The Enduring Value Of Brands
A recent listing of BrandZ ranked the Top 100 Most Valuable Global Brands for 2011. The list illustrates how important brands remain in our society, in business and in our lives. In the U.S., however, given the tough economic times and intense competition, private labels and store brands continue to gain share of market in most categories. And they are doing it faster than the well-known brands.
The reason some consumers overlook this is that stores have created their own brands by gaining exclusive rights to a recognizable brand that was struggling to survive alone. Major Walmart, Target, and Sears have dominant distribution of certain flat screen TV brands, like Vizio. Well-known designers are selling rights to their labels to major chains, like Liz Claiborne at JCPenney. Older familiar brands find their way onto “special models” aimed at price competitive niches—Polaroid, Sylvania, etc.
Does this means brands are no longer important? Branded products play an important role, especially in a retail setting. They provide a value reference point, from which private labels and store brands can be positioned. Without this brand value reference point, consumers struggle to judge the relative worth of even the best store brands/private labels. Brands also add confidence in shoppers’ minds that the store offers a complete value assortment.
Retailers who have used solely store brands have done poorly. Sears, whose “legendary store brands” have been among the most powerful, still had to add national brands in some categories. Only where consumer expectations are to find only store brands, can a retailer do well without well-known brands as value references. An exception to this is TV retailing, where QVC has successfully created several of its own brands—but this is uncommon without large media expenditures.
Consider the influence and images of the top ranked brands: Apple, Google, IBM, McDonald’s, Microsoft, CocaCola, AT&T, and Marlboro are the top eight in the BrandZ ranking—all originated in the U.S.—and now all are global brands. Each has a strong, clear promise that is immediately recognizable. And each has a loyal group of customers, who choose that brand over others because of its unique products, its brand image and familiar association with satisfying results.
The other characteristic most major brands share is that they are often higher priced than their private label competition. Why? Because it costs money to support and build a brand.
Since brands are a shorthand name for a promise and a relationship, the promise is one of particular value package that brand offers consistently. The relationship is one of loyalty by those who buy that brand and are pleased with what they bought—and continue to do it over a long period of time.
Brands are not a guarantee of the right to charge extra for anything. If the brand’s value is worth more money, then a price premium is appropriate. However, just because a company spent a lot of time and money getting a brand placed in distribution and in the minds of consumers has little relationship to what prospective buyers think it is worth. To justify a brand premium the value must be worth it—that’s it—no excuses.
Build brand value, build a relationship, never break the promise of what a brand stands for, and that brand will last a long time. Some brands even outlive the value package they stand for, until the products or services fail in the competitive marketplace and go away. Or, someone who really understands brands buys the rights to a good, old brand that has been damaged and rejuvenates it into what it once stood for.
Changing what consumers think a brand stands for is a fool’s errand. Once solidly entrenched in a consumer’s mind, the brand and what it stands for become inextricably linked. That is why line extensions done to capitalize on a brand’s image and relationships are risky, sometimes fail, and usually dilute the brand. How many flavors of Coke or formulations of Tylenol can a consumer really lock into their mind? Not too many.
We used to think that it took ages to build a brand, but the Internet changed that: No. 2 Google, No. 14 Amazon.com, and No. 35 Facebook, were unknown two decades ago. Others like No. 10 GE has been around for a century—No. 32 Gillette and No. 38 Disney brands have endured for over half a century.
The familiar icons associated with brands are often recognized the world over and transcend language and culture differences: No. 1 Apple’s logo, No. 57 Nike’s swoosh, McDonald’s “golden arches” and CocaCola’s script logo immediately light up parts of consumers’ brains with familiar images of the value each of them represents.
Whether old or new, powerful brands are valuable and if managed well, supported properly, and “cared for” they last a long, long time. Most of all, as BrandZ study shows that brands and the icons associated with them have huge economic value. Use a brand wisely, care for it properly, and that brand will be one of your powerful and enduring assets.