Strategic Planning – Understanding the Competitive Value of Your Brand

Brand IS a competitive advantage

A person of the most commonly disregarded sources of competitive advantage is brand. Branding is not just advertising, nor is it merely a catchy name for a company or product. The most important value in a brand is the value that it holds for genuine clients. This value is really complicated and highly-priced to construct – and fragile and quick to destroy. The issues of building and preserving a brand is just one explanation why supervisors the globe over are likely to prevent shelling out much time or cash on branding – specially in smaller companies. This is a disgrace, since a nicely-managed brand is so powerful that it can prevail over nearly any other competitive advantage. This a single reality is the cause why much larger businesses with plenty of managerial horsepower tend to invest a whole lot of time and revenue on branding.

What tends to make a brand important?

Manufacturers are important basically mainly because they induce consumers to be inclined to acquire your product fairly than an individual else’s. In a way, a brand is shorthand for the points the customer can assume from your product. In products and solutions that keep little meaning for the purchaser, this could be well worth much less, but in markets where by the customer invests his or her ego in the obtain of a specific brand, that indicating can be priceless. Let us look at some illustrations to see wherever branding may possibly or may well not be essential.

Very first of all, let us glance at some examples of brands with great pull. These models will sell very well just about any place they show up, for the reason that the shopper associates the brand with features they desire. Illustrations consist of:




Harley Davidson


Apparently, none of these models has universal enchantment, in that not each achievable customer will want the attributes of the brand over their solutions. For example, the Disney brand is used to a lot of goods:

Theme Parks


Accredited goods this kind of as clothing and toys

Computer video games

Time shares

Cruise line

Broadway reveals

Tv programming

In every of these pretty diverse product spots, the Disney brand signifies a thing a minor distinct. For case in point, in concept parks, Disney signifies thoroughly clean, household-oriented, creatively created, high-priced and (to quite a few) crowded. The negative components of the Disney branding in their concept park business are unavoidable – you generally have to settle for the negative with the positive. But the positive aspects are so powerful that tens of millions of persons from about the environment shell out a important part of their revenue to vacation to a Disney topic park.

The Apple brand has a similar tale. Apple carries a quantity of meanings, which include nicely intended, effortless to use, a lot less well-known and highly-priced. As with any excellent brand, this brand has a ton of moi invested in it for some people. This aspect of branding is much more noticeable in pcs because it is significantly additional complicated and time consuming to use a computer system operating procedure that just isn’t the most common (in other terms, Microsoft). Even with this difficulty, Apple has a difficult core of fans who would not consider of working with an additional brand, provided a selection. Clearly, this won’t translate into leading industry share for Apple, but it is a important advantage that has evidently held the Apple title alive when others have fallen by the wayside. Apple’s more recent goods – notable the iPod – have drawn on the positive elements of the Apple brand. The negative features of the Apple brand have been significantly fewer problematic for the iPod mainly because it is competing in a new product region in which market status has not been witnessed as a disadvantage. This is an outstanding illustration of utilizing a brand to grow beyond the main product line.

Why branding is significant in the world-wide market

In an more and more world marketplace, branding can provide two distinctive features that could be handy to you: very first, a “community” brand presents you and entrenched consumer foundation that is extra complicated (and high priced) to displace, and 2nd, a “global” brand can give you a foot in the door when seeking to enter new geographic places. Be forewarned: making a “world wide” brand is high priced, and frequently a “local” brand can be just as highly-priced. Even so, the brand can be a useful offensive resource and defensive device when you are competing with non-area companies.

There is a single reason why “area” brands can be additional expense-helpful, and a great tool for defending your dwelling turf from international level of competition: brand results is developed on 3 essential variables:

1. Knowing the key values in the thoughts of your customer

2. Figuring out how to place the customer’s values into your product or services

3. Proficiently associating your brand with individuals values

Two of these things, comprehending your consumer and associating your brand with values, are very considerably outlined by society. Consequently, someone from outdoors your lifestyle – and this could even be somebody who speaks the identical language from a distinct location – will discover it a lot much more tricky to get an precise examine on what your customer’s crucial values are, and how to convince the purchaser that his product or provider embodies these values. This is not declaring that a foreign competitor can not do this – just that it is a whole lot a lot more pricey and complicated.

How to consider your brand

Objectively evaluating your brand is tough, specifically if you want to set an precise dollar range on it. Luckily, this is normally not needed for fantastic strategic choice producing. Continue to, it really is a great notion to have at least a standard principle of the value of your brand when you are considering strategic options.

The most objective way to examine your brand is to evaluate the outcomes that happen with and without the need of the use of your brand. From time to time this is basic, simply because the way you current market may effectively lend alone to screening different hypothesis about your brand. For instance, a seminar company may well take a look at mailing brochures that characteristic (or don’t feature) unique brands, to uncover out the extent to which one of people models is pulling in attendees at the seminars. Also, if you have the wherewithal, you may go so considerably as to exam selling a “generic” version of your product in the marketplace to see if it can carry the exact same price as your present brand – at acceptable volumes. This is a minimal far more tricky with retail products, as some shops will insist on only stocking brand title merchandise on their shelves. In addition, retail outlets – in particular huge chains – generally need some sort of payment for the use of their shelf space, which helps make retail brand testing fairly expensive.

If testing is out of the dilemma, you can also approximate brand value by searching at the attractiveness and price of competing models with small or no brand energy. If you you should not have an definitely generic “no-title” competitor, it can be difficult to be goal about this – following all, how do you come to a decision which competitor has the minimum brand energy? Also, there might be some confusion about value because there are numerous components to the achievements of a brand:

Brand Sales = (Charge + Margin) * Quantity

If you were to attempt a calculation of brand value, you would be faced with extracting non-brand elements which have an impact on these 3 figures. For case in point, value can go up or down based on operation expertise, management, underlying expense composition, and buying competencies. Margin could be driven by brand electrical power, pricing talent, and ability in the distribution/retail channels. And quantity can be affected by each price tag and margin, brand electrical power, and distribution network, as perfectly as underlying demand for the products and solutions or solutions getting provided.

Even so, at the close of the working day your brand will get you just one of two measurable results: margin or volume. Evaluating your margins to the competition is 1 way to assess the value of your brand, if you choose heed of the caveat about other aspects which may change margin. Comparing quantity is significantly less likely to produce a excellent estimate of brand value, because you can – in quite a few markets – generate higher volumes with no brand value at all by charging reduce charges. This, by the way, is a terrible strategy to be following if you are anxious about less costly international levels of competition, since there are sizeable charges that you simply will not be able to beat your foreign competitors on.

So your brand isn’t really that important – is there hope?

In some situations, organizations run into a “brick wall” when they objectively assess their have brand. This can be brought on by a selection of elements, but the end result is the very same: some makes just really don’t signify just about anything to the consumer, and so do not have any premium in the marketplace. In a natural way, this sort of models offer tiny defense against low-cost overseas competition, and firms that rely too seriously on brand electricity that does not genuinely exist inevitably get into very hot water as international opposition takes advantage of its powerful power – the decrease price – to erode the market place share of domestic competition.

Is there a “crash training course” way to establish brand? Certainly – but it truly is inherently risky and not for the faint of heart. This is for the reason that branding is driven by the brains of our clients, not our wishes. In purchase to construct a solid, positive awareness of your brand in a hurry, you will have to do some thing that stands out. By “stands out” we never suggest “is a bit greater” – we indicate something that is definitely outstanding, or, in other words and phrases “worthy of remark”. Buyers will not make remarks about brands that are a very little better – they remark on variances that they uncover genuinely exciting.

An outstanding example of anything amazing is the Honda Element. This is a definitely distinct design and style in the overcrowded sport utility automobile market. The design and style is, in point, so abnormal that it pretty much in no way made it into production. Marketing people at Honda had been particularly unpleasant that the structure was so various from any other brand in the SUV industry that they wished to scrap it. The designers gained the fight to manufacture a small selection of Things as a “market” product, along with a a lot more mainstream design. By the end of the first year of creation, the Component was outselling the “protected” layout by 5 to 1!

The lesson here is obvious: if you are guiding some savvy competitors, you need to be organized to critically think about strategic options that make you unpleasant. We wouldn’t advocate betting the farm on outlandish new makes – in most scenarios – but we would counsel that owning just one or two just about every few of many years could possibly just push your brand into the direct by giving you a reputation for obtaining edgy, modern items.

Copyright 2007 by Centre for Simplified Strategic Planning, Inc., Ann Arbor, Michigan – Reprint permission granted with full attribution.