How Powerful Brands Create Demand, Add Functional Value, and Drive Markets
Key points on how a powerful brand is an significant asset:
Powerful brands lie at the center of all marketing efforts, and make everything else in the marketing mix much easier. The brand drives demand for existing products and provides pricing power within their industry
Powerful brands also unlock markets. In the case of market-driving brands, the brand can be the tastemakers of the industry
Lastly, powerful brands can add significant functional value to their products, shaping how consumers experience and perform with the product
If you’re a fan of video games, you know what it’s like to play on different difficulty levels. If you’re really feeling your oats, you play on ‘hard mode’, just to give yourself the extra challenge. Running a company is a bit like playing one big, complex, unpredictable video game. And by default, the difficulty level is set to hard. It turns out though, that there is an ‘easy mode’ - it’s called having a powerful brand.
So how exactly do powerful brands become incredible assets to their organizations? Let’s dive in
Powerful Brands Drive Demand
Let’s start with the obvious: A powerful brand drives demand for your entire product portfolio. You’ll benefit from repeat patronage and higher lifetime customer value. Greater demand also means more flexibility with pricing - powerful brands have a greater pricing power, and can also get more creative with their pricing tactics. And overall, marketing efforts becomes much easier, since your most loyal customers become your evangelists - spreading the gospel to their friends and family; generating interest in your brand through the ever-powerful word of mouth.
But beyond demand for existing products, a great brand also opens up opportunities not otherwise possible. We see this with new products, for example. As any business knows, it’s hard work launching a new product from scratch. When Netflix began its streaming service, it took them 5 years to get their first 25 million customers. But for Disney, who didn’t come into the streaming world until 2019?
They accomplished that within the first quarter of launching Disney+. In fact, they had 10 million subscribers on the first day alone! Disney’s overnight success was owed to the power of its brand and its existing fan base that was eager to adopt a new product.
Powerful Brands can be Market-Driving Forces
A powerful brand even has the ability to create a new market. Consider Airbnb. The core platform – allowing homeowners to rent out their properties – is often heralded for its innovation, boldness, and originality. However, this idea wasn’t new at all. HomeAway launched in 2004, and Vrbo started way back in 1995 – when Airbnb’s founder Brian Chesky was 14. He wouldn’t go on to start his business until 2008.
Instead, it was the power of AirBnB’s brand that framed this experience-based product in an entirely new light. While the existing players chugged along, highlighting ‘lower than hotel’ prices, Airbnb went deeper. From the very beginning, they weren’t merely the cheaper option, they were the ones that delivered the intangible: a sense of belonging. The brand conveyed a simple, but profound message to consumers that previous platforms didn’t.
Along similar lines, powerful brands can also drive the preferences of the market itself. Strong brands can master their market orientation. Most brands are market-driven: they undertake market research, understand what consumers already want, and then work to deliver on these demands. But this doesn’t always have to be the case. Powerful brands are oftentimes market driving brands: they can tell consumers what they should want, and then deliver that to them.
You can see this most clearly in the luxury industry, where market-driving brands such as Chanel, Hermes, and Louis Vuitton invest very little in understanding existing consumer preferences. Instead, they are the tastemakers of the fashionworld, defining what should be desired, and what should be considered high fashion.
How Powerful Brands add Functional Value to their Products
But perhaps the strongest ability of a powerful brand is its ability to alter your perception of reality itself.
Recall that the brand, from the perspective of the consumer, is a constellation of attributes and associations. The brand image exists in the brain of the consumer, and in the aggregate mind of the market. And this cluster of associations doesn’t just sit there - it alters how we experience the brand’s products.
Consider the classic case of Coca-Cola. Results from the classic Pepsi Challenge indicated that, when the brand is hidden and soda is judged on its merit alone, people generally prefer Pepsi. But when the brand is present, people claim that Coke tastes better! They thought they were enjoying the product, but they were actually enjoying the brand.
Powerful brands don’t just alter your perception of taste; they influence the perception of performance as well. In one study, participants were given identical sunglasses. In one condition, they slapped on the logo and told them they were Ray-Ban sunglasses, while the other they remained generic - without the brand. In the Ray-Ban group, they reported that it actually blocked the sun better!
Final Thoughts on The Power of a Brand
Having a powerful brand can be a game changer. So think about your company’s brand. What kind of power do they have, and what impact is it having on consumer psychology? Can you easily introduce a new product or will you have to do legwork like Netflix? Can your brand drive demand, unlock opportunity, and alter the perceptions of the market?
If so, you’re company’s already operating on easy mode. But if not, it may be a good time to start thinking about branding psychology, and to begin establishing a stronger connection with your customers and market.
Photo by Alora Griffiths on Unsplash
About the author
Matt Johnson, PhD is a researcher, writer, and consumer neuroscientist focusing on the application of psychology to branding. He is the author of the best-selling consumer psychology book Blindsight, and Branding That Means Business (Economist Books, Fall 2022). Contact Matt for speaking engagements, opportunities to collaborate, or just to say hello
References for How Sustainable Companies can sell Green Products by Going Beyond Sustainability
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