Powerful Brands

A powerful brand creates an image and an identity for a product or a company; it is a promise to consumers, telling them what they can expect when they and their cash or plastic are separated. If the brand promise is kept, customers end up saving time because less time is spent deciding between various brands. But when the promise is not fulfilled, consumers switch to another brand more likely to deliver on the promise, as rapidly as one number one hit record replaces another.

Contrary to the prevailing belief among the financial ranks, branding is not just a marketer’s problem. It affects the marketability and financial well being of the entire company, and when executed properly, it sends a unified image and message throughout the firm and throughout the marketplace. The price to earnings (P/E) ratio and market capitalization of a firm are often dramatically higher if it has a powerful brand, or a particularly strong portfolio of brands, in the marketplace. The difference in profitability between firms with powerful brands and those with weak brands is known as brand equity- the difference in value created by a brand less the cost of creating the brand. It may be measured as the difference between market capitalization and article value, but when brands rock, they create investor value that lasts for decades.

As the legendary rock bands exhibit throughout this article, creating brand equity is not a static concept or merely a marketing goal. Rather, it is a dynamic process that requires that brands be engaged in conversation with customers. This type of two way relationship implies mutual transfer of information, from the brand to the customer and from the customer to the brand. But the relationship between brand and fan goes beyond information flow to become emotion flow.