Do you know Apple sits at the top of the world’s best brands list with a total brand value of $214.8 billion? The tech giant is followed by Google, that has a brand value of $155.5 billion. The only reason that Apple, Google, or other similar brands have been able to reach where they are is because of the power of branding.
According to the Small Business Association, 30 percent of the businesses fail within the first two years, and 50 percent in the first five years. While there may be multiple factors that contribute to these statistics, such as lack of funding or a plan, absence of good marketing strategies also plays a pivotal role.
Good marketing goes way beyond advertising; it focuses on experience and builds a brand. Here is how branding can help your business.
1. It Creates an Impression
There is no one definition of branding. For some, it is limited to professional logo design, and consistent colors only, but those who have got the hang of it know that it is every interaction that you have with your customers.
They say, first impressions are the last impressions, and it is true as per a survey, which showed 48 percent of the consumers think that first time purchase is the best time to earn their loyalty. It gets difficult to get back a customer after the first bad encounter.
The ‘Secret’, an app that lets you post anonymous messages, was launched with a lot of enthusiasm. The company was able to gather $35 million from venture capitalists as well. However, the app failed miserably because when people logged on to it, they didn’t find the interface appealing. Moreover, there was no system to report cyberbullying.
2. Impacts Purchase Intention
According to Lucid Press, consistent branding bumps a company’s revenue by 23 percent on an average. It is because branding is built on two major blocks: repetition and consistency. When consumers are repeatedly shown stimuli, they start recognizing it, which subsequently increases the likelihood of repurchase.
The fig below is an analysis conducted on the factors influencing the intention of smartphones repurchase. The study depicts that companies need repurchases to maintain market share, and brand awareness has a significant impact on repurchase intention.
3. It Serves a Greater Purpose
Industrialization destroyed our planet. It polluted our water, air and unfortunately, nothing could be done at that time. Business dynamics, however, have changed today. Social media has given customers a voice, and they can kill a brand overnight for being irresponsible. To survive this ethical era, a company does not need to toot its own horn all the time; it needs to stand for something bigger because people will penalize it.
Dove has very cleverly associated itself with natural beauty. While other brands kept promoting fairness and glamour, Dove focused on common women and promoted a cause. The brand aims to be “an agent of change to educate and inspire girls on a wider definition of beauty and to make them feel more confident about themselves.”
Dove research found out that only 2 percent of the women think that they are beautiful. Subsequently, it launched the Dove Self Esteem Project, whereby Dove created educational programs and activities that inspire women to reach their full potential. Its efforts have made it one of the most popular beauty products.
4. It Creates an Emotional Bond
Customers with high brand loyalty are said to have three times higher lifetime value. When a business invests in consistent branding, customers no longer think of it as a firm that is trying to gain profit by selling its products. Rather, they associate with the company and in the best scenario form a community with a strong sense of belonging.
The best example of a brand that leverages an emotional connection is perhaps that of Harley Davidson. The brand is no longer just about motorcycles, rather it stands for freedom and individualism. When the company first started, it could not make an impact as high quality, low price Japanese bikes flooded the market. However, Harley Davidson was quick to realize the power of branding. Instead of just selling bikes, the company started selling emotions and worked on relationship-building strategies.
Harley Davidson set up a group HOG, and when someone purchases a Harley Davidson, they automatically become associated with the group. The company connects all Harley owners who help each other with all sorts of bike-related issues.
5. It Gives You the Benefit of Doubt
The purpose of branding is to build a company that people love as it’s the essence and the art of customer loyalty. And when people absolutely love a brand, they become its advocates. Consequently, they are more forgiving and let go of any minor mistakes that a company may make. It is inevitable that a company will make a blunder, and when it does instead of slamming it immediately, people wait to hear the brand’s side of the story.
Let’s take the case of Pepsi. When the soft drink brand launched its ad with Kendall Jenner, it was slammed by people for being insensitive towards racial equality. Pepsi was quick to apologize and immediately issued a statement: “Pepsi was trying to project a global message of unity, peace, and understanding. Clearly, we missed the mark, and we apologize.” Due to its strong brand equity, Pepsi was easily able to rebound from this incident without facing much loss.
Netflix, on the other hand, did not focus on building a brand initially. It was all about low prices and getting as much sign-ups as possible. However, when Netflix hiked its prices a bit, it had to face a backlash, and unlike the case of Pepsi, its action was not forgiven easily. Netflix lost 800,000 subscribers in one quarter, and its stock price dropped by a whopping 77 percent.
The content company tried hard to recover from this fall, but it took a few years. The company had to change its strategy from being just a service that gives access to content at low prices, to a place with quality content that is not available anywhere else.
The aim of any company is to improve its bottom line, and branding can help with that, but branding cannot make up for poor product or service. A business can spend a lot on CSR activities or advertising, but if the product doesn’t perform well people are going to leave. You want to become the next Apple or Nike, get your basics right.