A successful brand is the most valuable resource a company has. In fact, one authority speculates that brands are so valuable that many companies include a “statement of value” addendum to their balance sheets to include intangibles such as the value of their brands. Brands are used as external cues to taste, design, qualify, prestige, value and so forth. In other words, consumers associate the value of a product with the brand. For example, the value of Kodak, Sony, Coca-cola, Toyota and Microsoft is indisputable. One estimate of the value of Coca-cola, one of the world’s most valuable brand places it at over $35 billion. How does a brand create value to the customer? Why do certain brands have more value than others? How does a brand’s value with customer increase its profits?
The purpose of this paper is to review core literature to briefly define brand value and how customer-focused marketing increases brand value and ultimately profitability.
The BIG Deal With Branding
A brand is a distinguishing name and/or symbol intended to identity the goods or services of either one seller or a group of sellers, and to differentiate those goods or services from those of competitors (Aaker, 1991; Stanton, 1994, and Kotler, 1996). A brand thus signals to the customer the source of the product, and protects both the customer and the producer from competitors who would attempt to provide products that appear to be identical.
Today, it is widely understood that brands play an imperative role in generating and sustaining the financial performance of branded businesses, such as McDonald’s, Coca-Cola, Mercedes, and Apple.
With growing competition and saturation in virtually every industry, strong brands help companies communicate why their products and services are uniquely able to satisfy customer needs. (Aaker1995; Keller 1993). Since industries operate in an environment where the functional differences between products and services have been narrowed to the point of near invisibility by the adoption of total quality management a distinctive product image is most important.
As products become more complex and the market place more crowded, consumers rely more on the products image or “branding” than its actual attributes in making purchase decisions. Therefore, branding provide the basis for establishing meaningful differences between competing offers which, in turn, has a significant effect on how the customer perceives a product and they associate certain attribute to the brand.
As an example, two "unbranded" credit cards may deliver the exact same set of features in terms of fees structures, APR, acceptance, credit lines, and so on. As long as these two products remain unbranded, they will be undifferentiated and considered equivalent to the user. However, if we label one card "American Express" and the other "Value Card,” most users will attribute additional, intrinsic-value to the American Express product. The two branded credit cards are no longer undifferentiated; one becomes more “preferred” than the other. The same concept applies to service industries such as telecommunications or hospitality, but the key question is why does the American Express product become “preferred” over the other product when they essentially perform the same function? The answer is simple—“brand value.
Conceptualizing Brand Value
The ability of a businesses, like American Express, to differentiate themselves from their competitors and cultivate this “added” or “intrinsic “value that customers attribute to their products or services becomes one the principles in which companies can begin to build brand value. Brand Value can be...