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Power Branding
Power Branding
1988 was labeled as "the year of the brand". It was the year when the world saw Phillip Morris taking over Kraft in the US and Nestle buying Rowntree in Europe. Phillip Morris paid four times the value of the target company's tangible assets and Nestle over five times.
If we look at the figures, in 1988 just four brands were sold for a whooping US$50billion. Such incredible payments for "names" were a reflection of the value placed on the brands in terms of long term profit expectancy.
Since then the trend has continued and the power of brands to command gigantic prices has become much more conspicuous.
Now the question that arises is, how is it that brands can deliver such spectacular rewards? The answer - it's all in the mind!
How brand influence people?
Let's start of by defining what a brand is - A brand is a product, service, or concept that is publicly distinguished from other products, services, or concepts so that it can be easily communicated and usually marketed and branding is the process of creating and disseminating the brand name. Now from the definition above the first thong to recognize when we talk about brands are that that they are not just names, terms, symbols, designs or combinations of these, although it is true to say that such things can and often differentiate certain products and companies from others.
The additional ingredient that makes a successful brand is personality.
Today's leading brands are personalities in their own right and are well known in all societies and cultures as film heroes, cartoon characters, sports stars or great leaders.
World over, Coca Cola, Sean Connery, Nestle, Sony, Spiderman, Mercedes, Bill Gates and Michael Jackson are equally well known. Thousands of people relate to brand personalities in the same way as they do to human personalities.
There is, of course, a psychological basis to this, and the psychology behind brands really stems from Carl Jung's work where he described the four functions of the mind - thinking, sensation, feeling and intuition.
The secret to successful branding is to influence the way in which people perceive the company or product, and brands can affect the minds of customers by appealing to those four mind functions, or combinations of them. This is how it happens.
Some brands appeal to the rational part of a person, to the elements of logic and good sense such as toothpaste which prevents decay and cholesterol-free foods. Others appeal to the senses of smell, taste, sight and sound such as fashion and cosmetic products.
Some brands attract the emotional part of people appealing to the feelings' dimension to which consumers react with feelings of warmth, affection and belonging. Products such as Harley-Davidson motorcycles and companies like Benetton with its global village branding exemplify these.
Then there is the strange phenomenon of intuition. Some companies and products are attractive to people who intuitively feel comfortable with them, because they see these brands as an extension of themselves, a good fit to their personality, lifestyle, aspirations and behavior --companies like the Body Shop, with its environmental approach.
Brands influence consumer decisions to buy in any of the above ways, or through combinations of them, sometimes with tremendous persuasive appeal.
The Marlboro brand personality is a good example of how a company understands and combines the physical and emotional elements that appeal to certain customers who live or would love to live a certain lifestyle. Products such as gold credit cards, watches or prestige items help people to express themselves to others by demonstrating that they are different and have achieved something. They act as extensions of the personality, so it really is "all in the mind", and the key to brand management and development is a clear understanding of what benefits the customer is looking for.
Ask consumers what comes to mind when they hear the name of a big brand such as BMW or Gucci and they will reply with a list of attributes which go far beyond the physical tangible aspects of product and delivery, but if there is one word which brings all these things together in people's mind, it is value.
Time and again, research shows that the real driving force behind market leadership is perceived value - not price or inherent product attributes. As long as a brand to offer customers superior perceived value, then good market performance will follow, which makes consistency a highly important feature of brand behavior.
People prefer to buy brands
Brands are also successful because people prefer them to ordinary products. In addition to the psychological factors already mentioned, brands give consumers the means whereby they can make choices and judgments. Bases on these experiences, customers can then rely on chosen brands to guarantee standards of quality and service, which reduces the risk of failure in purchase.
Today's world is characterized by more complex technology, and this can be extremely confusing to people who are not technology minded. Brands can play an important role here by providing simplicity and reassurance to the uninitiated, offering a quick, clear guide to a variety of competitive products and helping consumers reach better, quicker decisions.
The rewards of brand
The most important point to be noted is that building a brand is a corporate strategic issue and not a short-term tactical activity.
For companies wanting to satisfy the needs of consumers and beat the competition, then building a brand provides an opportunity which, if realized, could do not only this but also defy the test of time - for brands have no limit to their life expectancy.
Many brands established in the 1930s are still the top brands now. From Coca-Cola to Colgate, Kelloggs to Kodak, we see many examples of the big brands successfully having defended their number one position in their chosen markets and they, along with other famous names, have become synonymous with their industries.
Brand loyalty also means that companies achieve a greater consistency of demand through customer retention. Over time, good brand strategies generate the production volume which gives the economies of scale necessary to have a favorable impact in unit costs. In turn, this allows companies to achieve higher margins, putting them in a winning situation.
Brand pliability can help companies ride out stormy weather, as with Mercedes in 1982, when other car manufacturers around the world suffered disastrous sales, apart from Mercedes which continued to sell well: often up to 50 per cent more than other European competitors. And, because of the magnetic influence they have over purchasing behavior, successful brands allow companies to charge premium prices for their products and services, which of course generate higher profits. Surveys indicate that brand leaders can return a margin four to six times that of the closest competitors.
Conclusion
Summing up the above, we see that in today's competitive world, successful global companies recognize that the source of their dexterity in world markets is branding, and that investment in plant, technology and people is no longer enough to guarantee long-term sustainable profits. This has led to the brand being a vital strategic issue for companies' world over and in the increasingly turbulent markets; a key to customer loyalty, long-term survival and growth.
1988 was labeled as "the year of the brand". It was the year when the world saw Phillip Morris taking over Kraft in the US and Nestle buying Rowntree in Europe. Phillip Morris paid four times the value of the target company's tangible assets and Nestle over five times.
If we look at the figures, in 1988 just four brands were sold for a whooping US$50billion. Such incredible payments for "names" were a reflection of the value placed on the brands in terms of long term profit expectancy.
Since then the trend has continued and the power of brands to command gigantic prices has become much more conspicuous.
Now the question that arises is, how is it that brands can deliver such spectacular rewards? The answer - it's all in the mind!
How brand influence people?
Let's start of by defining what a brand is - A brand is a product, service, or concept that is publicly distinguished from other products, services, or concepts so that it can be easily communicated and usually marketed and branding is the process of creating and disseminating the brand name. Now from the definition above the first thong to recognize when we talk about brands are that that they are not just names, terms, symbols, designs or combinations of these, although it is true to say that such things can and often differentiate certain products and companies from others.
The additional ingredient that makes a successful brand is personality.
Today's leading brands are personalities in their own right and are well known in all societies and cultures as film heroes, cartoon characters, sports stars or great leaders.
World over, Coca Cola, Sean Connery, Nestle, Sony, Spiderman, Mercedes, Bill Gates and Michael Jackson are equally well known. Thousands of people relate to brand personalities in the same way as they do to human personalities.
There is, of course, a psychological basis to this, and the psychology behind brands really stems from Carl Jung's work where he described the four functions of the mind - thinking, sensation, feeling and intuition.
The secret to successful branding is to influence the way in which people perceive the company or product, and brands can affect the minds of customers by appealing to those four mind functions, or combinations of them. This is how it happens.
Some brands appeal to the rational part of a person, to the elements of logic and good sense such as toothpaste which prevents decay and cholesterol-free foods. Others appeal to the senses of smell, taste, sight and sound such as fashion and cosmetic products.
Some brands attract the emotional part of people appealing to the feelings' dimension to which consumers react with feelings of warmth, affection and belonging. Products such as Harley-Davidson motorcycles and companies like Benetton with its global village branding exemplify these.
Then there is the strange phenomenon of intuition. Some companies and products are attractive to people who intuitively feel comfortable with them, because they see these brands as an extension of themselves, a good fit to their personality, lifestyle, aspirations and behavior --companies like the Body Shop, with its environmental approach.
Brands influence consumer decisions to buy in any of the above ways, or through combinations of them, sometimes with tremendous persuasive appeal.
The Marlboro brand personality is a good example of how a company understands and combines the physical and emotional elements that appeal to certain customers who live or would love to live a certain lifestyle. Products such as gold credit cards, watches or prestige items help people to express themselves to others by demonstrating that they are different and have achieved something. They act as extensions of the personality, so it really is "all in the mind", and the key to brand management and development is a clear understanding of what benefits the customer is looking for.
Ask consumers what comes to mind when they hear the name of a big brand such as BMW or Gucci and they will reply with a list of attributes which go far beyond the physical tangible aspects of product and delivery, but if there is one word which brings all these things together in people's mind, it is value.
Time and again, research shows that the real driving force behind market leadership is perceived value - not price or inherent product attributes. As long as a brand to offer customers superior perceived value, then good market performance will follow, which makes consistency a highly important feature of brand behavior.
People prefer to buy brands
Brands are also successful because people prefer them to ordinary products. In addition to the psychological factors already mentioned, brands give consumers the means whereby they can make choices and judgments. Bases on these experiences, customers can then rely on chosen brands to guarantee standards of quality and service, which reduces the risk of failure in purchase.
Today's world is characterized by more complex technology, and this can be extremely confusing to people who are not technology minded. Brands can play an important role here by providing simplicity and reassurance to the uninitiated, offering a quick, clear guide to a variety of competitive products and helping consumers reach better, quicker decisions.
The rewards of brand
The most important point to be noted is that building a brand is a corporate strategic issue and not a short-term tactical activity.
For companies wanting to satisfy the needs of consumers and beat the competition, then building a brand provides an opportunity which, if realized, could do not only this but also defy the test of time - for brands have no limit to their life expectancy.
Many brands established in the 1930s are still the top brands now. From Coca-Cola to Colgate, Kelloggs to Kodak, we see many examples of the big brands successfully having defended their number one position in their chosen markets and they, along with other famous names, have become synonymous with their industries.
Brand loyalty also means that companies achieve a greater consistency of demand through customer retention. Over time, good brand strategies generate the production volume which gives the economies of scale necessary to have a favorable impact in unit costs. In turn, this allows companies to achieve higher margins, putting them in a winning situation.
Brand pliability can help companies ride out stormy weather, as with Mercedes in 1982, when other car manufacturers around the world suffered disastrous sales, apart from Mercedes which continued to sell well: often up to 50 per cent more than other European competitors. And, because of the magnetic influence they have over purchasing behavior, successful brands allow companies to charge premium prices for their products and services, which of course generate higher profits. Surveys indicate that brand leaders can return a margin four to six times that of the closest competitors.
Conclusion
Summing up the above, we see that in today's competitive world, successful global companies recognize that the source of their dexterity in world markets is branding, and that investment in plant, technology and people is no longer enough to guarantee long-term sustainable profits. This has led to the brand being a vital strategic issue for companies' world over and in the increasingly turbulent markets; a key to customer loyalty, long-term survival and growth.
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