Despite having high quality and utilizing new technology, some products are brushed aside by consumers due to the fact that they are of lesser known, smaller brands.

According to a 2009 report from Samsung Economic Research Institute, the chief executives of small and mid-sized companies said their products fetched only 64 percent of the price they would have gotten had their brands been affiliated with a conglomerate.

Also, up to 87 percent of the CEOs said that they had been shortchanged because of their lower brand recognition.

As can be seen, undervalued brands face much adversity due to weak brand recognition.

The products and services may be admired, but brand value is what makes for stronger and consistently strong competitiveness, and therefore leads to higher prices.

This is why it is important for both the consumers and manufacturers to build strong brand value. The role of brand power can thus be divided into the consumer side and the corporate side.


Consumer side

From the perspective of consumers, branding plays the essential role of letting them know where the products come from, and therefore helps them distinguish between different manufacturers and sellers.

This means that they know there is someone who can be held accountable if there are glitches in the product or services they receive. In essence, brand is a kind of a guarantee provided by the company.

Second, brand value can reduce the time consumers need for selecting products. Based on the accumulated brand image of the product, consumers can more quickly choose what they want.

Third, brand helps reduce the perceived risk stemming from selecting the wrong product. Perceived risk can be identified as unpredictable results coming from purchasing and using products or services for which they have paid. Perceived risks can be categorized into performance risk, indicating the risk involved when product performance is not up to par; financial risk, involving the risk of the product not being worth its price; time risk; physical risk; social risk; and psychological risk.

Fourth, brand plays the symbolic role of expressing one’s ego. Apple Inc. products are associated with innovation, while Hermes and Mercedes-Benz are brands associated with luxury. As such, brands become a way for consumers to express themselves to those around them. 


Supplier side

Just as brands play a significant role for consumers, they are equally important for the suppliers.

First, brand value gives them a chance to distinguish their products from those of rival firms. This way, the products take on an identity that allows consumers to recognize a certain level of quality in them, which in turns increases customer satisfaction and brand loyalty.

Second, brand value guarantees sustainable growth. Companies with strong brand value are able to extricate themselves faster from crises on the back of customer loyalty and support from investors. Toyota, for instance, was in crisis mode following its 2011 recall, but it was able to quickly get back on its feet thanks to its strong support base and the strong brand value it had built up.

Third, brand value allows companies to set premium prices for their products. This is because customers are less sensitive about prices when it comes to strong brands. Last, it becomes easier to introduce new lineups to eventually earn greater profit.

A strong brand name provides brand equity, and this is directly linked to profitability.

The essence of brand equity management lies in making the consumers conjure up a strong, unique and favorable image of the brand, and this allows the firm to have differentiated position in the market.

Solidly built brand images can lead to brand equity, and in this way help the companies get through crises and maximize profit based on strong customer satisfaction. To earn maximized and sustainable profit, firms are urged to build up their brand value.

By Park Heung-soo, Yonsei University School of Business