Brand marketing is an approach to communications, sales, product, and service that grows the asset of brand equity.

The idea that every company needs a logo is nearly universal. The logo is close to the first thing on the to-do list for an entrepreneur.

But have you ever wondered what about brand marketing is so powerful that the logo is universal?

It is because everyone knows the power of a brand.

Brand marketing is the theory and tactics to make a strong brand. The theory of brand marketing: spending on marketing is an investment in building a brand’s value, and in-turn the company’s value. That investment-based strategy makes brand marketing different than other marketing strategies such as direct response marketing.

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Brand marketing constantly grows a company’s value.

Many first time entrepreneurs and small to medium-sized business owners view spending on marketing as an expense, while money spent on building and maintaining assets like machinery, intellectual property and location are considered to be capital investments.

A brand is no different than any other business asset.

Brand marketing focuses marketing so it is an investment building an asset called brand equity. Brand equity is the portion of a companies value or market cap attributable to a company’s brand.

All business assets have value because they generate future revenue and profits. A machine in a factory, facility for a restaurant or code on a server has value because it makes selling product possible.

A brand is no different than any other business asset. It makes future sales possible.

Brand marketing the opposite of direct response marketing.

As I write this, I am in a Hyundai dealership lounge waiting for my wife’s car to be serviced, and there is a big screen TV annoying me with an infomercial for Dr-Ho’s Pain Therapy System. Hyundai and Dr-Ho cannot have more different approaches to their marketing.

A screenshot from Dr-Ho's Pain Therapy System infomercial. And example of direct response marketing.

Dr-Ho practices direct response marketing. Direct response marketing is when the advertisement is urging you to take action right away. The most flagrant examples are infomercials, but you also see it a lot these days in social media marketing and crowdfunding.

Companies with products with a catchy benefit that doesn’t hold up to scrutiny use direct response marketing. Direct response marketers are not above psychological tricks and high-pressure sales, because they have no fear of losing the relationship with the customer. There is no ongoing relationship.

An advertisement for the Hyundai Ioniq hybrid. The most fuel efficient car in America.

Hyundai practices brand marketing. They are trying to establish a mutually beneficial, ongoing relationship with someone via their communications, sales, product, and service.

Hyundai does not expect any of their ads or touchpoints to result in a sale directly; rather the sum total will build a relationship. One ad might make you aware of a brand. Another ad may introduce the product. They have a website with information on features for customers who express interest, and on and on.

Hyundai is interested in all parts of the brand cycle (more info), where Dr-Ho is only interested in the ‘Evaluation’ and ‘Purchase’ phases. As a result, the value of Hyundai’s brand always increases, while Dr-Ho’s brand equity build only slightly. Hyundai’s brand will survive generations, where Dr-Ho’s would stop if the infomercials stopped.

The Brand Cycle: Impression Phase, Evaluation phase, Purchase phase, Learning phase, Use phase, re-evaluation phase and Leaving phase. Usable under Creative Commons license: Attribution-ShareAlike 4.0 International

Brand Marketing applies in B2B, assuming you aren’t white-labeling.

You business to business folks are not exempt from brand marketing. Your customers are still people, albeit a smaller set of people with a different decision-making process, but you are still forming relationships with them. Your company also has a reputation to consider.

I could see how you might think business to business companies don’t exercise brand marketing. The top ten most valuable brands are consumer brands. But look a little down the list, and the business to business brands pop up: IBM, Oracle, SAP, Accenture, Siemens, etc. Their brand names open doors, and lower acquisition costs.

Let’s talk about white-labeling. If you make a product and allow another company to sell it with their brand attached, then you need to keep in mind that you are growing a brand with your customer company, but they are growing their brand with the end customer. You need to keep this lack of accruing of value in mind in compensation and contracts

For example, Walmart has many vendors make Great Value products for them. A lot of these vendors compete with Great Value their own brand names. When they make Great Value product, they are building the brand for Walmart, not themselves. Walmart could easily replace them with another vendor.

Relationships like that may make business sense for a variety of reasons, but that lack of brand building needs to be considered when making financial calculations. It better be a very secure and profitable relationship.

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Tech Startup Trap

An entrepreneur receives investment from an angel investor who says: “go forth, and increase the value of the company.”

What does the typical entrepreneur do with their first marketing spend? Communicate only features and use direct response marketing techniques to close quick sales. Therefore, they do not increase the value of the brand  or the company. This is in direct opposition to what their clients asked them to do.

You need to take a long view on building a brand and invest all around the brand cycle. I recognize that is challenging in a startup. I know resources are limited and the pressure is to only spend time and money only on things that have direct and immediate results. You manage your engineers time accordingly, and that works. Do not manage your marketing the same way.

Manage your marketing spend to:

1) create positive impressions,
2) provide clear product info to facilitate evaluation from customers,
3) close sales,
4) teach your customers to use your product and extract the most value from it, and
5) check in with existing clients to make sure they are still receiving full value.

If you do those five things consistently, you will grow your brand and build your business’ value and your investor’s asset.

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