When you hear the word "brand," chances are you think of an ad campaign or other marketing plan. But seeing brand in such narrow terms misses out on its true potential to help you make efficient and effective strategic decisions that will drive profitable growth for your company.
What brand isn't
It isn't just about advertising or other forms of marketing; neither is it just about your logo; nor is it just about your packaging or price. It's not even about your company's overall identity.
What brand is
For customers and prospects, brand is a promise a company makes to the market, and the market expects it to deliver. When you buy an Apple product, you do so with the belief that you'll receive certain benefits from this product—benefits that Apple, either intentionally or unintentionally, has promised to deliver.
But few people appreciate that the true potential for brand lies in seeing it from the perspective of the company itself. Using brand to its full potential turns it into a powerful management tool, one that helps unite your entire company—from HR to operations to sales and marketing—around your promise to the market. This promise then guides every decision and action, and thereby drives the value of your company, either on the balance sheet or income statement.
One of the key ways to drive this value is through more effective decision-making. Every entrepreneur and manager has to make decisions, sometimes daily, based on incomplete information. For example, how do you decide which job candidate to hire? How do you decide what price to charge? How do you decide whether an ad campaign is effective?
Use the following formula to ensure that you and your management team make the best strategic decisions day to day: Brand = The value of a promise consistently kept.
Let's look at each element in that formula:
Value
A brand has value that shows up on the balance sheet and impacts the income statement. In some sectors, it has accounted for up to 40% of the enterprise value of a company. And GAAP rules now clearly indicate that breaking out the brand's value as its own line item from the goodwill bucket on the balance sheet is prudent accounting practice.
For every strategic decision you make, ask yourself: will the result increase or decrease the value of my brand and company—and how can I measure it to be sure? If you believe the result will, ultimately, increase your firm's value, you're probably headed in the right direction, even if in the short term it has a negative effect on revenue or profitability.
To assess whether you're adding value through your brand investments, there are a few options:
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