Understanding the Competitive Value of your Brand – Part 1
By Robert W. Bradford, President & CEO
Brand IS a competitive advantage
This post is part of a series taken from Robert Bradford’s article Understanding the Competitive Value of your Brand published in Compass Points September 2005. In this part we will introduce the series and discuss What makes a brand valuable?
One of the most commonly overlooked sources of competitive advantage is brand. Branding is not just advertising, nor is it simply a catchy name for a company or product. The most important value in a brand is the value that it holds for actual customers. This value is very difficult and expensive to build – and fragile and easy to destroy. The difficulty of building and maintaining a brand is one reason why managers the world over tend to avoid spending much time or money on branding – especially in smaller companies. This is a shame, because a well-managed brand is so powerful that it can overcome almost any other competitive advantage. This one fact is the reason why larger companies with lots of managerial horsepower tend to spend a lot of time and money on branding.
What makes a brand valuable?
Brands are valuable simply because they cause customers to be inclined to purchase your product rather than someone else’s. In a way, a brand is shorthand for the things the customer can expect from your product. In products that hold little meaning for the customer, this might be worth less, but in markets where the customer invests his or her ego in the purchase of a particular brand, that meaning can be priceless. Let’s look at some examples to see where branding may or may not be important.
First of all, let’s look at some examples of brands with tremendous pull. These brands will sell well just about anywhere they show up, because the customer associates the brand with qualities they prefer. Examples include:
Interestingly, none of these brands has universal appeal, in that not every possible customer will prefer the attributes of the brand over their alternatives. For example, the Disney brand is applied to many products:
Licensed products such as clothing and toys
In each of these very different product areas, the Disney brand means something a little different. For example, in theme parks, Disney means clean, family-oriented, creatively designed, expensive and (to many) crowded. The negative elements of the Disney branding in their theme park business are inevitable – you always have to accept the negative with the positive. But the positive elements are so compelling that millions of people from around the world spend a significant portion of their income to travel to a Disney theme park.
The Apple brand has a similar story. Apple carries a number of meanings, including well designed, easy to use, less popular and expensive. As with any great brand, this brand has a lot of ego invested in it for some people. This aspect of branding is more visible in computers because it is significantly more difficult and time consuming to use a computer operating system that isn’t the most popular (in other words, Microsoft). Despite this difficulty, Apple has a hard core of fans who wouldn’t think of using another brand, given a choice. Clearly, this doesn’t translate into top market share for Apple, but it is a significant advantage that has clearly kept the Apple name alive when others have fallen by the wayside. Apple’s newer products – notable the iPod – have drawn upon the positive elements of the Apple brand. The negative elements of the Apple brand have been far less problematic for the iPod because it is competing in a new product area where niche status has not been seen as a drawback. This is an excellent example of using a brand to grow beyond the core product line.
In the next post of this series, we will discuss Why branding is important in the global marketplace.
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