How does branding work?
In its rawest, hands-off, laissez-faire form, branding involves name acquisition, and nothing more. No help, support, guidance, assistance, or participation is guaranteed from the brandor. The brandee simply receives the conditional right to use the brand name in relation to their line of business.
Still, from a start-up perspective, all of the headaches and frustration the brandee would normally incur trying to launch their venture with the use of an unknown, unproven brand name are eliminated by partnering with the brandor, who has agreed to lend use of their established, time-tested brand name. Thus, the application of this one, simple principle can exponentially increase their chances of success.
That’s because research has shown that consumers prefer branded products and services over nonbranded ones nearly 2 to 1. Similar studies have proven that more branded businesses stay in business than nonbranded ones. Over the course of one study, 9 out of 10 branded businesses stayed in business, while only 2 out of 10 nonbranded businesses did.
To further illustrate these points, and the magic of branding, pretend that you owned a fairly profitable snack bar, Sal’s Sandwich Shop. Now, imagine how much more business you’d do and how much more successful you’d be, if you were granted permission to change your name to Subway®. Which leads to another simply undeniable fact…a branded business has the ability to generate more revenue than a nonbranded business!
In its purest, hands-on form, branding goes beyond just name acquisition to the point where the brandor, because they have a vested interest in the use of their own name, normally will offer assistance in helping to avoid all of the pitfalls and unforeseen circumstances that an individual would most likely incur when going into business without any guidance. Help can come in the form of business knowledge, special training, and industry specific information. Yet, despite being deeply motivated to lend a hand, the fact remains that the brandor is not necessarily contractually obligated or forced by law to do so.
To further your understanding, pretend that you own a fitness club at the local strip mall. You’ve been thinking that an association with an organized system would help enhance business, so you sign on. By branding with this organization, they’ve granted you the right to use their brand name. Other than changing over your signage and pledging to adhere to a very simple set of guidelines, you’ll continue to operate your club just the way you always have. Overall, you’re pleased with the way things have been going, so you’ve chosen to let the brandor just sit back and let you run the show on your own. Apart from the guidelines, they’d only take a deeper, hands-on approach in terms of your policies, procedures, and operations, if you requested help in these areas. If you were just getting started in the business, and this was your very first club, or if business was not as good as you’d like it to be, obviously you’d seek all of the help and assistance that you could possibly get from them.
Even though it’s just a tool, branding may very well be the most valuable one at your disposal, when you consider that with the stroke of a pen, an entity with literally no name value can instantly achieve national or even global recognition by virtue of an association with a brand that already possesses that kind of far reaching scope.