking for more choice and brands that reflect their values.
I think it works at more levels than just advertising, branding, talking to customers, it’s also the company ethos, and how employees feel working for the company — are they proud of the image there company projects? Is it ‘cool’ and ‘exciting’, or ‘strong’, ‘reassuring’ etc. I’d be interested to see how the companies selected for both indexes have performed during the recent ‘credit crunch’.
Thanks for the interesting read.
2 Ron // Oct 8, 2008 at 20:34
I think at this time it’s as important as ever to stay in the public eye — keep sales high and the business strong. Advertising or exciting creative ideas might help capture the public’s imagination so they spend what money they have with you.
3 The Value of User Experience — The BwLOG — The blog for Betley Whitehorne, a leading Channel Island Advertising, Design, Web and Branding Agency // Jun 26, 2009 at 16:24
[…] and Design agency Teehan+Lax started an experiment in 2005 inspired by the findings of the ‘Design Index’ study carried out by the UK Design Council. They wanted to test the theory that companies that value good design and a high level of user […]
4 Mike // Jun 30, 2009 at 21:41
Cool post, just subscribed.
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