Why build a brand? How to convince non-believers of the power of brand.
It’s not uncommon these days to run into people who don’t understand brands or their value. Perhaps they operate in categories that don’t have significant brand players, or they think product is all that matters, or that their technology will make the sell alone. How do you convince such non-believers of the power of brands?
Start with these top 5 reasons building a brand is important.
1. A brand helps you stand out amongst a sea of offers and builds recognition and trust.
I loved this example I read in a Monocle article about two wool sweater brands that were stationed across from each other at a tradeshow. One vendor had no one come by, while the other was full. Why? The lonely vendor told the other at the end of the show, “It took me a while to understand why your stand was so much busier but now I do. I have nice sweaters but you – you have a brand.” The brand that gained traction was John Sterner. The founder created an experience and told a story of why people should care about his products, decorating his booth with wool used in his products, showing a video of the farm that the company owns to produce the wool, and having identifiable iconography and symbols that conveyed the brand’s essence and could be associated with his brand later.
It’s not news that shoppers are overwhelmed by the number of products available to them today. Even in new categories such as ridesharing, consumers have to make a choice (do I use Uber or Lyft). A brand helps products become noticed, and over time a brand can trade on the awareness and loyalty it builds over time, lowering the cost of customer acquisition.
2. A well-managed brand ensures you have a differentiated and relevant product and positioning in the market, creating pricing power.
The alternative is to become commoditized and get traded based solely on supply and demand. This becomes a price game where the market is in charge, not your brand. Other partners, such as retailers, become more powerful in this environment, as well. On the other hand, a brand creates the opportunity to build consumer engagement and loyalty, as opposed to operating purely on functional benefits and product attributes, which makes you less susceptible to pricing pressure. A brand can also garner power over retailers when that brand can bring equity value to the relationship or drive traffic to the store or website.
3. Building an emotional connection to your brand and standing for more in consumers’ lives than just a transaction increases value.
Studies have found that brands that connect emotionally with their consumers deliver better results. For example, according to research by the predictive intelligence company, Motista, fully engaged, emotionally-connected consumers are on average across categories 50 percent more valuable than those who are just fully satisfied with a brand. In their words, “These emotionally connected customers buy more of your products and services, visit you more often, exhibit less price sensitivity, pay more attention to your communications, follow your advice, and recommend you more….” Pretty powerful.
Similarly, Kurt Salmon, through the development of its Brand Devotion Index, also found that “brand-devoted” consumers spend about 50 percent more than average customers.
Cap Gemini found that emotional over rational and brand factors have the strongest correlation to loyalty, and those consumers with higher emotional engagement tend to spend more and champion the product.
4. By building equity in a brand, you gain permission to extend into new offers, creating even more value.
Consider the Crest brand when it was just toothpaste. Today its products extend across the dental care market. Without the trust the brand had created in its initial product offering, it would not have had consumer permission to extend further and create more value becoming a billion-dollar brand.
5. Finally, a brand offers clarity for consumers and employees.
A brand sets the expectations for what consumers will experience and helps them understand if the brand is right for them. For employees, a brand helps guide their activities, providing focus and setting expectations for what they should deliver. By offering clarity to both parties, a company can be more focused and drive marketing efficiency.
When done right, a brand becomes a powerful asset that generates value. Branding is not fluff. Branding creates enduring results.
Source:
Waters, Jamie. “Knitty Gritty,” Monocle, Issue 109, Volume 11, p. 211-215, December 2017/ January 2018. https://monocle.com/magazine/issues/109/knitty-gritty/