Branding, Business, and Making Them Work (Part 2)
Why Brands Matter
In my last article, we defined and established the foundation of a brand, what it is and what it’s not, so, by now you know that a brand is an idea, an impression, a thought and that Adidas is not the brand, rather, the brand is what comes to mind when you think of Adidas. You know that Apple is not the brand, the brand is what comes to mind when you think of Apple.
Many times, I’ve been asked, why the impression the product creates is important and in many cases more important than the product itself, hence, why do brands matter?
Why brands matter
Psychological value (how a brand makes you feel when you own it).
There are too many options mostly with similar features and too little time to make choices. The brain is naturally designed to go with the least risky option. Our buying decision is mostly based on trust
People hardly buy things because of what it does even though they think they do. Whilst the intention is to make a rational decision, it is biologically impossible to do so because the brain is designed to first decide and rationalize afterward (I should write more about this later)
What this means is that the way the product makes you feel in the hierarchy of why you buy comes before what the product does.
People don’t just buy what they want, people buy how they feel. People buy WHO THEY ARE.
There are not so many reasons why you would choose Nike sportswear. Whatever your reason is, it is attached to how it makes you feel. Smart? Motivated? Rich?
Brands matter because of their psychological value. The psychological value then creates monetary value.
In 2001, Coca-Cola was valued at $120 billion. The brand value was $70 billion. What this means is that Coke’s market cap without the brand value was $50 billion. Marty says, without the brand value of Coke, the glass would be half empty.
Most of the parts of a computer are produced by the same company. The hard drive, the RAM, the motherboard, etc. Acer, HP, APPLE, and all the brands you buy have the same supplier, somewhere in China (I can’t remember). When you open them up, you find the same things, they may be assembled differently, have different sizes but they are mostly the same and come from the same manufacturer, designed to carry out the same tasks.
There are only two kinds of processors that can be in any computer. It’s either Intel or AMD until Apple launched the M1 in 2020
What then is the difference? The difference is what you think. The difference is what they make you think.
The main purpose of branding is to get more people or a certain demography of people to buy more stuff for more years at a certain price (usually high). When you do this, you have built a charismatic brand.
To build a charismatic brand you must understand difference and how to create it.
