What makes a brand powerful? What differentiates a lasting and influential brand from a weak and ineffectual one? Read on to learn how brands are built and what a strong brand means for companies. A company's brand is one of its most important assets, and when we're talking about a consumer brands company it's of paramount importance.

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By Robert Fredeen

Each year, a company called Interbrand announces the most valuable brands in the world. What makes these brands so valuable? They represent some of the oldest, most successful companies on the planet, and a large portion of that success is due to the companies' creation of a brand that inspires people to buy their products. In its purest form, this is what a brand is all about.

The benefits of having a strong brand are clear. Customers are willing to pay more money for well-branded products, and they'll make an extra effort to find them. Another benefit strong brands enjoy is greater negotiating power with other companies, whether in terms of lower marketing costs, greater distribution, or cheaper raw materials.

Before we get too carried away on the power of brands, one important point needs to be made: Brands need products to be successful. Nike's (NYSE: NKE) brand is tied to its shoes, not just to the image those shoes project. Coca-Cola (NYSE: KO) would not be the Real Thing if people didn't so enjoy swilling the soda. Keep this in mind when reading about brands. If a brand isn't backed by a product that lives up to the hype, that brand is most likely headed for the rubbish bin.

Core values
Successful brands are usually set apart by their core values and their ability to communicate these values to consumers. For instance, when people think of Nike, they think of an unapologetic need to win and athletes who are willing to do whatever it takes to beat the competition. Coca-Cola's brand is about its product making life better. Gap's (NYSE: GPS) brand is focused on convenience and basic fashions. Communicating these values effectively is what makes for good marketing.

When this communication breaks down, brands can run into trouble. Each of the companies mentioned above have run into problems focusing on their core brand values, and their performance has reflected this. While loss of core values focus wasn't the only problem these companies faced, it meant that communicating with customers became more difficult, which in turn made it more difficult to persuade them to shop the stores.

It's not uncommon to find companies refocusing on their brands and trying to reconnect with their customers. This process is essentially the same as building the brand in the first place, and it takes time, effort, and expense to regain the brand's previous position.

Speaking to customers
Ideally, a brand's core values will spark a response from consumers. Many people identify with Nike's brand values of single-minded winning, and of being the best at what they do. This is exactly what every brand needs to do -- create and communicate core values that resonate with customers. When customers take a brand to heart, the benefits of having a strong brand come pouring in.

Beyond the importance of the core values, how those values are communicated to customers is critical as well. Some messages work better in a particular medium -- ads full of text in magazines or newspapers, for example, and strong visual components for TV ads.

The brand's target audience also needs to be considered. Nike has a history of running "edge of the envelope" ads that offend people. For instance, during the 2000 Olympics, they ran an ad featuring an Olympic runner being chased through the forest by a chainsaw-wielding maniac. Many families watching the Olympic coverage considered this ad too frightening for children, and NBC pulled it. However, the same ad ran on ESPN, with a largely young, male audience, and there were no complaints. Placing ads that are appropriate for both the medium and the audience is important.

Brands a key asset
Ultimately, brands are a key asset. Strong brands have concrete benefits for companies, though brand value is an intangible asset that won't be found listed on any balance sheet. It's also a delicate asset in that companies can easily destroy it through not living up to their marketing, mishandling problems, or making other mistakes.

In the Internet Age, many people question whether brands matter anymore. We believe they do. Essentially, every company has a brand. The first brands that may come to mind are probably consumer brands, but companies that sell directly to other companies also have brands. An easy example is the saying -- common since the 1970s -- that "No one ever lost his job for buying IBM." In other words, IBM's (NYSE: IBM) brand was so strong among its customers and potential customers that purchasing managers knew they wouldn't have to defend IBM product purchases to their superiors.

Looking at more current examples, EMC's (NYSE: EMC) reputation among its customers as being a quality supplier of storage devices is part of its brand. The point is, companies have brands where it counts, with their customers. This is true regardless of whether the customers are consumers, companies, governments, or anything else.

These brands, especially consumer-oriented brands, are rather fragile. It takes more effort and time to build a brand than to destroy the value created. Brands are intangible, but rank among the most valuable assets a company can create.