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What is 'Brand Identity'

Brand identity is how a business presents itself to and wants to be perceived by its consumers. 

BREAKING DOWN 'Brand Identity'

Brand identity is distinct from brand image. The former corresponds to the intent behind the branding: the way a company chooses its name; designs its logo; uses colors, shapes and other visual elements in its products and promotions; crafts the language in its advertisements; and trains employees to interact with customers – all with the goal of cultivating a certain image in consumers' minds. Brand image is the actual result of these efforts, successful or unsuccessful. 

Examples of Brand Identity

Apple Inc. (AAPL) consistently tops surveys of the most effective and beloved brands because it has successfully created the impression that its products are sleek, innovative, top-of-the-line status symbols – and yet eminently useful at the same. Apple's brand identity and brand image are closely aligned.

At the same time, it is possible to craft a positive brand identity that fails to translate into positive brand image. Some pitfalls are well-known: attempts by legacy brands to appeal to a new generation or demographic are especially treacherous. An infamous example is a 2017 ad by PepsiCo Inc. (PEP), which depicted a non-specific protest that appeared to allude to Black Lives Matter, a movement protesting police violence against people of color. The brand identity it wished to project, as a spokesperson subsequently described it, was "a global message of unity, peace and understanding."

Instead, the ad was widely disparaged for "trivializing" Black Lives Matter, as the New York Times put it. The moment in the ad when a white actress hands a Pepsi to a police officer and seems to instantly resolve all of the fictional protesters' grievances came in for heavy criticism. Martin Luther King Jr.'s daughter Bernice King tweeted, "If only Daddy would have known about the power of #Pepsi," accompanied by a picture of King being pushed by a police officer in Mississippi. Pepsi pulled the ad and apologized.

Pepsi's sales do not appear to have been directly affected by this gaffe, but in some cases a negative gap between brand identity and brand image can affect financial results. The teen apparel retailer Abercrombie & Fitch suffered a severe downturn when its once-popular brand became associated with garish logos, poor quality, oversexed advertising and plain meanness. The company refused to sell women's XL sizes or larger, for example, because, "We go after the attractive all-American kid with a great attitude and a lot of friends," the CEO said. "A lot of people don't belong, and they can't belong."

By the same token, building a positive brand image 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

Beyond saving it money on promotion, a company's brand can be one of its most valuable assets. Brand value is intangible, making it difficult to quantify, but common approaches take into account the cost it would take to build a similar brand, the cost of royalties to use brand name, and cash flow of comparative unbranded businesses. Nike Inc. (NKE), for example, owns one of the world's most instantly recognizable logos, the "swoosh." Forbes estimated Nike's brand to be worth $29.6 billion in 2017, despite that fact that – in a world devoid of brand perception – taking the swoosh off of Nike's shoes and apparel would change nothing about their comfort or boost to athletes' performance.

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 the company and the market. A full SWOT analysis – a look at the company's strengths, weaknesses, opportunities and threats – that includes the entire firm is a proven way to help managers understand their situation so they can better determine what their goals are and the steps they need to take to achieve them.

Determine key business goals. The brand identity should help fulfill these goals. For example, if a carmaker is pursuing a niche luxury market, its ads should be crafted to appeal to that market and should appear on channels and sites where potential customers are likely to see them.

Identify its customers. Conducting surveys, convening focus groups and holding one-on-one interviews can help a company determine who its offerings appeal to.

Determine the personality and message it wants to communicate. What does the company want its market to perceive? A company needs to create a consistent perception, rather than trying to combine every conceivable positive trait: utility, affordability, quality, nostalgia, modernity, luxury, flash, taste and class. All elements of a brand – copy, imagery, cultural allusions, color schemes – should be in line with each other and deliver a coherent message.

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. Steve Jobs, Apple's founder, famously obsessed over details as small as the shade of gray on the bathroom signs in Apple stores. While that level of focus may not be necessary, the anecdote shows that Apple's successful branding is the result of intense effort, not serendipity.

History

National, religious, guild and heraldic symbols – which we might see as analogs to modern branding – go back millennia. The modern practice dates to the industrial revolution, however, when household goods began to be produced in factories, and manufacturers needed a way to differentiate themselves from competitors. These efforts evolved from simple visual branding 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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