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The Economics of Branding

Positioning for Maximum Value

Gerhard Reinecke

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VW-logo-deconstructed

The law of supply and demand has been understood since the fourteenth-century, when Mamluk scholar Ibn Taymiyyah wrote: “If desire for goods increases while its availability decreases, its price rises. On the other hand, if availability of the good increases and the desire for it decreases, the price comes down.”

This relationship was graphically depicted by Fleeming Jenkin in 1870, and has appeared in the first chapters of most economics handbooks ever since.

Branding 1

It gives us two value equations: A supplier who sees value as a price-quantity factor (V=PQ) or “what I value is to sell as many as I can for as much as I can”; and a consumer who views value as a price-quantity ratio (V=Q/P) or “what I value is to get more for less.”

Related: Balance Product Development and Branding in your Budget

Buyers and sellers bargain and finally agree at the point where the demand and supply curves intersect, and then… ka-ching!  If the billions of ka-chings that occur every day were audible, their collective din could drown out the noise emanating from the casino floors of Las Vegas.

So the economist’s view of consumer need is simply that “I want more for less.”

Many marketers have expressed this limited view of the consumer in value propositions and messaging; “Buy bulk and save”, “More car for your money”, “Trolley for trolley you pay less”, with the view of increasing short term sales objectives.

But wait there’s more…

The ‘more for less’ equation does not provide the marketer with a view on how to build the most essential component of profitability – brand equity.

Brand equity, in price terms, is the premium consumers are prepared to pay based on the perceived value of the brand, over and above the economic costs of production plus profit margin.

Consumers would queue to pay more for an Apple iPhone 6, rather than just buy a android phone with similar functionality for much less, for example.

In the supply and demand graph of brand equity, supply can be seen as differentiation from competitors and demand as relevance to the customer. Relevant differentiation is experienced by customers as either a functional benefit (a high performance engine, for example) or an emotional benefit (a luxurious driving experience), or both – a brand that simultaneously makes rational sense and also feels right.

The consumer is not just looking for ‘more for less’, and their value equation could therefore be replaced by V= (FB+EB)/P, (Where FB = Functional Benefits and EB = Emotional Benefits) or “What I value is a quality that makes sense and feels right, given the price”.

If relevance increases, the demand curve will shift to the right to reflect an increased quality experience at a higher price level.

The result is a brand premium earned by improved benefits rather than an increase in volume through price reduction. It is an increase in overall value.

Branding 2

Bringing this economic thinking to brand positioning, we have to define a positioning territory that considers both demand and supply side factors.

If you want to position an airline as fun, for example, as Kulula has done, or a bank as innovative, as FNB has done, these positioning territories need to be relevant from the consumer perspective – speaking to who they are, their needs and benefit expectations – but they also need to be a reflection of the difference the brand can actually make in the consumer’s life. The brand positioning needs to be credible.

Related: The Psychology of Colour in Marketing and Branding

A strategically sound brand positioning will reflect both the cognitive and the psychological considerations that customers make before purchase.

And then, wait for it.  Ka-ching!

After completing his B.Comm degree, Gerhard's corporate career began in the advertising industry where he was trained in account management and strategic planning, and worked across diverse products and industries. A move to Yellowwoodin 2014 has him once again doing what he is truly passionate about; strategic marketing and brand development.

Branding

How A Strong Brand Protects Your Business

Brand enthusiasts are welcome to follow Kyle Rolfe’s latest thoughts on brand building in South Africa and his analysis on relevant global trends and issues via Twitter @kylerolfeSA.

Kyle Rolfe

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intellectual-property

It is all too easy for small businesses to become victims of intellectual property theft and seeing their products and services copied by unscrupulous competitors. A clear case in point is that of Woolworths, which was recently accused of copying a baby carrier made by Ubuntu Baba, having a cheaper version made in China and selling it as its own in-house product.

Woolworths eventually apologised and withdrew its product, after Cape Town entrepreneur Shannon McLaughlin exposed similarities between the retailer’s baby carrier and that made by her company, Ubuntu Baba.

Small business owners can protect themselves from having their products or services copied by developing a strong and unique brand.

Brand uniqueness and an authentically developed product will give you a level of protection in the market, as it will be more difficult for a competitor to copy your offering.

What small business owners should avoid is the “white label solution”. This is taking any product, even one manufactured overseas, and putting your own branding and packaging on it and reselling it as your own.

There is nothing stopping your competitor from sourcing that same product and putting their branding on it and selling it as their own. In this case, as a small business owner, you would have no recourse.

Ubuntu Baba’s unique brand and authentically developed product, designed and manufactured locally, is what helped the small business successfully take on a giant retailer like Woolworths. They didn’t simply take someone else’s product and rebrand it as their own, they actually designed and built their own product.

A unique brand and product will position you as more than just a reseller and will give you a certain level of strength and protection in the market. It allows clients to differentiate you from your competitors and can also positively affect their purchasing decisions, directly impacting your profitability.

Effective branding, that is well defined and distinct, will not only help build your reputation, but it will also make you stand out from the competition.

Ultimately, your brand is your business identity. It is the image that you show to your client, making it one of your company’s most valuable assets. Effective branding portrays a company’s values and attracts the right client.

A strong brand identity also has the benefit of making your company appear bigger and stronger than your competition and consumers are generally attracted to well-established companies. So, ask yourself whether your branding conveys professionalism, reliability and trust.

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Branding

Young People Will Reward Brands That Take A Stand

A new generation of consumers are choosing to engage with the brands that share their values and beliefs.

Kian Bakhtiari

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young-people

Through much of the last century, advertising obligated people to pay attention to what brands have to say. A handful of television, radio or newspaper channels left the public with no choice but to consume the message that was being communicated. In short, attention was easy to capture, and consumers were powerless to the will of big business.

In the 21st century, we face an entirely new reality – thanks to the internet and the near universal use of social media and digital devices. Nowadays, consumers are confronted with an infinite number of choices; turning attention into one of the most valuable commodities. This is why some of the world’s biggest brands are struggling to connect with people in a meaningful way, in spite of spending billions on advertising.

The power has shifted from brands to the people

Today, online advertising is getting in the way of what people actually want to do with their lives; whether it’s reading an article, watching a documentary or surfing the web. As a consequence, ad-blocking is becoming the new normal. More than 12 million people are blocking adverts in the U.K alone. Unsurprisingly, the highest rate is amongst 16-24-year olds. It doesn’t take a genius to realise that this behaviour is only going to rise with the emergence of a digitally native generation that expects to control every aspect of their online experience.

Like most things in life, this is obvious to the man or woman on the streets, but news to the marketing department. As someone who works in advertising myself: I have experienced at first-hand the amount of time, effort and resources that goes into crafting an advertising campaign. Only for it to be summarily executed at a swipe of a button by one of my friends. Young people’s distaste for adverts also helps to explain the meteoric rise of subscription-based services like Netflix, Spotify and Twitch. These platforms act as a safe house from the constant barrage of adverts.

Related: Robert Kiyosaki on Building Brand Mystique

Young people are engaging with brands that share their values and beliefs

Instead, young people are choosing to engage with the brands that share their values and beliefs. In fact, 64 percent of consumers around the world now buy on belief. At the same time, one in two will choose, switch or boycott a brand based on its stand on a societal issue. The consumers of today are more informed and empowered than ever before. They have all the tools at their disposal to control the relationship they want to have with brands. In this new age of Information, it’s no longer enough to communicate a message, in the hope that it will resonate. To remain relevant, brands need to talk less and do more for people and planet.

The brands that have a purpose beyond profit will not only survive but thrive in this new age of conscious consumerism. Research carried out by Havas shows that meaningful brands have outperformed the stock market by 206 percent over the last 10 years. Enlightened brands recognise this reality and are transforming their entire modus operandi to meet young consumers changing expectation.

You only have to look at Adidas’s pledge to use 100 percent recycled plastic by 2024, Unilever’s mission to Improve health and well-being for more than 1 billion people and Ikea’s ambition of becoming climate positive by 2030. The results are also clear to see: Adidas sold 1 million shoes made of ocean plastic last year, Unilever’s sustainable brands are growing 50 percent faster than the rest of business and Ikea has seen sustainable product sales grow to a cool $1.9 billion.

What it all means

Historically, the role of a brand has been to simplify people’s increasingly busy lives. Today, that’s no longer enough. Young people expect brands to go beyond selling products, services or increasing profit for shareholders. They expect them to stand up for something, to improve lives and to play an active role in tackling global poverty, inequality, and climate change.

Doing good is not only the right thing to do but also a commercial imperative. For brands, this requires a move away from Corporate Social Responsibility — since under such initiatives, doing good is often separated from the core function of the business. In its place, brands need to make their products and services in a way which benefits people, planet and profit by taking responsibility for the overall value chain.

The brands that manage to adapt to this new reality will end up being richly rewarded with a natural place in popular culture, a deeper connection with consumers, business growth and longevity.

This article was originally posted here on Entrepreneur.com.

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Branding

3 Women Entrepreneurs Share Their Personal Branding Lessons And Goals

I asked three South African women entrepreneurs to share their challenges with branding them in 2018 and how they are going to do things differently in 2019.

Lien Potgieter

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Briony Liber

Getting your personal branding right is essential if you are a solopreneur. It speaks volumes of your professionalism, the standard of your products or services, and your values. Most importantly, you need to embody what you portray in your “packaging”.

Many entrepreneurs leave this step to the last minute, when it should form part of the foundation of your business. When starting out, it is wise to spend time and energy on creating a coherent, authentic look and feel, and message of brand YOU. Remember, it is all about how you want to be perceived by potential clients.

Various elements form part of your personal branding, including your website, logo, messaging, photographs, colours, your story, how you stay in touch with your clients, and how and when you show up on social media.

I asked three South African women entrepreneurs to share their challenges with branding them in 2018 and how they are going to do things differently in 2019.

1. Naomi Estment

naomi-estment

Personal branding photographer, videographer and trainer.

How did you build your personal brand in 2018?

Connection was a key word for me in 2018, so I kicked off the year by attending various networking events, followed by presenting a few live workshops. My primary focus for the year was to complete and publish the content for my seven online courses, while maintaining contact with my email list and engagement on my social media profiles, including some Facebook advertising.

What do you regard as the most important element of your personal brand?

Authenticity is fundamental to my brand, along with passion, inspiration and professionalism. I consider my website to be the hub of my personal and signature business brand, particularly since I’m the face of my brand. It’s an important point of reference for prospects to learn about me and explore how I can help them. My social media profiles are essential to expand my reach and to maintain engagement with my followers, while email marketing is key for developing the ‘know, like and trust factor’ for my brand and subsequently sharing value-rich promotions.

What are the biggest mistakes you made in branding yourself and your business?

If I could go back and begin my personal and business branding journey again, I would commit more focus, time and energy sooner to determining my specific niche, according to my uniquely personal combination of experience, talent, passion and skill. Once you have clarity about that, your brand message can consequently emerge. This tends to happen when you’re ready for it. A massive boost for me was winning a scholarship to Marie Forleo’s phenomenal online B-School in 2016. One of the many valuable lessons I’ve learned is the power of aiming for ‘progress not perfection’. The important thing is to take action and do the best you can with what you have, where you are.

How will you do things differently in 2019 when it comes to personal branding? How do you want to grow your business or influence in 2019?

In 2019, I intend to enhance my personal and business branding by expanding my reach further and amplifying my expert status through key affiliate partnerships, targeted Facebook advertising and contributing guest posts, articles and interviews to relevant media publications and podcasts.

Any hints and tips for fellow female entrepreneurs?

Don’t underestimate the power of brilliant personal branding photos and videos to position your brand as premium and amplify your reach, while dramatically up-leveling the way you feel about yourself and how others perceive you. If you find it challenging to face a lens, then practice being on camera and review your results repeatedly to get used to how you look and sound. This is the digital age. You can always delete and repeat. If you want to fast track your success, invest in expert help.

Related: Watch List: 50 Top SA Business Women To Watch

2. Pam Padayachee

pam-padayachee

Virtual assistant.

How did you develop your personal brand in 2018?

In 2018, I developed my personal brand by attending networking events that are specifically aimed at female entrepreneurs. To build greater awareness of my brand and my business, I also became more active on social media. My logo and website had a makeover too, with a specific focus on the colours that I use. When I started my business ten years ago (on a part-time basis and primarily to supplement the household income as the recession showed its face), I had no clue where to begin so I did an amateur website and no thought went into colours or branding. Business came in but at a snail’s pace.

In my eighth year of business, I tried out a new logo, a very earthy colour, which didn’t signify my personal brand at all, but it was a refreshing change from the last one. When I eventually decided to go into business full time in 2017, my goal was to rebrand and give my business a proper facelift. It was then that I contacted a business coach specialising in colour therapy to do a colour assessment for me. I took her guidance, which at first glance was quite shocking – the colours she recommended was red and blue!

I went with this guidance to the graphic designer and web designer and told them to work with these colours specifically. I then arranged a photo shoot and low and behold when I shopped for my suit, through pure synchronicity, the only suit that fitted was blue and white – with the addition of a red scarf, voila! I was exhibiting my company’s brand.

Well, what can I say, with the launch of the new website and branding, 2018 was a spectacular year with new business!

What do regard as the most important element of your personal brand?

To me, my value proposition is the most important element of brand me. I also hold in high esteem authenticity, consistency, expertise, and visibility.

What are the biggest mistakes you made in branding yourself and your business?

I allowed fear to get the better of me. I procrastinated for many years in taking the leap of faith and going into business for myself. The biggest mistake I made in my business was trying to do everything myself (once again fear to spend on investing in proper branding/marketing initiatives), as any start-up business begins.

How will you do things differently in 2019 when it comes to personal branding?

Get out there and get visible on social media! I also need to educate my audience as to what I do and who I am. This year, my goal is to effectively communicate what I do as the South African market is not familiar with the term “virtual assistant”.

What advice do you have for women building their personal brand?

Do not be shy and truly embrace who you are.

Related: 10 Successful SA Women Entrepreneurs’ Top Advice On Balancing Work And Family

3. Briony Liber

Briony Liber

Career development coach.

How did you build your personal brand in 2018?

In 2018, I developed my personal brand largely through social media and talking at workshops and events. I post and engage quite a lot on Facebook, Twitter and LinkedIn and make sure that it feeds back to my website. Through engaging on Twitter, I was invited to be a guest on several twitter chats. It was a lot of fun as well as good exposure. I was also invited to do a few talks to graduate students last year as a result of my engagement on LinkedIn. I volunteer on the Women in Mining South Africa (WIMSA) committee and through that involvement have been building a really good network.

What do regard as the most important element of your personal brand?

Confidence. When I am confident, I can bring my whole self to every situation. And the opposite is true – when I am not feeling confident it is incredibly easy for me to undermine my brand completely.

What are the biggest mistakes you made in branding yourself and your business?

Working from the basis of fear, and not having boundaries. Every time I made a decision out of fear like taken on a client that wasn’t right for me, doing work that wasn’t good at, taking on more than I have capacity for, it has never gone well. Or at the very least the outcome did not build my brand and my business.

How will you do things differently in 2019 when it comes to personal branding?

I will be focussing more on consistency and building a brand that is recognisable. I am also working towards getting my content onto third-party platforms so that I can increase the reach of my brand.

In 2019, I will be building on the foundations I have established in the last two years and working on consistent growth of private clients and the addition of one or two corporate clients by the end of the year. I am also developing an online course on “Managing your career like a business”, which I will be pilot testing this year.

Any hints and tips for fellow female entrepreneurs?

Get clear on who you are, what you stand for, what you will and won’t tolerate and what your story is. And then tell your story through every channel you can find. Stick to your values so that you become known as someone who stands for something, and keep advocating for yourself. Serve people before you try and sell to them and build a community around yourself or become part of a community. Having ambassadors for your brand is critical as we are definitely in a world where people value a personal recommendation.

Related: 13 Female Entrepreneurs Rising To The Top In SA

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