Strong Brands and Bottom-Line Value

Brand relevance and brand value are two sides of the same coin, both of which affect brand strength in the marketplace. Brand value is a key differentiator; it is more than just a collection of perceptions in consumers’ minds. Strong brands have real value when it comes to customers’ purchase decisions and deliver an economic impact that positively affects a company's bottom line.

When a brand has a strong presence in the marketplace, it reaps a number of economic benefits that include:

• Premium pricing: Consumers pay more for branded items that they believe have higher value and lower risk than lesser-known alternatives. This preference is based largely on the trust that a given brand engenders. Think Grey Goose vs. Smirnoff or Tumi vs. American Tourister.
• Lower cost of sales: Consumers of valued brands make more frequent and repeat purchases, which spread customer-acquisition costs over a long-term client relationship.
• Lower cost of promotion: Consumers of valued brands become ambassadors who spread positive word-of-mouth at no cost to the brand.
• Higher market share: Valued brands acquire loyal customers who recruit more customers to the brand, increasing the brand’s share of market while reducing customer-development costs and building immunity to competitive attacks.
• Lower employee turnover: Great brands attract passionate employees who pass their enthusiasm to satisfied consumers, who in turn make employees’ jobs more enjoyable, reducing employee turnover as a result. The trust factor is significant among employees as well.
• Higher stature: Valued brands enjoy a high level of awareness and esteem in the minds of consumers, industry leaders, community leaders, news editors, financial analysts and investors, which leads to yet higher brand preference and marketplace prominence.

In his well-known book, Strategic Brand Management, Kevin Lane Keller states, “the ability of a strong brand to simplify consumer decision-making, reduce risk and set expectations is…invaluable.”

The same is true for B2B brands. How can B2B companies truly differentiate their offering and be relevant to customers over the long-term?  The answer: brands.

According to Kevin Randall, Director of Brand Strategy & Research at Movéo Integrated Branding, “A strong brand becomes the customer’s ‘shorthand’ for making good choices in a complex, risky, and confusing marketplace.”

In an article on BrandChannel, Randall posits that “brands produce economic value in the B2B marketplace. According to a [previous] Interbrand/BusinessWeek ‘Best Global Brands By Value’ ranking, IBM, GE, and Intel, largely B2B-focused brands targeting sophisticated enterprises and ‘technical buyers,’ are among the most valuable brands. Their intangible asset of ‘goodwill’ drives billions of dollars in value and market capitalization. IBM’s 2009 brand value is US$60,211, (GE $47,777 billion, Intel $30,636 billion). Their brands, not their products, are their differentiators that lead to competitive advantage.”

Randall identifies that the intangibles, or “trust factors,” are even more important than the tangibles in determining which buying decisions are made. He cites GE as making more money and achieving greater differentiation through its value-added intangibles in the form of its “branded” offering (services, assurance, solutions, people, etc.) than its “parity products,” such as aircraft engines and medical equipment.

Says Randall, “Today’s B2B customers may articulate their need for ROI, higher performance or a better mousetrap; yet, what they really want is to avoid doing business with ‘an Enron.’ They want a name or people they can trust; they want to buy from a ‘leader.’ Strong brands play to these important drivers.”

Malcolm Gladwell’s best-selling book, Blink: The Power of Thinking Without Thinking, reveals a well-known “secret” among neuroscientists and new wave market researchers that “the driver of their real feelings, thoughts and actions is their unconscious. Buyers make split-second decisions (“thin-slicing”) based on stored memories, images and feelings—which is what a brand is all about.”

Such research has spawned an entire industry and created the field of neuro-marketing. Find out how Campbell’s Soup launched a redesigned label using neuroscience research or check out Dan Ariely’s book, Predictably Irrational.  

Do you agree that a strong brand equals a strong two-second impression, whether you’re buying potato chips or specifying microchips? Leave us a comment and add your voice and thoughts to the discussion.