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In the fiercely competitive business world of today, branding has become an essential component of success. In addition to reflecting a company’s mission and goals, a strong brand serves as its public face and shapes the perceptions of its target market.

According to studies, there’s a good chance that putting that rose in a McDonald’s or Coca-Cola container would really cause consumers to think it smells sweeter. A brand is more than just a name; it’s the culmination of a customer’s interactions with a well-known product. Brands are strong and frequently give businesses a competitive edge. Investors find it extremely difficult to appraise.

We’ll go over five main ideas that emphasize the value of branding and look at how well-known businesses have applied these ideas, including Apple, Nike, Google, Tesla, the National Basketball Association (NBA), and Amazon.

In addition, we will offer practical advice on how businesses can enhance their brand.

Branding matters because it reflects the vision and purpose of your business:

Branding serves as a visual representation of a company’s core values and aspirations.

It creates a unique identity that resonates with both customers and employees, showcasing what the business stands for. Successful brands excel in aligning their branding with their overall mission, allowing them to establish a strong and consistent narrative. Let’s examine how Apple, Nike, and Google exemplify this:

  1. Apple: Apple’s branding revolves around simplicity, elegance, and innovation. Their minimalist logo, sleek product designs, and user-friendly interfaces embody their commitment to delivering cutting-edge technology with a seamless user experience. By consistently aligning their brand elements with their vision, Apple has become synonymous with premium quality and innovative products.
  2. Nike: Nike’s branding embodies the spirit of athleticism, empowerment, and determination. Their iconic “swoosh” logo represents movement and embodies their slogan, “Just Do It.” Through their visually appealing advertisements and collaborations with world-class athletes, Nike inspires customers to pursue their goals and embrace an active lifestyle.
  3. Google: Google’s branding revolves around accessibility, simplicity, and trustworthiness. Their clean and colorful logo and user-friendly interfaces reflect their commitment to providing accessible and reliable information to users worldwide. Google’s brand consistency and focus on delivering exceptional user experiences have solidified its position as a trusted technology giant.

Branding matters because it’s usually the first thing your target audience judges you on and improves brand recognition within the marketplace:

In a crowded marketplace, effective branding enables companies to stand out from the competition and make a lasting impression on their target audience.

A strong brand not only attracts customers but also fosters trust and loyalty. Let’s explore how Tesla, NBA, and Amazon have leveraged their branding to leave a lasting impact:

  1. Tesla: Tesla’s branding revolves around sustainability, innovation, and luxury. Through their sleek and futuristic designs, Tesla has captivated the market, positioning itself as a pioneer in the electric vehicle industry. By associating their brand with cutting-edge technology and environmental consciousness, Tesla has become a symbol of forward-thinking and sustainable transportation.
  2. NBA: The NBA’s branding encompasses excitement, entertainment, and inclusivity. The league’s dynamic logo, high-energy game experiences, and marketing campaigns showcase their commitment to delivering thrilling basketball entertainment for fans worldwide. The NBA’s strong brand recognition and global reach have solidified its position as a leading sports league.
  3. Amazon: Amazon’s branding emphasizes convenience, reliability, and customer-centricity. Their recognizable logo and seamless online shopping experience have contributed to their unparalleled success as the world’s largest e-commerce platform. Amazon’s commitment to delivering exceptional customer service and its branding efforts have established it as a trusted and reliable online marketplace.

The design of your brand should align with the products and services you offer:

A well-designed brand communicates the essence of a company’s offerings and enhances the overall customer experience.

The visual elements should harmonize with the products and services, leaving a lasting impression on customers. Let’s explore how Apple, Google, and Nike have successfully aligned their brand design with their offerings:

  1. Apple: Apple’s sleek and minimalist product designs reflect the simplicity and elegance that their brand portrays. From their iconic iPhones to their user-friendly operating systems, Apple’s design philosophy enhances the user experience and seamlessly integrates with their branding.
  2. Google: Google’s clean and intuitive design language extends to their products and services. From the simplicity of their search engine to the sleek interfaces of their apps, Google’s design choices prioritize user-friendliness and accessibility, aligning with their overall brand image.
  3. Nike: Nike’s design language emphasizes performance, style, and functionality. From their iconic shoe designs to their athletic apparel, Nike’s products embody the spirit of athleticism while maintaining a trendy and fashionable appeal. Their brand design seamlessly integrates with their products, allowing customers to connect with the brand’s values and aspirations.

The right branding adds value and can make the difference between being a local or a national brand:

Strong branding has the power to elevate a company’s position from a local player to a national or even global powerhouse.

By building a strong brand reputation, companies can expand their reach, attract new customers, and command premium prices. Let’s examine how Apple, Amazon, and NBA have utilized branding to transcend boundaries:

  1. Apple: Apple’s consistent and compelling branding has propelled it from a local computer company to a global technology giant. Their innovative products, marketing campaigns, and commitment to user experience have positioned Apple as a premium brand, with a global customer base that transcends geographical boundaries.
  2. Amazon: Amazon’s focus on customer-centricity and exceptional service has helped it expand from an online bookstore to a globally recognized e-commerce platform. Their strong brand reputation and commitment to delivering a seamless shopping experience have enabled them to dominate the global marketplace.
  3. NBA: The NBA’s branding efforts, including strategic partnerships, global events, and marketing campaigns, have transformed the league into a global phenomenon. By creating a strong brand identity centered around entertainment and inclusivity, the NBA has attracted fans from around the world, solidifying its position as an international sports powerhouse.

The right branding allows you to showcase who you are and gives a company the ability to have much better marketing and advertising campaigns:

A well-crafted brand narrative provides a foundation for compelling marketing and advertising campaigns.

Read Also: 7 Brand Storytelling Structures

It enables companies to effectively communicate their unique value proposition, connect with their target audience, and differentiate themselves from competitors. Let’s explore how Tesla, Google, and Amazon leverage their branding to drive successful marketing and advertising campaigns:

  1. Tesla: Tesla’s brand narrative centers around innovation, sustainability, and a vision for the future. Their marketing campaigns highlight the technological advancements in their electric vehicles, positioning Tesla as a leader in the automotive industry. By aligning their brand messaging with their products, Tesla effectively captures the attention of their target audience and creates buzz around their offerings.
  2. Google: Google’s brand narrative emphasizes accessibility, simplicity, and the ability to provide reliable information. Their marketing campaigns showcase how their products and services can enhance everyday life, from their search engine capabilities to their suite of productivity tools. Google’s brand narrative allows them to create meaningful connections with their audience, emphasizing the value they bring to users’ lives.
  3. Amazon: Amazon’s brand narrative revolves around convenience, choice, and exceptional customer service. Through their marketing campaigns, they highlight the ease and efficiency of shopping on their platform, appealing to customers’ desire for convenience. Amazon’s brand narrative enables it to connect with its audience on an emotional level, positioning itself as the go-to destination for a wide range of products.

A company’s performance is greatly influenced by its branding, which reflects its mission, draws in the target market, complements its goods and services, adds value and makes it possible to run successful marketing initiatives. Businesses like Apple, Nike, Google, Tesla, the NBA, and Amazon are prime examples of how powerful branding can be, and they have effectively used these essential elements to strengthen their online presence.

How to Value a Brand

Interbrand publishes a list of the top international brands each year. This list includes many of the firms that make up the well-known Dow Jones Industrial Average (DJIA) and reads like a who’s who of the financial world. Still, you don’t have to be a Dow acolyte to identify the brands—these are among the most identifiable images on the planet. Is fame worth anything to a business? Indeed, it is.

Here are some instances where a company’s branding has made a difference:

Marlboro Friday: Phillip Morris, the inventor of cowboys, smoking, and smoking cowboys, was facing increased competition in the cigarette industry in the 1990s. When the company cut the prices of its heavily-branded cigarettes, investors pushed the panic button and drove the stock down 26% in a single day. Despite a decline in smoking rates, the Phillip Morris brand won back consumers at a lower price and re-established its dominance.

New Coke: In a textbook illustration of what not to do, Coca-Cola found itself competing against its own brand and lost badly. Coca-Cola was worried about upstart Pepsi eroding its domestic market share and decided to shift production to a new formula: New Coke. In doing so, they halted the production of the original Coca-Cola—an extremely profitable product they had been making for over a century. The backlash was so great New Coke was scuttled within months and Coca-Cola Classic re-entered the market. 

Apple: The 1990s saw computers getting faster, better, and, most importantly, cheaper. Microsoft was making billions by providing operating systems on all of these machines. Apple was making expensive machines and, as the company’s struggles showed, nobody wanted expensive computers when cheap would do. In 1997, Steve Jobs returned to Apple with the novel idea of making even more expensive computers. The difference was Jobs redoubled Apple’s branding efforts, culminating in the “PC vs. Mac” campaign. Apple still makes really expensive machines, but it has gotten a lot better at making people want them.

Even though it’s clear that brands are important to businesses, they are yet regarded as intangible assets. Investors have experimented extensively with detaching the brand from the balance sheet in order to arrive at a figure. There are three primary strategies that are currently popular.

  • 1. Stripping Out Assets

The easiest way to put a value on a brand is to calculate the brand equity of a company. This is a simple calculation where you take a firm’s enterprise value and subtract the tangible assets and intangible assets that can be identified, such as patents. The number you are left with is the value of the company’s brand equity. The obvious flaw is that it doesn’t take revenue growth into account, but it can provide a nice snapshot of how much of a company’s value is goodwill.

  • 2. Product to Product

Another way investors try to account for a brand is to focus on the pricing power of a company. Simply put, they want to know how much of a premium the company can charge above its competitor’s product. This premium can then be multiplied by the units sold to give the annual figure for how much the brand is worth.

  • The Intensive Approach

Although too time-consuming to be practical for individual investors, the methodology behind Interbrand’s ranking is the most complete. By incorporating similar approaches to the ones above and combining them with proprietary measures of brand strength and the role of the brand in consumer decisions, Interbrand provides a holistic measure of brand equity for the companies it measures. Unfortunately, Interbrand doesn’t offer a free analysis of all the companies investors want to know about.

Double-Edged Intangibles

Whether you ballpark it or dig down to a more specific number, most investors are happy to have brand equity on their side. Surely the branding edge of Coca-Cola was one of the economic moats Warren Buffett talks about. However, brands can cut both ways.

Although it is intangible, it is more than possible for a company to destroy or tarnish its brand equity. By jokingly calling his company’s jewelry “total crap,” CEO Gerald Ratner badly damaged the image of Ratners. In addition to losing market value, the company renamed itself Signet to distance itself from the disgraced Ratner brand.

Bottom Line

Ratner’s is a tale of caution for investors who are already paying a premium because of brand equity. Brands are fickle beasts that can be hard to nurture and easy to kill.

That said, a solid brand and the pricing premium it brings can be very attractive to investors and with good reason. The power of branding can help a company triumph in a price war, thrive in a recession, or simply grow operating margins and create shareholder value.

Like the brand itself, the premium investors are willing to pay for the stock with a branding edge is almost entirely a psychological choice. A stock with a large amount of brand equity is, of course, always “worth” whatever someone is willing to buy it for.

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