The Power of Brands

Consider for a moment what consumers' reactions would be to a pair of running or basketball shoes if the Nike name or "swoosh" was taken off of them or to a bottle of cola without the Coke or Pepsi name. Would a Godiva chocolate by any other name taste as sweet? Do plain blue jeans carry the same cachet as those bearing the Diesel or Calvin Klein label? There was a time when consumers were proudly declaring their independence from the appeal of name-brand names by favoring the more practical generics and private labels. However, in today's marketplace the appeal of brand names is greater than ever, and marketers recognize that building and reinforcing the image of their brands is a key to profitability and growth. Many companies now know that brand equity is as important an asset as factories, inventory, and cash because strong brands have the power to command a premium price from consumers as well as investors. The table below shows the world's most valuable brands as measured by Interbrand Corp., a leading brand consultancy company.

There are a number of reasons why brands are more important than ever before. Consumers have a tremendous number of choices available in nearly every product and service category but have less and less time to shop and make selections. Well-known and trusted brand names are a touchstone for consumers and help simplify their decision-making process. Branding guru Larry Light notes that the key to all successful brands

Source: Interbrand Corp., J.P. Morgan Chase & Co.

is that they stand for something and are much more than simply trademarks or logos. A brand is a promise to the customer. As one executive has stated: "Consumers don't go shopping for a 24-valve, 6-cylinder, 200-horsepower, fuel-injected engine. They shop for a Taurus, a Lexus, a BMW, a Jeep Cherokee, a Hummer, whatever.They shop for well-known, trusted brands."

Having a strong brand name and identity is also important to companies competing in the global economy as they must reach customers far from their home base. Companies such as Nokia, which is based in Finland, or Samsung, which is headquartered in South Korea, rely heavily on markets outside their home countries to sell their cellular phones and other electronic products. A strong brand name is also important for companies entering new markets or introducing new products. For example, Boeing recently began its first-ever corporate branding campaign as part of its overall strategy to expand beyond the commercial-aviation market and into new industries such as military aircraft, rockets, satellites, and broadband communications. Everything from Boeing's logo to its decision to relocate its corporate headquarters from Seattle to Chicago has been devised with the Boeing brand in mind.

While marketers recognize the importance of brand building, many are finding it difficult to commit themselves to the effort as the global economy slows and budgets tighten. Media sales staff, advertising agencies, and other marketing communications specialists have been doing their best to convince companies not to cut back on their spending but, rather, to continue to support their brands. They point to the last economic downturn, in the early 1990s, during which private-label brands leaped to prominence when many packaged-goods companies slashed their advertising budgets. Today, while many companies are avoiding the temptation to cut back on advertising and promotion to help meet earnings forecasts, others have shown less willingness to support their brands. Experts note that these firms run the risk of losing their pricing power and, more important, their connection with their customers. Moreover, they run the risk of losing market share to well-funded competitors that are eager to grab market share from weaker rivals. As marketing professor Kevin Keller notes, "People who starve their brands now will be paying in the future."

Sources: Gerry Khermouch, "The Best Global Brands," BusinessWeek, Aug. 5, 2002, pp. 92-94; Gerry Khermouch, "Why Advertising Matters More than Ever," BusinessWeek, Aug. 6,2001, pp. 50-57; Scott Ward, Larry Light,and Jonathon Goldstine,"What High-Tech Managers Need to Know about Brands," Harvard Business Review, July-August, I999,pp. 85-95.

The world's 10 most valuable brands, 2002

2002 Brand Value

Rank

Brand

(Billions)

Was this article helpful?

0 0
Classified Marketing Secrets

Classified Marketing Secrets

This sweet little campaign raked in 161 subscribers and 1350 in revenue, all for less than 25! Wanna know my secret? I want to level with you right here, right now. I'm really super lazy! No, seriously! I don't like putting out more effort than I absolutely have to! I've been just getting by for most of my life and in all honesty, it hasn't got me anywhere until recently. Very, very recently.

Get My Free Ebook


Post a comment