The most successful companies in the world are those whose customers have deep loyalty towards them. Those whose customers would be willing to pay double the price for their product over competing brands simply for the logo. I’m sure some companies come to your mind as I talk about this, companies that you may have bought from since you were a child, companies that you relate to happy memories.
Perhaps Coca Cola, Nike and McDonald’s spring to mind.
It is not by chance that you have those feeling for the company, they spend millions forming themselves a brand. The logo, colour scheme and design all instantly remind you of your previous experiences. Warren Buffet (the second richest man in the world) sees the value of brands, one of his main investing strategies is choosing business with a strong brand identity.
A strong brand allows you to charge premium prices, it increases your levels of repeat purchase and strong brands travel faster through word of mouth.
Strong brands make more money.
The Coca Cola Blunder
Coca Cola once made an enormous mistake that nearly failed their company because they underestimated the power of their own brand identity. They brought out “new Coke,” which was a new recipe of Coke, it was designed to be superior to the previous Coke. And in fact, during blind trials it had surpassed the original coke in taste tests.
But unfortunately a better taste didn’t make for a better coke, Coca Cola failed to realise that Coke isn’t just drank for the taste, people drank their product because they related to the brand, the had happy memories related to coke, it was those happy memories that kept them buying coke.
The “new Coke” didn’t have any memories related to it, the brand was almost ruined. It was so unsuccessful that Coca Cola had to open up a whole new office dedicated to handling the thousands of complaints being called in every day. People hated the “new Coke” so much that sales dropped drastically enough that Pepsi took the largest market share for a time.
But luckily they saw the error of their ways and back came the Coke that everyone loved, they called it the original Coke to restore the brand image, their customers rushed back and so did their revenue. The moral of that story is never underestimate the power of a brand.
Coke is now the most universally known word, known in more languages than any other word. It’s power lies in its ability to create customer loyalty through a strong brand identity.
Read more about big business blunders and how to avoid them in: When Giants Stumble.