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How Brands Add Value, Part I

When approaching the sometimes overwhelming and perplexing task of “branding,” most companies are cautiously optimistic and therefore very hesitant to pull the trigger on major initiatives such as a launch or re-brand. After all, branding is a major investment of both time and resources for what might seem like an intangible product or service. How does the client know that they are really getting a return on their investment? Do brands really add value to the organization?   Advertising agencies, brand consultants, marketers, or graphic designers will sometimes give differing opinions and definitions of what a “brand” is, and how it helps build audience perception, and therefore value, about a product, service, or organization. The problem for a prospective client is that depending on whom you ask, each response might be skewed in favor of increasing the chances of that particular creative firm winning the work.   The truth of the matter is that brands are more than simply intriguing or eye-catching advertisements, a great logo and package, or highly targeted and consistent messaging. This is not to say that these things are unimportant or irrelevant—when used on their own, each of these tactics can help enhance a brand’s image. However, the key to effectively building and maintaining a brand is to tell a compelling story about the company, its products, or services. In doing so, brands promise to provide customers with an experience that increases their perception of quality, increases their loyalty to the brand, and promotes a particular lifestyle.  

An effective brand that communicates the essence of quality will give customers the perception that the product or service is better than that of the competition.

Since it is perceived to be of higher quality, these brands will command higher prices, adding more revenue to the bottom line. For example, there really is not a lot of difference between a cup of Dunkin’ Donuts coffee and Starbucks’ regular blend. Both are made of the highest quality coffee beans, are grown in roughly the same geographic area, and according to taste tests, have the same flavor. Then why is it that a cup of Starbucks coffee costs a dollar or so more than the cup from Dunkin’ Donuts? In this case, the quality conveyed by the Starbucks name and logo on the cup has added real monetary value to the company in terms of higher profits per cup of java.  

Brands that perform consistently in delivering on their promise of quality increase customer loyalty.

A satisfied customer will tell three of their friends about their experience with the brand, while an unhappy one will tell as many people that will listen. While it is true that it is easy to go out and find new customers, an organization will see a higher return on their investment by consistently meeting or exceeding customer’s expectations, thus reinforcing brand loyalty and keeping the customers they already have.  

Loyal customers buy brands because they promote a certain lifestyle or image.

No matter how individualistic or different a person tries to be, it is only human nature to desire to be part of a group, to “belong” to something. Brands convey to others that a person has achieved a certain amount of success, or more often than not, that he or she desires to attain that lifestyle. Products or services that deliver on this particular promise connote a higher level of quality or are perceived to be luxurious—as a result, organizations may charge more for those brands. When it comes to automobiles, BMW, Mercedes and Volvo are perceived as luxury vehicles and command a premium price.  

Brand promises must be relevant to and address the needs and desires of the target audience or customer.

By promising quality, consistency, and image, branding has the power to add increased value and profits to companies. It is important, however, that organizations deliver on the promises that they make, and in every interaction with the customer. Failure to do so dilutes the value of a product or service, as we will discuss in the next installment.   —Ryan Hembree, principal/brand strategy