For example, Krispy Kreme evokes such intense emotions among its doughnut fans that even the most time pressed consumers will stand in line to satisfy their physical and emotional cravings. But police officers aren’t the only ones drooling at the sight of the now famous green and white polka dot box. Many financial analysts missed the ground floor of stocks of companies like Krispy Kreme, Starbucks, and Wal Mart because they underestimated the impact of emotional connections between brands and customers and failed to see the relationship between these brands and the culture.

After a stint of insanity during the dot com heyday, the business world has again turned to more realistic views of corporate value, for the most part. Warren Buffett and like minded investors, whose focus was always on return on investment, earnings per share (EPS), earnings growth, dividends, and similar measures, can exhale-financial analysts have put renewed faith in the old time religion that equates the salvation of a firm with its profits, not its prophets. In this reborn truth lies the fundamental role of the brand: It is a mechanism to boost a firm’s sales and profits higher than those of its competitors’.

Legendary Bands, Legendary Brands Only a few brands last so long that they might be called legendary.

One of those is Wedgwood china, cited by brand historian Nancy Koehn in her article Brand New (Harvard Business School Press, 2001).

Dating back to the 1700s, this brand still leads the market in terms of closet share among the rich and famous, and tops the wish lists of brides to be around the globe. By no means exclusive to the world of products and commerce, legends abound in the music world. From Bach, Beethoven, and Brahms (whose music has transcended the centuries) to Al Jolson, Glenn Miller, and Louis “Satchmo” Armstrong (who crossed racial barriers and defined an era of music), artists have connected deeply with people and helped to shape culture.

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.

Allied Chemical ?2 1.40 1.82 2.14 1887 26.02 1. Aluminum Co. of Am. ?2 4.25 5.18 2.08 1939 55.01 1. Amer. Brands ?2 4.32 3.69 2.24 1905 13.46 2. Amer. Can ?4 2.68 3.76 2.42 1923 40.01 2. Amer. Tel. & Tel. 43 4.03 3.91 2.52 1881 45.47 2. Anaconda 15 2.06 3.90 2.17 1936 54.28 none Bethlehem Steel ?2 2.64 3.05 2.62 1939 44.62 1. Chrysler ?2 1.05 2.72 (0.13) 1926 42.40 0. DuPont 154 6.31 7.32 8.09 1904 55.22 5. Eastman Kodak 87 2.45 2.44 0.72 1902 13.70 1. General Electric ?4 2.63 1.78 1.37 1899 14.92 1. General Foods 34 2.34 2.23 1.13 1922 14.13 1. General Motors 83 3.33 4.69 2.94 1915 33.39 3. Goodyear ?2 2.11 2.01 1.04 1937 18.49 0. Inter. Harvester ?2 1.16 2.30 1.87 1910 42.06 1. Inter. Nickel 31 2.27 2.10 0.94 1934 14.53 1. Inter. Paper 33 1.46 2.22 1.76 1946 23.68 1. Johns Manville 39 2.02 2.33 1.62 1935 24.51 1. Owens Illinois 52 3.89 3.69 2.24 1907 43.75 1. Procter & Gamble 71 2.91 2.33 1.02 1891 15.41 1. Sears Roebuck ?2 3.19 2.87 1.17 1935 23.97 1. Std. Oil of Calif. 56 5.78 5.35 3.17 1912 54.79 2. Std. Oil of N.J. 72 6.51 5.88 2.90 1882 48.95 3. Swift & Co. 42 2.56 1.66 1.33 1934 26.74 0. Texaco 32 3.24 2.96 1.34 1903 23.06 1. Union Carbide ?2 2.59 2.76 2.52 1918 29.64 2. United Aircraft ?2 3.13 4.35 2.79 1936 47.00 1. U. S. Steel ?2 3.53 3.81 4.85 1940 65.54 1. Westinghouse ?2 3.26 3.44 2.26 1935 33.67 1. Woolworth 49 2.47 2.38 1.35 1912 25.47 1. a Adjusted for stock dividends and stock splits.