Thursday, December 3

Top Factors That Build a Strong Brand

In this post, we shed light on three conclusions about what it takes to build a strong brand, whether you work in B2B or B2C. And just because it should be crystal clear – by a strong brand I mean (only) a brand that drives sales or justifies a higher price.

Which brand associations drive sales? That is to say what kind of thoughts and feelings about a brand makes people buy?

The lessons learned from the analyzes can be boiled down to three main points.

1. A strong brand is built by both hard and soft associations

Brand associations can, roughly simplified, be divided into hard and soft building blocks. The hard ones are about things that meet the functional needs of the buyer, and therefore often have to do with the product or service itself. Concrete examples are production capacity, downtime costs, fuel consumption, the resolution of a TV, the formal expertise of a law firm or the breadth of a product range. The soft building blocks are less about how the product or service performs and more about how the brand, or the company behind it, is perceived. For example, if it is expected to be prestigious, innovative, thoughtful or inspiring.

In all the studies, you can find that the soft building blocks have at least the same, and usually greater, importance than the hard ones.

It may seem contrary to common sense that a company’s core competence or the quality of a product plays less role than, say, the buyer experiences a sense of community with the brand. But keep in mind that most products in most markets are increasingly lacking in the buyer a relevant, rational characteristic. Especially in mature industries, the largest competitors have more or less similar offers in terms of the most important basic functions, which is why this type of properties is generally regarded as hygiene factors.

But even in industries where there are actual differences between the products, it turns out that the differences can often be difficult to perceive and appreciate. This may be because the buyers tend to, despite the differences, continue to choose the supplier or brand in the same way and basics as they have always done. If the actual differences are not made clear and meaningful to the customer, the differences are short and well meaningless.

For example, can you determine the relevant difference in technology between a washing machine from two brands? And what else is relevant to compare when choosing a washing machine? This problem increases in magnitude the more complex a decision becomes, simply because it is impossible to make a rational comparison between all the different parameters in, for example, a complete production plant.

Instead, it is usually the buyer’s overall thoughts and feelings about the brand that will be the decisive basis for the decision. These highly subjective expectations of the brand can be rooted in everything from their own experience of the company or product, the recommendations of others, the company’s or brand’s general reputation or its communication.

However, the reason why the soft building blocks are so often the strongest sales factors is not solely due to the general lack of functionality and quality differentiation. Another and much more profound reason is that we humans always make decisions with our emotions, even when we think we are rational (the truth is that we subsequently rationalize our already emotionally founded choices).

Although our decisions are guided by our emotions, the rational arguments are important – without them, it is not at all possible to sell a more expensive B2B product and in a slightly lighter context, the arguments are needed for the buyer to rationalize his decision afterwards. The basic problem, therefore, is not facts in communication, but many companies unfortunately only communicate hard facts, the soft reasons for choosing the company as a supplier fall completely into the cloud. And how many regularly measure the company’s perceived brand personality as a complement to traditional quality surveys?

In order to build a strong brand, both hard and soft associations must come into play. It is only then that your brand has the best conditions for being more valuable than its competitors, i.e. generate higher revenue and higher profits.

2. The social role of the brand is underestimated

A particularly forgotten building block is the social aspect – which is just as important in B2B as in B2C. Simply put, a brand’s social role is about how we buy, use or want to be associated with a brand to signal a certain identity or status towards ourselves or our environment.

Usually, “status” is only associated with luxury and lifestyle brands, but social status has a significant revenue-driving impact in most industries – not least in B2B. For many years, “Intel Inside” created security for those who bought relatively unknown PC makes from Asia.

And many business leaders have proudly stated that the new strategy is being developed in collaboration with McKinsey or the new profile of Interbrand – both of which are considered the best (and most expensive) in the world. Therefore, it is not unexpected that “prestige and status” is one of the three most revenue-driven, general associations in B2B according to the meta-study – significantly more revenue-driven than, for example. product quality and product range.

Another example of the brand’s social role is the feeling that the brand brings us together and creates community. Apple, Scania and CAT are three typical examples of brands around which a clear so-called. brand community. Members of such a community can meet and socialize from golf competitions and other events to seminars and formal customer training. The members of this community are much more loyal than customers in general – they act as ambassadors for the brand.
This makes the brand’s social role an untapped revenue-generating opportunity.

3. There are often various factors that cause customers to want to buy and pay more

Ever since it started talking about brands almost thirty years ago, the accepted sign of a strong brand has been that it can charge a higher price than its competitors. Nevertheless, the price issue is often left outside the strategic analysis and decision making around the brand. Instead, it is common with nozzles that “if we raise the price we lose customers”. In some cases this is of course true. But that is not to say that it would be less important to understand exactly what it is the customers are prepared to pay more for. Indeed, very few industries are so locked that customers categorically refuse to accept a price premium. And every percent higher price margin is clearly visible on the bottom line.

The art of getting a premium price is to charge your brand with exactly the right associations – those that customers and potential customers are willing to pay more for. And that applies by the way, whether you can or intend to charge a higher price or not. Because if you can make customers want to pay more but do not raise the price, you have loaded your brand with more value for money.

An important brand aspect is that there are often different associations that cause customers to choose a brand (volume premium) and to pay more for a brand (price premium). What drives price premium in general terms is the role of the brand socially. The analyzes show that customers in B2B are prepared to pay more for brands associated with “status”, “inspirational”, “creative” and “exciting”.

What, in general terms, makes people want to buy (volume premium) are functional associations that often have to do with reliability and risk reduction.

That there are various brand associations that drive price and volume premiums may include. be good to keep in mind depending on whether your main challenge is to win or defend market shares (volume premium) or to motivate why your goods and / or services cost more than competitors (price premium). Depending on your company’s business, branding and marketing strategy, it is therefore about highlighting different things. Or in the best of all worlds: Find a credible, possible and sustainable association that both drives a desire to buy and motivates a higher price.

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