Brand awareness is a measure of how familiar a customer is with a brand. The greater the brand awareness a business enjoys, the more their products and services are recognizable to their target audience, thus, in theory, augmenting its long-term strength on the marketplace. Brand awareness is a key element of an effective marketing strategy.
- Breaking down brand awareness
- How does brand awareness work?
- Why is brand awareness important?
- Costly in the short term, a valuable asset in the long term
- Brand equity and premiums
- Brand awareness and switching costs
- Brand building and demand generation
- Brand awareness and marketing strategy
- Brand awareness, share of mind and moats
Breaking down brand awareness
- Brand awareness describes the familiarity of a consumer to a specific brand.
- Brand awareness allows organizations to dominate competitive consumer markets through differentiation and the usage of brand names in daily conversation.
- Creating and maintaining brand awareness can be costly and a function of success.
How does brand awareness work?
For better or worse, consumers are spoilt for choice when making a buying decision. Overwhelmed at the thought of having to choose from multiple products, consumers often stick to brands they know. This is brand awareness at work. Awareness breeds familiarity and familiarity breeds a purchasing decision that the consumer is comfortable with.
Brand names that have turned into nouns are also great examples of brand awareness in action. Band-aids were originally made by Johnson & Johnson, but the term is now widely used to describe any small bandage regardless of manufacturer.
Kleenex is a brand of facial tissue made by Kimberly Clark, but kleenex as a noun now denotes a generic term for any kind of facial tissue. Regardless of the product, brand names that have infiltrated the English language are so familiar to consumers that they do not have to think twice about purchasing them.
Why is brand awareness important?
Brand awareness is important because it is almost impossible to defeat. It is difficult to imagine that band-aid or kleenex will ever disappear from daily usage and be replaced with something else. Indeed, these brands enjoy what Warren Buffett called an economic moat. Businesses who enjoy an economic moat are so recognizable that their market share and profitability are protected from competitors.
Brand awareness is also important in industries where there is little scope for product differentiation.
For example, soft drink is largely indistinguishable from one brand to the next. Companies such as Pepsi and Coca-Cola rely on brand awareness to beat their competition – even if their soft drink looks no different from their competitors.
- They can sell their products or services at a higher price because of a higher perceived value.
- They can expand their product or service offerings based on products that sell well.
- They have a greater social impact because of the attached value of their brand.
Costly in the short term, a valuable asset in the long term
Brand awareness has the potential to be costly and time-consuming. Start-ups or smaller businesses hoping to emulate the reach of Johnson & Johnson or Coca-Cola will need to develop a robust brand that has the potential to appeal to a large group of people.
Popular brands also attract further costs associated with maintenance as competitors seek to take advantage of their popularity.
For example, a restaurant bearing the name “Little Mac” was threatened with legal action by McDonald’s if they did not change their name.
Aside from the obvious trademark infringement, maintenance is important to ensure that a brand is not tarnished or sullied by copycat competitors.
Brands can also suffer from negative awareness when they are attached to people who act in contrast to the brand’s values or attract negative attention in other ways.
The impending death of Steve Jobs, for example, caused Apple share prices to fall.
This is because consumers believed the next CEO would be unable to maintain the product quality they had come to expect from Jobs.
Brand awareness and switching costs
Of course, in order to make this mechanism stick, the customer experience needs to be aligned with the other aspects of the marketing strategy.