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Category: Brand Value & Pricing

Brand Value & Pricing

8 Ways To Build A More Valuable Brand

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Valuable Brands

We talk a lot about the pressures on brands to perform and about the difficulties of staying competitive in huge and rapidly changing markets. Nevertheless, global brands experienced a 12 percent increase in value in 2014 – and there are powerful lessons for all those responsible for brands in how they did that. If demand generation is part of your role, here are eight things that you can be doing to retain reputation, stem decline and make the most of upswings in economies and consumer preferences.

1. Be part of a rising category – According to Millward Brown, the top 10 apparel brands, for example, grew by 29% last year. If you have brands in this or another of the rapidly growing sectors, that’s a clear prompt to be investing to meet what is clearly increasing interest. If you don’t yet have brands in one of the rising categories, are there ways that you can naturally (and quickly) extend your brand into these burgeoning categories through acquisition, partnership, licensing and/or co-branding?

2. Be part of a resurgent economy – If your brand is spread across diverse regions, it makes sense to focus on those areas of the world where there is inherent economic growth driven by rising consumer confidence. To ride the wave, look for ways to get a foothold through an agency arrangement or work with an established player to increase their stock range. Also introduce premium lines to take advance of rising aspirations.

3. Tackle social issues – A number of sectors are fighting reputational issues at the moment. Brands in areas like fast food and soft drinks need to directly address their social impacts or risk being disrupted by healthy challengers. Equally brands with potential ethical issues – environmental, social, health-related, behaviour based or that involve processes that people feel strongly about such as animal cruelty – are going to need to show that they are actively minimising the downsides of what they do. Addressing reputational issues won’t necessarily mean growth, but it will help arrest declining sales.

4. Increase “share of life” (Millward Brown’s phrase) not just share of market by integrating and extending ecosystems. Apple are the masters of this approach, closing loops between product and content in order to retain control and to encourage consumers to stay and shop within their universe. By diversifying into new areas of interest and maximizing brand equity as they do so, brands can look for smart ways to be more involved in every person’s every day. As Nigel Hollis observes, “. Apple spans our needs for entertainment, music and productivity. Amazon fulfills our need for convenience with effortless one-click shopping and relevant purchase recommendations for stuff we never knew we wanted. Nike, with its Nike+ Fuelband, has transformed itself from a mere apparel brand to a companion and coach for runners.” They do this through that they offer and what they socialize.

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Brand Value & Pricing

Brands And Discounts: A Dangerous Liaison

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Brand Pricing and Discounts

Failing retail brands often have a second theme that unites them: discounting.

While the popular press might trumpet sales promotions as being good for the consumer, it’s also worth remembering that price discounting is very bad for brands that over-use it.

Let’s start with the most obvious drawback: it’s literally money off the bottom line. Too many marketers focus on traffic and revenues at the expense of margin. And that could be a crucial error when there is a vital trade-off between attracting more consumers into the store with discounts versus cutting deep into gross margin with 30% or 50% off list prices.

The second downside of discounting is commodification. The reason consumers are hopefully prepared to pay more for your brand is because it represents more to them than the alternatives. The brand associations add value to the offer and that lowers price sensitivity, increases demand and further enforces brand loyalty and repeat purchase – the classic outputs of brand equity.

But just as you build brands by focusing on their associations, you break them when you reinforce the commodity at the expense of those associations. And that’s what discounting does. It draws attention to the price and the product and says to the consumer ‘forget about what we stand for, buy us because we are cheap. Buy us because we are a commodity’.

When I see brands on sale for less than the recommended retail price it makes me question the brand. Suddenly it is not expertly made, high-quality fare – it is just cheap at a bargain price. Once the spell of the brand is broken, very few branded manufacturers can support their high cost operating model in the cut-throat environment of commodity competition.

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Brand Value & Pricing

9 Factors That Help Anchor Your Brand Price

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Brand Pricing Strategy Anchor

Behavioral economists refer to the decision making process brands use to set a price in the minds of consumers, especially when those buyers are dealing with something that is unfamiliar to them, as “anchoring”. Anchoring provides a reference point from which to perceive and negotiate “worth”. Brands looking to set a high value on what they offer anchor highly; brands looking to position themselves as accessible and everyday do the opposite.

De Beers anchored the value of their rings around “two months’ salary”. The message to purchasers – in this case, men in a jewelry store (perhaps the ultimate social fish out of water) – was that it will hurt but it’s worth it. At the other end of the value scale, when Coca Cola originally positioned their “delicious, refreshing” drink at 5c a glass, they were sending a clear signal to drinkers that Coke was the affordable beverage everyone could enjoy every day. Both messages were on brand, even though they presented vastly different value propositions.

De Beers’ “price” of course takes no reference from the actual cost – how can it, given that two people could have very different salaries? But then, neither for that matter, does Coke’s.

One thing is certain. In this age of ‘fair pricing’, what companies charge is certainly a topic that incites a lot of debate, as the reactions to this article about the cost of making a designer T-shirt prove.

I’ve found brands often look to reference their pricing on what they think a product should be worth (in their eyes) rather than how valuable it might be to a consumer and more particularly, how its anchor price compares with the other anchors that consumers see around them, and draw reference from, every day.

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Brand Value & Pricing

9 Characteristics Of Brands That Work As Assets

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Building Brands As Assets

A lot of people talk a lot about brands as impressions: brands are how you are talked about when you are not in the room; your brand is the sum of the prompted and unprompted associations that people have of you; your brand is expressed in the ways that you are remembered. All of these definitions accurately describe the associative advantages of a powerful brand. But the critical aspect for me is that a brand today must not only look the part, it must also function as an asset – by definition that means it must be “Something valuable that an entity owns, benefits from, or has use of, in generating income.”

In order to do that:

  1. A brand must be tangible – there must be something identifiable to offer, and that something, whether it is a product or a service, must have value.
  2. There must be a distinctive and viable business model – a brand requires an efficient and competitive commercial delivery model in order to get into market and to meet demand.
  3. A brand must differentiate itself from other offerings like it in order to prosper – brands require a competitive environment in which to thrive because without such an environment the concept of a value equation means nothing.
  4. A brand must be visible to the people that matter to it – a brand must take conscious and measured steps to gain and retain their attention.
  5. A brand must engage with the people it seeks to work with – so it must have a personality that people are attracted to and it must tell a story that people want to hear more of.
  6. A brand exists to earn margin beyond the going market rate – and a brand that fails to do so joins the ranks of the commodities.
  7. It must create expectations – and those expectations must underpin the promises the brand makes in market and the values that it works by.
  8. Brands must capture who they are through a distinctive identity across a full range of touch-points – great brands are symbolized in ways that people know and that graphically capture their character.
  9. A brand must offer experiences around the goods or service it offers expressly to generate trust, connection and distinction with its audiences.

While these characteristics will be familiar to many, the implications are wide-ranging:

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Brand Value & Pricing

Brand Pricing: Less Versus Off

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Brand Pricing Strategy

If I buy something on sale, what should I get? 40% less – or 40% off? They are very different things.

If I purchase something for 40% off, that means I get what I would have got if I’d paid full price but I get a 40% reduction on the asking price for the very same goods or services. The result, as we’ve discussed many times, is that the brand’s perceived value deteriorates and, if enough retailers participate, the actual market value of the brand also drops.

40% less on the other hand means I pay a lesser price but I get less for that price. How can that be? Surely a pair of shoes is a pair of shoes, right? Not necessarily. One of the first rules we were all taught in direct marketing is that it is much more economical to give than to take away. In other words, it is much more economically sensible to add services to a product in order to make it more valuable than it is to discount the asking price.

That’s because the price I can pay to add perceived value is generally much less than the cost of taking money away. Airlines are very good at this. You pay a lot more for a Premier seat than you do for an Economy seat – and in exchange the airline gives you a bigger seat, a different menu and perhaps more movies. They add to what you get, at a lower cost to them, than the revised price they ask you to pay.

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