marketing management discussion 5

Understanding why brands are important

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- Why are brands important?

 

Let's take a look at one of the best brands

 

in the world, Coca Cola.

 

The total market value of the company is

 

around $175 billion, but one asset in particular makes up

 

about 75 billion of that, and it's not the secret recipe.

 

It's the brand.

 

Brands are both a strategic as well as a financial asset.

 

A strong brand creates customer loyalty,

 

and that increases the value of your company,

 

value which can grow if you continue to invest in the brand.

 

There are many other benefits of brands.

 

Brands allow you to set higher prices

 

for your products and services.

 

People associate higher quality to branded products,

 

and they'll pay more than for a generic version,

 

even when the two products are identical.

 

Why? Because they trust the branded product more.

 

Brands make and keep their promises.

 

Once your product is branded,

 

you typically earn a higher market share

 

while lowering your cost of sales.

 

Loyal customers don't need to be marketed to as much.

 

With an established brand,

 

it's easier to launch new products.

 

When consumers see the brand's logo on a new product,

 

they instantly associate the brand promise

 

to that new product from day one.

 

There are other benefits of brands

 

than just the marketing advantages.

 

For example, studies show that companies

 

with great brands have lower employee turnover.

 

Popular brands help companies recruit the most talented

 

and passionate employees.

 

Brands create status and esteem for your company

 

in the minds of industry leaders, community leaders,

 

the media, and financial markets like Wall Street.

 

But despite all these benefits, it may not make sense

 

for you to create a brand.

 

There are certain business situations

 

where it would be a waste of money.

 

For example, in completely new markets

 

where there are very few, if any, customers,

 

you'd be smarter to invest your resources

 

in growing awareness and interest in the category first.

 

If you're already the market leader

 

with most of the market share,

 

creating a brand probably won't pay off.

 

If you're in a highly fragmented industry,

 

with hundreds or even thousands of small competitors,

 

a brand may not be able to reach enough customers

 

to make it worthwhile.

 

If your business is such that you have only a handful

 

of customers, perhaps even one customer like the government,

 

branding won't do much.

 

Take a look at your situation before you jump right into it.

 

But if your business depends on creating loyal,

 

repeat customers, a strong brand is the surest way to do it.