The Importance of Branding

The Importance of Branding

Many people frequently misuse the term “brand” by interchanging it with advertising, marketing, naming or a design. These improper applications have caused much confusion as to what branding is and how it works.   As such, “brand” has become a bit of a buzzword. But, what does it really mean and how does it work? Where did all start and how can it create value? To benefit from the effects of branding, a common understanding of “brand” must first be established.

Invented by P&G

Procter & Gamble invented the business strategy of “Brand Management.” Brand management focused attention on product specialization and differentiation instead of business function. By distinguishing the qualities of each brand from all other P&G brands, each would avoid competing with one another by targeting different consumer markets with a different set of benefits. This was especially important in product categories that the company manufactured several competing brands, like laundry detergent.
Over the years, P&G and the companies that embraced the brand management concept became extremely successful.  The most successful brands—those that lead their category and produced the highest ROI—used what they termed the Unique Selling Proposition or “USP.” 

The concept of “USP” has three guiding principles:

• The proposition must be clearly stated to the consumer: “Buy this product, and you will get this specific benefit.”
• The proposition itself must be unique. It must express a specific benefit that competitors do not, will not, or cannot offer.
• The proposition must be strong enough to pull new customers to the product.

Brand Positioning

In the late 60’s and early 70’s, the concept of “brand” began to take on new meaning, including the larger concept of image and values. Al Ries and Jack Trout captured this evolution in their Harvard Business Review article and later authored a book by the same title: POSITIONING: The battle for your mind. Their concept stated that it was not product superiority that mattered, but rather consumers’ perception of a given brand that paved the road to success. This concept was dubbed “brand positioning” and to this day it remains the standard for developing successful brands.

In practice: A brand is an experience living at the intersection of promise and expectation. Here’s how it works. A company expresses its brand as a promise, both overt and implied. That promise lives in consumers’ hearts and minds as an expectation. When brand promise and consumers’ expectations reflect one another, the brand holds tremendous value for both parties. 

Consumers use brand as an identification tool

Without brands, the marketplace would be overwhelming. Imagine a world without brands: You’re out of ketchup. You run to your local store where you are met by a wall of red bottles with simply the word “ketchup.” Without brands there would be no signals to illustrate the differences between the vast array of choices other than size and price. No name, no unique package, nothing! So which one do you choose, why and how?

You can quickly see how making a purchase becomes an ordeal and making a repurchase of a product you liked would be next to impossible. However, we live in a world where consumers have a system for differentiating products and services as well as tracking their experiences. Brands provide a method of classification, differentiation and identification that allow you, as the consumer, to simplify your ketchup buying decisions. 

Branding is managing customer expectations

Branding is not about getting people to choose your offering over the competitions. It is the act of managing consumers’ expectations so as to condition your target audience to see your offering as the only answer to a specific need.

By defining a realistic and manageable promise of what the brand owner will deliver and what consumers can expect of the brand, branding has become the backbone of modern business strategy. “Brand” drives consumer purchase decisions and affects nearly every functional area of a business. With product offerings converging into sameness, companies are viewing “brand” as the only avenue of differentiation.

Branding defines market position (brand strategy) and, through a series of signals, articulates that position as promise (brand positioning). When strategy and positioning work as one, brands obtain sustainable and favorable market positions. This has shifted the task of brand building and management to the primary business strategy.

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Excerpt from Eric Schulz’s new book “The Smart Marketer’s Toolbox” now available on Amazon.com.

Eric D. Schulz