Brand investment is crucial for companies to build sustainable competitive advantage and achieve high returns. However, branding should not be viewed merely as a cost center. With proper brand strategy and execution, it can generate loyalty, word-of-mouth, and long-term profits. This article will analyze how to invest in brands, assess brand value, choose between building and buying brands, and employ effective brand extension strategies. There will be a focus on concepts like brand equity, brand positioning, brand personality, and brand architecture, with mentions of major brand examples like Nike, Apple, and Coca-Cola.

Brand equity creates value and barriers to competition
Brand equity refers to the value premium generated by the brand name. Strong brands allow companies to charge higher prices, boost market share, expand into new categories more easily, and withstand competitive threats. Much of Nike and Apple’s corporate value stems from intangible brand equity rather than tangible assets. To develop brand equity, brands must cultivate a sustainable competitive advantage in the minds of customers, through exceptional quality, cutting-edge innovation, aspirational branding etc. This shapes positive brand associations that drive preference and purchasing.
Brand positioning and personality connect with target consumers
Brand positioning refers to the specific brand identity and image that a company wants to develop in the minds of customers. This includes identifying target consumer segments and highlighting the key brand attributes or values that will appeal to them. For example, Coca-Cola positions itself as an iconic brand that sparks happiness and optimism, which resonates widely. Brand personality uses human personality traits to describe a brand’s image. Popular brand personality frameworks like Jennifer Aaker’s include dimensions like sincerity, excitement, competence etc. Strong brand personalities make a brand more relatable and memorable for consumers.
Building brands organically can be slow but brings lasting value
Companies can expand their brand portfolio by building new brands organically or acquiring existing brands. Building brands allows tighter control over brand identity but tends to be more expensive and time-consuming. However, organic brand building often creates lasting brand equity and consumer loyalty. In contrast, acquiring brands can be faster and cheaper in the short run but has high failure rates in generating long-term value. Companies should assess factors like market dynamics, integration costs, and brand extension potential when deciding between these routes.
Brand architecture decisions impact brand extension effectiveness
Brand extension refers to leveraging an established brand name to launch new products. Brand architecture defines the branding strategy across a company’s portfolio – using common corporate brands, creating independent brands, or hybrid approaches. Decisions about brand extension must consider existing brand equity and target consumer alignment. Expanding into unrelated products or categories can dilute core brand positioning over time. Brand architecture should match business diversification strategy.
In today’s experience economy, brand investment is essential to gain competitive advantage, enter new markets, and reap enduring profits. Companies must cultivate brand equity through strong positioning, deliver tangible quality and intangible identity, and make smart branding portfolio decisions.