For many successful companies, brands are their most valuable asset. Trevor Choy from Choy Lawyers explains how they identify and develop their brands from an idea into a million dollar value.
One of the most profitable things a businessperson can do is to work on building a valuable brand.
It is precisely what consumes Sir Richard Branson when he works on expanding the Virgin Group. We would estimate the Virgin brand to be worth billions of dollars if Branson were to sell it now. Although we are not aware of any recent valuation of the Virgin brand, 2001 valuations by brand consultancy Interbrand of Fedex, Pampers, Carlsberg and Absolut - all less known than Virgin - range from US$1 to 2 billion.
Size does not matter, and small businesses also need to build brands. If you want to sell your business one day for a large amount of money, focus on your brand.
Previously, businesses used to think of "building up goodwill". Although goodwill is a related concept, goodwill itself is difficult to define and turns business into a game of chance, one which is out of the control of the business managers. Branding is a far more scientific and logical process which delivers real, measurable results.
The smartest businesspeople know that the fastest way to make money is to focus on building up their brands. They do not leave business success to chance.
There are essentially four steps to building successful brands:
- Identifying the brand
- Work out how to communicate the brand to consumers
- Protecting the key elements against copying
- Using the brand consistently without exposing it to loss
Let's start with identifying the brand
A brand is basically a promise that you make to the customer. It may be a promise of quality, price, tradition - any number or combination of attributes. But it is based on a consistent promise, attributes which you can always deliver. Try thinking about your own business and filling in this sentance:
"If customers buy (my brand), they will always _________________________"
If customers buy Tag Heuer watches, they will always end up with a watch that is sporty.
If customers buy Swatch watches, they will always get a funky, trendy watch at a reasonable price.
These are examples of what the Tag Heuer and Swatch brands stand for. If you have to choose between Swatch (incidentally, the Swatch brand is valued at $1 billion) and Tag Heuer, you will probably decide firstly whether price is important to you and whether you want a trendy watch or a sporty one.
Customers will choose the brand that represents the attributes that they want.
Why do customers do this?
Because they normally know a lot less about your product than you think.
When you go to the supermarket to buy soap, are you an expert on the best type of soap to buy? Do you know how to choose from the many varieties on display? Do you know which type of soap is better for your skin? If so, do you know which companies produce consistent quality? Brand A may have a great formula, but if their machines are outdated and badly maintained, thier quality may vary from batch to batch. You may buy from a batch that will actually dry out your skin badly. If you're worried about this, you will buy a bigger brand that promises you consistent quality. But if you're worried about price, you will buy the brand that promises you good value.
What are your brand's attributes? What does your brand stand for? If you are not sure, ask your customers why they buy from you.
You may come up with a list of, say, 10 attributes. The next step is to choose only those attributes which are different to others in your industry.
For customers to choose your brand over someone else's, they will need to see something that is different.
Price is rarely a good way to differentiate your brand. Customers use price to decide only when there is no difference between other attributes (or, of course, if there is a massive difference in price). You should also evaluate your competitors, and avoid highlighting pricing if they are wealthy enough to fight a price war with you.
Once you have worked out your brand attributes, you are ready for the next stage - working out how to communicate with the customer about your brand.