The Power Of Branding Cannot Be Overlooked In Finance Industry
Shakespeare in his time asked what is in a name and suggested that a rose will smell just as sweet as it does irrespective of the name it is called by. Well, that was in the Shakespearean era but not today when there is a fierce competition among businesses to make a name in the market. The power of branding therefore cannot be overlooked in the present market context.
Why? The answer to this question is found in different studies that have shown that:
A brand is more known by its name
It provides the sum total of the consumer experience and
It makes a product more recognizable.
This means that if you print a rose in a MacDonald’s wrapper or on a Coca-Cola container, with all its probabilities will actually make people perceive that it will smell that much sweeter. Therefore, a brand is that much more powerful.
However, if you look at the other side of it you will find that it is also very frustratingly hard for the investors to provide the right value to it. How on earth a rose relate to the soft drink or the chicken burgers? Well, that is where the power of branding comes into play and affects the investors: it makes them think!
Helps create an elite list
With proper branding a business can feature into the bracket of the elites in the similar trade. That means, when people look for a specific product or services and types the specific keywords in the search box, they will find the companies and brands that rank high on the search engines result pages or SERPs. This is why when you type ‘debt relief’ in the search box chances are high that you will see Nationaldebtreliefprograms.com feature among the first five names on the first page of the SERP.
Every year a new list is released with the ranking of the best global brands by Interbrand. This list includes all those who’s who in the financial world. There are several finance brands and companies that make up the famous DJIA.
But how do you recognize these brands without being a stern follower of it? Well, these brands have some of the best and most recognizable logos and symbols with which these are known all over the world. This is the power of branding.
Tips to value a brand
Therefore, it is not required to be a follower or well-known to a brand to distinguish it from others. With proper branding you can make the mark that you wish to in the minds of the people. For this all you need to know is how well you can create a value for your brand.
Though brands are still considered to be an intangible asset it is of great importance to a company. Investors are often interested in a specific brand by looking at the value of it. This helps them to separate a brand from the balance sheet so that they can figure out the exact number.
To ensure that this intangible asset provides the real value to the stocks you must focus on the most significant approaches that have gained importance over the years.
Doffing out assets – This is probably the easiest of all ways to add the desired value on any brand. This is the way in which the brand equity of any company is calculated. The process followed in very simple wherein you simply take the enterprise value of a firm and deduct the tangible assets as well as the identifiable intangible assets such as patents. The number you get will be the brand equity value of the company. Though there is a drawback in this process as it does not take into account the revenue growth of the company but this is a very useful process that will provide you with the value of goodwill of the company.
Pricing power – The product to product pricing power of a company is another way in which the investors can account for a brand. In simple language it means that this method tells them about the amount that the company can charge as a premium over and above the price of a similar product of its competitor. This premium value is then multiplied by the number of units sold to get the annual figure of the brand’s worth.
Intensive approach: This is a time consuming but more practical and holistic approach followed by the individual investors. In this method the above to approaches are combined with the proprietary measures of the brand strength as well as the role the particular brand in decision making by the consumer. This provides a more complete measure of brand equity of the company.
If the power of branding is utilized properly it will help the finance companies to triumph in the price war, grow their operating margins and even thrive in a recession to create a better shareholder value. Therefore, just like the brand, the premium investors will also be willing to pay for those stocks that have a better branding edge. This then becomes almost an exclusively psychological choice.
Use of social media
Social media plays the most significant role when it comes to branding and most finance companies have started to realize and reap the benefits of it.
Today you will see most of the finance advisors jump on to the social media bandwagon. According to a recent report of SEI, more than 185 financial advisors and investors were interviewed regarding their experience of social media presence. It showed that:
56% of the advisors had some initial social media involvement and
18% of them secured a new client due to their social media branding strategy.
These statistical data prove that it is best to use the social media platforms for branding especially by the finance companies. This will help them to see real business returns. All it needs is a better social media plan, process and policy in place instead of using it sporadically for their marketing efforts.