Brand Identity

Loading the player...

What is 'Brand Identity'

A company’s brand identity is how that business wants to be perceived by consumers. The components of the brand (name, logo, tone, tagline, typeface) are created by the business to reflect the value the company is trying to bring to the market and to appeal to its customers. Brand identity is separate from brand image – the term for how consumers actually perceive the brand.

BREAKING DOWN 'Brand Identity'

Most miscommunication in daily life can be chalked up to an mismatch between intent and perception: You think you said one thing, the person you talked to thought you said something else. Companies often have the same problem. 

In the context of business and branding, a company’s brand identity is what it says about who it is – the product or service it delivers, the quality it gives customers, its advantages over competing brands. The brand image, on the other hand, is how the brand is perceived by the public. The challenge any company faces when trying to build a brand is to make sure that its identity matches its image as closely as possible. A negative gap between brand identity and brand image means a company is out of touch with market sentiment, which can make offering services or products more difficult and can even result in a loss of value on the company’s books.

Building Brand Identity

The steps a company needs to take to build a strong, cohesive and consistent brand identity will vary, but a few points apply broadly to most:

Analyze itself and its market. A full SWOT analysis – a look at the company’s strength’s, weaknesses, opportunities and threats – that includes the entire company is a proven way to help a company’s managers understand where they’re at so they can better determine where they’d like to end up and how to get there.

Determine its key business goals. The brand identity should help fulfill them.

Identify its customers. Who is the company trying to reach with its products/services?

Determine the personality and message it wants to communicate. What does the company want its market to perceive?

Building a brand identity is a multi-disciplinary, strategic effort; every element needs to support the overall message and business goals. It can includes a company’s name, logo, design; its style and the tone of its copy; the look and composition of its products; and, of course, its social media presence. It’s common for companies to hire a creative team to handle its branding. 

Real-World Examples of Brand Identity

A well-built brand identity will effectively communicate a company’s personality and its product value to potential customers, helping build brand recognition, association and loyalty.

If you asked people on the street what Bose Corporation sells, they’d most likely tell you headphones. And that is indeed one of the company's major product lines.

On its face, getting your market to know who you are and what you sell may seem a simple task, but it’s critical to gaining an advantage. While awareness can be critical to the success of a company, it’s important that the kind of awareness is associated with something positive.

The messages companies try to communicate are rarely complicated, but making them effective requires ensuring that all the elements of a company’s brand identity work cohesively. Successful brands such as Coca-Cola Co. (KO), Nike Inc. (NKE), Starbucks Corp. (SBUX) and Apple Inc. (AAPL) have achieved this difficult task. What may come to mind when you think of these brands are, respectively, "refreshing," "fast," "morning coffee" and "sleek." Getting that kind of strong and positive brand association can help make a company and its product "top of mind" to its customers.

Building brand loyalty can bring in consistent sales and make product roll-outs more successful. An example of the benefits of brand loyalty could be seen in the introduction of two new subscription-based music streaming services in 2015. Tidal and Apple Music had to make very different choices in the marketing and rollout of their services because of brand loyalty. Apple, an established brand with very loyal customers, didn't have to invest in the type of celebrity-oriented marketing that Tidal used in order to promote its new service. 

Brand Value

A company’s brand is usually considered one of the most valuable assets on a company’s balance sheet. Giving that brand a monetary value is, among other things, a metric that can help brand managers better understand their performance as stewards of the company’s name and the goodwill a positively associated brand can buy the company. There are various ways that a monetary value can be placed on a brand, including the cost it would take to build a similar brand, analyzing cost of royalties to use brand name, and cash flow of comparative unbranded businesses.

History

Branding as we know it today originated with the industrial revolution of the 19th century. As more household goods were produced in factories, manufacturers needed a way to differentiate themselves from competitors and convince buyers that they were as trustworthy as local producers of these products. These efforts evolved from simple branding of products, to advertisements that included mascots, jingles, and other sales and marketing techniques.  A British brewing company, Bass & Company, and the food-processing company Tate & Lyle both claim to have the oldest trademarked brands. Other brands that emerged in that period include Quaker Oats, Aunt Jemima, and Coca-Cola.

RELATED TERMS
  1. Brand Management

    A function of marketing that uses techniques to increase the ...
  2. Brand

    A distinguishing symbol, mark, logo, name, word, sentence or ...
  3. Brand Equity

    The value premium that a company realizes from a product with ...
  4. Brand Personality

    A set of human characteristics that are attributed to a brand ...
  5. Brand Recognition

    The extent to which the general public (or an organization's ...
  6. Brand Extension

    A common method of launching a new product by using an existing ...
Related Articles
  1. Investing

    Understanding Brand Identity

    A brand identity comes from visible elements, such as the company name, the design of its logo, its packaging design, and colors, tagline and typeface.
  2. Investing

    The Power Of Branding

    It's the ultimate economic moat, and we look at the approaches and effects of good and bad branding.
  3. Financial Advisor

    Why These Are the Most Valuable Brands of 2015

    A company's brand can be worth billions of dollars. Here are the most valuable global brands in 2015.
  4. Entrepreneurship & Small Business

    Explaining Brand Equity

    The value premium that a company realizes from a product with a recognizable name as compared to its generic equivalent.
  5. Insights

    Top 100 Most Valuable Global Brands 2016

    A look at the BrandZ 100 Most Valuable Global Brands Report
  6. Insights

    Top 20 Brands Worth More in 2016 (WPPGY, AMZN)

    A look at the top 20 brands whose value has increased in 2016.
  7. Entrepreneurship & Small Business

    6 Branding Tips For Small Business Owners

    One of the most important areas for all businesses to utilize is branding.
  8. Insights

    Explaining Brand Personality

    Brand personality is comprised of human characteristics attributed to a company and its products.
  9. Personal Finance

    Understanding Product Lines

    A product line is a group of related products manufactured by the same company.
  10. Markets

    If You Love a Brand, Should You Buy Their Stock? (AMZN,NFLX)

    Is there a correlation between brands consumers love most and the performance of their stocks?
RELATED FAQS
  1. Why is brand equity considered an intangible asset?

    Brand equity is an intangible asset because the value of the brand is not a physical asset and is instead determined by consumer ... Read Answer >>
  2. What are some of the benefits of positive brand equity?

    Learn how having positive brand equity enables companies to make a higher margin on sales and spend less money on marketing ... Read Answer >>
  3. What are some of the ways that a company can improve its brand equity?

    Learn why brand equity is so valuable in business. These strategies for gaining high exposure and a great reputation will ... Read Answer >>
  4. What are some examples of companies or products that have outstanding brand equity?

    Brand equity is the heart of reputation building for companies and products. With solid equity, the quality of a service ... Read Answer >>
  5. How does a customer base dictate goodwill?

    Find out how a customer base dictates the value of the goodwill by providing a ready market for its products and spreading ... Read Answer >>
  6. What are the differences between brand name drugs and generic drugs?

    Discover the process by which brand name drugs lose their patent, allowing generics to be manufactured, as well as the differences ... Read Answer >>
Hot Definitions
  1. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
  2. Brexit

    The Brexit, an abbreviation of "British exit" that mirrors the term Grexit, refers to the possibility of Britain's withdrawal ...
  3. Underweight

    1. A situation where a portfolio does not hold a sufficient amount of a particular security when compared to the security's ...
  4. Russell 3000 Index

    A market capitalization weighted equity index maintained by the Russell Investment Group that seeks to be a benchmark of ...
  5. Enterprise Value (EV)

    A measure of a company's value, often used as an alternative to straightforward market capitalization. Enterprise value is ...
  6. Security

    A financial instrument that represents an ownership position in a publicly-traded corporation (stock), a creditor relationship ...
Trading Center