Branding is costly. Look at the marketing and branding budgets of Transnational Corporation (TNCs) and look at the metrics. What is the total value of branding budget to sales revenue. Is there a correlation between the two?
Product knowledge of consumers
Often, companies hope to upgrade consumers at the lower end of the market to use their higher end products. This push can be from two ways. For example, it can be due to a growing middle class or simply a concerted effort to push out higher priced products with greater functionality. The question is how can we entice consumers to fork out more for a product?
The first step is to ensure that the low-end consumers understand and trust this brand or even the company. It is human tendency to opt for stability. Changes appear to confuse and distract people’s lives. Hence, to make easy decision, they based on previous experience of using the product. Only when consumers are familiar with your product categories, encouraging them to upgrade is possible.
Go to a coffee shop to have a coffee. How much would it cost you? Probably 80 cents for a cup. Take a ride to a Starbucks store; the price is magnified multiple times yet many would still go to Starbucks to have the pricey coffee. What is so magical about it?
It’s all about how consumers value the products and services. Their “shopping” experience counts a lot. People go to Starbucks pay for the ambience and the crowd feeling. It is also about the association with the brand. Brand capital helps to differentiate your products from others and encourages others to pay a premium for them.
Any close substitute?
Having a similar nature product does not means that there can be no differentiation. It is still possible. The root of all competition is due to close substitutes of the products many businesses are selling. This can range from consulting, teaching, cosmetic, vehicles, food & beverages or even apparel. If you raise your price by too high a margin, people might simply switch to another store. This positions your company at a great disadvantage point.
Through branding, you are trying to move away from price to non-price competition. Products that have patent appear to be trust worthier. Warranty assures consumers that your products are of good quality through the signal effect. For others, it is through educating the consumers of their product. This plays an important role in ensuring that consumers are not compelled to purchase a product under pressure. It seeks to evoke the willingness and eagerness for the consumers to purchase and try your product.
Brand Promise. Brand Purpose.
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