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Six Ways A Strong Brand Improves Profits
 Six Ways A Strong Brand Improves Profits

One of the most challenging conversations you will ever have is to explain the power of brand and branding expenditures in a small business context. Most of us find the notion of "brand" hard to define though we know a superior corporate brand when we see one. How does a strong brand make a company better off? We list six common ways a strong brand can improve profits to answer this question.

  1. A strong brand helps to increase sales. Which products are easier to find, branded or off-brand products? Walk through any store looking for a particular kind of product. Which product are you drawn to? The branded one, of course. If customers can easily find the products they need from a specific brand, they are more likely to purchase those products than if they have to search for them. This behavior occurs because customers often prefer convenience over other factors, such as price.
  2. A strong brand helps to attract new customers. A strong brand can increase sales by generating positive word-of-mouth. When customers enjoy a positive experience with a brand, they spread the word with friends and family. This word-of-mouth can be extremely powerful in increasing sales and making more people aware of the brand and its products or services. A strong brand makes the referral process more manageable by making your brand a "known quantity."
  3. A strong brand drives customer loyalty. Customers loyal to a brand are more likely to continue buying that brand's products even when other options are available. Companies can develop customer loyalty in many ways, such as providing excellent customer service or offering high-quality products. Brand loyalty is precious because we tend to be more forgiving of products or services with strong brands. For example, let's take the case of a new waiter in a restaurant you love who messes up your order. You are far more likely to forgive this one slip than at a restaurant you are trying for the first time. That response is in part due to the brand of the restaurant you love.
  4. A strong brand can help increase a product's perceived value. Strong brands achieve higher perceived value by making their product or service appear more exclusive, higher quality, trustworthy, searchable, or memorable. This perception of value, in turn, can help with point-of-sale conversions and increase sales.
  5. A strong brand reduces marketing costs. Customer loyalty, greater awareness, a better definition of customer preference, and higher customer lifetime values are all reasons a strong brand reduces marketing costs (or makes the same marketing spend more effective).
  6.  A strong brand helps companies connect emotionally with customers. Customers who feel emotionally attached to a brand are more likely to purchase its products, even if cheaper alternatives exist. Marketers can create an emotional connection by aligning the brand with the customer's values. To align with customers' values, marketers carefully research their target market—studying customer demographics and interests. Then, they make life better for those customers by ensuring their products or services solve a problem their target market cares about. In advertising, marketers use language that resonates with their target market and is authentic and transparent. Customers are more likely to trust and respect a brand if it is genuine and honest!

Brand equity, the corporate staple measurement of brand strength, is an acknowledged measure of the value of a brand. Brand equity considers many of the variables highlighted above: customer loyalty, name recognition, customer awareness, and market share. These variables, however, are often difficult to measure in a small business context - especially with little or no market research budget. What to do? Instead, take the first, most crucial step. Think about concrete actions you can take to learn what your customers think of your brand, then work to improve it by working through the list above. We'll share ideas on ways to enhance brand equity in upcoming posts.

Happy brand building!

 








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