• Sunday, June 16, 2024
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Eight benefits of building strong and admired brands

CVA: Consumers encouraged to vote for best brands in Nigeria

The American Marketing Association defines a brand as a name, term, symbol, and/or design that’s intended to identify the goods and services of one seller or a group of sellers and to differentiate them from those of the competition.

However, we argue that a brand is more than a mere name that helps with identification and differentiation. Identifying a brand and differentiating it from competing brands only makes sense when the brand offers value. We define a brand as a value-generating entity (name) relevant to both customers and the brand owner. If no one wants to buy the brand, the name doesn’t have much market relevance. Such a brand fails to provide value to either the company or customers. But what does it mean to say that a brand offers value to customers and companies? Let’s first consider what we mean by brand value to companies.

What An Admired Brand Does

Revenue Generator: An admired brand increases customer loyalty and attracts new customers.

Cost-Efficiency Enhancer: An admired brand is in demand, which allows the company to take advantage of economies of scale and allows the company to enjoy cost-saving customer brand loyalty and brand advocacy behaviours.

Growth Facilitator: An admired brand facilitates the introduction and success of its extensions to other markets and other products.

Employee-Morale Booster: An admired brand motivates employees to protect and strengthen the brand.

Second-Chance Provider: An admired brand enhances customers’ willingness to forgive mistakes made by a company.

Market Protector: An admired brand serves as a barrier to entry to future competitors.

Alliance Facilitator: An admired brand facilitates alliances with desirable and powerful external partners.

Asset Builder: An admired brand enhances the company’s marketplace value, and also allows it to demand a premium price in a brand-selling situation.

Revenue Generator
An admired brand increases customer loyalty and attracts new customers. These twin outcomes enhance a brand’s revenue. A strong brand also increases revenue by making customers less price sensitive, allowing companies to charge a higher per-unit price. Think about the price premium brands such as McKinsey and Goldman Sachs can charge in the marketplace.

Cost-Efficiency Enhancer
An admired brand is in demand, which allows the company to take advantage of economies of scale. Strong brands create favourable word of mouth (WOM) and customer evangelists who further contribute to marketing efficiency by lowering marketing costs. In fact, some brands became marketplace successes purely through WOM.

Growth Facilitator
An admired brand can be leveraged and extended, creating growth (and revenue) from new product or market categories. An admired brand makes it easier for companies to grow and grow efficiently, through product and brand extensions that use the brand name. Such extensions help the company’s overall growth.

Employee-Morale Booster
An admired brand also motivates employees to protect and strengthen the brand. Employees of admired brands are more committed to nurturing customers than are employees working for brands with no discernable equity. Why? Because they believe in the brand and are proud of what they do to help it flourish. Employees who work for companies ranked as most admired in their industries take pride in the company’s success, and they work harder to protect and strengthen the company’s reputation. Executives who manage admired brands are even willing to accept lower pay for the opportunity to work for the brand.

Second-Chance Provider
An admired brand also enhances customers’ willingness to forgive unfortunate mistakes made by a company, giving it another chance to redeem itself. MTN, Sterling Bank, Martha Stewart, Toyota, Nike, and Harley-Davidson, to name just a few, have all fallen victim to brand gaffes and disasters. Yet the strength of their brands, the loyalty of their customer bases, and their customers’ willingness to see brand mistakes as rare and unusual events have helped them to recover.

Market Protector
An admired brand protects by serving as a barrier to competitive brand entry. Customers are reluctant to switch from an admired brand to a new one unless the benefits of the new brand are sufficiently compelling to motivate switching. Customers’ familiarity with admired brands provides comfort via what they know and have experienced. Their affection for a brand they know and admire makes them unwilling to invest in a new and untried brand.

Alliance facilitator
An admired brand can facilitate with desirable and powerful external partners. Such alliances can both leverage brand admiration and enhance it further. Alliances allow companies to build additional revenue and markets without making costly investments in areas in which they lack expertise. The ability of Apple and Samsung to attract partners serves as a testament to how much other companies admire these brands. Recent alliances between BMW and Louis Vuitton, Apple Pay and MasterCard, and Spotify and Uber also illustrate this point.

Asset Builder
Finally, an admired brand generates greater shareholder return because investors take notice of admired brands when making their investment decisions. This in turn makes a company’s marketplace value substantially higher than its book value.

Last line
The critical question is this: If an admired brand offers value to companies on so many dimensions, how can companies develop an admired brand? The answer to this question is both simple and deceptively complex. The simple answer is that companies can’t reap the benefits of these myriad and significant sources of value unless they also provide value to customers. The deceptively complex answer is that the field of marketing has yet to develop a compelling perspective on what customers actually do value.