Wednesday, September 23
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What Makes a Brand Strong?

In my last post, I revealed the top list of brand associations that, in general terms, drive sales in business-to-business (b2b). In this post, I highlight three more general lessons about what it takes to build a strong brand, within both b2b and b2c. Thus, a brand that drives sales or justifies a higher price.

After almost years and years of research and a large number of analysis projects, there’s enough data to, what kind of thoughts and feelings about a brand not only liked it, but liked the right things in the past.

Top lessons for building a strong brand. lessons can be boiled down to three main points.

1. A strong brand is built of both hard and soft building blocks

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 the shelf life of bread, the fuel consumption of a car, the contrast of television, the formal competence of a law firm or the breadth of a construction trade 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, fun, thoughtful or inspirational.

In all the studies,  it has been found that the soft building blocks have the least importance and are usually of 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 property is generally regarded as hygiene factors. Then actually good enough is usually just that: Good enough.

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 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 one company and a washing machine from a different company. By the way, what is relevant to compare when choosing a washing machine?

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 general reputation of the company or brand or its advertising.

Some examples of soft building blocks analyzes have proved to be important in choosing a brand are “energy” and “new thinking and forward” (travel), “warm and thoughtful” and “community feeling” (food), “fun to work with ”(engineering industry).

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). That this is so is due to basic human mechanisms, as proven by, among others.

In short, we choose with the heart but motivate with the brain.

Although our decisions are guided by our emotions, rational arguments are important – they are needed for the buyer to be able to rationalize his decision afterwards. But unfortunately, many companies are communicating single-building blocks, the soft harbors in the cloud. When Niklas and Johan examined what companies consider to be the most important arguments for creating a strong brand (within b2b and b2c), 1 in 3 responds to “product quality” but only 1 in 20 indicates any kind of emotional aspect. The same goes for measurement: As many as 64% of companies measure perceived quality, only 22% state that they measure some form of brand personality.

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 soft building block is the social aspect. Simply put, a brand’s social role can be expressed in two different ways.

First, it’s 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. Studies show that social status has a significant revenue-driving impact in most industries.

Take the grocery store as an example. There are a number of chains that are perceived as basically the same on most points. The only thing that sets them apart, and which ultimately explains why a certain chain does not reach the market share it should have (based on other variables), is the perceived social status. Or, rather, the lack of social status. The grocery chain is perceived as a bit shameful to shop at.

The same phenomenon also occurs at the product level. A concrete example is rice. A category that lacks brands that are perceived to give status in the social circle. Nevertheless, many consumers choose not to buy rice from budget brands. The reason is, according to the analyses, that the brand is not perceived to be consistent with the image consumers have of themselves or want to signal to others. (There are also consumers who buy budget brand rice but pour it over and store it in nicely designed glass jars.)

The point is, therefore, that status does not always have significance in a positive sense only. The lack of status can be a serious obstacle to sales – a kind of “embarrassment factor”. The brands that have been given a badge will have a very difficult time attracting new customers, no matter what changes in the physical offer they make.

In the B2B context too, status plays a crucial role in the customers’ choices. For example, a meta-study shows that “prestige and status” is one of the three most revenue-driven, general associations within b2b – significantly more revenue-driven than for example. product quality and product range. Another example, taken from a classic industry, shows that it is more crucial for customers’ buyers to be able to be associated with a certain prestigious supplier than for example. what product quality and expertise the suppliers experienced.

The psychological sense of community has proven to be important also in b2b, where it can be created at a tactical level from golf competitions and other events to seminars and formal customer training. For example, Caterpillar has been good at building a brand community that both employees and customers want to be a part of. And according to the analyzes, sales are driven in, among other things. the packaging and office furniture industries to a much greater extent by the psychological sense of community than by e.g. experienced delivery capability and actual guarantees.

Unfortunately, as I said, many business leaders, entrepreneurs, marketers, and sellers underestimate the brand’s social role. Only 3 out of 10 companies systematically measure and evaluate what social role their brand plays for customers. With Swedish companies, it is even worse: only 1 in 10.

This makes the brand’s social role an untapped revenue-generating opportunity.

3. There are often different things that make customers want to buy or 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 no-holds barriers such as “we raise the price we lose customers” or “we cannot raise the price because, in the end, it is still the trade or suppliers who determine both the final price and our price premium”.

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 price-locked that customers categorically refuse to accept a price premium. So the art is to charge your brand with exactly the right associations. 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.

A very 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 are prepared to pay more for brands associated with “status” (real estate and areas/locations), are perceived as “cool” (mobile phones), “sophisticated” (travel), “inspirational” and “fun” ( food), “creative” and “exciting” (steel suppliers), and for the brand’s advertising that the target group likes.

What, in general terms, makes people want to buy (volume premium) are functional associations that often have to do with reliability and risk reduction. For example, customers are attracted to buy brands that are perceived as “affordable” (mobile phones), “genuine” (food) and “man-know-what-you-get” (travel). In many cases, being perceived as too unique inhibits the brand’s volume premium, which is interesting to consider with regard to how often uniqueness is emphasized as the decisive factor for successful positioning and differentiation.

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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