How great brands work
Strong Brands Have Value
Enterprise companies generate value from branding because they usually have more sophistication, discipline, and resources than small firms.
1. Branding represents an estimated 20% of the S&P 500's market value. This varies among industries and companies. For example, Coca-Cola's brand is worth $73.1 billion or 34% of its market capitalization.
2. Highly branded companies outperforms the S&P average as a whole by nearly 200%.
3. A Pitchbook survey revealed 70% of private equity investors believe branding is important for investors and lenders, potential hires, the media, and other stakeholders.
So, what are the elements of a strong brand? This cheatsheet summarizes them. With effort, small companies can build brand value if they stick to their brand promise in their marketing and customer interactions.
Strong brands are coherent
Neurobiology shows that people's brains light up when they encounter strong brands. They do not respond to brands that are fragmented and inconsistent. Coherence (the quality of being a unified whole) means that branding is consistent both conceptually and in execution.
✔︎ Keep brand style compatible with core message
✔︎ Create a consistent customer experience
✔︎ Be consistent in marketing communications
✔︎ Nurture a company culture that supports the brand
Strong brands are distinctive
Strong brands have something unique to set themselves apart from competitors. In can be fast delivery (Dominos, FedEx), consistency (McDonald's), charitable actions (Tom's, Newman's Own), a lifetime guarantee (Craftsman, Eddie Bauer). A distinctive promise crystallizes the brand's identity.
✔︎ Have a unique promise that is relevant to your purpose
✔︎ Your promise should benefit the customer
✔︎ Your promise should be different from the competition's
Strong brands are relevant
Research supports the idea that recall is a main determinant of consumer purchase behavior. To achieve recall, a brand must tie itself to associations that are personally meaningful to its consumers. Personal relevance is the mechanism by which emotions govern memory. Irrelevant, meaningless brands fail to achieve mindshare and recall.
✔︎ Base brand on the buyer's mindset
✔︎ Tie brand to meaningful associations
✔︎ Keep associations clear and direct
Strong brands are emotional
Harvard Business School professor Gerald Zaltman studied how people buy. He found people are unaware of their true purchase motives because they occur on a subconscious, emotional level. The more complex the product, the more people rely on intuition rather than logic to process choices. Branding operates on a subconscious level – and that is why it is so powerful.
✔︎ Know your customer inside and out
✔︎ Tap into subconscious motivations and needs
✔︎ Provide rational reasons to support emotion-based buying decisions
Strong brands are engaging
Engagement is more than customer satisfaction. It means customers are emotionally attached to your brand. Highly engaged consumers are more profitable because they spend more, refer more, and are more loyal. Engagement occurs holistically, not in a marketing silo. Authenticity allows consumers to have a positive experience at every touchpoint.
✔︎ Have a blog (and get 67% more leads)
✔︎ Encourage employees to post on social media
✔︎ Respond to reviews promptly
Strong brands are visible
Brands must have awareness in the marketplace. Even the most passionate brand will fail without market exposure. This means that a brand must engage in marketing, even if that means relying on grassroots word-of-mouth campaigns like Lululemon or a legacy reputation like Rolls-Royce.
✔︎ Set aside a marketing budget standard for your industry
✔︎ Identify where potential customers can be found
✔︎ Create a marketing plan to reach those customers
✔︎ Do not cut marketing during economic downturns