From my experience as a marketer, I have seen that branding is crucial because selling a product today is no longer only about saying, “it is functional and does the job.” The real challenge is explaining why consumers should choose your product when competitors may sell something that performs essentially the same function.
This is where branding becomes important. In his lecture Should Marketers Build Brands by Using Unpaid Social Media Marketing?, Anthony Miyazaki explains that it has become more difficult to compete only on price, convenience, or quality. Maintaining a sustainable competitive advantage over time is extremely difficult because competitors can often imitate many of these characteristics. As he puts it, the answer becomes: branding.
How people understand a brand, what they believe it represents, and whether they identify with its values can strongly influence how they perceive the product. Brand perception and reputation therefore become important in determining how much value consumers attach to it and, eventually, how much they are willing to pay.
Luxury makes this particularly easy to see. A Rolex and a Casio both perform the basic function of telling time, although there are clear differences in materials, craftsmanship, and production. However, those differences alone do not explain the enormous difference in price. Rolex has also built associations around prestige, achievement, heritage, exclusivity, and recognition. For a consumer who values those associations, the brand name itself enhances the desire for the product.
This connects directly with Miyazaki’s explanation of brand equity: the value that a brand adds to or subtracts from a product. A brand with strong positive equity can charge more because consumers perceive additional value beyond functionality. (Miyazaki, 2020)
In luxury, consumers are not only paying for what the product does; they are also paying for what the brand makes the product mean.
That is why brand image, how different audiences perceive the brand, is so important. A Rolex may simply be a watch to one consumer, but to another it can represent professional success, status, tradition, or a personal milestone. That difference in perception can create a very different willingness to pay.
Bibliography
Miyzaki, A. (2020). Build Brand Community with Unpaid Social Media Marketing #MarketingMinute 143 (Digital Marketing). From YouTube: https://www.youtube.com/watch?v=mYtitqqIzRY
Miyazaki, A. (2020). MAR 6336 “Road to Brand Loyalty” (Brand Loyalty Hierarchy). From YouTube: https://www.youtube.com/watch?v=x6jgiDq1fUU