The best way to build a brand is to make sure it’s worth investing in before you start, writes Jon Michail.
Throwing money at a brand in the short-term can have some benefit and throwing tons of money can even help in the medium-term; however for brand value to increase in the long-term it must have an integrity that fits its values. This means you have to make sure the foundations are solid.
I recently went to the supermarket to buy a can of Serena tuna. Next to it was a plain label supermarket brand in the same size for 30% less in cost. I thought I’d give it a go and discovered that not all tuna products are the same. The plain brand had a slosh of fish (that looked like reconstituted mush) where the original Serena brand’s content was solid and chunky (yes, advertising believe it or not works and in this case justifies the product).
My verdict: I should have listened to my wife’s advice and bought the trusted brand category leader. This presents a great case of false economy on my part, although you can’t blame me for trying to save a buck.
My awareness of Serena’s brand is now far greater. In fact, brand awareness is an important way of promoting commodity-related products. This is because for these products, there are very few factors that differentiate one product from its competitors. Historically, the product that maintains the highest brand awareness compared to its competitors will usually get the most sales.
For example, in the soft drink industry very little separates a generic soda from a brand-name soda in terms of taste. However, consumers are aware of the brands Pepsi and Coca Cola, particularly when it comes to their images and names. This higher rate of brand awareness equates to higher sales and also serves as an economic moat that prevents competitors from gaining more market share.
Why Brand? To differentiate!
So you want to brand to differentiate yourself, but how much should you spend? For a small business or solopreneur, a starting point may be from $1,000 and for the medium size to large corporations up to $500,000 plus.
Depending on how much you want to differentiate, you will spend much more or much less.
In today’s online world you can maximise your ROI if you outsource aspects of your branding like stationery design, packaging etc. However the end cost can be considerably more if you choose a vendor solely based on price. Managing them to specifications is a huge task in itself. You can expect vendors to take twice as long or twice as much or more than planned.
Remember, building a brand is a core business activity, just as important as leasing office space, recruiting the right people or developing your product or service. It’s not something you want to cut corners on.
This means you must get the brand correct from the start. If you don’t do this, it could cost you more in the long run and you may have to start again from scratch.
I have witnessed clients who think they can cut corners and get away with branding aspects that any professional knows is not possible. Having a $200 logo designed online is not what we normally recommend. By all means hunt out the best for your budget, however be aware that the old saying ‘you get what you pay for’ in this case is real.
Pepsi logo price tag: $1 million.
The new Pepsi logo was designed by the Arnell Group in 2008. The listed prices include a complete branding package unless otherwise noted.
Google logo price tag: $0. The original Google logo was designed in Gimp in 1998 by Sergey Brin, one of Google’s founders. It has since been fine-tuned several times, but the original concept was kept intact.
The Power of Strong Brands
Interbrand analysis provides compelling evidence that strong brands deliver superior financial returns. Since the launch of the ranking in 2000, Interbrand’s Best Global Brands (BGB) portfolio has been shown to significantly outperform the S&P 500 and MSCI World indices. The analysis also shows the BGB portfolio outperforming throughout the economic cycle, demonstrating that strong brands shield their businesses from economic headwinds and accelerate growth during the recovery.
According to Forbes, the following top five brands are worth:
1. Apple – $87.1 billion.
2. Microsoft – $54.7 billion.
3. Coca Cola – $50 billion.
4. IBM – $48.5 billion.
5. Google – $37.6 billion.
Upstart tech brand Facebook is worth $13.1 billion, which is the 36th highest among all brands. However the social media site was crushed in a survey by Landor and PSB. Consumers dinged Facebook on trust and transparency attributes, as well as on understanding and caring about customers. Clearly, privacy concerns remain a hot-button topic among Facebook’s roughly one billion users. The brand ranked No. 99 with consumers among the top 100 with only Verizon faring worse. The poor consumer ratings knocked Facebook down to No. 73 overall on the power brands list…
Excerpted from an article originally published in the April/May 2014 issue of Think & Grow Rich Inc. magazine. If you are a subscriber to Think & Grow Rich Inc. magazine, you will receive this article in your April/May 2014 issue of TGR. If you are not a subscriber, click here to subscribe.