The Value of Your Brand

Each year major brands in foods, pharmaceuticals, automobiles, and technology spend billions of dollars growing and protecting their brands. From Coca Cola to McDonalds, it is the public’s understanding and acceptance of the brand that makes the names more valuable than the products.

An established brand is a powerhouse.

Local and regional businesses frequently think of “branding” as something done by Fortune 500 companies or global enterprises. Which is why at the local and regional levels of marketing, the concept and application of branding is often missing in the marketing strategy.

While brands like Coca Cola and McDonalds spend billions to build their reputations, small businesses often have little or no money available for the type of broad advertising that builds brands through top of mind awareness. But lack of funds should never be a reason to disregard the principles of branding to attract customers because the results of successful branding are economic.

A generic brand product is just like a generic un-branded business. There are no distinguishing differences in generic products. The store brand of ketchup is cheaper than Heinz, not because it costs less to produce, but because people will not spend as much money for generic as for the brand.

Branding techniques make it possible to focus on what is best for your business, how to establish priorities on where funds are spent, how to determine what is in your best interest for product/service expansion or market expansion, and what kind of people to hire.

Perhaps the best way to understand the competitive edge that comes with branding is to think about one of the most basic products consumed every day — water.

Where water was once just something you got from the faucet when needed, today the market for “branded” water makes it a very profitable industry.

In most communities the tap water is just fine. Yet consumers think nothing of paying $1.29 or more for a 16-ounce size of branded bottled water. The equivalent in the price paid for gasoline for their cars would be $10.32 per gallon, a price that would cause a consumer rebellion.

But branding of bottled water has changed and influenced consumer perceptions about the product so that they spend money on it without thinking. A bottle of water will cost more than a bottle of soda. Branding has the power to influence and change consumer perceptions about your business and products as well.

If you are planning to expand your business to develop greater market share, you need to be a brand. The process of creating your brand starts with consistency. Brand integration must happen over a variety of mediums including advertising, Web sites, signage and every touch-point with a customer.

Perception is Reality

The perceptions about your business, products or service become the reality regardless of whether they are true, false, exaggerated or underplayed. When using marketing techniques to develop your brand, the first rule is that you can’t sell what doesn’t exist. You need to take an objective look at how you measure up against the competition around you.

One way to do this is to assign your management team this task: Ask each of them to decide who they think is your biggest competitor. Then have them list all the ways they would sell against you if they worked for the competition. The results will guide you in how to position your business as a brand.

More is Not Always Better

One of the lessons you can learn from product branding is that too much growth can have a negative impact on a brand. In the book The 22 Immutable Laws of Branding by Al Ries and Laura Ries, this is called the Law of Expansion. Over-expansion with new product knock-offs and spin-offs, additional product lines, and new services can dilute the brand and create confusion about what the brand is.

The lesson is that you should not try to be all things to all people. Many times it is more sustainable to be the number two brand in your industry category, staying true to your core products, than to do too much.

It’s good to remember that having a successful brand doesn’t mean that everyone in your market will use your product or service. Even successful brands don’t appeal to everyone (think of Coke and Pepsi).

A Singular Focus

Another lesson to be learned from product branding is the value of being known for just one thing. Perhaps in branding this lesson is best demonstrated by Starbucks. Starbucks grew to a global size by focusing on coffee. Starbucks delivered what was perceived as superior coffee, served by a well-trained service staff, in a setting that encouraged social interaction as well as the “grab a cup on the run” trade.

Because Starbucks garnered the #1 position they could charge more for their coffee without any negative impact in growth. When they started converting from the café to broader restaurant fare, they began competing with other fast-serve food services such as Panera and McDonalds.

It wasn’t until Starbucks started broadening their scope that the brand began to falter. Starbucks began to lose it’s singular identity and food competitors, especially McDonalds, were presented with opportunities to provide a Starbucks alternative to great coffee at less cost. By losing it’s singular focus Starbucks opened itself to competition.

What’s in a Name?

One of the most difficult challenges to overcome in building a brand exists for companies that have no names. Category, label and alphabet names are nearly impossible to build into brands because in the mind of the consumer they are categories, not names.

People often challenge this by mentioning the success of companies with alphabet names such as IBM or UPS. But the reality is that when those companies began, they were known as International Business Machines and United Parcel Service. It was the marketplace that eventually shortened them to alphabet status AFTER they were known brands.

It is often considered that the reason McDonald’s has kept the #1 position from Burger King is that McDonald’s is a name and Burger King is a label.

The law of the name is why Mac TV commercials resonate so well with viewers. Mac is a name. People identify with the Mac – the computer and the operating system. The competition is PC, a label. In this case it is a label that covers a wide range of actual brands, and in essence the Mac brand isn’t competing against another computer; it is competing against the software systems that are run on PCs.

If your company name is a category, a label, or just letters, the obstacles you need to overcome in branding are greater than those of a company with a name. People can’t distinguish between SCL Group and LSC Corp. Those names mean nothing.

There are companies who believe if they have either the best price, or the best product or the best service, they will become #1. While all of this is worthwhile, the reality is the company that is the best-known brand will take ownership of the market every time, even if the product isn’t the best or the price isn’t the lowest.

That’s the value of branding.

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