Branding is a major contributor to the success of a business or product.
Strong branding means that a business is recognisable and most of all trusted
by consumers. This video is going to explore the 3 key benefits of building a strong brand
and how brands such as Nike, Kellogg’s and Bentley have benefitted from strong branding.
But first… what is branding? Branding refers to the deliberate actions you take
to influence people’s perception of your product or service and it is a driving factor in why they
keep using your business time and time again. Many things form part of a businesses branding strategy
anything from advertising to logos and even customer service
but strong branding is essentially getting your brand to be at the forefront of peoples minds
when wanting a service or product that your business offers.
Being in the minds of your customers through strong branding comes with three key benefits.
The first benefit being that it adds value to your business.
Strong branding and having a well-recognised, trusted brand is a huge asset to the business as
it is often the reason customers purchase your product or service over similar alternatives.
For this reason a strong brand adds value to the business as it means people believe in what you do
and trust the products or service you provide in comparison to your competitors. This value
added by strong branding in turn creates loyal customers that are advocates of the brand and
purchase your products more frequently. Making the brand more valuable than an unbranded substitutes.
Take these two item for example. One of the items is plain footwear and the
other is from the globally known brand Nike. Both are made from similar material and look
similar. However the unbranded trainer sells for roughly £12 and the Nike one is roughly £120.
This is a 10 times price increase. Nike has the ability to do this as they have added value to
their goods through branding. People perceive Nike footwear to be better quality, more prestigious
and more valuable because of the billions of dollars they have spent to build this brand and
its trusted image. Nike spends billions of dollars to be associated with winning and sponsoring top
flight teams in the premier league, NBA and NFL and also high profile athletes such as Michael
Jordan, Ronaldo and Serna Williams. This is all done to create an emotional connection with their
customers and to be perceived as a winning brand. This effort to build a strong brand
has added value to their clothing and footwear in the eyes of their customers in comparison to rival
brands making the brand itself worth billions. The same is also easy to see even with everyday
items such as breakfast cereal. Why do people pay up to 5 times more for a box of Kellogg’s
cornflakes compared to an unbranded box of cornflakes containing essentially the
same product. Because Kellogg’s has added value to their cereal through branding.
People will pay more for Kellogg’s for the perceived quality, consistency and trust a brand
like Kellogg’s has managed to put at the forefront of consumers minds through strong branding.
The next benefit of strong branding goes hand in hand with added value and it is the ability to
charge premium prices. Once the business has added value to their product through strong branding, It
gives them the ability to charge a premium price, especially in comparison to similar unbranded
products. This is a huge benefit to a business as seen in the previous Nike and Kellogg’s example
as they can charge significantly more based on the strength of their brand.
This results better profit margins & increased revenues due to the business
investing in building a strong brand image. Another great example of a brand that can
charge premium prices because of strong branding is Bentley. Bentley have built a strong brand
image around, quality, luxury and exclusivity. People are willing to pay hundreds of thousands
to millions of dollars to drive around in a Bentley because of what the brand represents to
them and how the brand makes them look. Bentley can charge premium prices in comparison to many
other car manufactures because they have invested in persuading customers to think of their brand
as being luxury and exclusive and something that luxury car buyers desire. Other car makers
have the ability to replicate the look of a Bentley but without the branding of Bentley
these items could not sell for anywhere near the price tags of a Bentley as the branding
and what the brand represents is what motivates people to pay premium prices for their cars.
The final benefit of strong branding is that it reduces price elasticity of demand meaning that
when a product of a well-known brand changed the demand for the product stays relatively stable,
For example if Nike were to raise their prices by 10% (which is quite a steep increase in one
go) then it is very unlikely that the demand for their product would decrease
due to the strength of its brand. People would no doubt still queue around the block to secure
a pair of their latest sneakers despite a price increase as the brand still holds an emotional
and reliable place in the minds of their customers. This is beneficial as it means
the vast majority of loyal Nike customers would not switch to Adidas if Nike raised their prices.
This is a major benefit of having strong branding as people feel a connection to your product
unlike a product with weak or no branding, where changes in pricing (mainly increases) will see
customers switch to a similar alternative as they have no affiliation or loyalty to the brand.
Branding is about building a feeling of trust and belief in the product
through the image and message your business puts out. If you can create a business
with strong branding that people trust then you are adding value to the business,
resulting in the ability to charge premium prices for your products or service
and reducing the amount demand fluctuates with changes in pricing. Good branding is essential
in creating customers that are loyal and believe in your brand. Thanks for watching the video,
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