Lars Wallentin : the avantages of a brand name

Valuations of brand names belonging to major companies show that the brand name is often worth more than the whole production apparatus. When one considers how a brand name, known for its quality, can make a short-cut to the consumer’s wallet, it is easy to see the sense in such a valuation, as well as the need for manufacturers to nurture and reinforce their brand names to achieve success in the market. Lars Wallentin at Nestlé is indefatigable when it comes to the subject of brand importance…

What are the obvious advantages of a strong brand name?

L.W. There are several.

Stable sales: when the people at Del Monte start the day’s work, they have a fair idea of what their sales will be that day. The Del Monte brand is noticeable on the shelf. Had it been an anonymous brand it would not have been so easy to predict the day’s sales.

Protected market: Nescafé has staked out such a huge claim to the instant coffee market that it is highly unlikely that any other brand could gain a significant part of its market share, even if the competitor spent immense sums on advertising.

Communication with consumers is easier thanks to the support of a famous brand?

L.W. Definitely yes! Kodak do not own any photo shops, so they cannot speak to the consumers in the shops and tell them to buy Kodak film! But because Kodak is one of the most established brand names in the world, the company can bypass the shopkeeper and still create demand for its products by talking directly to the consumer via various forms of advertising.

But let’s sum up the advantages of a strong brand:

Confidence in the purchase: a person who buys an IBM computer does not ask himself whether it will work or not. With a brand name made up of a mass of incomprehensible characters in a strange language, straight off a pallet, he is probably not as confident!

Added value for the consumer: when comparing differently priced, competing products, it is natural to wonder how much of the difference can be motivated by the higher quality of the more expensive product, and how much by the satisfaction of consuming a product with a stronger brand name. The consumer is not really interested in all the other factors: transport, labour costs, etc. that contribute to the higher price.

All of this does not only apply to consumer goods, it is also true in most other situations in which a consumer chooses between competing goods and services.