The Relationship Between Branding and Marketing

Piyush Gupta | Manager, Product Growth
Reading Time: 5 minutes

According to management consultant Peter Drucker, a business enterprise has only two functions: marketing and innovation. 

Marketing is about understanding the customer’s needs and creating products and services to meet those needs. Marketing is crucial for businesses to understand what product or service they can offer and how to launch a product successfully. 

Branding is an important aspect of marketing that focuses on creating a positive perception of a company’s products and services, and conveys its value system and ethos. 

What is branding?

Branding is not limited to products and services, but applies to the overall organisation. It is about the vision, mission, and values that help you distinguish your company from others in the market. 

The visual representation of a brand includes its name, logo, tagline, font, and colors used. Brand identity helps companies form associations with customers and it should be consistent across all of the company’s marketing communications.

Brand value is the monetary worth of your brand and signifies its strength in the market. For instance, Apple is the most valuable brand in the world, with its brand value estimated at $241bn. Apple derives brand value not only because of its user-friendly products and services but also as the world’s most innovative company.

Marketing helps you to get customers for the first time, but it is the brand that keeps them engaged and willing to make repeat purchases.

Measuring the impact of branding

Brand strength influences the customer response to paid marketing campaigns and at every stage across the sales funnel. Brand strength in paid marketing can be assessed through a Sales Accepted Lead (SAL), which refers to a sales opportunity or lead that is considered promising enough to be pursued by the sales team.

Branding significantly influences the return on investment (ROI) of paid campaigns. A company with branding generates higher leads and revenue from campaigns compared to companies with no branding, as represented in the graph below:


Another way to measure brand strength is through search volume trends. Airbnb, a shared accommodation brand, has increased its brand strength compared to its more established competitors over the years, as represented in the graph below:

You can similarly plot your brand search volumes for the time period when you are running marketing campaigns and compare the volume trend for the period when there was no campaign. If there is an increase in search volumes during the campaign period then your brand strength has influenced your campaign outcomes, leading to higher Return on Advertising Spend (ROAS).

Similarly, you can plot search volume trends against ROAS and you will find both trending up over time due to the impact of brand strength on campaign performance.

What is paid marketing?

Paid marketing is customer acquisition through advertising or paid promotion on both online and offline channels. In paid marketing, companies purchase advertising spots in offline channels such as newspapers, magazines, billboards, and television. 

The equivalent online channels for paid advertising are search engines, social media platforms, and display advertising. Paid marketing also includes event sponsorships and brand placements to create brand awareness and generate interest.

Paid advertising focuses on acquiring customers in a shorter time frame to build a sales pipeline and achieve revenue goals.

How is paid marketing different from branding?

Branding is about long-term investment in creating customer affinity through a shared vision and values. A brand serves a purpose for customers and is an integral part of their life. The results of branding efforts take longer to materialise but once the brand value is created, it endures over a period of time, creating greater returns for the organisation.

In contrast, paid marketing is about company investment in advertising and promotion for a quick payoff. The ROI for paid marketing is more tangible in terms of leads or sales generated compared to the ROI for branding, which is essentially measured as brand value. Paid advertising may not lead to loyalty and long-term commitment, unlike branding

How does branding reduce marketing costs over time?

Companies routinely overspend on promotion and underinvest in advertising, product development, and new distribution channels. As a result, the company brand weakens over time and loses customers. In contrast, brands that invest for the long term find their marketing costs reduced because of a loyal customer base that emotionally connects with the brand.

Take the example of two brands to see how branding can reduce the cost of marketing over time. Vlasic, a beloved American kitchen brand for 50 years, started discounting its pickles by offering them in gallon-sized jars in the late 1990s through Walmart at unbelievably low prices. Soon, Walmart cannibalized Vlasic sales through other channels, and also caused margin dilution to an extent that Vlasic had to file for bankruptcy.

In contrast, Nike, when faced with a similar situation with US-based retailer Foot Locker, decided to cut the allocation of shoes by 40%. Consumers stopped shopping at Foot Locker as they couldn’t find the desired Nike shoes, even as competing retailers’ sales increased. Ultimately, Foot Locker was forced to accept Nike’s terms and conditions.

The difference is how Nike and Vlasic managed their brands. Vlasic focussed on a short-term sales strategy by discounting and disproportionate concentration on one channel.  Additionally, the company reduced advertising and investment in new product development in the years before it was forced to file for bankruptcy. 

In contrast, Nike preserved its brand identity and invested in branding by allocating $1.2bn to its advertising budget, and maintaining strong relationships with multiple channel partners. Nike positioned itself for the long term and, as a result, it continued to own customers whose brand loyalty increased as years passed, leading to a higher ROI for the company.

How can you measure your marketing campaign performance ?

You need to have a good digital marketing intelligence tool to measure your campaign results accurately and assess the influence of your brand on the results. EasyInsights is an artificial intelligence-powered marketing data platform that integrates data from all your marketing channels, analytics tools, and CRM to provide you with complete visibility of your marketing performance. Start a free trial of the tool now and get a detailed understanding of your brand’s performance. 

References:

https://www.forbes.com/2006/06/30/jack-trout-on-marketing-cx_jt_0703drucker.html?sh=34a2e06c555c

https://www.forbes.com/powerful-brands/list/

https://medium.com/traveltechmedia/searches-for-airbnb-are-at-an-all-time-high-d9a4dc4fff0c

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