sales vs brand equity

Why Sacrificing Sales Can Help Your Brand11 min read

The biggest brands in the world have an enormous amount of resources to develop and sustain their brand equity… but does that mean businesses that are just starting out can’t compete?

The most basic business formula in the world is to decrease costs and increase revenue.

More sales, better ROI, larger profit margins, and more market share.

In business, we’re psychologically drawn to short-term financial success:

What were your sales in Q3 compared to Q2?

How much are we spending this month?

What are we doing to make the most efficient system possible?

How much are we bringing in?

short-term sales

It’s tempting to flip your branding strategy month-on-month to try and squeeze every penny of profit you possibly can.

And when you’re running your own business, or simply don’t have an enormous budget to work with, one can hardly blame you!

But… chasing profit alone can sometimes make you short-sighted. In a quest to make the bottom-line increase, many marketers fall into the trap of trying to make easy sales by constantly price-slashing or blowout sales.

These tactics may get easy sales in the short run, but you’re going to miss a key element, critical for long-term success – brand equity.

Why Does Branding Matter?

Let’s cut to the chase here: anyone in business knows that at the end of the day, it’s all about increasing those profits. When you’re able to brand yourself or your business, and brand well, you move beyond price-based marketing.

jaguar brand equity

Those that compete only on price can always be under-cut. Someone can always figure out a cheaper way to make something. But when you create a strong brand presence around your business, cost will no longer be the biggest driving factor to get sales.

That means more money in your pocket.

You can sell the exact same product or service as before at a higher price-point than you could if you were just a generic product. Businesses that invest in their branding make a consumer feel as though they’re purchasing more than just a bare-bones product or service, making it worth the extra money.

A Cheesy Choice

Take a look at these two boxes of macaroni and cheese from Target:

kraft mac and cheese brand

Our first box is the well-known brand Kraft. A 7.25-ounce box of this all-American household staple costs is priced at $0.99.

But when you turn to the 7.25 oz box of Target’s generic store-brand mac and cheese, it’s even cheaper and priced at just $0.55 a box.

What’s actually all that different between the two boxes? Not that much. They’re both processed, enriched elbow macaroni with powdered cheese that you can cook in the same amount of time. But the box of Kraft costs nearly twice as much, and is still the leading dry macaroni and cheese mix brand in the United States.

Feeling sceptical? Next time you pop over to the grocery store, look at the price differences between the generic and branded versions of the same product.

How does that work? Well, even with commodity products such as boxed mac and cheese, it’s been proven time and time again that effective branding is what makes all the difference in creating a successful, lasting business.

What Exactly is a Brand?

Let’s start off with the definition of branding itself:

Marty Neumeier defines brand as “a person’s perception of your product, service, experience, or organization”.

It isn’t just your logo or slogan. A brand goes beyond the basic functional benefits of your product or service to evoke a certain feeling in consumers, creating a connection with them and increasing their trust, inevitably getting you more sales.

Going back to our mac and cheese example, take a look at this ad compilation of Kraft’s best mac and cheese commercials:

Kraft uses their commercials filled with humor, children, and family to position themselves as a family-friendly and wholesome brand – perfectly capturing the attention and trust of the parents that go grocery shopping for their family.

What is Brand Equity?

So, you’ve got down pat what a difference a brand can make on a business. What about brand equity?

Brand equity is the measurable value that your brand brings to your business.

starbucks as a luxury brand

Think about how many premium consumers are willing to pay for a Starbucks coffee. Is it the best quality coffee in the world? Well, that’s a matter of opinion. But the fact is a latte from Starbucks costs about $5, where a latte from a gas station costs about half that. It’s the Starbucks brand that gives a measurable value to the business.

Father of modern branding, David Aaker, wrote that brand equity is held up by three main pillars: brand awareness, brand associations, and brand loyalty.

Brand awareness is the extent to which consumers are familiar with your brand and its qualities. If your target audience isn’t even aware of you, how will they ever get to a point of purchase?!

Brand associations are what happens once a consumer becomes aware of your brand: they’re going to associate it with different things. We see that Kraft is associated with family and childhood memories – they’ve worked hard to build this perception!

Brand loyalty is what happens after you have established and secured that coveted relationship with your customers and get repeat purchases. If you’ve grown up with Kraft, you’re probably going to reach for it without a second thought!

A customer can become committed to your brand, and once that happens, that loyalty is extremely expensive for a competitor to break.

It costs anywhere from 5 to 25 times more to acquire new customers than it does to retain your existing ones. That’s because your repeat customers are cheaper to market to, they spend more with you, and they make purchases with you more often.

…And for Small Businesses or Budgets?

Okay, having the capital and time to create high-budget ads or to hire top industry influencers to boost brand awareness, secure brand loyalty and increase brand equity is great, but in reality, the truth is that most businesses out there aren’t working with multi-million dollar budgets and an enormous team of specialized experts.

small business making sales

Don’t let that get you down, though. Every mega-brand out there today started off with one or two passionate people that took the time to invest into their brand.

Whether you’re working on creating a brand from scratch or doing a massive rebrand, here’s a brief checklist of 5 things you need to build your brand:

  1. Determine your target audience. Knowing exactly who you’re targeting gives you the base on which you’ll develop your niche and build all aspects of your brand.
  2. Understand that brand equity is built around the target audience. Successful brand managers know that branding isn’t about them, it’s about the customer.
  3. Outline the key qualities and benefits you can offer. By knowing what you’re capable of and where you excel, you’ll find it much easier to create your brand vision and convince prospects to become customers. Your strengths could lie anywhere! Perhaps it’s your deep knowledge and experience in your field, your brilliant design skills, the efficiency of your supply chain, or even your exceptional customer service.
  4. Ask yourself why your business started in the first place. If this is your own brand, this portion is quite easy. What inspired you or your founder to start? Is there a story you always tell when people ask why you do what you do? Use it! A huge part of exceptional branding is storytelling.
  5. Think of your brand as a person. Seem weird? The sooner you get into this mindset, the better. Each person has their quirks, their likes and dislikes, their values, even the parts that can rub others the wrong way. Your brand will have the same. A brand has a distinct, unique personality – that’s what makes them memorable in the minds of consumers (and gets you at the top of their minds for a purchase!).

Start brainstorming about the type of person your target audience would like to be around!

Your answers to these questions will take some time, research and creativity on your part. Having these answers will give you the foundations you need to build the rest of your brand: from your logo to your website to your social media presence. All things that you need to build your brand equity, and in turn get those oh-so-wonderful sales.

The Other Secret to Building a Profitable Brand

We’ve gone through some key points to building your brand’s equity. Yet there’s one more critical aspect all successful business owners, marketers, and branding experts worth their salt should know…

Be consistent across every single marketing channel.

Your emails, your images, your Tweets, your blogs, your ad copy, your website… everything needs to sound like it has the same brand persona.

Why?

Brand equity is built slowly, over time by repeated, positive customer interactions time and time again. If you constantly change your logo, your brand presence, or your emails, you’re going to confuse your audience and make them less likely to trust you enough to make a purchase.

We track the performance of any marketing initiative over time and with a focus on data. Which of your emails have the highest conversion rates? What do you need to improve your website? These quantifiable, actionable metrics should be how you measure your performance and decide if you have to make a change in your branding.

Whether you’re looking to perform a rebrand or whether you’re starting from scratch, you need to create your brand strategy and brand guidelines, implement them to a T, and give it some time to test the waters.

Do You Have to Sacrifice Short-Term Sales for Long-Term Brand Equity?

So now, to answer your question that had you click on this blog in the first place. Do you have to sacrifice short-term sales for long-term brand equity?

The answer is…

Yes.

On the first day of your site launch, you might want to price everything at $1 to get every possible person under the sun to buy your alligator shoes.

alligator shoes brand

But if consumers know that they can buy your spicy shoes at just $1, do you think they’re going to be willing to pay the full $150 when you end your sale?

Your audience will likely see your shoes as cheap – even if they’re lovingly handcrafted – and assume that if your business can afford to sell these shoes at a measly $1, why would they need to pay the full price?

Pricing strategies aren’t easy to ascertain, and it can take some trial and error to figure out the perfect price and sales strategies that maximizes your revenue. You must take into account your costs, as well as the perceived value of your brand.

Brand building is a long game, but when executed well, brings lasting financial success. Take a look at the most valued brands in the world:

Apple’s brand = $182.8 bn

Google’s brand = $132.1 bn

Microsoft’s brand = $104.9 bn

apple store queue

When we think of these giants, we feel different things. You don’t just think of Apple as a technology hardware manufacturer. There’s a cult following around Apple. People camp out overnight in the freezing cold for the latest release of the product – that right there is the result of strategic brand building and a high brand equity.

A Final Word

If you’ve enjoyed this article and want to learn more about how to build a profitable and sustainable brand that converts, connects, and lasts, check out Adversent’s Branding Mastery Course, where you can learn step-by-step how to create a profitable brand from the ground up.

Adversent is a digital marketing education community that provides business owners and budding entrepreneurs a place to learn the real methods of how to build a successful business in the digital landscape.

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