KNOWLEDGE

// Articles

Ten answers about branding (part 1)

At the top management forum in Davos last January, top CEO's and other leading business executives agreed that corporate reputation is a more important measure of success than stock market performance, profitability and return on investment.

In Hong Kong, both Hong Kong Trade Development Council and Hong Kong General Chamber of Commerce preach the importance of branding. Recently, we read about the “Best of the Best” awards, in which Capital Magazine named Mercedes Benz, Nokia, Häagen Dazs, Cathay Pacific and Sony “The best of the Best for Executives 2003 ”.

But what is branding? What is a strong brand? Why is it so profitable and important? Does every company really have to think about it? How do you build one?

Read on, and you'll find some of the latest knowledge and some helpful tips on branding. And come back to this web site. Part two, where you will find more important answers on branding, will be published shortly.

1. What is branding?
Branding is the process of making your products, services and your company known, preferred and wanted for decided features in your decided target audiences.

Every company must consider four target audiences:
* Internal (staff and close collaboration partners)
* Market (buyers, prospects and providers)
* Owner groups (shareholders, including analysts, financial and stock markets)
* Society at large (including authorities, media, and potential employees)

Branding is about helping people in those audiences to know, understand and want your brand, be it the company, the products or services.

Note that branding is not for consumer goods only. Selling fashion shoes is obviously different from selling laser-welding equipment. But the differences are in the details, not in the principles. Products are made to make life or business better, and people are looking for solutions to their problems in business as in private life.

"Within technically sophisticated areas, where products are now changing with increasing speed, brands are doubly important – more important than brands for packaged consumer products, which are easier to comprehend since they remain basically unchanged for long periods of time,” said Dennis Carter, Marketing Director of Intel Corporation.

There are strong brands in every line of business – heating, shipping, insurances, conveyor belts, excavators; you name it. There are even companies trading in grain, bricks, plastic resin, wool, and sand that have developed strong brands. You may not have heard about them – but then again, you are not in their target audience.

2. What is a strong brand?
If I say “Mercedes”, you think of something else than if I say “Toyota”. Maybe of the sound of the engines, maybe about the design of the cars, maybe the financial performance of the companies. Maybe you think of the symbols, or maybe of an ad you have recently seen.

But whatever you think, the thought doesn't enter your mind by accident. It's put into your head by long-term, systematic, and skilful work by the brand people of the two companies. In short, you think about these brands the way the brand owner wants you to think.

Toyota and Mercedes are both strong brands. They differ , but both are well-known, well-defined, and trusted by millions of people in their chosen target audiences.

So how about your brand? Are you well known in your target audiences? Or are you on the fourth or fifth or eleventh place in the surveys? Is it clear to your buyers why choosing your products is better than choosing your competitors'? Are you the most trusted company in your business? If not, maybe you should start thinking about branding.

3. Why is a strong brand so profitable?
A strong brand is more profitable than weaker brands in all dimensions; it pays less, it charges more and it sells more. Moreover, it attracts employees that are more skilled.

A) Why strong brands buy cheaper.
* More companies want to sell to a strong brand. They want to deliver the volumes and have the strong brand on the client list. Therefore, the stronger brand can choose its suppliers among more providers, and the oversupply will reflect in the prices paid.

Importers want to import strong brands, distributors want to distribute them, and retailers want to sell them. A strong brand is a Very Important Person and the brand owner makes better deals and keeps a larger portion of the profit margin.

B) Why buyers pay more for a strong brand.
* More people know the strong brand name. And there's a solid connection between knowledge and attitude. The better known the more positive the attitude. And the more positive the attitude, the greater the willingness to pay the asked price.

* We all rather buy from someone we know than from a stranger. We feel more secure, and for this security we accept to pay a premium price. This is especially true when it comes to high-risk, high-investment products, as with corporate investments.

* More people know more benefits of the strong brand. Therefore, they are willing to pay more. Don't you agree a buyer knowing 100 percent of your benefits would be more likely to pay more, than a buyer knowing only 20 percent?

* More people know where to find the strong brand. Search costs go down. And more people trust the strong brand. This is very important in international business, where a buyer may buy a solution for eight, ten or even more countries. It's obvious that the better-known company is more easily accepted – even when the price is higher.

C) Why strong brands sell more.
* When more people know about the brand, by mere statistics more people will buy it. Which equals more sales.

* Branding tells people in your chosen target audience why buying from you is the best for them. And people – consumers or professionals – want to buy the best.

D) Why strong brands attract better people.
* It looks better on the C.V. and feels better to work for Nike than for JumpStar. So strong brands attract more qualified people for every position and secure both the succession and the success of the company.

4. How can Tomorrow help you?
The Tomorrow Group is a specialist consultancy firm in business branding, marketing and communications. The founders have over 20 years of experience each from the international business arena.

We have assisted small, large, and super-large companies in building brands and sales on regional and global markets. In 2002 we founded the first specialist agency in the field in Hong Kong, and we met great interest from Hong Kong based companies wanting to develop their brands internationally.

Today we help companies increase their brand recognition in Hong Kong, China, and Asia. Some of our clients are ABB, Bacou-Dalloz, Finnair, Nolato, Swedish Trade Council, and Uniross. All of them international organizations concerned about the strengthening of their brands.

We could assist you as well. Our processes and work methods are effective and proven to work. We have vast experience of aligning the internal forces in a company, and make all important people see, accept, focus and work towards the same target. The first results are more coherent behaviour, less friction, clearer vision, and more productive internal work. The ultimate result is a more consistent and powerful image and appearance on the markets.

Should you like to know more, please contact us .