What’s it: Brand refers to the name, logo, term, sign, symbol, or design, or a combination to identify your product. It acts as a differentiator from your competitors’ products. Brand image is closely related to the level of credibility, quality, and satisfaction in the minds of consumers.
A strong brand is essential for creating customer loyalty. When customers like your brand, they will continue to buy it for a long time. And money continues to flow into your company. So, it is a source for your sustainable competitive advantage.
A legal term for a brand is a trademark. It may identify one item, a product family, or all items of your company. And, if you use it for the company as a whole, the preferred terms are trade names, for example, McDonald’s.
Importance of brand
Several reasons explain why your brand is essential to your company. Through it, you can differentiate your product from competitors’ products. You, for example, can include logos and colors that are easily recognized by target consumers.
It allows you to achieve an effective positioning. You can emphasize certain aspects, such as quality, consistency, and reliability, to influence consumer purchases.
For your target consumers, branding helps differentiate the quality of goods without the actual purchase. If your product is easily identifiable, your product’s failure – to satisfy them – prompts them not to buy it later. When you do, you finally have a strong incentive to maintain quality and make amends.
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We see companies spending a lot of money on advertising and branding. Building a sharp brand image allows consumers to respond by asking their product with their brand name.
Companies believe that by investing in quality brands, they will build success. Consumers will respond by inquiring about their products under the brand, being loyalists, and willing to pay dearly for them. In addition, when loyal, consumers are less vulnerable to discounts or other incentives offered by competitors’ products.
To increase loyalty, companies build their brands to reflect the personalities of their potential buyers. For example, Nike represents an attractive, calm, tough, innovative, and durable personality. Apple creates perceptions in the eyes of consumers about cool, innovative, and creative products.
PREPARE YOURSELF TO THE NEXT LEVEL
Let me summarize a few points about why brands are essential:
- It influences your target customers, including what they wear, what they eat, where they buy, where and how they travel, and so on. To do so, you can emphasize aspects such as quality, consistency, and reliability.
- If your brand is strong, it allows you to have a sustainable competitive advantage. That is important in the midst of fierce market competition. You can further increase market share, encourage economies of scale and increase profitability.
- It reduces price pressure, especially on competing products of similar quality. You compete through differentiation, and that means consumers will be less price-sensitive.
- You can have more negotiating power with distribution channel intermediaries. They like products with a strong image because they have a greater chance of buying. They are willing to place the product on strategic shelves to highlight the product.
- You can use a strong brand name to increase your shareholder value. Because a strong brand underpins your competitive advantage, it means you can make money over time. You are doing better than competitors, as reflected by your above-average return on investment (ROI). Investors see your company’s stock as worthy of collection, leading to an increase in its price. In addition, you can set aside a portion of the profit to be distributed as dividends.
Why brands are so powerful
They convey four main messages about your product: attributes, benefits, values, personality, culture, and users. Here, I will try to discuss the first four.
- Attribute. The brand represents the characteristics and benefits associated with your product. For example, Mercedes implies expensive, durable, quality, fast, and so on.
- Benefits. A brand is not just a set of attributes. Consumers buy your product because of its benefits, not because of its attributes. Your job is to translate these attributes into the functional and emotional benefits of the product.
- Values. It relates to the values of your target customers. If they match yours, they are more than likely to buy. For example, Mercedes means high performance, security, prestige, and so on.
- Personality. If your brand aligns with your target consumers’ self-image, they are interested in buying.
Branding is about creating customer perceptions and positioning your brand among competitors in the market. When developing your brand, you must find a unique selling proposition. It is the hallmark of your product, helps differentiate from other products on the market, and making people want to buy your product.
Some aspects of branding you need to consider:
- Brand awareness: how much consumers know and identify your brand with the products you offer.
- Brand development: how you strive to improve your brand image in the market
- Brand loyalty: the extent to which your target customers are tied to your brand.
- Brand value: the extent to which consumers consider your brand name when buying products based on their reputation.
In general, branding is useful for creating brand loyalty. You can differentiate your brand from competing brands, making it easy to identify.
You can also be more flexible in determining prices. A strong brand image makes consumers less sensitive to price changes.
Lastly, it helps you when launching new products. You can leverage the success of current brands to develop and offer new products. It is more likely to be successful if your current brand image is strong.
Types of brand
Some of the types of brands are:
- Manufacturer’s brand
- Own-label brand
- Product brand
- Family brand
- Corporate brand
You manufacture your own product and label it with your brand, then sell it. This is a common practice. By developing a product under the manufacturer’s brand, you control the product and its development process, which is useful for developing a brand image.
But, you also have to deal with the production process, which is complex.
You use your brand for products you don’t manufacture. This is common for retail or wholesale businesses. You outsource production to another company. Once the output is available, you label it with your brand and sell it under your brand. We also call it a private label.
The branding strategy under private labels is cheap. You don’t have to deal with the production process. You can focus more on the marketing aspect.
However, because you do not produce internally, you become highly dependent on the partners’ performance. Their business failure can have a significant impact on your business. In addition, consumers often perceive private labels to have lower-quality images.
You give a different brand name to each product you produce. Also known as individual brands.
Consumers perceive each product as unique and separate. They are not unrelated in the minds of consumers. It reduces economies of scale. You also find it difficult to leverage a strong brand image in one product for another.
You use the same brand name to cover several related products but serve different needs. For example, you give the same brand to the soap and detergent products you produce. This is also called the umbrella brand.
Its main advantage is the economies of scale of marketing. You only need to promote one brand for several products.
It also makes launching new products more accessible. You can leverage the success of your existing brand to do so, increasing the chances of acceptance among consumers.
However, the family branding strategy also carries risks. Poor quality in one product can damage the image of another product.
You use the company name as the brand name for your product. It is similar to a family brand, except that its success and failure affect product image and company image.