What is a brand?

Like strategy, the words brand and branding are frequently misused in the business world. This is unfortunate because brands – together with the process of branding – are incredibly important to a business’s success.

How important?  Well, the fact is this. A high-value portfolio of brands is one of your most valuable intangible assets. Which is one reason why – as part of international accounting standards – a brand portfolio and its inherent brand equity can now be listed on a company’s balance sheet.

How much is a brand worth? Depending on the type of business you’re in, your brand could be worth as much as 30% of the overall value of your business. Take the examples in the graphic below of brand values from Brand Finance, one of the world’s leading brand valuation firms.

As illustrated in the graphic, Nike’s enterprise value as at January 2017 was US $88 billion.  Its brand value? US $31.8 billion.  And Apple’s enterprise value at January 2017 was US $797 billion, with a brand value of US $107 billion.

brand worth

Granted, these are valuations of large firms.  But, even if you are a small one person business, your brand has a monetary value.

Now, if you don’t really understand what a brand is – especially on a strategic level – and the potential value it can add to your business, you may not appreciate the importance of strategic branding. Furthermore, you could be led astray by those who think they know branding – but in reality, don’t have a clue what they’re talking about.

Good news!  After reading this lesson, you will clearly understand what a brand is,  you will know why a brand is so important, and you will know how a brand’s value is built.

So what is a brand? Let’s firstly look at what a brand and branding are NOT.

  • A brand is NOT just about a logo
  • A brand is NOT about graphic design and pretty pictures
  • Creating a brand does NOT start with a designer, creative director or art director 
  • Branding is NOT just advertising or promotion

What is a brand then?

The traditional definition of a brand as it pertains to business is that of a mark, and the definition originates from the mark or brand that cowboys and farmers either burn or paint on their livestock in order to identify ownership. So farmer George’s cows, for instance, may be branded with a big “G” on their sides.

For a modern day definition, Brand Finance defines a brand as the “Trademark and associated IP including the word mark and trademark iconography”.  

In Brand Finance’s definition, we get some clarity around the fact that a brand is Intellectual Property (IP) or an intangible asset owned by a company.  To add to the definition, a brand includes brand names, icons, secret recipes, unique processes, methods and even hard-to-replicate skills.  So, there are different types of brands and brand assets.  But ultimately, think of a brand as an asset.

And the main purpose of a brand? Firstly, a brand establishes ownership. But, the main purpose of a brand is to communicate a perception of value or to highlight why one brand should be chosen over another. Sure, a brand tells the public “who we are”, but it also needs to tell the public “why we are”, “why we matter” and “how we will benefit you.”

The ability of a brand to convey value, and not just ownership, is what makes it so potentially powerful – and a key intangible asset. So here’s my definition of a brand:


Some key points:

  • A brand is an intangible asset. And potentially, it is worth a ton of money to you.
  • A brand communicates value.
  • A brand conveys positive and negative perceptions in multiple ways, including human behavior.
  • The two core brands in a brand portfolio are the business brand and the product/service brands.  There are several other types of brands that make up the portfolio and these are discussed in greater detail in my branding guide.

The two core brands 

As highlighted above, in every business a brand is established at core two levels.  Firstly you have your organizational/business brand which reflects the positioning, values and culture of your organization and its people.

The next core brand is at the product/service portfolio level, which represents the positioning, features and benefits of your respective products and services.

Now one of the key steps in the strategic planning process is evaluating and refining your brands.

In your strategic analysis, at the business brand level, you primarily look at your business strategy, strategic position and organizational and personal values. Why? Any strategic branding or rebranding initiative must start with understanding and clarifying the organization’s values, culture and personality.  Just as importantly is ensuring that these values are built upon truth and reality. Then determine how well these factors are aligned and communicated. 

At your product/service level you need to analyze your product/service strategy and positioning, and then determine whether or not your product and service portfolio delivers on promises you make to your target audience.

When it comes to product/service level branding you most likely have a portfolio of products/services by which to offer customers or clients. Ideally, each of these needs to be given a unique brand identity and branded as such.

Now, what if the analysis comes up with some unpleasant reality? Say you realize your product sucks or your leadership leaves a lot to be desired? You need to fix it.

How to build brand value?

At the outset, when a brand is created, it has little or no value.  Yes, you may have invested time and money establishing the brand, but the underlying value is not worth much. So how is the value built?  Through the activity of branding. Put another way, Branding is the activity of generating brand awareness.

Before people can make a judgment or form an opinion about your brand, they firstly need to know that you exist.  So branding is about getting your name out into the marketplace.

Brand awareness can be generated internally or externally. Internally-driven brand awareness includes your marketing and advertising, promotion, sales people communications, PR, pay per click advertising and any other form of communication that puts your brands in front of your target audience’s eye and ears.

Internally-driven brand awareness also includes the behavior of your people, which helps explain that branding has very little to do with vision or mission statements.  Instead, it is what your people do and how they behave on a day-to-day basis that either adds to or subtracts from, the overall brand value of your business.   Internally-driven marketing communication is something you have a high-level of control over.

The second type of brand awareness you actually don’t have as much control over.  What is it?  It is externally-driven communication and includes word of mouth, social media chatter, viral marketing and externally-driven PR.  

Externally-driven communication can be either positive or negative.  On the positive side, word of mouth played a major role in the success of the 1977 movie, Saturday Night Fever, and helped John Travolta become a global superstar.  The movie’s budget was US$3.5 million.  In terms of return, total box office revenue was US$237.1 million, or more than 70x budget. Conversely, negative press towards United Airlines’ handling of its 2017 passenger over-booking blunder caused its share price to fall.

So whether it’s internally or externally driven, branding either adds to, or substracts from, the underlying value of the brand asset.  The key is making sure you are adding to the value.  How?  You need to develop and execute an integrated sales and marketing communications system.

If your brand-building efforts are successful it will allow you to perform the 3rd part of the brand-building process.  And that is? Monetizing the brand. In other words, brand monetization is the activity of converting brand awareness into a financial benefit in the form of paying customers.

The three most important activities for growing a business

To conclude, you need to to take a strategic approach to brand asset creation and branding. Actually, when you simplify it, business building all boils down to performing three key activities:

  1. Creating awesome brands
  2. Generating high-value brand awareness,
  3. Monetizing the brands  

So, you really want to build your business?  Then think seriously and strategically about creating and building high-value brands.