Why is branding important? We must start by understanding what a brand is, and more specifically, the difference between a product and a brand. A product is simply a commodity, basically goods or services for sale. Products are generic and can be sold in bulk. There is not necessarily any company name behind these products.
But when a company name, symbol, or other abstract indication of proprietorship is associated with the product, it becomes a brand. Brands denote ownership, expectation, and accountability. Brands predate the Roman Empire and have been used throughout history to designate ownership. They distinguish products emblazoned with their brand from other generic products and other brands.
The word “brand” comes from the Old Norse word “brandr” which means “to burn” like branding livestock with a hot iron to identify ownership. This practice dates back more than 4,000 years to the Indus Valley. Archaeologists have identified roughly 1,000 unique potters’ marks used in the first three centuries of the Roman Empire.
This mark of distinction and proprietorship was, and still is, done for the purpose of developing a reputation for performance, assurance of quality, ease of recognition for the customer, and setting customer expectations. Brand builders hope to create a loyal following by consistently delivering quality and value under that mark. They hope to build brand recognition resulting in repeat buying, and customer loyalty. The ultimate value of the brand is measured by customer loyalty and the potential for continued and increasing sales.
The word, “branding” is used to describe the process of setting customer expectations on a product, service, and more recently a person. These expectations are set in several ways including the brand’s appearance, image, performance, positioning and promise. In other words, this is the brand’s identity and reputation, and it is how to add value to your business.
In the last decade personal branding has become more popular than product and service branding. Personal branding is the low hanging fruit for marketeers because there’s simply more people trying to sell themselves than products. With personal branding, digital marketers try to promote their client’s main messages, distinguishing characteristics, and appealing aspects of their personality.
Consumers today want to see the person behind the brand of the product or service they are buying. So personal branding has become a highly saleable commodity to entrepreneurs, presidents, CEOs, and lately, the entire C-Suite of larger companies.
There’s no question that personal branding is increasingly important today given the ever-improving communications technology, especially since personal branding can create cult-like followings of loyal consumers in love with the product’s spokesperson.
Except for speakers, advisers, coaches, writers, and other single service providers, personal branding is the person behind the physical brand. In other words, you must sell your physical brand before you, as the brand spokesperson, have the luxury of getting up on the stage and charming the audience or the camera. Once your sales are significant enough that you have brand recognition for your branded products, you will have the platform required to give credibility to your personal brand.
So here, we will explore why branding is important to physical consumer brands. Remember, the Department of Commerce still reports that more than 90% of all retail sales are consumer brands and the vast majority are still sold in brick-and-mortar retail stores. When we see online merchants like Amazon expanding into the bricks-and-mortar retail space, we know from our experience that they are not doing it to close down those bricks and mortar outlets.
On the contrary, we believe that they see the value of physical foot traffic, notion buying, displays, and convenience. It’s always less costly if you can get your online customer to come at least halfway to pick up their orders. Home delivery is not free. FedEx, UPS, and DHL are all paying for their trucks and their drivers. How are they doing that? Simple, they’re getting paid by Amazon and/or Amazon’s suppliers. There’s no such thing as a free lunch, and there is no such thing as free delivery.
So now we are back to why branding is important to physical CPG branded products. Certainly, the charisma of the physical brand’s spokesperson is important to the product’s brand image. But where the customer, the money, the branded product, and the decision all come together is at the point of sale in the retail store. Factors that influence the decision to buy are why branding is important. It comes down to sales! Good branding leads to good sales.
All branding is designed to improve the customers’ perception of value. Here is our take on the three most important aspects of physical product branding and why branding is important to their success:
- BRAND IMAGE
Your CPG brand image is how your branded products appear to the consumer at the point of sale. Good branding (in a physical retail space) requires a deep respect for the restrictions of the distribution system and the retail environment. This is the final place to communicate your message to your potential customer. This is the place where your return customer must identify and locate your branded product. This is the place where your brand must be in stock, regardless of the challenges of distribution management.
Your logo must pop out of the crowd of other logos vying for attention. It must convey a message that your customer can identify with. It must have something to do with some aspect, feature, or benefit of your branded product. And it must do so simply and clearly. The purpose of the logo in the retail space is to help the customer locate your brand. Excellent brand recognition is the goal of good retail branding.
Your package must distinguish itself from packages of other branded products. Its height, width, and shape all have a bearing on brand recognition. This also includes colors, label designs, point-of-purchase materials, display advertising, and shipping carton design.
Logos, labels, and packages can send a value proposition with the use of quality cues such as medals, awards, gold ink, and embossing.
Shipping cartons must be clearly identified with your brand and the type and quantity of your products contain therein. Otherwise shipping mistakes can be made which result in out of stocks. The worst customer experience is when your loyal return customer goes back to buy your branded product and finds it is out of stock. They will blame your brand, buy your competition, and even when your brand is back in stock, they will think twice because now, in their minds, it’s “unreliable.” Many CPG brand builders forget how important it is to clearly brand their shipping cartons.
Some marketing professionals like to include brand reputation under brand image. We believe brand reputation is part of brand promise explored below.
- BRAND POSITIONING
A big part of branding in the retail space is how your branded product is positioned relative to other brands competing in your category. There are several ways you can send the message about where your brand falls in the range of offerings customers have available to them. But none is more effective than price.
Every category of products has several price points. There’s high prices, low prices, medium prices, and velocity prices. Using pricing as a branding tool, you can send a value message to your prospects and your customers. Some brand builders are okay with low volume because they have been able to sell at higher prices. These brand builders benefit from consumers who believe that nothing good can come at a low price. These customers clearly equate value with price.
Some brand builders are interested in demonstrating high value for low price, but to do so they must sell in high-volume. So, they attempt to hit the velocity price point, the price at which most branded products in their category sell. All categories have a velocity price point. In order to establish the value proposition, these brand builders must continually communicate awards, accolades, and endorsements to convince their customers of the value for money.
Temporary price reductions can get your customers’ attention by briefly positioning your brand at the same price as a lower priced brand. This tactic can be used to introduce potential new customers to your value and hopefully retain them as return customers once your price goes back to normal.
Physical product brands can also be positioned by their distinctive attributes. They can offer more, less, or different features than their competition. They can be the original, genuine, or authentic brand in their category. Some brands can identify or create their own category or subcategory making them exclusive in addressing a particular need of the customer.
Another way to use positioning as a branding tool is through some form of cause marketing where you give your customer a social reason to buy your product. We have found this to be stronger than any mercantile reason. When you support the goals of the nonprofit your customer supports, they are more likely to choose your brand and even advocate it. Identifying with a worthy cause is a great way of generating referrals
- BRAND PROMISE
The expectations your customers have about your brand are collectively called your brand promise. It is the promise your customers perceive that you are making to them about many aspects of your brand. These include but are not limited to your pricing, your quality, your dependability, your availability, and even what your brand and your company stand for.
Again, these are your customers’ expectations. It’s not necessarily what you would like them to think, but it’s what your history with them and your general reputation has led them to expect. In other words, you don’t own your brand promise. Your customers do! This is a hard pill to swallow for many brand builders who think that they can solely, through their own activities, set the brand promise.
Consumers judge your brand more on its historical performance and reputation than they do on any marketing program you may initiate. This is why so many brands fail. They violate their brand promise thinking they control their brand promise. When you don’t live up to your customers’ expectations they leave!
This is why radical changes in packaging, logos, labels, pricing, or public image are not recommended. We believe in evolution not revolution, where each step of the change is carefully thought out to not upset the customers’ expectations. In their hubris, large corporations can make brand decisions at the top that can negatively affect sales. For instance, a decision to go to single-use plastic packaging at a time when the Pacific garbage patch is twice the size of Texas would be a bad move from a branding perspective.
The behavior of the company behind the brand can also affect the brand promise. If, for instance, the company’s labor practices, gender equality, environmental, or public health practices are at odds with the values of their customers, they have violated their brand promise. Since brand promise is a function of reputation, and reputation is a function of behavior over time, it can take years to establish a positive brand promise, but it can be lost in a matter of days with an unfavorable news story.
Customers don’t like to shop for a new brand. It creates anxiety and uncertainty. They don’t know what they’re going to get. They don’t know how many new brands they’re going to go through before they find one that lives up to the brand promise of the one they’re no longer happy with. But even with that type of homeostasis, if the brand promise is violated, customers will still bite the bullet and look for a new brand.
The worst part of breaking a brand promise is that your loyal customers who have been advocates will feel obligated to tell their friends, neighbors, and associates that they are no longer supporting your brand.
So, if you want to know how to add value to your business, honor your brand promise. Before you make any changes, be sure to discover, understand, and respect what your customers have come to expect. After all, it’s their brand. You are only the brand steward. When you start generating referrals, remember that it’s a double-edged sword. It’s not just setting customer expectations, it’s honoring them over the long term. Brand recognition is a result of carefully branding your product’s image, position, and promise. It takes years, so protect your investment! It’s the personality of your product.
Who We Are
Michael Houlihan and Bonnie Harvey co-authored the New York Times bestselling business book, The Barefoot Spirit: How Hardship, Hustle, and Heart Built America’s #1 Wine Brand. The book has been selected as recommended reading in the CEO Library for CEO Forum, the C-Suite Book Club, and numerous university classes on business and entrepreneurship. It chronicles their humble beginnings from the laundry room of a rented Sonoma County farmhouse to the board room of E&J Gallo, who ultimately acquired their brand and engaged them as brand consultants. Barefoot is now the world’s largest wine brand.
Beginning with virtually no money and no wine industry experience, they employed innovative ideas to overcome obstacles, create new markets and forge strategic alliances. They pioneered Worthy Cause Marketing and performance-based compensation. They built an internationally bestselling brand and received their industry’s “Hot Brand” award for several consecutive years.
They offer their Guiding Principles for Success (GPS) & Shelf Smarts courses to help consumer product brand builders achieve success. Their book, The Entrepreneurial Culture: 23 Ways To Engage and Empower Your People, helps corporations maximize the value of their human resources.
Currently they travel the world leading workshops, trainings, & keynoting at business schools, corporations, conferences. They are regular media guests and contributors to international publications and professional journals. They are C-Suite Network Advisors & Contributing Editors. Visit their popular business site at www.thebarefootspirit.com.
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