Rise of Brands: Why they are key to driving your business

What is the single most important asset of your company? I’m guessing that you said “our product.” But if you’re a modern business, your answer should be “our brand.” If you want to improve profits and maximize customer satisfaction, it’s time that you invested in branding!

Brands are increasingly becoming important in all industries. They are not only necessary for traditional brick-and-mortar stores and products; they are even more critical to online sellers and digital deliverables.

What is Added Value of a Brand?

Any product or service delivers value on four parameters:

Functional: This is what the product or service does for the buyer
Psychological: How it makes the customer feel owning or using the product or service
Social: The impact of the product on society in general or the user’s larger community or network
Financial: How the service or product helps the end user in terms of perceived value for money

The psychological, social and financial parameters are intrinsically linked to the brand, and often even the functional value. The brand image is not just how your customers perceive you; but also reflects on each of these values.

Why does a business need a brand?

A company’s brand is its primary way to communicate these values. As such, branding has a significant impact on the success of virtually every business that exists today. It impacts both customer acquisition and retention; it drives sales productivity while building loyalty.

Trends Increasing the Need for Branding:

Trend 1: Direct to Customer

Retailers provide a lot of value to customers by interacting with them and educating them on the value of the product. Their own reputation backs the product. For example, you would buy milk directly from the farmer and you trusted the farmer not to adulterate the milk because you had known him from childhood. Or you trusted the fruit-seller because you could always find her the next day and get a substitute for that rotten mango.

But when you buy directly from the producer channel, the process of discovery, trust, delivery – everything must be done remotely and this has to be communicated only through the brand.

Trend 2: E-Commerce

On an eCommerce marketplace like Amazon or Flipkart you are selling only on the basis of your ability to deliver a product that does what it claims, and also provides value for money. The marketplaces ‘own’ the customer data, so the only way to get repeat business is to build loyalty to your product.

In addition, the algorithms are not designed to favour you organically. So let’s say you find a nifty product like a router UPS when you’re buying a router on Amazon. Next time when you go into Amazon it is unlikely that it will pop up for you – you’ll have to search for it by name, as the e-commerce algorithm is likely to be busy promoting “you may also like” products to you. If the UPS brand has done its job, you’ll search for it, else you’ll just buy what’s recommended by Amazon – and that’s a win for the Amazon brand.

Trend 3: No-touch sales

Over the 18 months of the COVID-19 lockdown, we’ve gotten used to buying remotely. The buying cycle changed – we started researching the products online, identifying where they were sold, and then purchasing it, either as a “pick-up” or as home delivery. Of course, we will return to shops, but we will continue to research online and often make our decisions before we go to the shop. When there is no physical intervention, it is your brand that is the key salesperson. And it has to be powerful enough to help the customer withstand all the temptations in the retail format.

Trend 4: Rise of the higher-order customer

The vast majority of India is still evolving from being a scarcity economy with very little discretionary spending. Most purchases are still driven by the functional benefit. But we are moving up, and as soon as we go up Maslow’s hierarchy and stop worrying about food and shelter, brand matters even more.

In Maslow’s hierarchy, the basic needs are essentially what is required for survival. As we get higher up in this hierarchy of needs, our criteria for purchasing decisions change drastically.

Do we need an iPhone to make a few phone calls and enjoy Whatsapp? Not at all. But we want one anyway. Do we need to spend Rs 500 in Starbucks to have a “chai latte” when you could have freshly brewed milky tea for Rs 10 down the road? Nope. But we want to.

As more and more of India moves from needs to wants – and I really want for everyone to have the potential to make those choices – the brand becomes super important.

Trend 5: India as a Superpower

As a country, we have to become an economic superpower. There is no other way to provide a good living to our billions. And the easy way to do that is to add more intrinsic value to our production. We need to move up the value chain from commodity sales to brand sales.

This can be done even in agriculture. Barbados increased the premium for its sugar by branding it as “Barbados Reserve” and single-origin sugar. A public-private partnership helped to get more stores to stock this sugar and popularise it. Till this initiative took off 15 years ago, Barbados used to import brown sugar for its own consumption! When we brand commodities, we ensure greater value capture for the producers – the farmers, not the distributors and retailers.

Can you brand a banana? The answer is yes. Chiquita, Dole and Del Monte control 59% of global sales in the banana market! As per the International Institute for Environment and Development/Sustainable Food Lab 2012 report, only 2% of their retail value reaches farmers.

Conclusion:

Brands are a win-win for producers and consumers. Consumers derive greater value from their purchases through the non-functional, intrinsic benefits imbued by a brand. Producers are able to extract greater returns for delivering reliable products, consistently. To summarise, brands are required for a more trusting and trustworthy world.

About the author:

Jessie Paul, CEO, Paul Writer