When Kraft bought Cadbury for $19.5 Billion what did they buy? The chocolate? The factories? The recipes? The candy makers? No they bought the brands


Why Brand Building Is Important.

Looking out into the world today, it’s easy to see why brands are more important now than at any time in the past 100 years. Brands are psychology and science brought together as a promise mark as opposed to a trademark. Products have life cycles. Brands outlive products. Brands convey a uniform quality, credibility and experience. Brands are valuable. Many companies put the value of their brand on their balance sheet.

Why? Well you don’t have to look very far. When Tata Motors of India bought Jaguar and Range Rover from Ford, what did they buy? Factories? Raw Materials? Employees? No Goldman Sachs and Morgan Stanley helped Ford sell the brands to Tata for $2.56 billion, and the brands were worth more than all other ingredients combined.

Likewise, when Kraft bought Cadbury for $19.5 Billion what did they buy? The chocolate? The factories? The recipes? The candy makers? No they bought the brands.

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Four Seasons Hotels and Resorts

And when Four Seasons Hotels, Inc., Canadian-based international luxury, five-star hotel management company,  sold itself to Bill Gates and and Prince Al-Waleed bin Talal of Saudi Arabia for $3.8 billion what did they buy? Locations? Restaurants? Staff? Beach front property? No they bought the brand.

The list goes on with many examples such as InBev acquiring Budweiser to add to their house of brands that includes Stella, Becks and Labatt. Or Geeley Motors of China acquiring cult Swedish Auto brand Volvo. Or Mahindra of India buying  Ssangyong, Korea’s third largest car company.

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Branding is fundamental. Branding is basic. Branding is essential. Building brands builds incredible value for companies and corporations.

If you are still not convinced, let me give you another example. The dollar is a world brand. In essence it is simply a piece of paper. But branding has made it valuable. All the tools of marketing and brand building have been used to create its value. On the front you will find the owner of the brand: the Federal Reserve. There is a testimonial from the first President of the United States, George Washington. There is a simple users guide: “This note is legal tender for debts public and private.” And if you’re still not convinced, the owner has added the all important emotional message: “In God We Trust”. The dollar is a world brand. It confers a uniform value globally. But as I said it’s really just a piece of paper. Branding has made it worth something.

I mentioned earlier that brands are more important today than in the past. There are a few reasons for this. Firstly, the world has come online and there are many new markets and a growing middle class in places like India, China, Brazil, Russia, South Africa, Nigeria, Indonesia and in many more places. These consumers buy brands. They buy premium brands. The best branding today is based on a strong idea. The best brands have remarkable creativity in advertising to help them break through people’s wall of indifference to create brand heat and product lust.

In the face of the current economic challenges, it’s worth noting that brands do better in tough times compared to unbranded products. Brands outlive product cycles. And in these challenging times, there are still great brands being built. Brand owners still recognise opportunity and their brands will thrive in the years ahead. Brands such as H&M of Sweden, or Tesla a great new car brand, as well as new names such as Tom’s Shoes, Honest Tea, and a rising brand from Florida called European Wax Center which Inc. Magazine named a company to watch.

No branding, no differentiation. No differentiation, no long-term profitability. People don’t have relationships with products, they are loyal to brands. In a movement strategy, brands have a purpose that people can get behind. Brands can inspire millions of people to join a community. Brands can rally people for or against something. Products are one dimensional in a social media enabled world, brands are Russian dolls, with many layers, tenents and beliefs that can create great followings of people who find them relevant. Brands can activate a passionate group of people to do something like changing the world. Products can’t really do that.

In today’s world, branding is more important than ever. But you can’t simply build a brand like they did in the old days. You need a cultural movement strategy to achieve kinetic growth for your brand. With that, the sky’s the limit.


Tulisan ini disadur dari milis yang disampaikan dengan sangat bagus oleh Ronald Mahardhika seorang Brand Strategist dari Paper&Apple yang juga Strategic Brand Consulting, silahkan mampir ke www.paperandapple.com

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