Why branding is important
The answer to the question, ‘Why is Branding important?’ is quite simple and
straightforward. Effective branding helps in higher sales for the organization
and contributes directly towards the growth of the company. This single most
important factor has many companies investing time and money in improving their
branding strategy so that more customers can buy their products which
subsequently results in better sales and more profits. It is quite safe to say
that the branding exercise is profit-driven.
As a brand manager, there is a constant need to uplift the brand in the mind’s
eye of the consumer. Here are some more ancillary reasons which make brand
building an important activity:
1) Branding results in better differentiation points between products. As the
world becomes more competitive and new products are launched in the same
category, it is branding which helps people decide what they want to buy. For
example, Johnson baby products have such a strong branding in the minds of the
consumers as a high quality child care product and similar (and sometimes even
better) quality products get left out on the shelves. It has been Johnson’s
constant endeavor to create a brand which becomes synonyms with care and
quality.
2) Branding helps in creating a place under the sun. Without sounding
overdramatic, a lack of branding can result in poor sales and subsequent shut
down of business. There are many corporate case studies available to validate
this fact. Branding helps in creating a space for the product in the consumer’s
mind space as well as create demand for it.
3) Better brands can also result in increasing the value of the product.
Consumers accept a higher price for a good brand. This is an established rule in
the consumer world and one of the main reasons to improve the branding of the
product or service. High level of brand awareness can thus have a very positive
effect on the overall sales of the company.
4) Better branding provides more acceptances from consumers at the time of a
problem. It is unlikely that a company can continue to exist without any
hiccups. If the company has a well established brand, it is likely to sustain
public hiccups more easily and with wider acceptance. Thus a better brand is
unlikely to be forgotten very soon as well.
5) A good brand brings in more value for goodwill at the time of a merger or
acquisition. The return on investment in brand building is also realized at when
the organization goes under the hammer. Though companies should not work with
this in mind, the value created by the perception of the brand can very much be
accounted for in financial terms.
6) Easier entry into newer markets. A good brand in a particular category of
products makes it easy for the organization to enter into newer product
categories. There are many examples of such an entry.
Needless to add, branding can become one of the main methods in which a
business can grow and take over the competition.
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