Getting clear about brand value
Consulting firms rank brands on value. Marketers promise to increase it.
But brand value has little to do with whether a company is famous or even profitable.
The accurate measure of brand value is the premium that consumers will spend over the generic.
What time, money or risk will they take for a valuable brand compared to the very same offering from an unknown?
Luxury goods, by necessity, have high brand value, because the generic knock-offs sell for a tiny fraction of the price. (Heinz ketchup commands a much smaller price premium. You may have heard of them, but you don’t care that much.) Familiarity is not always a proxy for high value.
New products launched by high-value brands get off to a faster start because consumers who trust them feel like they’re taking a smaller risk.
Valuable brands often get applications from potential employees and partners of higher quality than an upstart might.
And yet…
ChatGPT, Perplexity and Claude all gained enormous traction at the expense of some of the most highly ranked brands in the world.
Systems change, and user experience and the network effect often defeat brands. Plan accordingly.
