My morning routine includes turning on the TV and listening more than watching CNBC’s Squawk Box as I get ready for work. This morning, as I passed by the TV in the sun room, I saw a news graphic that stated, “Cramer: The Stronger the Brand, the More Pricing Power a Company Has – And That’s Important.” (It is possible that I was replaying a recorded episode of Mad Money this morning, but that isn’t important to my point.)
Small businesses tend to not think in terms of “brand power”, but they should.
Thirty minutes later while driving to work, the message of this particular graphic kicked in and I pondered its declaration. It was the phrase “pricing power” that first attracted my attention, but after a bit of thinking, someplace around the Coke plant on Phoenix, I realized the importance of “the stronger the brand” part of the statement.
In case you don’t know who Jim Cramer is, he hosts a show on CNBC called Mad Money where he talks about the current day’s stock market activity, then offers his thoughts on which publically traded companies might be worthy of his viewers investment.
Cramer explained that a company’s “brand equity” gives a company the ability to charge more than their competitors because their brand stands out from their competition and the people that need their product or service know their name. Part of the reason people know their name is that they have spent large sums of money advertising their brand over long periods of time, providing their customer with a value perceived greater than the price they pay for the product or service. The difficulty for some small businesses is that they are operating most days on resourcefulness because of the scarcity of their own resources. They don’t have loads of money to spend on advertising. So is it possible for a small or privately held business to build their own brand equity creating future pricing power?
Let’s define brand equity in the simplest of terms. Brand equity is created when a business has been successful in presenting their products or services to their target market so that the market remembers their name, their customers are serviced, satisfied, and believe they are receiving a great value for their money spent, and they trust the business to deliver on their promises. Hopefully your business is already doing this for your customers. But just in case, let me offer a few tips for accelerating the increase in your company’s brand equity.
Quit being modest, but don’t lie. Many people have been taught by their parents and teachers that it is rude to brag on themselves. That is generally true. However, people won’t think you are rude for bragging on your product, service or employees. Don’t confuse the two. Also, if you believe in your company, make it a main topic of your conversation in social settings, when you get your oil changed, or when watching your nephew’s football game. Just make sure you know when you’ve made your point to those people you converse with. Keep in mind that the more people who know the name of your business and the more people that are familiar with your product or service, then the more likely they are to become a customer. And bragging doesn’t cost much money.
It is your responsibility to educate your customer about your product or service and its value to them. Who knows more about the value of your product or service and its features and benefits than you? When working with your customers take the time to inform them about both the obvious and the less obvious benefits your product or service provides. When people understand the real story of your product or service, the probability will increase that they will perceive the price your charge as a great value.
Always try to make it better. Having a superior product or service is what wows your customers. That doesn’t mean your product has to be the Royals Royce of the in the industry. A Honda can wow a buyer because of its quality workmanship, reliability, and affordability. Honda has wowed me since the 1980’s when I bought my first Honda, a Honda Civic. But the Honda Civic in 1985 has evolved into a much better Honda Civic in 2014. You will build your own brand equity by continually improving your business offerings.
Brand equity is important to any business. Large companies have full time professionals to focus on building their brand equity. Smaller companies don’t. But a small company with passion focused on providing its customers excellence and value, with owners and employees that are willing to brag about their capabilities, don’t need a full time professional to build brand equity. Isn’t it time you let your target market know who you are and the reason they should buy from you?