Value, Brand Value…

I was surfing the net this week, and I thought this article was totally appropriate for complementing what we’re learning in class this week.

Here are some my takeaways from this article:
1. “A brand’s value is simply about the extent to which it can sell its goods and services at a premium price.”
I totally agree with this. While we learned in class that “Brand = Trust”, ultimately, this trust is used as leverage to charge consumers a higher price and make greater profits.
2. The article begins by posing the question: “How much value do companies really derive from cultivating brand names?”
Looking at the situation in a different perspective, another question I would ask is: “How much value does a brand name offer to consumers for them to pay premium prices for the products?” Aswath Damodaran mentions in his presentation that “Brand Value is an illusion”. Relating this back to myself, I have an Apple MacBook Pro. I was willing to pay $1600 compared to other lower priced PC laptops in the industry. Why? Thinking back, did I really want this product based on the user-friendly interface? The sleek and nice design. How much are these functions on the MacBook worth to me? Probably around $1000. The other $600 are just because most of my friends have it, and I want to be seen by others as an artsy type of guy.
3. “Luck and serendipity are just as important as advertising.”
Something we haven’t discussed in class is the notion of luck and uncertainty. I’m glad that I read this article. In many instances, we spend a lot of time, effort, and money to do something, and we want to do it well. But a lot of things can go haywire. A company can spend tons of money in doing a situation analysis, but when it actually implements its plans according to its research, it might not go their way. I could spend my days studying for an exam to ensure my chances of a high mark, but I can never know what questions will be on the exam. For all I know, I might have studied all the wrong stuff and failed the exam.

Many of us would not think twice when making a purchase from a certain brand. Going back to what we learned in class, “Brand = Trust”. We trust in the quality of the products that the brand makes, the values that the company may stand for, and that is why we would buy their products. But, what it all comes down to for companies after building this trust is to reap the benefits and generate greater profit margins. Then again, from an economic standpoint, all companies are looking to make a profit. But my question is, how much are we willing to pay for these brand names?