Branding Multiplies the Value of Your Business
Brand Image is often Valued at Several Times the Physical Assets
Dec 18, 2008
A brand is not just the logo and tagline. It is much more. It is a psychological image that consumers have come to associate with the company or product. Even the most impressive logo and tagline can fail if the company or product does not deliver satisfaction.
Elements of the Brand
The essence of a brand is that it distinguishes a product from competition. Many brands for the same product can exist in the market because different groups prefer different attributes. Young persons prefer movement and vitality while older persons prefer stability and dependability, for example.
Branding involves making particular groups of people believe that the product delivers just what they want. It is the "belief" that is important; in reality the product might not be much different from other products in that category.
It is branding communications (supported to some extent by actual experience with the product) that creates the belief. The brand communicators manage to get the product associated with particular qualities in the minds of consumers. It is this psychological dimension that makes brands valuable.
The psychological dimension needs something concrete to attach itself to. A logo, stylistically presented name and catchy tagline are typically used to create a unique symbol. This symbol is simply a device that helps people recognize the brand.
Value of a Brand
A successful brand creates a distinct competitive advantage for the brand owner.
- People prefer branded products because they know what to expect, as against an unknown product
- Consumers loyal to a brand will be willing to pay a premium price for the branded product
- They will recommend their brand to other people
As a result, branded products typically enjoy much higher levels of sales and profit margins, which enable them to sustain the branding campaign.
Companies that own successful brands are typically valued several times the net value of their physical assets. For example, the common stock of Coca-Cola was quoting at more than six times its net worth as per its balance sheet at the end of 2007.
Brand Building
As mentioned above, brand building mainly involves communications that make the consumers believe the brand is something special. It also involves delivering a basically satisfactory product. No amount of branding communications can support a shoddy product.
Branding communications involve:
- Creating a symbol that is unique, easily recognized and aligned to desired image objectives
- Building recognition for the symbol through advertisement campaigns
- Associating the symbol and product with qualities that appeal to the target group through advertisements, media publicity and publicized events
- Sustaining the campaign to keep your brand in front of consumer eyes
A successful brand can provide great competitive advantage, and add value several times a company's tangible assets. Such a brand is mainly a mental image, supported by an easily recognizable symbol such as a unique logo. You build brands mainly through well designed and sustained branding communications.
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