The Importance of Branding and Brand Culture for Entrepreneurs

The Importance of Branding

Branding has grown to be one of the most critical aspects of business strategy. Individuals may believe it is merely a function of advertising. It is central to creating customer value and is vital for both beginning and maintaining a competitive advantage. However, Startups often make the mistake of deprioritizing funds for branding. After all, it is natural to focus on sales or attracting investors when resources are scarce. Yet without effectively branding their products or services, entrepreneurs run the risk of having their offerings become a form of "me-too" products. What this means is that the products or service appears to have been designed with the sole purpose of bearing similarity to a leading brand, rather than creating something that has more value for the customer. 

Unfortunately, this is where a significant number of newly launched products and services fail. Entrepreneurs must understand that brand building must be done initially and must go hand in hand with the business strategy for it to be effective. This paper will explore the importance of building a brand culture and further expand into the four components that make up the brand value.

The Importance of Brand Cultures 

One can think of a brand as the culture of the product. Much like a human culture - which utilizes history, sociology, and anthropology to understand it - brands acquire meaning or connotations as they circulate in society. Over time, these meanings become conventional and are widely accepted as "truths" about the product of service. It is at this point that the product or service has acquired a culture of sorts. 

When a new product is introduced to the market, it becomes recognizable by the name, logo, and packaging color. However, the brand in itself does not exist yet beyond its unique design features. It is only when more and more people begin to associate the logo with their unique experiences, with advertisements, films, sporting events, and conversations with friends, that the brand truly begins to capture meaning. Once this process is repeated with many individuals in a society, brand couture is formed. 

To put the importance of brand building into perspective, 94% of the world’s population recognizes the Coca-Cola logo. That puts the brand name right beneath “okay” as the most understood term in the world. The red and white logo is recognized at an international level regardless of language, geographic distance, or socioeconomic status. To go even further, it is safe to assume all said individuals have some personal anecdote associated with the brand, whether they have tried it themselves, have had close friends or family members purchase the product, or have seen the soft drink's advertisements. 

The Four Components of Brand Value

As previously mentioned, brand cultures can significantly affect the perception of customer value. Sticking with the Coca-Cola example, if we were to place a branded Coca-Cola can and an unbranded one in front of a consumer, they would likely choose the branded can even though the two products may be physically identical without the brand culture. It is here where the four components come into play through stories, images, and associations of the brand culture.

Reputation Value

Brands serve as “containers” of reputation. Products and services have tangible features that deliver on their consumer’s goals, whether it is dish soap that leaves plates clean, a jacket that keeps you warm during the winter months, or flights that take off on time. Customers are always taking on risk when they purchase a product, particularly for those kinds of products that will be utilized in the future and cannot immediately discern if they will be of high quality before the purchase is complete (think a new car, a new brand of tomato sauce, or a software program). For this reason, customers get added value from products or services that lower this risk of future performance failure. When there is a risk inherent in a product, customers are usually willing to pay to reduce this risk. This is where the branding comes in: brands operate as a signaling mechanism to increase a customer's confidence that the product or service will provide the expected quality time and time again. The history of a product or service experience, both successful or not, is spread through stories and is ultimately aggregated to form part of the brand culture.

Relationship Value

As previously mentioned, brands communicate that the firm produces goods and services that can be trusted in the long-run, even when future customer needs may evolve. For many products, customer uses and conditions cannot be fully anticipated. A significant aspect of product value is the perception that the company will respond in a desired manner, much as it has done in the past. Once again, the brand is the vessel that carries the consumer's value, making the company reliable and consequently building a customer-firm relationship based on trust. 

Experiential Value

Entrepreneurs must brand their products and services as particularly useful in delivering on a single benefit desired by customers. This is because the brand's heuristic value provides for considerable savings in consumer search costs and in need to process new information to make effective purchasing choices continually. For instance, Procter & Gamble has an extensive array of detergent brands, each designed to solve a particular cleaning product: tough stain removal, washing delicates, all-temperature washing, etc. From a psychological standpoint, the brand acts as a perceptual frame that highlights a particular benefit delivered by the product or service, ultimately shaping their product experiences. 

Symbolic Value

Finally, brands act as symbols that express values and identities that dictate how individuals say their statuses, lifestyles, social identities, and even their political views. Think of how Nike became a powerful marker of American ideals of perseverance, strength, and achievement. Apple became the symbol of rebelliousness, creativity, and libertarian values. When these symbolic values become a convention in a brand's culture, it often creates a halo effect on the other dimensions of brand value. Entrepreneurs must acknowledge that a brand carries three distinct sizes to its symbolic significance: the desired physical experience when consuming the product or service, the creation of social distinction, and the use of the brand symbol to forge solidarity or identification with others. 

Concluding Remarks

The most influential brands are those made up of various, if not all, of the four branding culture components. Entrepreneurs must understand that one part may take priority over another and become the primary driver. Simultaneously, the four components overlap, how an entrepreneur chooses to give importance to each component will depend on the target segment, product category, and the local culture. In addition to understanding the elements that make up brand culture, entrepreneurs must anticipate institutional shifts rapidly. Having the ability to align brand strategy to remain relevant, entrepreneurs will gain a considerable advantage over those who refuse to adapt to change. 

1. Find an example where a brand overtly exploited its consumers through branding while failing to deliver on value. How did they do so? What was the backlash they received?
2. Think of the luxury goods industry. People may often critique luxury branding for feeding on consumers' desires to be seen as affluent while ignoring social welfare issues. Do you agree with this statement? Are luxury brands inherently wrong for wanting to create a heightened sense of decadence or wealth for those who can afford it?

Answer rating: 100% (QA)

1 Theranos established back in 2003 is an ideal example of a brand that duped its consumers through a falsified branding Theranos made audacious claims of revolutionizing blood testing with their grou... View the full answer