Brand and Branding in More Detail

Loyal consumers don’t buy Coca Cola because it’s a sweet tasting brown effervescent liquid.

That it quenches their thirst is certainly a factor but beyond the functional attributes there are many other factors we could call emotional, or that relate to self image, that play a vital role.

Like finger prints, the precise experiential encounter with Coke, or any brand, will never be identical for any two consumers, but there are many factors that are significant across a wide range of consumers.

These include the ability of Coca Cola\'s brand image to conjure up an emotional connection with the consumer and to align with a consumer’s self image through signals and associations, and peer group acceptance. Being fun, trendy and the association with a particular group and lifestyle all contribute to Coke’s enormous success and longevity as a brand.

These aspects contribute to explaining why loyal drinkers choose Coke over other alternatives to fulfil their specific needs, and are prepared to pay a premium to do so.

In this respect Coca Cola is assessed not only on its ability to satisfy physical needs, like quenching thirst and tasting good, but also on the subjective issues just mentioned.

This assessment occurs in the mind (the battleground for brand image and positioning) and involves a value exchange (price), which customers pay in exchange for the perceived bundle of values that Coca Cola provides.

Brands are conceived in the mind, born on paper, yet live in the ‘hearts and minds’ of their supporters.

So what then is a brand? There is a great deal of variance in the understanding and definition of the term.

Many professionals such as lawyers and accountants often view brands solely from the perspective of a trademarked entity.

The American Marketing Association (AMA) defines a brand as a: “name, term, sign, symbol or design, or a combination of them intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of other sellers.”

With respect to the AMA this is a simplistic outward manifestation of brand and does not go nearly deeply enough.

In our view a more holistic view for a successful brand is:

A successful brand is a distinctive identifiable product, service, or place to which, at the very least, a combination of functional and emotional values have been added and perceived by the target market to match their needs most closely. A successful brand includes values that are unique, and communicates these to consumers and other stakeholder through optimal signals and associations.

Brands are valuable assets and account for a significant proportion of the capitalised value of many companies both in Australia and internationally.

According to measurements by leading international brand valuators financial brand value constitutes more than half (sometimes over 80%) the capitalised value of many companies including Disney, McDonalds, Tiffany, and others.

As an example of the absolute value of the world’s top brands, Google had a brand value around $114 billion in 2010, according to Millward Brown.

In the case of ‘for profits’, their ultimate goal is to maximise profits within the structure of their brand model and core values. Unless brand value is optimised this cannot be achieved. In order to optimise financial brand value, brand equity needs to be built, strengthened, and sustained in the face of competition.

The composition of brand equity requires a detailed discussion, but in essence the stronger the brand equity measures like brand awareness, brand salience, brand quality and loyalty, etc, the greater the financial brand value.

This in because the stronger the brand equity, the better the longevity, cash flow and other financial measures that impact present value calculations are. These and other factors all influence financial brand value.

Cash flow is one of the most important determinants of shareholder value. A brand’s cash flow is influenced by four major aspects:

• A price premium as a consequence of the perceived superior value offering.
• Growth rate
• Costs
• Investment required, relative to sales.

Firstly, successful brands are able to command premium prices as a consequence of the value they are seen to deliver. Compare the price of a Nike running shoe to a very similar pair with a relatively unknown brand name. Premium prices therefore enhance cash flow.

Brands that are successful grow faster than weaker brands, again impacting positively on cash flow.

Strong brands usually have lower operating costs as a consequence of economies of scale.

Successful brands also often have a better return on investment as a consequence of their leverage with suppliers, or conversely need to spend less proportionately than weaker brands to achieve the same outcomes, which is a distinct advantage.

In conclusion, it is important to note the difference between brand and branding. We defined a brand earlier in this article.

By contrast, branding is about how you go about establishing and communicating your brand’s value offering and differentiation in people’s minds. It focuses on attempting to influence your target audience to see your offering as providing the best alternative to meeting a specific need or set of needs.

These needs can be functional like supplying a cord free tool to drill a hole in a wall or emotional, like making people believe that they will have a care free buying experience backed up totally by the brand of their choice. Reputation and warrantees can help meet this need.

Alternatively, consumers may have a need to feel special by being a member of a special group, which membership of an exclusive club may provide.

Signals that brands provide through logos, taglines, messaging and in many other ways should all be consistent and combine synergistically to convey the brand image, including the very important brand promise.

It is crucial to understand that for branding to succeed that the brand fundamentals should be sound in all respects.

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Contact Optivance 360 for a no obligation discussion on how we can assist you with all your branding, marketing and communications endeavours in a consulting, non executive management or mentoring capacity, or for any of our other key business services.

This article is for general information and the reader should seek specific expert advice before taking any action.