Every brand has value. Understanding how to capture and promote that brand value can yield substantial returns. Consumers will pay more for a product with a higher brand value. Consider the prices for bottled water. Local water brands cost a fraction of recognized national brands like Smartwater or Dasani. The perceived brand value justifies the difference in price.
Increasing your brand value can increase revenue, but many companies can’t define, let alone validate, their brand value.
Understanding Brand Value
Brand value can be hard to quantify, but it’s simple to define – it’s the difference between what a product costs and what customers are willing to pay.
To illustrate, let’s return to our bottled water example. A study by the Arad Group estimated a gallon of bottled water costs $1.22, which is 300 times the cost of tap water. Consumers will pay more for bottled water because they believe it is purer than tap water. Consumers are willing to pay $1.98 for a liter of SmartWater because of its brand value.
Three factors drive brand value:
1. Uniqueness – What makes your brand stand out from the competition?
2. Proprietary – What can the brand claim that no one else can?
3. Value – Can the customer perceive value, i.e., “What’s in it for me?”
Building Brand Value
The objective of any brand is to build brand equity, and companies spend millions of dollars on increasing brand value with expensive ad campaigns and expanding brand reach through social media campaigns and digital media outlets.
Brand equity is the customers’ perceived value based on their brand experience. The more brand equity you create, the more you can charge. Brand equity is also transferrable to other products with the same brand.
You can improve your brand equity and increase your brand value by focusing on three areas:
1. Customer experience – What does the customer get from your brand beyond practical features? What is their emotional response to the brand? Isolate that emotional response and give customers a better sales and service experience. Be sure that positive customer experience extends to advertising, packaging, collateral, online content, and customer-facing material to reinforce your brand value.
2. Price integrity – Your brand is worth what customers will pay. Discounting goods and services to increase sales diminishes brand value. If you are selling shoes for $200 a pair, but the customer can buy those same shoes on sale for $100, they will never be willing to pay full price again. Discounting and holding periodic sales can improve the customer experience by building anticipation and promoting inclusion but uses sales to increase brand loyalty without degrading brand value.
3. Targeting influencers – Name brands use celebrity spokespersons because they hold sway with consumers. Customers gravitate toward products endorsed by those they admire. Targeting industry influencers who stand behind your brand increases brand value.
The good news is you don’t need a big marketing budget to build brand value. All you need is the right approach. The place to start is with your customers. Understand their likes and dislikes and what they love about your brand. Identify what makes your brand exclusive and desirable. Build on that emotional response. The more you can connect with your customers and continue to delight them, the more brand equity you will have and the greater the brand value.
John Gumas is CEO of Gumas Advertising based in San Francisco, co-author of Challenger Brand Marketing (2022), and author of Marketing Smart (2010).