Posts Tagged ‘value’

III. The Value Creating Power of ‘Brand’

Thursday, January 13th, 2011

Part III of an extended exploration of nature and value of “Branding” and practical discussion of how to create, strengthen and extract greater value from your ‘Brand’

Successful branding can be hugely valuable, far beyond the mere functioning of the product or service itself.  Think Google and Facebook, Coca Cola, Mercedes Benz, Apple, Nike, Whole Foods, the Rolling Stones ….  

LYCRA brand elastane fibers, a phenomenal money-maker for its inventor, the DuPont Company (and for current owner, Invista) is a great story of branding success.  Even though DuPont didn’t make the LYCRA swimsuit or lingerie, or even the stretchy fabric that the garment is cut from, DuPont’s investment in branding has made LYCRA one of the most respected, well known and valuable names in fashion and functional apparel.   

During its heyday, DuPont’s LYCRA fibers commanded huge market shares –and prices often 50 percent higher than competing spandex fibers – translating into hundreds of millions of dollars of extra profits, year after year, for DuPont.  This, even though the LYCRA fiber was often technically inferior – in the length of its stretchiness, the strength of its snap-back, its resistance to repeated trips through the washing machine and dryer – compared to the competing brands. 

DuPont pursued a decades-long, comprehensive, coordinated strategy to reinforce the mystique and exclusivity of the LYCRA name, including:

   – Targeted advertising and co-promotions

   – Support, encouragement and publicity for innovative fashion designers

   – Support for sports science research, product development and promotion

   – Leadership in end user focused product and technology development

The resulting avalanche of profits, year-in year-out, was DuPont’s reward for years of aggressive investment in building, maintaining and protecting the LYCRA brand.

Other examples of the value added by a company’s or product’s good name and reputation?  Look no further than Facebook, Intel microprocessor chips, or Gucci bags, a Niemann Marcus, GatorAide or your latest i-accessory.   

The extra value represented by this ‘brand equity’ isn’t just a psychic reward for market success.  It has real, money-in-the-bank consequences:

   – Enhanced market share points and growth rates

   – Opportunities to charge premium prices

   – Opening up new markets and reducing the risks of introducing new products

    – Greater market value for your company

And a final, cautionary, note:  “Brand” isn’t necessarily forever.  Neglect and abuse can degrade the value of your brand just as surely as they can wreck the value of your house.  Think Lehmann Bros, Lindsay Lohan, Oldsmobile or Gateway computers. 

 Maintaining the hard earned value of your brand requires continuing attention and investment – in new product development, in perfecting news ways of relating with your customers, in diligent conversation with your marketplace, and in continuing excellence in execution.