Brand elevates your pricing power.
Your pricing power reflects how much value you bring to your customer. It elevates their willingness to pay; it elevates how much they want what you offer.
Strong brands capture higher margins than do weak brands, because by definition, preferred brands confer higher willingness to pay – and customers’ willingness to pay is what gives you pricing power.
This is why we care about brand. Brand helps us to have healthy margins so that our business can thrive.
Consider this math:
Value = Benefit - Price
The value that you bring to your customer equals the benefit that you bring, minus the price that she pays to enjoy that benefit.
So, you bring customer value by bringing to her a benefit that exceeds the price that she is paying.
Given this equation, there are two ways that you can bring outsized value to your customer: a really big benefit or a really small price. The big benefit is the one that brings value to both you and your customer. When your benefit is big, your customer’s willingness to pay is also big, and this enables you to command healthy margins for your business.
This is why:
- Nike is more profitable than is Payless Shoes
- Whole Foods is more profitable than is Safeway
- Casper is more profitable than is Mattress Discounters
Look to your own purchase behavior. When you love a brand, aren’t you more willing to pay for that brand than you would be for an alternative brand?
Increase your business’s value by bringing a huge benefit to your customers. Define this big benefit as your North Star brand strategy, that will create ever more value for your business and for your customer.