Branding is the most powerful business toll available today. Some people feel that branding is marketing blah blah backed by advertising jargon. However, branding has moved well beyond the marketing function to demonstrate its overall role in building strong business. Interbrand’s valuation of the world’s biggest brands clearly demonstrates in business terms the huge financial value that branding can provide an organization.
Brands have value because they mean something to their constituents- consumers, associates, investors, et al. The more powerful the meaning, the greater the brand equity and the higher the value of the brand. Coke represents America, and because it stands for such a powerful concept, it has become the brand with the highest valuation in the world.
Building brands is more than just a marketing task. This is an organizational task that stems from the very purpose of an organization. Wipro is not a marketing wonder; it is an organizational wonder, because it lives its purpose and reflects this in all that it does.
To create a deep resonant meaning, brands need to live what they stand for, thereby letting all their constituents experience the meaning that the brand represents. All that a brand says or does reinforces the existing meaning or adds new meaning to the brand. Brand meaning can be tainted or even eroded if there is a dissonance between its significance and is action. If a brand uses outsourced sweatshops to get its products manufactured at a low cost in order to boost profitability, then this act would give a negative meaning to the brand that negatively impacts its valuation.
Brands gets several business benefits due to their equity, and the best way to maintain these benefits is by operating in a decent, caring manner with a clear, long-term view. To get a consistent focused message out, brands need to make everyone associated with them think and act in this focused manner, thereby reinforcing the meaning that the brand has.
Crude shortcuts only hurt the band value by taking away the meaning of the brand. For example, if a toiletry brand that professes concern for one’s skin suddenly starts using chemicals that can harm one’s skin then the meaning of the brand changes. The brand will lose the trust that consumers reposed in the brand, based on which the brand was consumed, and sales will plummet.
To understand the relationship between running a business in a decent ethical manner, brands and valuation, one must understand what branding is all about. Branding is about brands providing a meaningful relationship to their constituents that has a commercial value. A relationship can take the form of liking, preference, a sense of trust, a belief on quality, etc. that leads the constituent to want to continue consuming a brand.
Some of the several benefits that string brands enjoy are listed below. It is never worth losing out on any of these for short-term benefits.
- Drive those volumes consistently: A good brand sells a base consistent level of volumes in its market regularly. Whether it is Coke, Ariel, Samsung, these brands have a base consistency in terms of sales to consumers.
- Better profitability by commanding a premium: Strong brands are often able to get a premium over competition based on their brand equity.
- Brand builds insurance against bad times: It is easy enough to forgive a friend for a mistake; however, it is not easy to forgive a stranger for the same mistake. Similarly, consumers tend to be more forgiving towards known brands that have made a mistake than they would be towards unknown labels.
- Commands shelf space: Trade often favors big brands, and the majority of the extremely scarce shelf space is dedicated to big brands.
- The best talent: The task of getting high-quality manpower at fairly economical rates becomes easier for companies that are well known and respected.
- No dearth of willing leaders: One of the less-discussed but extremely obvious advantages of a brand is the relative ease with which it can raise money.
- Claim to immortality: There is no telling the life of a label, but brands have long lives because of the relationships they enjoy and the values they represent.