What’s the value of a brand? Why does a consumer pay more for a Rolls Royce than a Mercedes, or more for a Mercedes than a Toyota, or more for a Toyota than a Nissan, and so on. Most people will respond, “well it’s a better car!” So how did it get to become a better car? (If it is really a better car, I’m not really convinced that this would be the main reason). Some might say, “It’s more prestigious”, sure I can go along with that. But no matter what, the Brand is very important to a company. As Henry Crowell, one of the founders of Quaker Oates, once said to his partner, “…You can keep the company, if I can keep the name…”

When I was teaching marketing at California State Polytechnic University, I wanted to drive this point home with my students. Brand management is one of the most lucrative segments of an established company. Companies usually guard the image of their Brand very carefully. They are very defensive as to how their Brand is used or represented, because it has direct repercussions, “Losing the edge!”, starting from scratch, or worse, starting from behind scratch. Audi knows this very well. 

We all know and encounter brands every day. Yet, as lay people, we don’t really analyze and understand that a brand has a real monetary value for a company, because it drives decisions, and gives the owner of the brand a competitive edge or advantage.

A Brand pushes people to make decisions based on the fundamental principles of marketing, without a concious effort. A brand, that has been established as a quality brand, will not only encourage the consumer to buy the product; but it will encourage them to pay more for an equivalent product, and be more confident about the quality.

As an example, if there were two identical stereo systems, one with a “no-name” brand, and one with the “Sony” brand, I will go out on a limb and say, if both of these systems had the same features, dimensions and color along with the same exact price, the Sony would command a 100% market share for that product. What if the Sony system was 10% higher in price? Then there would be some consumers that jump to the other side, right? Probably not too many though. What if it was 20% or 30% premium? Depends on the product or market, right? There will be a point at which the price premium will force 50% of the consumers to opt out of buying the Sony ad buy the no-name brand. This “Premium on price“, multiplied by the “number of product sales potential“ is one part of the equation when calculating the value of the Brand.

The value of the brand also increases by evaluating the savings that the Brand owner enjoys because it is easier to promote a new version of the product. Another advantage or savings comes from the spillover of the promotion effort reduction to ancilliary products. Let’s look at an example.

Apple introduced the IPod and it took off as a rocket amid a market of hundreds of MP3 players that had been in that space for a long time. No one can dispute that the “iPod” is a Brand, and it has real value as a Brand. Because of the original iPod, subsequent versions like the iPod Nano, or the iPod shuffle, enjoyed promotion with a lot less budget thrown into marketing. Now with the new iPhone, the same phenomenon is spilling over. So the value to Apple is not only the value of how much more they can sell the iPod over the competing MP3 devices only, but where else it can save and/or enhance in the company’s bottom line. 

Many companies have a different name than their brands. For instance, if I ask people where can I get a “Big Mac”, most people will know the company that owns the brand and say, “McDonalds”. If I ask “who makes Windows” most people will think of Microsoft, even though companies like Anderson Windows, and Pella make real windows that go on houses. If I utter the words, “Search Engine”, most people will say “Google”, although a few years back they would have said “Yahoo”, of course in the case of Yahoo!, it would be an example of a brand that lost its luster as well as market share.

Some companies have brands that are bigger than their names, we can call these Genericized Brands or a Genericized Trademarks, in some cases, where a consumer might use the brand interchangeably for any company’s equivalent product without regard to the original company that established the brand. Examples of this would be Kleenex, Q-Tips, Xerox, Walkman, etc. When someone says, “Can you give me a Kleenex?” It shoul really be, “Can you give me a tissue?”, or “I will xerox it and send it to you”. I think you get the idea.

If you are working on a product, whether it is a large company or one that you are starting, work on wstablishing and owning a brand. Remember, Googling someone might have meant something different before the year 2000. The Google Brand established that.

 

Diran Afarian
Jan 7, 2008 

I heard from a well connected friend that Yahoo! will be opening its source code to developers, giving them a chance for collaborating with the search giant.

Can you imagine the possibilities? One that I can think about, if they open their search databases, is to know what people are searching for. For instance, if I am in the shoe business, and I knew people are searching for shoe laces, or velcro top, then I would make special pages that deal with those issues. If I was in the music business and I knew there was a lot of searches being conducted on Britney Spears, then I could add content on the site accordingly.

Now, when I help sites with SEO and SEM issues, I scour the news and video sites looking at the issues most discussed, and most commented on, then add content on sites that deal with those issues. I try to of course stay on the subject, because if the site is about shoes, and the content is talking about Britney Spears, unless Britney Spears bought some shoes and that’s what the article is talking about, then it is not going to get good placement on the Search Engines.

This has been in effect on the web since the beginning when people would put “S-E-X” in their meta tags, with the hopes of attracting users. Well, the ones that came were disappointed and never came back to the site etc.

Oh, No! I went off on a tangent. Sorry, I just love SEO and SEM issues so much that I go off on a tangent sometimes. Back to our topic.

I, for one, am very excited about the possibilities. Of course I am not going to discuss everything that is good about it, because even in Black Jack, one of the cards is still hidden. I have a few things that I would like to implement once this happens. And I have promissed myself that I will have it done quickly.

Ok, I guess I can share another one, what if Yahoo! opened it’s user pages and somehow was thinking of taking Rupert Murdock up on his offer of the MySpace for Yahoo! Stock trade? Would this be big? Wow! would it ever. This would send Google and Facebook in a frenzy. What could you do then?

More on this later. I can’t wait for the official announcement

It seems like Skype is disrupting another industry, the mobile phone industry. With their “3SkypePhone” you can supposedly call using your wirelss network when you are near a wifi connection or hotspot.

So what does this mean? This means you can make free calls while you are at home, at the office, at starbucks, in the airport et,c etc. Isn’t that where the Cell phone companies make the most money from you? Specially at the airport.

 Well, if these phone come to the U.S. (Currently only available at U.K & Italy and a handful of other European countries), you would think Ebay would do well, right? Maybe. Most people might buy Ebay stock in anticipation that they will reap the rewards and so the stock will go up.

But what about other hidden companies that might stand to benefit from such a service being launched? Say a company that provides Wifi Hotspot service. If I think latterally, then I would buy stock in T-Mobile (Not a recommendation, just what I would do). Why T-Mobile? Well they have already established a model for Wifi Hotspots, they provide hotspots in airports, starbucks etc. I for one would get an account and have access to wifi in as many places as possible.

Just my opinion. I welcome yours.

By: Diran Afarian

Diran Afarian is a seasoned marketing executive with 12+ years of experience in the Technology industry, and an MBA in Marketing.

Other articles submitted include those found on www.BuildWebsite.com 
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