Brand Identity

DEFINITION of '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.

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