Since value creation is the most relevant issue for every business, marketers will agree that working with quality marketing elements is a differentiator in building brand value. This will result in growth, by meeting the needs of consumers. By having a significant brand, more of it will be consumed, generally at the highest possible price for the segment of interest, generating better results for the company. The Kantas consultancy cites a McKinsey study, where the use of this value generation strategy allows a 1% price increase to favor profit growth by an additional 8%.
Unfortunately, when things are tight it’s common to look to cut costs where you can. Cutting marketing spend, especially in areas like promotions and advertising, can create a momentary illusion of improvement. What many marketers recommend is the complete opposite. It is in these difficult times, both for the consumer and for the brand, where you have to invest more and better. This investment should be aimed at creating value for the brand with the intention that the consumer continues to acquire it. There are examples of companies that do precisely that, such as the case of Coca-Cola, which increases its brand value, causing a 12% growth in its net income in a year as complicated as 2022 (data from the third quarter). It does this by focusing on adding new customers while retaining current ones. Much of this is done through strategies that link consumption with the passions of consumers, such as music and games of their interest.
Contrary to what many may think —that a product is just a way to satisfy a need—, today any product that seeks to generate more value should include something else. Consumers buy benefits, by satisfying the product a need, a benefit is generated. A marketing maxim states that “products are created in factories, while their value is created in the mind of the consumer.” A product, tangible or intangible, generates more value when it offers additional benefits to the simple product. This is how we have, in addition to a soft drink, a mental value of good times. Or, a transport service, in addition to taking us from one place to another, does so with comfort and punctuality. These additional benefits to the satisfaction of the need make up what generates that additional value that the consumer is willing to pay.
The perception that the consumer has of receiving something of value increases the profitability of the brand. The perception of value makes buyers buy more and at better prices. Although factors such as distribution, coverage and promotions, among others, should also be considered, the competitive advantage that a high perception of value gives is difficult for the competition to overcome. Of course, it is necessary to recognize a marketing strategy that meets, is lasting and is constant, even in difficult times for everyone.
Brands that are recognized by consumers are so because they are perceived as different from others and as significant. So what you have to look for are those elements that make the consumer, after turning to see us, stay with the brand, buy it even in difficult times, while appreciating the value it provides. By doing this, the evidence indicates that more sales are obtained with better margins, due to the efficiencies that come with maintaining and increasing the perceived value of the brand.
By: Dr. Jorge A. Wise, Professor of Marketing and International Business at CETYS University, member of the CETYS Graduate School of Business