Benefits of a strong brand

Why invest in an asset that's tricky to value?

Building a strong brand is a choice.

You choose to consciously do it; or not.

Why however would you decide to invest money into building a strong brand, an intangible asset?

What are the tangible benefits of building a strong brand?

  1. Better margin - strong brands typically command a higher financial margin for their products. Consumer perception of good brands compels people to be more price elastic in comparison to offerings from competitors. Popularity of strong brand products stays high even as prices go higher.
  2. Lower customer acquisition costs - the reputation of a good brand precedes any form of active promotion of that brand's products, lowering the cost of customers acquisition and retention. If you are spending a lot of money trying to build your customer base, chances are that the money would be better spent building the brand rather than paying Google, or your ad agency, for their expensive services.
  3. Attract better talent - above all else, talented people want to work for companies who's brand name they would be proud to have on their resume. Good brands attract good people who make those brands even stronger; it's a perfect positive reinforcing feedback loop.
  4. Resilience - good brands weather market fluctuations far better than weaker brands; they feel less of a drip when times are tough and come back quicker and stronger when conditions normalise again.
  5. Lower input costs - supplier businesses want to work with strong brands and in many cases will lower their prices to ensure that relationship is a fruitful one for all concerned.
  6. Secure better suppliers - 'brands attract brands' is the adage and strong brands tend to partner easily with other quality brands. This makes lucrative partnerships easier and enables strong brands to become even stronger.
  7. Less overall resistance - business tends to function far better when there is trust between parties. With high levels of trust, relationships between people happen smoothly and easily. A strong brand is like a trust lubricant, it ensures that there is less relational resistance to moving things along.  

Considering these very tangible benefits, it would seem pretty obvious that building a strong brand should be everyone's priority #1.

What isn't perhaps overly obvious is that the cost of doing business decrease exponentially; while simultaneously the number of opportunities to capitalise increases the stronger the brand reputation of that business becomes.

It's this fact that makes investing in companies with good brands the very best thing that you can do with your money. Their intangible brand reputation acts like a giant spinning fly-wheel creating even more wealth and opportunity as it turns.

Just ask Warren Buffett what he really likes about Coca Cola and Apple.