Brand Equity and Creating Long-term Value

Unfortunately, we've stopped investing in lasting brands and are in an era where branding comes last.

Please have one eye on the Microscope and the other eye on a Telescope

A Chat GPT inquiry on brands possessing the most brand equity produces Apple, Nike, Starbucks, Louis Vuitton, Rolex, Mercedes, Disney, Sony, among others. What do they all have in common? They don't pride on being the cheapest product in their category. What caused this occurrence? The unequivocal response is the significance of long-term brand growth and the value of brand equity to the organization. For example, Apple has a valuation of $300 billion in a market size of $2.7 trillion, whereas Louis Vuitton is valued at $40 billion in a market of $450 billion.

The Microscope approach

1. Offer a discount on marketplaces and drive sales
2. A pure performance marketing strategy
3. Advertising can sell ordinary products
4. Customers want the cheapest product
5. D2C is the best way to go

All five are tactical, short-term, and myopic. They undermine profitability, exhibit insufficient distinction, scalability, and consumer allegiance.?

Substantial advertising budgets during the television era enhanced commonplace products, encouraging consumers to purchase beyond their necessities and thereby enriching Procter and Gamble. P&G had a model that worked then which was make products like Tide support it with top dollar advertising make profits, reemploy those profits to buy more TV ads and Vola you have a great business model. This reminds me of the words of the Greek philosopher, Heraclitus

“No man ever steps in the same river twice, for it’s not the same river, and he’s not the same man.”

The same way customer have changed and so have the mediums that influenced their choices. I recall a statement from the former head of the U.S.patent and trademark office "Almost everything we can realistically imagine that we need has been invented."

I try and delve into problems associated with each of the five aforementioned points.

1. Run constant discounts to drive monthly run rate

The most expedient method to diminish brand equity. Consumers unconsciously associate discounted products with inadequate quality, obsolescence, scarcity, or impending closure. Utilizing discounts to enhance sales is detrimental to brands. E-commerce sectors in emerging nations such as India generate substantial volumes driven by discounts, rendering this a need. Market volume commitment escalates with augmented discounts. However, brand custodians must have the heart to say no to bad business read more the tight rope walk

2. A pure performance marketing approach

We can classify the majority of customers into two types.

A) People who want to save time.

B) People who want to kill time.

Without specifying any social networking platform in particular, to attract clients willing to pay for a premium product, target your advertisements toward time-constrained individuals, as they possess the financial resources. TikTok users are improbable purchasers of high-value things. If you want your ads to appear alongside videos of cats in trees, that's a topic for another conversation. Likewise, investing substantial funds in soap operas is an imprudent strategy.

Allocate time to engage with customers in the A type. Their customary pattern comprises 20–30 minutes with a prominent daily newspaper, monitoring stock markets via a preferred application, briefly looking up Google Maps for traffic conditions on route to work, 30 minutes in an airport lounge prior to departure, and a drive that exposes them to hoardings or a podcast. That's where your ads should be, and performance marketing on those channels is not a ready-boxed product because those ads perform; they don't just inform.

you want to advertise to the innovators and early adopters, that 16% is key, because the rest will follow and its no secret that its unlikely that people scrolling TikTok or watching soap opera TV shows or browsing products on discount marketplaces have the influence to drive the rest of the customers.

3. Advertising can sell ordinary products

Consumers are aware of their purchases. Therefore, the product must be of high quality. Your product must deliver on its commitment to resolve an issue. Google reviews, Amazon reviews, and social media posts can irrevocably undermine brand goodwill, leading to business closures. This is the point at which brand value is paramount.

Brand who have invested in driving up their value with brand building efforts over a long period of time are more capable and can endure product failures, recalls, and adverse reviews. The iPhone 6 bend gate, Maggi MSG controversy, Cola pesticide issue, and Cadbury worm, Google Bard (now Gemini) incident are now in the past, and owing to brand goodwill and consumer loyalty, these brands have triumphed.

Promotion cannot salvage inferior products. Consequently, investment in research and development, competition analysis, packaging stress testing, thorough product trials, soft launches in controlled settings, legal compliance, cultural alignment, and a product promise delivery assessment are necessary.

4. Customers want the cheapest products

Contrary to discounting, as discussed in point 1, people perceive affordability—especially when associated with excellent quality—as subpar. The Tata Nano was a passion project of Ratan Naval Tata. Seeing a family of four riding a scooter and expressing concern for their safety motivated him to design a secure, fuel-efficient, and cost-effective automobile for middle-class Indian families. Cut to the The Tata Nano case study

The least expensive option may not align with the buyer's preferences. Brands aim to enhance individuals' self-esteem; therefore, any contrary approach is destined to fail. Consumers don apparel featuring prominent brands to enhance their self-esteem. Opulence is accessible to individuals who do not depend on brands. What is the rationale behind Mr. Zuckerberg's pricing of $450 for a logo-less black crewneck T-shirt?Billionaire fashion

5. D2C is the best way to go

So says Shopify, Google and Meta coz you ll build your D2C website on Shopify, advertise on Google and Meta Platforms and pay CAC's that never justify your LTV.

There are benefits to selling outside of marketplaces. You will obtain superior data, regulate pricing, and enhance the client experience. A purely direct-to-consumer model will consistently face challenges in achieving scalability. The alternative channel of D2C should not be conflated with its only channel.

D2C websites also come with additional burdens of complying to DPDP norms

Every company generates terabytes of data, but does it possess the technology to leverage it? Entrepreneurs find it challenging to confront data theft, cyber hacking, and other contemporary issues.

In Conclusion: Have one eye on the telescope

Entrepreneurs ought to focus on the cultivation of long-term value rather than employing techniques that diminish the business's worth. This implies trenspotting unlike a BlackBerry that simply dint believe that apps and multimedia would ever make it to phones, investing slightly ahead of the curve (plethora of MNC investing in healthier F&B), Moving with demographics (Fintech products that are pure digital) etc.

The Benefits of creating brand value with one eye on the telescope are mentioned below

1.??????? Customer Loyalty and Retention

2.??????? Pricing Power and Premium Pricing

3.??????? Reduced Marketing Costs

4.??????? Competitive Advantage

5.??????? Easier Product Launches and Brand Extensions

6.??????? Greater Financial Value and Company Valuation

7.??????? Higher Employee Morale and Recruitment

8.??????? Resilience in Times of Crisis

9.??????? Increased Market Share and Customer Acquisition

10.? Building Partnerships and Alliances