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How Your Brand Really Makes You Money

Updated: Oct 5, 2022

Research shows that a strong brand can seriously increase profits.

The other day, I was lunching with a CEO, and he was explaining why his company was cutting their marketing budget. I was working hard to stay objective.

“Our brand is established,” he said, raising his hand for emphasis. “We are where we need to be, and I can’t justify spending any more money.” Then, with a flourish, he asked what he thought was a rhetorical question, “I mean, what will it get me? What’s a brand really worth?”

Well, according to this article in the Harvard Business Review, a brand is worth a lot more than the CEO imagined.

The startling conclusion of a study on brand markups and brand preferences was that the value of brands has increased a lot in just over 15 years. Consumers will now tolerate bigger price markups based on how loyal they are to a brand.

The study said, “Consumers were 30 percent less price sensitive—meaning less likely to abandon favorite brands and seek cheaper equivalent products—in 2019 than they were in 2006.” This meant that over time, you could raise prices and keep them up.

As I read the research, I asked myself what makes a brand so valuable? How does it provide such a big competitive edge?

In the end, the answer was simple. A brand is valuable because it makes a promise and implies a guarantee. When it’s done right, it tells the consumer 3 things.

1. I promise to consistently deliver the “experience” you expect from me, both practical and emotional. Mcdonald's does this right. They’ve got the taste profile and the taglines for customers on the move who want their fast food with a feel-good experience.

2. I guarantee this consistent experience with service, rewards, and replacements. Apple and Amazon do this right. If anything goes wrong with their products or service, they overdeliver to make the customer happy.

3. You own me. I exist to serve you. The customer owns the brand, not the manufacturer or ad agency. All they can do is cue the customer to see the brand in an even better light. That's why online brands have an edge. They can constantly check on how well they are "serving" their customers and adjust as necessary.

That’s it.

  • Never stop working to improve the experience your brand provides.

  • Make sure your customer service is fabulous.

  • Know your role when engaging your customers.

So simple. Such a powerful competitive edge.

John Parikhal is President of John Parikhal + Associates.


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