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The Value of a Strong Brand

value of a strong brand

Branding does seem like a lot of work, and it’s often times expensive too. I won’t lie to you: Branding is expensive, in terms of money and money. So today I’m will tell you about the value of a strong brand, and why it’s important to spend the money, time and effort.

The Value of a Strong Brand

Higher Price Points

Charging higher prices and getting less price pressure sounds awesome, right? It’s no secret that people pay more for something they perceive has a higher value—and often the perceived value is tied to the brand. Just think about it – do you buy only the store brand at the grocery?

A strong images helps keep a company’s products and services from turning into commodities. People buy brands because they feel the branded items provide:

  • Higher status (people buy brands that they feel mesh with their identities—you may feel Louise Vuitton handbags better represent who you are over comparable purses without a recognizable name or with a name that you feel isn’t “you”);
  • Greater quality (you don’t want the generic or off-brand antihistamine, because you believe it won’t work as well as the name brand); and
  • Safety (you’re not sure about the standards of that car-repair shop, so a national chain seems like a better bet).

Higher Market Value

Due to the ability to charge higher prices with less price pressure, a strong brand increases a company’s market value. Companies with strong brands have higher valuations and provide better shareholder returns than similar companies with weak brands.

In some cases, companies have been purchased for their brand value alone.

Market Protection

Robust, well-managed brands also protect companies in turbulent and recessionary markets. No company is immune to a serious financial crisis; however, strong brands are more likely to survive them.

Why? Money is more precious than before, so people want to make “safe” choices about where to spend it. Strong brands seem like safe bets for the quality and safety reasons mentioned above.

From a consumer perspective, a customer is much more inclined to buy one “good” thing in many product and service categories than something they feel could fail or disappoint in short order—per the adage, “You get what you pay for”.

Reduced Competition

Think you can enter the sportswear market and take on Nike? Think again.

Nike’s extremely strong brand in the sports apparel market makes it very difficult to compete against. New market entrants have an incredibly tough time, especially without considerable dollars to compete long-term in the marketing game.

In fact, a predominant brand in a category will often discourage market entrants entirely. If there’s too big of a barrier to entry, you must find another point of access.

People Want to Work with You

People get starry eyed about working with organizations that have impressive brands. Saying that you work for or with a name-brand corporation lends caché.

A strong brand improves the company’s value proposition for internal and external stakeholders alike.

Increased Opportunities

Because of the increased value of working with a name brand, companies that have them will find they are offered  more favorable business opportunities.

Companies want partnerships with strongly branded organizations. Highly valued brands are offered lucrative licensing deals. And companies with robust brands are more likely to see acquisition opportunities under very favorable terms.

Still Unsure?

Branding does take hard work and dedication, but the challenging things in life are often the most worthwhile. And branding is definitely both. If you’re interested in learning more about measuring the ROI, check out my previous post here.

And, just for the record, Nasty Gal is my current branding crush – and might I mention it’s also the fastest growing e-commerce site. Sophia Amoruso knows what’s up!

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