Brand Strength Can Create Tangible Value For Your Start-Up
Below is my first post as a contributing writer for the blog collegemogul.com. I have recently decided to write once a week for the site primarily on topics relating to the consumer and powerful brands. You can find the original post here.
————————
I never really understood the power of a brand until joining Virgin Group. It’s not something that’s traditionally discussed during the early stages of building a start-up, and as a founder, you generally push this to the back burner and focus on more important things. Given where I sit now, and Virgin’s intense focus on building recognized consumer brands around the world, I have to say this deserves as much of a discussion during the early stages of a company’s life cycle as the product, operations, marketing, etc.
Brand building, when done effectively, creates true distinctive value for those organizations who undertake it. Brands are one of the few sustainable, non-replicable forms of competitive advantage and unlike most assets, a brand becomes more valuable with increased usage. For my first post to the CM readers, here are 4 ways that Brand Strength can convert to add incremental value to your startup. Keep these in mind when building your next company…
1. Increase Trial – Simply put, Brand Strength will increase consumer trial. A trusted brand will almost always see a demand curve shift as volume becomes less price driven than one would imagine. Think of any brand that you trust and ask yourself if you would, in general, try alternatives products from that brand? I know I would.
2. Increase Perceived Value – Brand Strength also gives consumers a higher perceived quality-to-value ratio. As consumers, we believe that a product or service with Brand Strength must be higher value than like competitors with no Brand Strength. Don’t believe me? Look at earnings multiples of similar publicly traded companies and you will almost always find ones with strong brands trading above those without any Brand Strength.
3. Increased Marketing Scale and Effectiveness – Strong brands have lower cost of customer acquisition and generate more free media than competitors. There are countless examples of companies where this is the case and in my opinion, this is the most obvious benefit of building a strong brand.
4. Increase Loyalty – Going hand in hand with increased trial, Brand Strength increases customer satisfaction and reduces churn. Great brands have the ability to create incredibly loyal customers who will keep coming back time and time again. In addition, loyal customers are more accepting of company problems and will usually put up with flaws longer than your average person.
