This summer, I have the chance to teach my first comprehensive course on brand strategy.
I’ve spent much of my career helping companies develop and execute brand strategies — from my early days as a consultant, through my time at an ad agency, to my years at Google. I’ve also led several seminars on the subject. However, this will be the first time I can dedicate a full six weeks to the topic (and I’ll follow it up with a fourteen-week course on Digital Brand Strategy in the fall).
I’m thrilled, and I want to deep dive into some of the key issues surrounding brand strategy in this newsletter. Branding is one of the most misunderstood and complex topics in business, all too often leading to mistakes.
We all think we know what a brand is — it’s a logo, a name, a catchy slogan, perhaps even a jingle.
But a strong brand goes further. It conveys not just what a company produces but what it stands for. It shapes consumer perceptions of a product before they even try it and can transform a one-time purchase into lasting loyalty.
This week, we’re exploring the fundamental question: What is a brand, and why does it matter? Because understanding the power of brands to simplify, differentiate, and connect is where everything begins.
The Origin of a Brand (Yes, It Involves Cattle)
The term “brand” originates from the Old Norse word brandr, which means “to burn.” In ancient times, people would brand their livestock with a mark to denote ownership, serving as a signal—a shortcut and a promise of origin.
While this function remains, today the signal isn’t found on cattle but on sneakers, coffee cups, streaming services, academic programs, and TikToks.
The American Marketing Association (AMA) describes a brand as a “name, term, sign, symbol, or design, or a combination of these, used to identify the goods or services of one seller or group of sellers and to set them apart from competitors.” However, the essence of a brand goes beyond this definition. It includes the mental associations consumers build between a brand and its key attributes, such as product features, benefits, and values.
In essence, a brand represents the collective thoughts, feelings, and knowledge consumers have about a particular offering. An outstanding brand communicates not only what a company produces but also what it stands for.
Why Brands Matter: Benefits for Consumers and Firms
Strong brands are powerful tools that provide significant advantages for both consumers and the organizations behind them.
For Consumers, brands:
- Identify the source of a product or service, making it clear who is offering it.
- Simplify purchase decisions by acting as a shortcut in a crowded marketplace. A familiar and trusted brand reduces the perceived risk and effort of choosing.
- Reduce risk by conveying a certain level of expected quality and performance, providing confidence in their purchase.
- Offer symbolic value, communicating aspects of the consumer’s identity or aspirations. Think of brands like Nike or Patagonia, which signal more than just their products.
For Firms, strong brands:
- Differentiate offerings in a competitive market, allowing them to stand out and communicate their unique value.
- Command price premiums due to their established equity and perceived higher quality compared to less established competitors.
- Foster customer loyalty, leading to repeat purchases and positive word-of-mouth as a result of positive experiences.
- Facilitate brand extensions, allowing a well-respected brand name to be leveraged for new products or services with a higher chance of consumer acceptance. Consider how Dove extended from soap to deodorant.
- Build shareholder value, as brands are increasingly recognized as crucial intangible assets contributing significantly to a company’s overall worth. Brands can constitute over 60% of a company’s intangible value.
In the competitive and connected market of today, having a robust brand is crucial for both survival and success. Strong brands stand out amidst the clutter, offering clarity and confidence to consumers overwhelmed with options. In the digital era, a brand’s reputation can swiftly be made or ruined, which makes having a clear and consistently communicated brand message more important than ever.
A robust brand serves as a strategic asset, enabling companies to manage market challenges and avoid competing solely on price.
Introducing Brand Equity: The Power Behind the Name
The foundation of a successful brand is its brand equity. Brand equity consists of the assets and liabilities associated with a brand, including its name and symbol, which can increase or decrease the value a product or service offers to a company and its customers. In essence, it represents the extra value that the brand name brings.
According to David Aaker, the core components that contribute to brand equity often include:
- Brand Loyalty: The attachment a customer has to a brand. Loyal customers reduce marketing costs and provide a steady revenue stream. High loyalty levels can serve as a barrier to competition.
- Brand Awareness: The extent to which consumers recognize or recall a brand. Awareness increases familiarity, which can lead to trust. It also anchors associations that define the brand image.
- Perceived Quality: The customer’s perception of the overall quality or superiority of a product or service. It influences purchase decisions, brand positioning, and pricing strategy. Perceived quality is often more impactful than actual quality.
- Brand Associations: The mental connections consumers make with the brand — including product attributes, organizational values, user imagery, symbols, and emotional benefits. These associations create a rich brand identity and help differentiate the brand.
- Other Proprietary Brand Assets: These include patents, trademarks, channel relationships, and other legal protections that can provide competitive advantage and maintain brand strength.
By measuring and strategically managing these components, firms can build and sustain strong brand equity, leading to a variety of positive outcomes.
Understanding Brand Benefits: Connecting with Customer Needs
To build a brand that resonates, it’s essential to understand the benefits consumers associate with it. Successful brands root their identity in these benefits. These benefits typically fall into three key categories:
- Functional Benefits: These relate to the tangible performance and practical aspects of the product or service, addressing basic needs. Examples include reliability or specific features.
- Emotional Benefits: These appeal to the feelings and emotions a consumer experiences when using the brand, such as feeling exclusive or safe.
- Self-Expressive Benefits: These allow consumers to communicate their self-image, values, or aspirations through the brands they choose. The degrees you offer your students provide this benefit.
Often, the strongest brands effectively blend all three types of benefits.
Looking Ahead
This week, we established the basics by defining what constitutes a brand, recognizing its significance, and introducing the ideas of brand equity and brand benefits.
Next week, we’ll delve further into defining brand identity and examine Aaker’s Brand Identity Planning Model. We’ll start to explore the process of crafting a clear and inspiring brand identity, which is essential for all your branding efforts.
In the meantime, consider the brands you encounter daily. How do they fulfill your functional, emotional, and self-expressive needs? What aspects shape your understanding and perception of their brand equity? Reflecting critically on these real-life examples will reinforce the ideas we’ve discussed this week.
Until then, Keep Analyzing!
