Chapter 1. Size Is Not a Strategy

In the past 20 years, no marketing concept has captured the collective business imagination more than "branding." Every year, several important new books are written on the subject. And professional service firms from business consultancies to advertising agencies are advising clients on how to "brand" their offering.

Given the billions invested in this effort, it's worth stepping back to examine the nature and value of brands. In answer to the question, "Why is a strong brand important?" one might say that it creates customer preference, lifts sales, or even makes the sales force's job easier. But the most important answer to this question is that a brand commands a higher price. And the stronger the brand, the higher the price.

This phenomenon is indisputable; it's been demonstrated numerous times by research and brand consultancies the world over. In one such recent study, international research firm Millward Brown looked at a variety of brands of differing sizes and indexed their price against the category. What they found, not surprisingly, is that "it is abundantly clear that brands with higher equity have a price premium over lower equity brands"[3] (see Figure 1.1).

The High-Equity Price Differential: Source: Adapted from "Brand Equity and the Bottom Line," by Peter Walshe and Helen Fearn, Admap, March 2008.

Figure 1.1. The High-Equity Price Differential: Source: Adapted from "Brand Equity and the Bottom Line," by Peter Walshe and Helen Fearn, Admap, March 2008.

Now consider the seemingly ...

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