Our expert Product Brand Strategy consulting services will help clients to correctly identify and plan the new product brands to create and what existing product brands need augmenting or transforming to boost their business's competitive strength and customer impact.
Product brands are one the most important assets of any business. They embody a recognition of the value your business is giving to customers and how they and other key stakeholders like, trust, and have confidence in your business. When these are good then it is highly likely they will translate into becoming a source of sustainable competitive advantage and profitable growth which will boosts the net value of your business.
A ‘Product’ is a tangible or intangible item of use that must be experienced by a consumer to know what benefits it gives. A product as a ‘Brand’ does more than this because it implicitly says, “this is what I am about and what I stand for, if you like and trust me then please buy me”. This is an augmentation of the customer experience with a product and the company that sells it, which 'pulls' customers to want it. When this happens, a product to becomes a Product Brand, which is far more valuable. So, because brands are experiences, and experiences are an implicit thing to a person, a product brand is therefore a non-tangible asset of a company, which if continuously improved and managed well through carrying out a proper product brand strategy they will endure for a long time.
To further understand what a Product Brand Strategy is and its role in business it is important to emphasise it is not the same thing as a Marketing Strategy or Sales Strategy. This is because the role of marketing and sales is to communicate messages about a product that in basically translate into “this is what I can do, so buy me”, therefore one role of marketing and sales activities is to 'push' a company’s products to customers to gain a sale. The other very important role of marketing and sales activities are that they must reinforce and augment an overall positive customer experience with a product and its selling company so that the brand ‘pull’ effect will grow, which makes it relatively easier and cheaper to market and sell.
Marketing and sales messages tend to come and go in many different forms through many different communication channels, but in doing so they must deliver consistent explicit and or implicit messages that not deviate from the type of customer experience a company wants and needs to give to its target customers from using its products, and from being associated and interacting with it. To ensure companies do not stray from this, marketing and sales must consistently adhere to the principals, values, and pathways set out by a Product Brand Strategy. This means marketing and sales strategies and activities are the servants of a Product Brand Strategy. A Product Brand Strategy is a servant of a Corporate / Business Strategy, which is a servant to a company's purpose and mission. This hierarchy demonstrates that brands are 'strategic' matters whilst sales and marketing are 'tactical' matters. Therefore, developing and executing a relevant and strong Product Brand Strategy is a very important investment in identifying and shaping the why, how, and what new products to develop and improve to meet a target customer’s needs and wants, and how to get the many customers to adopt and endorse a company's existing and new products.
A well thought out and executed Product Brand Strategy will not only significantly increase the chances of strong product brands to emerge and stay the course and make selling products easier, it also contributes to boosting the loyalty, motivation and commitment from your employees and other key stakeholders, which leads to higher business performance results. A Marketing Strategy and a Sales Strategy are still very important because these are strategies govern and that set out tangible goals and objectives, and shape the why, how and what types of transient marketing and sales tactics should be deployed to makes sales and grow the value of the brands.
Even from a financial and accounting perspective a Product Brand Strategy is very important because brands have a prominent place and role on a Balance Sheet which determines the value of a business, whilst post product launch marketing and sales activities are treated as an expense on the profit and loss financial statement thereby designating it as servants to brand building. The following demonstrates this:
According to accounting standards aligned with international accounting standards, when a product is developed and it is anticipated future positive economic benefits will flow to the entity that created it, all development costs spent to get it to market gets recognised as an intangible asset on a company's financial Balance Sheet. This is a starting book value of a new product brand which contributes to net asset value of a company. Marketing and Sales expenditure on product launch and beyond are treated as expenses on a company’s Profit and Loss Financial Statement, therefore these activities do not seem to directly increase the value of a brand on financial accounts. However, if the industry and market players perceive the new product is going to be and or showing it is a hit then the product brand value will increases, but this value is not recorded on the Balance Sheet but can be calculated off Balance Sheet through financial modelling.
When a company acquires another company the difference between what they paid for the company and the value of its physical assets is the 'Goodwill' value of the acquired company, which is the value of all its product brands, intellectual property and other intangible assets that were accumulated because of the mark and impact of having prior and existing products to market and sell into markets it had and opened up. This time 'goodwill' value is shown on the acquiring company’s Balance Sheet in the Intangible asset section. This is because a real value price was determined for the company and real cash and or non-cash items was exchanged for the purchase of the company. Subsequent marketing and sales expenditure of the newly acquired product brands are still treated as an expense on a profit and loss financial statement and the value of the acquired ‘goodwill’ is depreciated over time as things such as the life of intellectual property protection reduces, and older products are retired in favour of newer ones. However, where the product brand has trademark protection then the product and business brand value can still grow carried by good sales, profits and reputation from the replacement product models.
Having strong product brands in your business portfolio also gives providers of finance the confidence and security to invest in your business with funds you need to expand, grow or refinance your business at a lower cost than would be case if you had few or no product brand assets. Another example is if have a browse at any number of vendor websites you will often see them flashing the well-known brand badges of companies they do or done business with. Vendors love to work and keep working for companies with strong brands because by doing so they can piggy-back strong brand’s reputation to augment their own business brand value. To a prospective customer who naturally looks for short cut information about a potential vendor’s credibility will tend to quickly register in their mind “if this vendor is good enough to produce for this brand then they are more than good enough for me”. How much that vendor has contributed to a brand’s development and growth could easily get overlooked.
The management consulting industry is another example of this because there is a growing industry for hiring out the freelance services of former employees of the big top management consultancy firms at a perceived lower price than directly hiring one of the big management consulting firms. These former employees supported by freelance recruitment consulting platforms can in most cases easily push out very qualified and competent freelance management consultants just because these others don’t carry a big management consulting brand name in their resume. There is a moral and political debate to be had here about safeguarding against any practices that restrains the talent, trade and attacks the livelihoods and families of very competent and fair priced others that don’t carry a brand name in their portfolio, and given the UK being a service-led economy has got one of the worst productivity levels of the G7 nations there should be an debate for change to get better productivity results.
What is fundamental point that is demonstrated here is product brands in whatever form they come in can be become very powerful assets, so it makes sense that your business should develop a good Product Brand Strategy that governs the right direction and shape of your product development, marketing and sales activities to deliver the right positive outcomes for your business, consumers and other key stakeholders.
by Kristof Farrell, 10th March 2019