Blog #5: Branding pays off on Your Bottom line

Your new business is growing and the future looks bright. You’re even beginning to make some money. This is not the time to hold back or stand pat. Continue investing in your business. Consider that a significant share of that investment should be dedicated to developing perhaps the most significant aspect and valuable fixed asset of your business, your BRAND!

Why? Because at this point you have recognized the value of building a strong emotional and intellectual connection to the unique name, term, design or logo that defines your business, product/service or mission.

There are a number of powerful reasons why successful businesses of all sizes have spent years and significant dollars investing in brand development.

•The stronger the brand, the more you, the brand owner, has control in pricing, margin and distribution. Brands like Apple, Ralph Lauren, The New York Yankees and Oreos control their own destinies and, while sensitive to competition, are not at its mercy.

•The stronger the brand, the lower your cost of sales and promotion, as the investment amortizes over time. Word of mouth increases exponentially. Amazon, Costco, Zappos, Trader Joes and Shake Shack have all reached brand utopia; they invest little in advertising while growing in awareness, recognition and value.

•The stronger the brand, the stronger and more polarizing the emotional signal, consequently generating more direct conversation and increased communication through social media

Consistent brand building also leads to increased awareness, stature and market share for your business as it enters the psyche and everyday language of distributors, resellers, consumers and clients. Think about how Walmart and Target have leveraged the emotional connections of their brands to eliminate or severely wound their competition?

And think about how Sears and J.C. Penney have failed to support and sustain that leverage. In the hyper competitive New York supermarket business, when Fairway enters a new neighborhood their brand equity makes it easy for them to gobble up market share and become profitable from Day One.

Building brand equity also creates a real potential for building category extensions, co- branding and licensing opportunities representing not only major potential sources of revenue but increased asset value of the brand. Think of the acceptance Apple earns with every new product entry or the synergy when Kinkos became home to Federal Express. For owners who plan to market a well-known and widely-accepted brand, the return on investment is incalculable.

Brands can survive, even while the companies which developed them may not. There are no better examples of the monetary power of brands as when they survive and outlive their owners. The Los Angeles Dodgers and Twinkies were recently purchased from their owners in bankruptcy court at valuations of $2 billion and $410 million, respectively, by new owners – and it is unlikely that very many people could name the new owners of these brands. The new owners recognized that without those product identifiers, their purchases would have lost most of their potential for success. Why? Because the long term investment in those brands had consistently showcased those elements that made those two businesses special – and had done it in a way that was distinctive, recognizable and relevant.

Burt Wallerstein, a mentor in the New York City chapter of SCORE, is also the founder and principal owner of a global sourcing, marketing and consulting agency. He has also written commentaries on improving higher education for the Washington Examiner and John William Pope Center.