What is an idea really worth? It’s a question posed often by creatives who know that the true value of creativity has always been hard to price, explains Mike Foster, Founder and Strategic Creative Director at Straight Forward Design.
In adland, where creative minds are whirring constantly, the idea factory spits out a consistent stream of thought. Arguably though, the majority of ideas have little value. That is, until execution unlocks their worth.
Take PepsiCo: in celebration of Pepsi’s 125th anniversary on 31st December, the CPG giant has unveiled a brand-design revamp, currently rolling out across North America and expected to hit European shores during early 2024. The corporation boasts an in-house design team of more than 100 people in London, and 300 in New York, but still drafts in branding experts to squeeze all the value it can get out of the creative process.
Those experts don’t necessarily change designs; instead they bring focus and clarity to ensure that the brand execution builds upon its distinctive assets; that the new design uses creativity to solve brand problems; and that the makeover performs within the ecosystem of the brand. Ideas are indeed abundant, but their value is only realised with strategic execution that attracts customers and delivers sales.
So, this is what brand-first thinking looks like. It’s based on human connection – that intangible space between the product and the decision-making process – which compels the customer to reach for the higher value item on the shelf, rather than the challenger brand, or its own-label dupe.
Selling power = staying power
Brand value describes the worth of brands based on their ability to make and nurture consumer bonds. And real growth comes not only from helping new consumers fall head-over-heels for the products, but also by persuading existing customers to buy across categories from a brand they are loyal to, and often feel that they love.
Just think of the selling power of Apple: it’s not just about the products. Of course the Mac, iPhone, iPad, and Apple Watch are groundbreaking in themselves, but the real value for brand Apple is about encouraging customers to stick around and opt for the pricier Pro version of its products, to shop from its App Store, buy into AppleCare, iCloud, and subscribe to AppleTV+.
Indeed, despite significantly higher prices, Apple remains market leader in the North America smartphone market, with more than twice the share of number two Samsung, according to Canalys. Apple says it now has more than 1 billion paid subscriptions on its platforms, with its total device installed base standing at more than 2 billion. Apple’s gross margins tell an equally impressive story; reaching a historical record of $394.33bn in 2022. As of 2023, Apple is the second most valuable brand worldwide.
Brand-first thinking
Brand-first thinking doesn’t only sit with high-cost items, it extends to lower-price-point FMCG items too. Despite the proliferation of own-label grocery over the years, this still represents only a small portion of purchasing. Globally, own-label was just 22% of FMCG value share in 2022 according to Kantar, proving that the vast majority of items are still being purchased because a brand brings something more than just the basic product.
As consumers grow personal connections with brands via social media, email, and other forms of personalised marketing, the value of brand is expanding beyond a simple exchange of currency for products. People increasingly get information, a sense of community, and lifestyle inspiration from brands.
In a New Consumer Trends survey, 40% of US consumers indicated they “somewhat” or “strongly” agree that “I want to feel personally close to the brands I buy.” This was higher among Gen Z consumers (44%) and even higher among Millennials (55%). Meanwhile, 39% of consumers agreed they are “willing to pay more for products from brands founded by people / companies I identify with,” also higher among Gen Z (45%) and Millennials (55%).
Where the value lives
Strong brands enhance business performance primarily through their influence on three key stakeholder groups: customers, employees, and investors. They influence customer choice and create loyalty; attract, retain, and motivate talent, while the twin benefits of trust and longevity lower the cost of financing.
It’s here that the reason for businesses to shift from operating simply as product companies to living and breathing brands becomes crystal clear: because this is where the value lives.
Of course, the brand-value versus product-cost dynamic is complex and multilayered, but in most cases, strong brand connections justify a higher price point, as customers are willing to pay more for the added value, prestige and aspiration associated with the brands they feel most connected to – and even love.
And although the value of a brand may seem intangible, inscrutable, and inexplicable, it does exist. Only the most cynical of businesses ignore it, and likely at their peril. As Oscar Wilde once famously said: “A cynic is a man who knows the price of everything, and the value of nothing.”
