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Print : The Value of Strong Brands

Updated: Feb 10, 2021

excerpted from FrogDog

Branding takes effort and expense. But what do you gain?

Higher Price Points

Charging higher prices and getting less price pressure sounds nice, right?

People pay more for something they perceive has a higher value—and often the perceived value is tied to the brand.

A strong brand 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)

  • 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

Partly 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.

Market Protection

Strong brands also protect companies in turbulent and recessionary markets. No company is immune to a serious financial crisis, but strong brands are more likely to survive them; the companies that struggle the most are the ones with the weakest brands.

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.

This is particularly true in business-to-business markets during rough times (like right now). Business decisions are under greater scrutiny, and in recessionary times, executives are less willing to take risks and will work with company brands they know.

The same dynamic applies to consumer sales. People are much more inclined to buy one “good” thing in many product and service categories rather than something they feel could fail or disappoint — per the adage, “You get what you pay for.”

Reduced Competition

Market domination comes with a strong brand. Who is going to compete with Facebook? My Space quickly perished. Google’s attempt to take on Facebook with Google+ also failed. More than any other company, Google should have been able to rival the social networking giant. However, Facebook is so entrenched that even Google had to throw in the towel.

Well established brands make it extremely painful for competitors to enter the market. In fact, a predominant brand in a category will often discourage market entrants entirely.

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 is notable and exciting. Who would not like to have Google or Tesla on his or her resume?

Well branded companies will find it easier to hire top-notch candidates and will find more favorable terms from suppliers and partners. A strong brand improves the company’s value proposition for internal and external stakeholders alike.

Increased Opportunities

And because of the increased value of working with a name brand, companies that have them will find they are offered increased and 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.

So, you are a small or startup company. How do you build a strong brand? That is for next time…

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