Branding as a Tool for Competitive Advantage

by | Jul 10, 2015 | Business

Branding is a highly important strategy of securing a competitive advantage for firms. For many branding is limited to advertising and maintaining presence on social media and other digital channels. However, branding is actually a comprehensive methodology that covers aspects including company logo, strong customer loyalty, product and service experience and emotional values.

Companies, in addition to increasing sales pipeline, should also focus on building and sustaining their brand in this age to set them apart from their rivals and make them more noticeable to customers. Rothschild corporations’ business consulting services in Houston offer clients a toolkit for creating a branding strategy.

The following is a brief guide on how firms can turn their brand in a competitive advantage.

What is branding?
A brand refers to a “name, term, sign, symbol or design, or a combination of them intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of other sellers” according to the American Marketing Association (AMA).
Branding, on the other hand, refers to the process involved in crafting a unique personality and image in the mind of the consumer for the purpose of influencing strong customer loyalty and market dominance. Branding employs a series of tools to achieve this such as advertising campaigns, cross-channel visibility and two-way communication.

What is a competitive advantage?
A competitive advantage is any resource or capability that a firm has at its own disposal that allows it to have considerable financial and non-financial gains at the expense of its rivals. Common types of competitive advantages include the adoption of new technologies that lead to substantial cost savings or the more efficient utilization of resources or competences such as a more qualified workforce, superior product/service features and so on.

How branding leads to a competitive advantage?
Building a brand can cause a firm to achieve a competitive advantage in many ways.
Firstly, branding allows better positioning of the company’s products or services in the minds of customers. Positioning allows the brand to be differentiated according to particular set of features or qualities; it clarifies the purpose of the brand and makes it easier for customers to consume your product or service. For instance, Southwest airline positioned itself as a low cost airliner that signaled the benefits of quick, inexpensive travelling. Compare this with American Airlines that is positioned as an all-services airliner that offers premium as well as standard airline service facilities.
Branding also allows attaining stronger customer loyalty. This is because customers are not just interested in the functional aspect of the products and services that they use, they also seek emotional values in their use that allows them to fulfill their needs in a better way.
Apple’s strong customer base is a witness to its strong functional and emotional appeal of its products such as the iPhone and iPad. It has cultivated an entire generation of loyal Apple worshippers that has allowed Apple to be among the most valuable brands worldwide.

End note
Branding is an immensely critical tool that all businesses must employ to increase their profitability and long-term value. However, successful brands can take multiple years to develop and hence branding should be viewed as a long-term exercise.

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