Regardless of size, many business owners want to create a brand around their business. A brand is the collective impact or lasting impression from all that is seen, heard, or experienced by customers who come into contact with a company and/or its products and services. In creating a brand, or "branding," you have to manage the effect that your product or service is having on the customer. We'll look at the hands-on process of creating a brand in this article, as well as what it can mean as an investor. (For related reading, see Well-Established Brands Worth Billions.)

TUTORIAL: Investing 101

Define Your Business, Define Your Brand
To get an idea of what your brand may look like, write down three things that define your business. For example, a dry cleaning company that specializes in suits and higher-end clothing might choose: 1) Properly cleaned attire 2) Same day service 3) Safe cleaning technique, whether it be silk, satin, cashmere or cotton. This would then boil down to: Clean, Quick and Safe. (For related reading, see Economic Moats: A Successful Company's Best Defense.)

You want your brand to have the same message and effect on all your customers. Bar none, the best example of this is McDonald's. You can go to Bangkok and pick out a McDonald's just by looking for the golden arches. After you go inside, you will be able to order a burger and fries without speaking a word of Thai.

Moreover, you will know how that burger is going to taste before you take the first bite. This is because McDonald's has a standard menu that is the same all over the world. There is a smaller regional menu that is up to the owners of the franchise, but every restaurant has to offer the same basics (cheeseburger, Big Mac, etc.).

People don't go to McDonald's because it is healthy. They go there because they know what to expect and they like it. You want to create this same message of consistency: "when you use/purchase my product or service, you will get exactly what you want every time." (For more, see McDonald's: A History Of Innovation.)

Brands that are successful create a gap between themselves and their competitors in the minds of the consumers. Generally speaking, companies in the same industry usually offer products that are 99.9% identical to non-specialists – the difference is in the brand. For example, how many people would notice if you tore the label off a pair of Levi's and sewed on a Calvin Klein label?

In differentiating your brand, you will have to work against other brands in your field. You need to find that small difference between your service or product and that of your competitors. After you have discovered it, hype it up every way you can in your marketing campaigns. If consumers are given two identical choices as far as price and quality, they will merely go to the one that is closest at that time. By differentiating your brand, you will encourage them to seek you out instead of your competition. (For further reading, see Competitive Advantage Helps.)

Innovative ideas and unique messages delivered through creative mediums will always enhance the status of a brand. From 2000-2010, Apple computers underwent a significant upsurge in sales. There are many reasons for this, but an important one is that they had changed their brand to embody creativity. Apple ran ads that associated their computers with people on the cutting edge.

When people first saw the 1985 Super Bowl commercial of blindfolded businessmen marching off cliffs or the ads run with images of the Dalai Lama and Einstein, it was clear that Apple was for innovators and Windows was for lemmings. This message has been pounded into consumers' minds over the following decades with multiple campaigns enforcing the same theme. (For related reading, see The Power Of Steve Jobs.)

Emotional Connection
You want people to connect to your products or services on an emotional level. If customers can tie using your product or service back to a positive time in their lives, you have a much better chance of building brand loyalty. It doesn't necessarily have to be a direct connection.

Tampax ran a series of ads showing events in history (Woodstock and such) with the simple message "Tampax was there." Folgers associates itself with a different pastoral scene every commercial it produces – hockey in the winter, walking up to a summer sunset, camping in the mountains – who could possibly watch that without having positive memories invoked.

It doesn't always have to be a positive connection either, just an emotional one. Insurance companies do this well by showing the aftermath of disasters like floods and fires and then showing their agents walking about consoling people. The voiceover says something like, "we will always be there for you."

The simple truth is that your brand will endure far longer if you can get away from the purely rational side of people's brains and find your way into the emotional side. Try to enhance the emotional appeal of your brand with every marketing campaign you undertake. (It is a blanket term that represents, in one lump sum, the value of brand names, patents, and customer base loyalty. For more, see Can You Count On Goodwill?)

Monitoring Your Brand
As you establish and grow your brand, you will have to watch it carefully. You don't want to have your competitors infringe upon or take over essential elements of your brand. Here's how to prevent it.

Review Materials
All the promotional materials for your business should have the same look, feel, and message. If you have materials that don't match, for example a wordy green poster and a sparsely written blue pamphlet, you are sending a mixed signal on several levels that will confuse customers. Make sure there is a sameness to all the material, and that it matches your business as well. (For related reading, see Advertising, Crocodiles And Moats.)

Review Company Culture
If you have employees, they too become documents that send out your brand's message. If you are running a health food chain, you are going to want employees who have a lifestyle that exudes good health. If you run an accounting firm, you are likely going to want employees that exude a sense of responsibility.

You have to keep this in mind while you are hiring as well as when you are setting up the office environment. Ask yourself what kind of office - from benefit policies to working conditions - will attract and keep the employees you want. (For further reading, see Qualitative Analysis: What Makes A Company Great?)

The Review Process
A simple formula to follow when building a brand is:

1. Test out new ways to market and brand your product or service.
2. Review what went right and what can be improved.
3. Enhance on the image you already have.
4. Repeat the first three steps until it works

What It Means for Investors
As an investor, it is difficult to put a dollar figure to the value of a brand. For companies like Coca-Cola and Apple, the time and effort they put into branding has a palpable impact on their bottom line and creates an economic moat around them.

Interestingly enough, it will be easier for you to approach brand evaluation as a consumer than it is as an investor. By looking at a company's products, seeing how their displays are set up, and keeping your eyes out at the supermarket for products that are attracting attention, you may be able to spot new companies with strong potential brands before they reach the valuations that Apple and Coke demand.

Bottom Line
Good brands take time to develop. You will not go from being a corner store cobbler to overthrowing Nike in one year. You have to be patient and keep refocusing your campaigns and improving the quality of the product or service you are trying to brand. From an investing standpoint, companies that spend time and money on effective branding have the potential to pay off in the future. (For related reading, see 9 Brands Resurrected Into Household Names.)

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