Your company's brand may not be a dedicated line item on your P&L – yet your profit will absolutely increase based on the strength of your brand. Brand serves a very pragmatic economic purpose, which is to make you more money. Here are a few ways to frame a brand's monetary value:
- A strong brand has high willingness-to-pay. High willingness-to-pay translates directly to better margins. Look at renowned brands like Apple, Mercedes-Benz and Williams-Sonoma – or niche brands like Lululemon, Campagnolo and Vitamix.
- A strong brand is the only truly sustainable competitive advantage. Patents expire. Technology gets reproduced. Ideas are copied. But a strong brand simply can't be duplicated, and if well-tended can last a lifetime or longer. Brooks Brothers has been around since 1818, DuPont since 1802, Jim Beam since 1795. (Our country only goes back to 1776.)
- A strong brand resists commodification. If we look, feel and sound like everyone else, we are a commodity. In that case, we can only compete on price, which drives margins down. Customers don't purchase a Volvo based on price, nor do they purchase a Tiffany diamond or a Tag Heuer watch based on price.
- A strong brand guides strategic decision-making. When my brand is well-defined, I can look to it to filter where and how I can innovate, or what categories I can expand into with confidence in my ability to grow.If I am the CEO of Brooks Running and I'm considering areas for innovation, I look to my brand, represented by the tagline of "Run Happy." My brand is about the joy of running – not the joy of skateboarding, not the joy of sports in general, not even about running for the sake of things other than joy. This lens puts into sharp relief where I can or cannot grow, making my decisions easier and more accurate.
I'm using the phrase "strong brand" with intention. A weak brand does not command the same value as a strong brand. At LCP Consulting, we define a strong brand as one that is customer-motivating, distinctive and ownable to you, simple and singular, and leverages your unique competencies.