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What Is A Brand? A Summary Of The Basic Dynamics

Brands Provide Information:

A brand includes information we use to understand the world and make decisions. As you develop your brand, you must determine what different types of information you will provide for the different audiences.

Brands Create Feelings and Beliefs:

A brand includes feelings and beliefs we use to understand and make decisions about your offerings. As you develop your brand, you must generate expectations that align with what your audiences feel and believe.

Brands Develop Over Time:

A brand is developed over time, and includes the full history of communications and previous experiences we have with a company and its offerings. As you develop your brand, you must consider how your brand will be perceived in the long term, and how you might change your brand in response to changes in the market.

Brands Are Perception:

A brand creates a perception of value. The price tag does not create that perception: it only confirms or contradicts the perception of value that the brand has already created in the mind of each customer.

Brands Make Decisions:

A brand is a decision-making shortcut that allows customers to consider or ignore an offering without investigating it fully.

Brands Are Critical:

A brand is critical in the crowded modern marketplace. This was not the case just a few generations ago. Without a strong brand, today’s entrepreneurs will have a very hard time competing.


A World Without Labels: Brands Provide Information

You walk into a large grocery store and see thousands of products sitting on hundreds of shelves. On the outside of each bottle, box and bag are descriptions of the contents and lists of ingredients. But suddenly you realize that this grocery store is a little different – all of the labels are printed on plain white paper and contain only black text. You head over to the beverage aisle where you see hundreds of plastic bottles containing brown liquid. Each one is marked “carbonated soda.” There are no logos, photos or bright colors to help you find what you want. Which bottles are filled with Coke? Which ones contain Pepsi? Is there any root beer? Diet soda?

This is a world without brands.

We’re familiar with grocery stores, and we know how to use labels to find what we want. But a brand is much more than a label; a brand is a specific set of mental images that we use to understand the world and make decisions. It isn’t just what’s in the bottle, it’s also information about what to expect from the offering. In the case of soda, this information includes how many calories are in a serving, what kind of flavor the soda has, whether or not the flavors are natural or artificial, how much is in the bottle, how much it costs, the expiration date, the ingredients, whether or not the bottle is recyclable, and much more. But there is also a world of information available about the product that isn’t on the label. We encounter soda brands in commercials, on billboards and at sponsored events. We also learn about these products when we hear about studies on the effects of high fructose corn syrup or when a dentist recommends drinking less soda and more water. All this information blends together into a cohesive mental summary that we evoke whenever we say “I’ll have a Coke.”

How much information do we have about your brand? What do we know about your competitors? About your industry? How do we differentiate your business from every other? Do we know enough to make a decision?

Each entrepreneur must offer a rationale for every purchase. It may be as simple as a label, or it may be a cultivated, long-term relationship with a salesperson. But however it’s delivered, this information becomes the catalyst for making a decision. As you create a brand for your business, you must clearly provide information about your products and services, describing how they compare with others in the marketplace. In our information-rich society, the difference between success and failure may be the quality of information that potential consumers receive.


If It Feels Good, Do It: Brands Create Feelings And Beliefs

Politicians, celebrities and sports stars have brands. Every company and organization has a brand. And, of course, everything we purchase has a brand. We think about each of these things in a particular way, and the way we think encourages or discourages real-world actions. If we like a politician, we may cast a vote for her. If we dislike a movie star, we may choose to skip his latest film. We may decide to give money to nonprofit organizations we approve of and avoid buying products from companies we disapprove of. But no matter what decisions we make, we are acting from a very limited amount of information — we don’t know much about the politicians we vote for and the nonprofits we donate to. Often, we make decisions based on feelings and beliefs rather than empirical data.

Some people think Apple computer makes products that are overpriced and overhyped, while others think it offers groundbreaking products that are worth every penny. The offering is exactly the same for everyone; each group just interprets the offering differently. But few people make Apple purchasing decisions based on a detailed analysis of the technology and a clear understanding of how that technology will be integrated into daily life. Apple understands this. They don’t just offer technology, they also offer expectations and feelings. Their website provides pages of technical information for those that want it, but they also provide videos, ads, in-store experiences and highly effective public relations that create feelings of desire.

The same will be true for your business — the brand you create will be compared to all the other brands in the marketplace, and this comparison will determine whether or not anyone does business with your company. In order to establish a strong brand in the minds of potential customers, you must develop certain feelings and beliefs that potential customers may use to generate expectations and rationalize a purchase.

Apple works very hard on this part of the brand. They host conferences several times a year and broadcast the keynote presentations. Their product launches frequently make the evening news on all the major networks. They’ve invested in hundreds of retail stores and trained sales associates to answer questions from novices and experts, making new customers feel more comfortable and secure. They carefully hone the appearance of both products and operating systems to make people believe that their products are easy to use. These efforts are all to create feelings that lead to purchasing decisions. It can be difficult to work on this part of a brand; it’s much easier to describe a product than to generate emotion. But much of our decision process is governed by feelings, and an effective brand cannot ignore emotional appeals.


The Sum Of Its Parts: Brands Develop Over Time

I loved Coca-Cola when I was a kid. I can still remember the sweet burn of a cold Coke on a hot Texas summer day. I can imagine the feel of the wet glass in my hand and see the tiny fountain of bubbles trying to jump over the rim. I remember the unique shape of the glass bottle and the commercials that ran each December featuring young people on a hillside singing, “I’d like to buy the world a Coke.” All of these individual images form a collage – a mental summary – of this particular product and the company behind it.

You also have a picture of the Coca-Cola brand in your mind. It was formed from thousands of pieces of information. Your summary probably includes an iconic white logo against a bright red background. It may include a glass filled with soda and vanilla ice cream, NASCAR races festooned with the Coca-Cola logo, or judges sitting next to large red glasses on American Idol. Your mental summary may also include warnings about sugar from your dentist or an article describing the dangers of high-fructose corn syrup. Each of these experiences and communications adds a piece of information to the brand you carry in your mind. A brand is developed over time, and includes the full history of communications and experiences we’ve had with companies and their offerings.

When you see a Coca-Cola logo on a vending machine, all of your thoughts and experiences merge into a single decision: either “I want a Coke” or “I don’t want a Coke.” Everything that the Coca-Cola company has done over more than 100 years — the goal of more than $3 billion in annual advertising spending — is to influence your decision in that moment. Coca-Cola understands this, and works hard to maintain the brand over the long term, adding new experiences for each new generation of consumers.

As you develop your business, you will need to plan how you want your brand to be perceived over the long term and understand how to change your brand as needs dictate. Many small businesses create a brand and then stop, hoping that the initial push will be enough to generate business far into the future. But as competitors arrive and new trends emerge, a brand must revitalize itself to stay present in the minds of existing and potential customers.

If you open a coffee shop and tea suddenly becomes trendy, you may have to change your offering to keep customers happy. If the price of gas increases dramatically, your auto repair shop may need to expand into motorcycles. These new offerings would require new communications and marketing strategies.

A brand changes over time, independent of the actions or intentions of business owners. Successful businesses must adapt as well.


Is It Worth The Price? Brands Are Perception

We often think about the value of a product or service in terms of its price, but that’s the opposite of how value is created. Value is a perception — one you can control.

You walk into a shoe store at an upscale mall. The interior has been painstakingly designed and a large architectural display features fewer than a dozen pairs of shoes, each an individually lit piece of wearable sculpture. You see a shopper being attended to by a well-dressed salesperson; a sales assistant brings him two boxes and carries away several others. Another salesperson walks up and quietly asks you if there is anything you need; perhaps a glass of champagne to sip while you shop? You spot an exquisite pair of black boots resting on a white pedestal, soft white light emanating from somewhere underneath. You can’t see a price tag — it was either intentionally left off the shoes or cleverly hidden from view. Can you guess how much the boots will cost?

You walk into a nationally branded shoe store featuring large, florescent orange and green posters in the windows: 60% off! Buy one pair get the next pair free! Inside, dozens of shoppers are pulling hundreds of shoes from the shelves, trying them on unassisted and attempting to find mirrors hidden behind bags and tissue paper. One tired looking salesperson is standing at the cash register serving a line of fifteen impatient shoppers. You spy a pair of black boots on the floor near a stack of boxes — boots almost identical to the ones at the upscale store. You can’t seem to locate the box that they came in … how much do you think the boots cost?

If you knew that one pair of boots was $99 and the other cost $2,000, would you be able to match the pair of boots with the correct price? If you saw these pairs of boots — both similar in appearance — outside of the context of the stores, would it be just as easy to price them? We would expect the boots at the upscale store to cost 20 times as much; every aspect of the customer experience leads us to make that assumption. The upscale store has made an investment in its branding infrastructure, and that investment makes it possible for them to charge much more for their products than the discount chain ever could.

This does not mean that the upscale store is more profitable: the discount chain may be highly profitable, even though it receives must less profit per sale. Both stores may, in fact, be owned by the same company. Many large corporations own a wide portfolio of brands in order to attract customers of many types. We don’t know how much it cost to manufacture each pair; is one pair really worth 20 times as much? We may assume so, but we really have no way of knowing the truth. Our perceptions have been intentionally created to provide information about what to expect and to generate certain kinds of emotions. When we see a price tag, we are making a judgement: are our perceptions in alignment with the price?

As an entrepreneur, you must define expectations that clearly create a perception of value. If you are going to offer expensive products or services, you must make that clear through every facet of the customer experience. Otherwise, your customers will not assume that the price you charge accurately reflects the worth of your products and services. And if you want people to think that your products and services are bargains, you must also generate those expectations. Before we see the price tag, we already have an idea of what something should cost. The price tag only confirms or contradicts the perception of value that we have already developed.


Value derives from everything except price: your website, your storefront, your customer service, your competition, your reputation — everything you do and say will create an impression of value. When people see the price tag, they will make a decision. If the price is too high, they won’t buy. If the price tag is too low, the customer may believe he got a bargain, but may also assume the product is of low quality. In addition, the business owner has lost potential revenue. Each entrepreneur must clearly define, communicate and deliver accurate value to maximize sales and minimize losses.

It’s tempting to think that products and services have value independent of our thoughts, but value only exists in the mind. Value is at the heart of the branding process — it is the goal of all branding activities. As an entrepreneur builds her offering, she must focus on how each impression adds to the perception of value.


Where Do I Go? What Do I Do? Brands Make Decisions

Communications and experiences create the Coca-Cola brand in your mind; each individual impression may be positive or negative. If your mental image includes lots of negative thoughts, you probably don’t buy much soda. If you have lots of positive thoughts, you may buy it every day. In this way, brands are decision makers. Each entrepreneur must decide how she wants people to think about her business and then communicate that brand effectively in order to move customers from “Should I buy?” to “Yes!”

In the moment of decision, all of our positive and negative thoughts are weighed on a mental scale. If there are more pros than cons, we make a purchase. Otherwise, we don’t. But we don’t make a list of pros and cons for each product every time we visit the grocery store — a single trip would take hours! We use the brand as a mental shortcut to make these kinds of decisions very quickly. When you walk down the soda aisle in the grocery store, it may take only an instant to decide whether to buy Coke or Pepsi or Sprite or something else. You don’t have to read the labels — the brand makes it possible to make these quick purchasing decisions.

Do you already know what brand of phone you’re going to buy next? Where do you prefer to buy clothes? If you need to buy shampoo, do you know what brand you’ll add to your grocery cart? All of these decisions are made by the brands you carry in your mind, formed from years of communications and experiences. But remember that for every brand you purchase there are dozens that you don’t purchase. Just as brands make it easy to make “yes” decisions, they also facilitate “no” decisions.  

As an entrepreneur, you want to build a catalog of mental impressions in the minds of potential customers so that when the time comes for them to make a choice it’s easy for them to make a “yes” decision. The more information a potential customer has about your brand, the easier that decision will be.


Divas Draw The Crowd: Brands Are Critical

Most of us wear what we want and act the way we want to, then hope people like us. We dress in clothes that look fairly similar to what everyone else wears and wear our hair in one of a few socially acceptable styles. When someone wears something truly outlandish — a dress made out of meat, or a neckline that plunges to the waistline — it becomes news. Red carpets at award shows are watched by millions, and the clothing worn to these events is discussed for weeks afterwards. But would anyone pay attention to the red carpet if everyone just wore jeans and t-shirts? Celebrities — human brands — understand that they need to be memorable to get attention.

You may not like to stand out from the crowd but this should not be true for your business. If your business seems just like every other, why should anyone bother to come in? How will you get noticed? How will you be remembered?

Every entrepreneur must find a way to present her business so people can form a quick mental image of how this business is different from — and better than — all similar businesses. When there was only one grocery store or one auto repair shop in town your brand didn’t matter very much. If people wanted to buy food or fix their cars, they patronized the local grocery store or body shop; they had no other choice. But today we can get almost anything from dozens of similar businesses. And, for the most part, we can choose the type of purchasing experience we want: we can shop online, buy from catalogs, visit brick-and-mortar stores or watch the shopping channel. We live In an age of tremendous consumer choice. Brands make choices easier to understand. In today’s market, brands have become the critical primary driver behind our purchasing choices.

If I want organic groceries from a community-minded, progressive company, I can visit a local grocery store co-op. If I want familiar brands at the lowest price possible, I can shop at a massive national chain with extensive distribution channels. If I want to buy from a store that offers lots of convenient locations, I have that choice as well. We decide where to buy groceries (and everything else) based on what brands tell us: what each company has communicated about their products, prices, location and values. These communications don’t just come from weekly ads or websites; each brand communicates something about itself by the products it offers and displays, the number and type of available products, the number and locations of the stores in the chain and the prices it charges.

In this crowded marketplace, entrepreneurs must do more than decide what products and services to offer. They must define their offering in the context of the overall marketplace and communicate that position. This is where the personality of your business comes from; this is where you decide what kind of celebrity you want to be.

Once you’ve determined how you want your business to be perceived and how it fits into the larger marketplace, you must develop a brand that stands out from the crowd. If you find a way for your business to capture positive attention, you’ll have a much easier time luring potential customers away from your competition.