Branding a Company – Definition and Elements of Brand Building
Definition and elements of branding and brand development
What makes brands (whether products or companies) transparent, clear, valid and, above all, valuable? Here is a complete guide to brand development.
A brand is created from the perception of the interplay of structures, processes, products, services and the people in a company. A brand is a conglomerate of emotions. Conscious and unconscious emotions. People buy brands, not products.
Due to the volatile and uncertain times caused by climate change, the war in Europe, inflation, supply chain problems and the pandemic that has just been overcome, consumers are much more cautious in their purchasing tendencies. Purchasing decisions are much more considered:
Impulse purchases are declining significantly. 68% of consumers surveyed say that they have become more price-sensitive. 58% research more extensively before they buy (Edelman Special Report Brand Trust 2023). Trust in the brand I buy is the decisive factor.
This makes it all the more important to define brands (whether products or companies) transparently, clearly, validly and relevantly, to position them clearly and to develop them into trustworthy life partners! This article describes how to do this.
1. How to define a brand
Let’s take this approach: The more relevant a brand is, the more its products are bought. Selling is the goal of every entrepreneurial activity. And yet: around 80 % of all interactions with a brand have nothing to do with the actual act of buying. The strength and clarity of the brand defines the image we have of a company or a product. And this brand image also defines how strongly it is preferred over other brands, how the price-performance ratio is perceived, how the loyalty, the repurchase rate and also the willingness to recommend a product is.
The brand is therefore the tangible and intangible construct of all factors that can be perceived with all five senses, which is created in the context of the management, marketing and production of products and services, i.e:
- the interaction of the people who represent a brand,
- the services and the perceived product quality,
- the price perception,
- the communication of the brand to customers and their interaction with the brand,
- the trust it enjoys and
- the individual relevance of making life more pleasant and better.
To put it even more simply: the brand is the personality – the individuality – of a product or a company.
Long-term brand management means establishing the brand personality as a kind of creative template for the actions of all those responsible for the brand and constantly comparing the brand with this template once it has been defined. And yet: the template is not set in stone. It has to be readjusted from time to time because social values change, because needs evolve and because scientific findings force the brand to act in new ways.
We see that a brand has a personal obligation to the consumer to offer a price-performance ratio that is expected to be appropriate, and that brands also have a social responsibility. The company’s expertise inevitably gives rise to an ethical and socio-political obligation.
In addition to product quality and product-related services, the ecological and social effects of production and consumption are therefore decisive for brand management and its acceptance.
Today, it is very easy to see whether a brand sincerely, honestly and openly wants to make consumers’ lives better with its performance, or whether it is only interested in short-term profit maximization without a social or consumer-oriented vision. Greenwashing, quality fraud or inconsistency in the entire brand system are quickly exposed.
Only when a brand is managed with a sincere vision at its core can it develop its full potential both internally and externally. All corporate units and departments must be aligned with the same brand objective. A brand is therefore above all organizational development.
2. Brand identity: the entirety of the building blocks of a brand
The brand identity describes everything that makes the brand perceptible and defines it externally (for customers, consumers or potential employees) and internally (among colleagues in their daily work and in the perception of investors). These building blocks are our tools for successful branding.
In the following, we take a look at the most important levels of brand identity:
- Brand Strategy
- Brand Design
- Brand Architecture
A. Brand Strategy
Brand positioning (product, target group, market):
The purpose, the creative idea of the brand, is the nucleus from which everything else develops. This why of the brand addresses a clearly thought-out, special product or service idea to a precisely defined target group with special needs. The aim must be to create an offering that stands out from the competition – and thus enriches the lives of customers.
If we want to be a friend or helper or advisor to consumers, then the brand and its personality must also suit the customers and speak to them at eye level. As we can see, the socio-demographic characteristics of the target group description are too rough and imprecise. We need to describe the target group in psychological and behavioral terms, we need to immerse ourselves in the values and motives of our customers, we need empathy for the styles and lifestyles of our target groups.
Brand values (values, attitudes, brand personality):
If our offering, competitors and buyers are clearly defined, then we can also stake out the personality of our brand. The archetype of the brand, i.e. the living example of a person, matches the persona of the customer. As brands are absorbed into the lives of their customers and ideally become a life companion, they should also take on a role in the lives of consumers like a person. This brand personality is defined like a consumer persona.
Although the development of a brand is an intellectual process, it must not be designed on the drawing board, but is based on the lived values of the founders and developers.
Brand character statement (the guiding principle of the brand):
The brand statement summarizes the brand’s claim in a bold and memorable sentence. It serves as a value-based guiding principle for brand positioning.
Ideally, we condense the identity into a model. Summarized as a one-pager, it helps us to understand the elements in their interaction and causal relationship.
The definition and documentation of the brand is at the heart of branding. Sketching the plot, the walls and the supporting pillars of a brand helps to make a brand architecture three-dimensional. The brand architecture defines the space for efficient brand management. Because what is defined and documented as elements of the brand can be called up, can be communicated to all brand managers and employees, is the plan for behavior, campaigns, PR, employer branding, product development and services.
The model contains all the elements of the strategy outlined above – presented in a condensed and easily consumable form. There are numerous ways to present it. Some models place greater emphasis on market performance and the target group. Other models focus on culture and inward-looking identity, others on corporate management. A wonderful overview of brand models with the corresponding templates to fill in can be found here: The Right Brand Model.
I can only advise every company and every brand and marketing manager to do this exercise and condense the brand elements developed so far into a model. Such a one-pager then becomes a template for brand management. If you keep visualizing this condensation in the truest sense of the word, you will be regularly reminded of the brand’s guard rails. The model helps to make the brand tangible and communicable to others. And it also helps to outline the path for further brand development.
B. Brand design
The identity of the brand manifests itself in the totality of the brand signals it sends out. These individual elements of branding, which determine the brand design, are as follows:
- Design grid
- Icons & disruptors
This is not just about visual design elements. Language, written or spoken, is also a central element of brand design. Especially now, in the age of voice assistants, podcasts and an abundance of digital content, language is becoming increasingly important as an element of differentiation.
C. Brand Architecture
Brand architecture defines the interaction and interdependence of corporate brands, product brands and sub-brands.
There are various forms of such architecture. Procter & Gamble, for example, is perhaps known to consumers as a sender brand for competence and quality. The strong product brands Knorr, Magnum and Dove – to name but a few – are certainly known for their special differentiation in their segments. P&G does not build up epic product ranges directly under the corporate brand, but establishes many strong individual brands in different segments under different names. This product brand strategy also enables P&G to be present in the same segment with more than one brand and thus to appeal to different personas with different brand worlds. Those who can afford it …
On the face of it, the brand name Nivea has nothing to do with Beiersdorf, the company that created the brand. But Beiersdorf has developed hundreds of products under the name of the Nivea brand family.
The Würth brand is completely different. Würth is a corporate brand. Würth is a product brand. Würth is the brand of a vertical and horizontal range of different products. Würth is written on every pack of screws, on the organization systems for tools and on electrical appliances.
The following illustration shows the aforementioned levels of brand identity with their building blocks.
3. Branding – How to: The success factors of a brand
The foundation is laid when we have gained the right basic understanding of the scope and starting point of a brand (see 1.). Then we also know which building blocks and levels of the brand are important – for a relevant approach to customers (see 2.).
So where are the levers that differentiate successful brands from less successful brands? We will concentrate on the three most important IMHO:
A. Strategic intelligence and creativity
Creating a successful brand is somewhere between an art and a craft. Why? Isn’t marketing an applied science? Well! The strategic development and planning of a brand is an art AND a craft! Finding the strategic starting point for a brand is based on a creative and, at best, innovative idea. Business ideas or product ideas do not fall from trees. They are developed with sweat, diligence and a great deal of creative intelligence. And that is why the strategic development of a brand is also an artistic process. The downstream branding is the process of making and establishing a brand. And that is the craft of marketing – always supplemented by creative design – for example, the further development of products or the creation of eye-catching campaigns.
The purpose of the company, the idea of customer benefit, is our creative foundation for the long-term stability of the brand. If this is not strong and does not carry a decisive customer benefit, the brand is not marketable. The brand should make people’s lives better in one facet of their world of needs. And: consumers expect brands to also have a positive impact on the environment, society and economic ethics. Attitude is expected by many consumers today. And it is an important differentiating factor in the market. Brands accompany people through life. People also want to know what world view these brands have that makes them a friend of the consumer.
Finding the sweet spot of product, market and consumer outlined at the beginning is our creative challenge. Observing the wishes and needs of prospective customers and finding an innovative translation for the product and the brand is our most important creative challenge and therefore also the greatest success factor for a brand. If we don’t gain the right insights at the very beginning in order to develop a creative idea for our brand, then we will most likely not generate enough relevance for our product and therefore no raison d’être for our company.
Sometimes there is a lack of a holistic view of the status quo. In my practice, this was recently brought home to me again when I was developing a new brand for an online retailer. The retailer had conducted an incredible number of studies on customer behavior and preferences, there were evaluations of the user journey on the online store and there were insights into the impact of the campaigns. But what they didn’t have … well … all these insights were not put on a table to critically cross-reference the data and draw conclusions from it as a whole. Instead, the flood of data was totally overwhelming. The duty to put all the data on the table means hard work and sweat. Drawing conclusions from it is strategic creativity.
Strategic branding makes all points of contact as consistent as possible. Customers’ feelings, thoughts and actions should be consistently influenced in line with the brand orientation. Brand awareness and image are decisive factors for purchasing. Performance marketing, i.e. an impulse-driven sales measure, only works efficiently if the brand also generates relevance in the aforementioned sense. Brand work and branding deliver up to 80 % of the success, performance marketing only the remaining 20 %. This has now been researched in various studies (including by Les Binet and Peter Field). The exact percentage split of an efficient optimum between performance and brand marketing is industry-specific. In the FMCG sector, for example, the optimum split is 60% brand marketing expenditure and 40% performance marketing expenditure, while the optimum proportion of brand marketing increases for complex products or capital goods that require explanation. With these products, prospective customers make less impulse-driven decisions.
In the current period of uncertainty and crisis, brand marketing is becoming increasingly important because impulse purchases are on the decline. Purchases are being carefully considered. 58% of consumers say that they will make fewer impulse purchases in 2023 than in previous years (Edelman Trust Report 2023). Trust in the brand matters more than ever.
B. Added value through digitalization and services
A second important success factor for brands is the creation of added value that enhances the actual product or service in a differentiating way. Why? It is becoming increasingly difficult to differentiate products from those of the competition so that brands can gain a competitive advantage.
It can be the unconventional, accommodating and engaging way of addressing consumers that captivates them and offers additional reasons to buy. Ikea achieves this with its own language and tonality.
But it can also be the service design that sets brands apart from the competition. The tiles in the bathroom that I can have printed with my own decorations, the M&Ms that I can personalize with birthday greetings for the grandchildren or the muesli that I can put together according to my own preferences. These services use digital platforms that make these special services available and convenient for everyone.
Consumers today choose brands. Brands do not choose customers. The multitude of digital contact and service points on the customer journey enable consumers to gain a vivid, differentiated picture of the brand world and make a decision. The digital customer journey offers the opportunity to increase awareness for brands, but it also offers the opportunity to make the decision-making process faster and more seamless.
The design of modular product offerings (entry, medium and premium) increases accessibility by reducing barriers to entry. At the same time, it creates desirability for upgrades. This value ladder works particularly well digitally, e.g. as part of subscription models, but also as part of additional service packages that can be easily purchased.
C. Courage and patience
Branding is an ongoing and long-term process. Branding requires continuity of measures in order to build up an awareness depot in the customer’s mindset. In times of crisis, companies try to save money and cut their marketing budgets first. In good times, spending is increased again. Wrong!
The Ehrenberg-Bass Institute for Marketing Science in Australia analyzed 365 brands in the USA at the beginning of 2023 and measured the rapid negative effect of stopping advertising measures. Brands lost an average of 10% market share per year in terms of sales compared to companies that did not stop advertising spending. Due to the low competitive pressure, these companies enjoyed undivided attention and thus increased visibility. Making up for the loss of market share is more costly than maintaining a constant presence.
Strategic branding and brand management therefore means building up reserves for weak times and continuously investing in branding. Perhaps it takes courage to invest in branding counter-cyclically. But it is actually only sensible.
It is also sensible to align the brand with the development of the market and the needs of the target group. This includes leaving the comfort zone and constantly questioning yourself. In any case, it takes courage to venture into new brand territories and break new ground.
a. Rügenwalder Mühle:
It was a bold step for the traditional meat-producing brand Rügenwalder Mühle to switch a large part of its production to vegetarian and vegan “sausage”. It was against the butcher’s honor and against the approach of the competition. Today, the company produces and sells more vegetarian and vegan products than meat and sausage. In doing so, this brand has dared to challenge its traditional food segment and has taken the risk of entering a completely new segment from the perspective of its traditional customer base.
At the same time, Rügenwalder Mühle has taken a stand in its communication by clearly stating that meat consumption is a cause of climate change. In doing so, the brand literally cut itself in half. And was ultimately extremely successful.
Taking on social responsibility as a brand can be courageous because you are venturing out of your traditional core area. It can also polarize. But it offers further potential to position yourself even more clearly as a brand and stand out from the competition.
The luxury label reinvented itself once again around 2015. With Streetculture, the company inspired the value-sensitive Gen Z anew and broke with the old clichés. For this generation, luxury from Gucci moved out of the elitist corner and onto their level. Gucci has thus “democratized” luxury without abolishing itself as a luxury label or even becoming cheaper. The desirability is there, more than ever. The special character of the brand has been preserved. However, the brand has opened itself up to a new generation that has expectations of meaning, authenticity and passion.
The world belongs to the brave. The world belongs to the brave brands! This claim is the constant driving force of the brand leader. This aspiration guides the development of the brand, which must constantly question itself. In order to permanently satisfy the needs of customers in the best possible way, in order to be absolutely relevant. To make customers’ lives better. Yes, perhaps even to make the world a little better.