Cash & Loans Advice Blog

The advantage of credit brands

Before considering decisions that can build and strengthen brands, it is helpful to understand what advantages they offer. The value of a brand lies in the understanding or trust of customers. This leads to the first advantage: pricing. A successful and established brand can command a price premium that exceeds any extra cost in terms of production and marketing, derived from the element of trust that a brand provides.

Research in the UK has shown that in many cases consumers would be prepared to pay 30% more for a new product from a trusted brand than for an unnamed one. This is particularly true in the highly competitive food industry.

Distribution advantages are another benefit, as an established brand can ensure that manufacturers get the best distributors in terms of quantity and quality. This is because the distributors are more likely to be receptive to a new product from an established brand, in much the same way (and for similar reasons) as their consumers. This is particularly useful for new products. Again, this is because of the element of trust and reliability associated with brands.

The concept of brand identity or image is valuable as it reinforces the product’s appeal. For example, the Rolls-Royce brand has a stately identity and is associated with the values of craftsmanship, tradition and prestige. Volvo has a different brand identity and set of associated values, including safety, functionality and family-orientation. These identities reinforce their appeal to their particular market segments.

When markets decline, however, brand identity can become a handicap, linking the product to an unfashionable past.