By: Ujaya Shakya
Brand as the Most Valuable Asset
We all are aware that most consumer product companies are built around brands. Brands are the most valuable assets for these companies, and major multinational companies have already realized that capitalizing on their brands is always more important than their tangible assets. Companies with strong brands surpass others in generating profits and growing shareholder value. Brands are also an indication of what the company does and more importantly, what the company stands for. Usually, brands are why the company exists, not the other way round.
Brands are also valuable to companies because they are valuable to their consumers. Because these consumers rely on brands to deliver a consistent level of quality and reliability, they will generally pay more for a branded product than a generic product. In fact, if you have realized it, brands are in a way helping to simplify life by imbuing a product or commodity with meanings. Brands allow people to express themselves, to help define who they are and what they stand for. So, the dress you wear, the car that you use, the pen that you write with, the holiday destinations you go to, and even the place you work for defining your persona. And these are the brands you gradually are loyal to.
Brand Loyalty or Strength of the Consumer Commitment
Even today’s most established brands were once new to these markets. Brands build their value as they evolve from unknown to well-known, converting first-time users into loyal and devoted customers. But all brands, either strong or weak, have users with varying levels of loyalty, so managing a brand, it is critical to understand the strength of consumer commitment.
Studies done globally demonstrate that users with strong attitudinal loyalty towards a brand devote a much higher proportion of their category expenditure to that brand than those users with lower levels of affinity. If brand custodians can understand what underpins the attitudes of a brand’s most loyal customer, they may be able to identify opportunities to convert other consumers to this profitable position.
These global studies have also discovered a few factors that drive brand loyalty which are discussed below:
a) Product Difference:
If the product is well-differentiated in the category and the difference is also perceivable by the consumer then there are chances of building brand loyalty based on the satisfaction derived out of that brand. Loyalty is driven either by functional or symbolic benefits. Functional benefits here refer to tangible features offered by the product while symbolic benefits are intangible features like brand personality. Product differentiation helps the company to reduce competition in the market and have substantial influence on customers’ mindset. Examples can be the Turbo technology of an automobile or the gum cavity sensitivity of a certain toothpaste brand.
b) Emotional benefits:
Emotional benefits are an advantage when the brand or the experience of the brand makes people feel good. For example, a customer sticks to a particular convenience store due to the emotional and sentimental attachments with that store. This attachment may be due to the physical location of that store, product pattern provided by the store that exactly suits her, or maybe due to the esteemed assistance and services provided by a shopkeeper or his team himself.
c) Rational benefits:
Rational benefits can drive success when those benefits make a brand the most lucrative choice. For example, a customer makes the purchase decision after they evaluate the suppliers and measure the profitability criteria, or the offers they consistently get in the context of a particular brand, or perceived technology superiority as in the case of a telecom brand.
d) Brand Popularity:
Popularity can also drive purchase by signaling that a brand is a safe choice, from either a functional or a social point of view, or both. Many times, well-known celebrities are used by brands compensating them with huge remuneration just to leverage their celebrity brand equity or image for the brands in question. Popularity breeds familiarity and thereby a level of trust.
e) Brand Dynamism:
A brand with a sense of dynamism is one that is setting trends or shaking up the status quo. The most successful example is Apple products which have a huge loyalty among its users with the sheer power of brand dynamism.
f) Value Proposition:
A value proposition will always be appealing to people who are looking for a good deal or the lowest price. If the price differentiation is perceivable then price-led loyalty can be built. Price differentiation is often practiced by supermarkets and airline companies which gives away sales promotion offer and freebies. But continued sales promotion can also lead to brand dilution.
g) Consumer Engagement:
With the advent of social media more and more brands are involving consumers in the new initiatives through various social networking websites like Facebook, Twitter, or mobile/web applications. This is done to constantly engage them and have a friendly relationship with their consumers, Higher involvement will also result in a higher rate of repeat purchase from those consumers who are in constant touch with your brand through those social networking platforms.
In many categories, just one of these factors may be enough to make a brand the default choice for your consumers, but many strong brands benefit from a number of these advantages.
These factors of loyalty will play out in different ways depending on the category, and the nuance of each will differ from brand to brand. For example, the satisfaction that you feel when relaxing at Annapurna Coffee Shop at Durbar Marg is a different feeling than the satisfaction experienced while driving a Volkswagen car.
About the Book
Ujaya Shakya’s Brandsutra is a collection of inclusive & incisive thoughts on the marketing & advertising field in Nepal. This book tries to introduce all of the 360-degree communication touch-points, elucidating upon the model of Integrated Marketing Communication, or convergent branding.
Published by FinePrint
Ujaya Shakya is the founder and managing director of Outreach Nepal based in Kathmandu and the author of ‘Brandsutra’.