What’s The Single Biggest Economic Rationale For Brand?

What’s The Single Biggest Economic Rationale For Brand?

What’s The Single Biggest Economic Rationale For Brand?

What’s the single biggest economic rationale for brand?


Brand elevates your pricing power.

Your pricing power reflects how much value you bring to your customer. It elevates their willingness to pay; it elevates how much they want what you offer.

Strong brands capture higher margins than do weak brands, because by definition, preferred brands confer higher willingness to pay – and customers’ willingness to pay is what gives you pricing power.

This is why we care about brand. Brand helps us to have healthy margins so that our business can thrive.

Consider this math:

Value = Benefit - Price

The value that you bring to your customer equals the benefit that you bring, minus the price that she pays to enjoy that benefit.

So, you bring customer value by bringing to her a benefit that exceeds the price that she is paying.

Given this equation, there are two ways that you can bring outsized value to your customer: a really big benefit or a really small price. The big benefit is the one that brings value to both you and your customer. When your benefit is big, your customer’s willingness to pay is also big, and this enables you to command healthy margins for your business.

This is why:

  • Nike is more profitable than is Payless Shoes
  • Whole Foods is more profitable than is Safeway
  • Casper is more profitable than is Mattress Discounters

Look to your own purchase behavior. When you love a brand, aren’t you more willing to pay for that brand than you would be for an alternative brand?

Increase your business’s value by bringing a huge benefit to your customers. Define this big benefit as your North Star brand strategy, that will create ever more value for your business and for your customer. 


Share this article

Leave your comments

Post comment as a guest

terms and condition.
  • Sean Hopkins

    There are endless benefits of building a brand.

  • Aaron Max

    Excellent article

  • Dylan Simpson

    People are far more likely to choose a brand that they recognize over something unfamiliar

  • Josh Tetley

    Having a brand is what differentiates you in the marketplace.

  • Philip Guilliard

    Brand loyalty often lasts a lifetime and even transfers to future generations.

  • Philip Guilliard

    A strong customer service is essential to make sure that your customers have no issues and are willing to come back to your brand anytime.

Share this article

Lindsay Pedersen

Brand Strategy Expert

Lindsay is a Brand Strategist and Founder of Ironclad Brand Strategy, which builds brands using an exacting and analytic method. Her background as a P&L owner at Clorox fostered a deep appreciation for the executive charge: to create sustainable value. Ironclad advises companies from burgeoning startups to national corporations, including Zulily, IMDb, T-Mobile and Starbucks. Lindsay holds an MBA in Business from the University of California Berkeley, Haas School of Business.



Cookies user prefences
We use cookies to ensure you to get the best experience on our website. If you decline the use of cookies, this website may not function as expected.
Accept all
Decline all
Read more
Tools used to analyze the data to measure the effectiveness of a website and to understand how it works.
Google Analytics