The discussion around the value of branding often centers around the comparison of a brand to its unbranded, commodity equivalent (e.g., Starbucks coffee vs. bulk coffee)—specifically how a brand commands a price premium over the generic version. But, as most people in today’s world choose between different brands within a category, we think it’s much more meaningful to talk about the distinction between different calibers of brands.
At Six Degrees, we make a distinction between base brands and power brands.
Both base and power brands command a price premium over a generic substitute. However, base brands tend to carry a relatively weak price premium while power brands carry a much higher price premium. In what follows, we will delve more deeply into the differences between base and power brands.
Base brands tend to represent the majority of brands in any given category. Among chain hotels, for example, base brands include Marriott, Hilton, Hyatt, Doubletree, and so on. There are essentially no differences between these hotel brands and a customer who magically found themselves in one of these brands would be hard-pressed to know which brand they were in. These brands are easily substituted and command similar prices to one another, although all still beat a generic equivalent (i.e., a one-off hotel) by a small premium because of the extra peace of mind and the more broadly convertible rewards points (frequent guest program) that a large chain brand offers. And, no surprise here, the reason for selecting one of these brands over another will most often come down to rational decisions, such as the convenience of location and which frequent points program the guest has the greater preference for.
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Beyond hotel chain brands, the same may be said for most automotive brands, consumer electronics brands, retail brands, B2B brands, etc. An easy way to spot a base brand, beyond looking at the lack of their ability to command a substantial price premium, is from several associated “tells”. One such “tell” is the frequency with which the brand owners (must) engage in promotions. Base brands facing multiple similar competitors will promote heavily and offer discounts on a regular basis. Another is a marketing focus on features and benefits of the brand, often fairly minor ones, and even unrelated issues (sustainability, sweepstakes, etc.), as base brands work hard to differentiate themselves from their competition and attract customers. But, like a hamster on a wheel, forward progress largely remains elusive while marketing efforts mainly serve to maintain the status quo.
In effect, base brands have only engaged in superficial branding. They have developed a unique name, logo, and look and feel, but they have not created a very deep brand.
Enter the power brand.
Unlike base brands, power brands have a clear, meaningful, and differentiated brand vision and brand promise. Power brands set and meet expectations in ways that both customers and non-customers recognize as different. Their vision and promise transcend functional variables like features and benefits and engage customers emotionally and/or attitudinally. Consider some of the following power brands: Ritz Carlton, Disney, Porsche, Nike, Apple, Starbucks, and Goldman Sachs. These brands not only command a significant price premium over competitors but, by “owning” a higher-level brand vision and promise that reach into the emotional and attitudinal, these power brands can extend well beyond their original remits. Consider how easily you can imagine a Porsche-designed house or a Nike hotel or an Apple car—the same cannot be said for a house from Ford, an Asics hotel, or a car by Hewlett-Packard.
Power brands, whether they appeal to a given person or not, set unique experience expectations and by delivering on those experiences over time, power brands build passionate and loyal customers. Given the economic value that power brands enjoy, the extra effort in creating, implementing, and nurturing a unique brand vision and promise seems well worth it to the intrepid and disciplined marketer.
All others must be satisfied with the modest price premium and promotional treadmill associated with the base brand.