Brand: Necessary Evil Or A Complete Waste Of Money?

We get it, your products are comparable to what’s available out there in the market. Your quality, or the value that your product brings, both exceeds market expectations. You know it, your existing customers know it, and maybe even your competitors know it too. But the question is this: how do you reach out to other potential customers? How do you grow your business beyond your existing, albeit small, reach? Do you really need to squeeze your already tight budget on that “evil” branding exercise?…

What Exactly Is A Brand, And Do You Really Need One?

A brand, for the lack of a better word, is an identity… A unique identity… One that can be assigned to you, whether to represent a product, a service, or even your business as a whole. It is a platform on which you can build your reputation.

You know the phrase “Your reputation precedes you”?… Well, that’s exactly what a brand does. It singles you out from the ocean of similar products, services or businesses. It is with this identity that customers, potentials, even the general masses know of you. By building favourable descriptions of your brand identity, audience will be able to relate that to you… your brand. Without a brand, you’re essentially selling a generic commodity…

“Yes, yes, yes, I know what a brand is… The question I’m more interested in is how it can help build my business?”

A business, in an overly generalised description, is the activity of selling something for revenue. So the more you sell, the higher your revenue is. However, the revenue isn’t your profit… At least not yet… You still have other expenses to deduct, before you can determine your profit. And business expenses, including the “evil” branding exercise, are what most businesses are trying to reduce, in order to increase their profit margin.

Let’s take a look at a hypothetical example. You purchase bulk refined sugar from a sugar refinery, pack them into 1kg consumer size, and distribute them to retailers to sell. Let’s take a look at the different outcome, both with and without assigning a brand identity to the finished products.

(1) You Sell “Sugar” As A Commodity

Everybody knows what sugar is, hence everybody knows exactly what you’re selling. You don’t need to bear unnecessary expenses to decorate your packaging. It is exactly what it says on the label – sugar.

But then, the “problem” starts to arise… There are dozens, if not hundreds of competitors, selling exactly the same thing, to exactly the same customers. The result?… Well, reducing of your stock movement is the most obvious. There simply are too many players in the market, all vying for the same slice of cake as you are. The law of supply and demand kicks in, and acceptable price drops down to a level that consumers are willing to pay for the commodity. In order to remain competitive, you’re gonna have to start reducing your selling price. But there’s a limit to how low you can go, before your profit reaches zero. And when it does, it’s no longer viable to sell the commodity at all.

Yes… It’s a dog-eat-dog world out there…

(2) You Sell A “Sweetener” As A Branded Product

Instead of selling sugar as a commodity, you can give it a brand identity, and sell it as a branded sweetener. Call it a beverage sweetener, cooking sweetener, anything other than plain old “sugar”.

Now you’re no longer competing with the rest of the other players out there on the same playing field. Heck, you’re not even selling “sugar” as a commodity anymore. The market-acceptable retail price for sugar no longer applies to you. You’re no longer affected by the dog-eat-dog world, where everybody is trying to undercut one another, just to push up their total sale up by a little bit.

You’re now in the realm of “specialty sweeteners”, with a whole new set of consumers, and very few competitors to worry about. And consumers who chooses specialty sweeteners over plain old sugar generally have more disposable income. Hence, they’re willing to pay more for perceived quality.

The outcome?… You don’t really sell more of your branded product by reducing your selling price. Instead, you get to price your product much higher than what the commodity is selling for. As a result, you enjoy a higher overall profit margin. Now that’s a dream come true, selling fewer products, and yet earning more profit at the same time…

Branding Isn’t Necessarily Evil After All

You see, it’s usually not about the “quality” of the product, or any product for that matter. It’s more of a status symbol of exclusivity. Consumers of a higher income bracket consciously choose not to purchase the same products with the rest of the lower income group. It’s sort of like a bragging right. After all, not many people are financially capable of purchasing or consuming higher priced products, hence its exclusivity.

At the end of the day, the question that you need to ask yourself is this – do you want to sell a commodity or a branded product? Remember, the reputation of a brand identity usually reaches far wider than “just another commodity”. The value of the brand name on the label far outweighs the value of the raw material that the container holds within.

In Conclusion – Some “Evil” Food For Thought

The phrase “the rich get richer and the poor get poorer” holds true. You ultimately want to increase your bottomline. But understand this, you don’t get rich by saving money. You get rich by earning money… Saving what little money you have, by not investing in a proper branding exercise, will result in you having to work doubly hard. Despite that, it’ll still earn you the same pittance from all the hard work that you’ve invested in.

So what do you think?… Is establishing a brand a necessary evil, or a complete waste of money?… Interested, but not quite convinced? Give us a call, and we’ll provide you with more details. Heck, we’ll even buy you coffee while we’re at it… Evil, don’t you think?… *wink*

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