Wednesday, April 30, 2014

Are You a Brand or a Commodity?

The purpose of building your brand is to use that perceived value, through marketing, to sustain sales at a greater level of return than the market is inclined to give a non-branded service or product.

The objective of every brand should be to lift what people are prepared to pay and to motivate them to value you over your competition. It doesn’t matter whether you’re a discount brand, a scale brand, a luxury brand, or a cult brand, that’s the goal. It doesn’t matter whether these are boom or bust times.

If you’re not a brand, you’re a commodity. You are only worth the value that the market assigns you. And in good times, many companies are happy with that. They stop spending on advertising/branding/design, ride the commodity wave, and "bank" the organic growth. They believe the increases are of their own doing.

However, when the wind changes direction, and when things get tough, the temptation is to cut expenditures and ride it out. The myth of cost-cutting is that it makes you a more competitive company. It doesn’t. It does make you a leaner company, a less expensive company, and it does provide you with more cashflow, but it doesn’t generate preference. In fact, it doesn’t generate anything.

If you’re a company in trouble, branding is not the magic bullet. It won’t suddenly save you because it probably won’t lift your perceived value fast enough before you hit the wall. It needs to be used in conjunction with a range of other turnaround initiatives. Without branding you are, quite literally, nothing special, whether your coffers are telling you that or not.

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