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Writer's pictureJohanna White

Brands Drive Higher Margins

Updated: Feb 21, 2021



How Does Branding Your Company Drive Higher Profits?


The simple fact is, brands drive higher margins. Don’t believe me? Stroll no further than your nearest drugstore, and observe the price difference between the brand name headache product and the Walgreens equivalent… Advil for $13, or the same amount of Walgreens Ibuprofen for $6. And after years of general knowledge, most of us know in our heads that the active ingredients are the same, and therefore we should just grab the cheaper bottle. Yet despite that knowledge, we still often go for the name brand instead, because our mind has built brand familiarity around them. It is reassuring, and something tells us that Advil probably works better.


On smaller price points, this back and forth decision happens every day in our brains. And on larger ticket products or services, we may not even CONSIDER non brand name, because your brain is hardwired to conserve calories by making the easiest decision that it can. Given the choice between an unheard of unknown product or service, and one that has warm fuzzy memories generated by great branding, word of mouth recommendations or consistently repeated visual reminders, it is going to choose the known brand for ease and convenience.

No matter if your company is old or new, your aim should be to develop a brand that will get you recognized, because that is how you can drive more sales and ensure consistent profits.


Another Benefit of Branding? Far Less Need to Compete On The Price


A strong and recognizable brand won’t compete on price again because you will be the only possible choice for your customers. Take any fan of Apple products, and try to present them with a list of why android is better (starting with a price that is often less than half) Tell them that Apple hasn’t made as many new advances in technology, or that it doesn’t even have as many features.. And yet, 95% off your Apple fans will ignore apparent said logic, and still splurge on that Macbook Pro, simply because being an Apple user it is part of their identity. Thanks to years of great brand campaigns that identified their users as people who “Think Different,” Apple built a brand that makes you feel more creative just because you use it.



I know it can be hard to believe especially if you have been conditioned to think that customers only care about the price. However, if you have a strong brand and you’re offering premium products and/or services that align with the quality of your brand perception, then your customers will buy from you no matter if they have to pay more than other companies. Make no mistake, there will always be consumers who make purchase decisions based solely on price, but unless you are Walmart or Amazon, they are likely not your ideal customers, and that is ok too.


The Brand Is a Valuable Asset of a Company


Did you know that more than a third of Coca Cola’s value is its brand? In a company worth $180 million, $69 MILLION of that valuation is contributed to the brand name alone.


Various research studies have been carried out in consumer markets to determine the premium that people will pay for brands over and above a base line. Measuring the value of brands and assessing the value of intangibles by asking consumers to separate out the brand and place a monetary value on it is difficult because we rarely do this in the real world. In fact, most consumers, when asked to place a monetary value on brands, are in denial about paying a premium just for the name.


That being said, when people are asked in brand value surveys to place a monetary value on a car (the same car is used in the photographs but different badges are superimposed on the hood to suggest it is a different brand) the Volkswagen brand is seen to be worth more than that of Ford while the Mercedes brand has a value above both. In the auto industry, the brand name has been estimated to add no less than 10% to the price. In markets like the luxury fashion industry, the profit earned on purchased significance & name brand far exceeds the the cost to manufacture and design the product.




Online Word of Mouth


Online reviews and recommendations are super important. A customer who chooses you consciously and because he/she believes in what you do and will be more likely to leave a review and recommend you to friends. It is a free and viral promotion, which is priceless.

People don't trust promotions, they don't trust marketing, data, and facts, celebrities, or authorities but they trust their friends, followers, fans, or any stranger on the net who leaves a review.


A Strong Brand Attracts, Motivates, And Improves the Loyalty of Employees


We often forget that the first customers that a company must convince are its employees. Brand loyal employees will not only speak well of their company to their friends and acquaintances, but will also be more motivated and engaged! This results in lower employee turnover and higher employee engagement, thanks to the clarity of your brand


When an employee is engaged in their work, their results take on a completely new dimension; they help to create a vision that goes beyond money and salary. The same virtuous circle is established as with clients: the exchange is no longer simply your time and commitment in exchange for money, but you make your contribution to something bigger than you.



With Clarified Brand Messaging, Reaching Your Customers Will Be Simple and More Effective.


Cost per acquisition (CPA = the cost of a certain action performed by a user) will be lower. Do not underestimate the power of clear, concise, and linear communication. And thanks to a strong and consistent brand, you get exactly that. The brand helps you guide your audience on a completely virtual journey where strangers first become acquaintances who know what you do; then they decide they like the way you do things, they start trusting you, your skills and finally they become your customers.

The brand helps you build that KNOW - LIKE - TRUST factor, without which you cannot be successful online.


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