Understanding the Competitive Value of Brand – Part 1

Understanding the Competitive Value of Brand

Understanding the Competitive Value of  Brand – Part 1.   In this part we will introduce the series and discuss What makes a brand valuable?

One of the most commonly overlooked sources of competitive advantage is brand. Branding is not just advertising, nor is it simply a catchy name for a company or product. Its most important value is the value that it holds for actual customers. This value is very difficult and expensive to build – and fragile and easy to destroy. The difficulty of building and maintaining a brand why managers tend to avoid spending time or money on branding. This is especially true for smaller companies. This is a shame, because a well-managed brand is so powerful that it can overcome almost any other competitive advantage. This is why larger companies spend a lot of time and money on branding.

What makes brands valuable?

They are valuable because they can cause customers to be inclined to purchase your product rather than someone else’s. In a way, it is shorthand for the things the customer can expect from your product. In products that hold little meaning for the customer, this might be worth less.  In markets where the customer invests his or her ego in the purchase of a particular brand, that meaning can be priceless. Let’s look at some examples to see where it may or may not be important.

First of all, let’s look at some examples of brands with tremendous pull. These will sell well just about anywhere they show up, because the customer associates the brand with qualities they prefer. Examples include:

Disney
Nintendo
Sony
Harley Davidson
Apple

Interestingly, none of them has universal appeal, in that not every possible customer will prefer the attributes of the brand over their alternatives.

                                                              The competitive value of Disney’s brand

For example, the Disney brand is applied to many products:

Theme Parks
Movies
Licensed products such as clothing and toys
Computer games
Time shares
Cruise line
Broadway shows
Television programming

In each of these very different product areas, Disney means something a little different. For example, in theme parks, Disney means clean, family-oriented, creatively designed, expensive and (to many) crowded. The negative elements of the Disney branding in their theme park business are inevitable – you always have to accept the negative with the positive. But the positive elements are so compelling that millions of people from around the world spend a significant portion of their income to travel to a Disney theme park.

                                           The Competitive Value of Apple’s Brand

Apple has a similar story. Apple carries a number of meanings, including well designed, easy to use, less popular and expensive. As with any great brand, this one has a lot of ego invested in it for some people. This aspect of branding is more visible in computers. Apple has a hard core of fans who wouldn’t think of using anything else. This doesn’t translate into top market share in the computer market. But it has created a niche specialty market that is completely separate from the computer marker that Apple owns.  The other computer makers are left is a cut-throat commodity market.

Apple’s newer products – notable the iPod – have drawn upon the positive elements of the Apple brand. The negative elements of the Apple brand have been far less problematic for the iPod because it is competing in a new product area where niche status has not been seen as a drawback. This is an excellent example of using a brand to grow beyond the core product line.

In the next post of this series, we will discuss Why branding is important in the global marketplace.

Robert Bradford is President/CEO of the Center for Simplified Strategic Planning, Inc.  He can be reached at rbradford@cssp.com.

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