Is Lowering the Price the Answer?

In an economy like we've experienced lately, some marketers turn to price reduction as a defense. For the short sighted, it's a short-term solution. It can also be the brand's long-term demise.

You see, there are many reasons to build your brand, not the least of which is value. First, the notion that brand name products fetch higher prices is true, even in hard times.

There are plenty of brand value studies demonstrating that the number one brand in a category can charge a 10% price premium over the number two brand. Companies with a strong brand image are always more valuable.

The point is that once you've developed and nurtured your strong brand, you can reduce prices for short periods and still maintain, or even improve, your market position. Nobody thinks Neiman Marcus is going out of business when it has a fur sale. The less notable brands - with just price as a differentiation - will quickly become a commodity.

It's easier for big, strong brands like Kellogg's or Tyson to demand higher prices and more shelf space; after all, they've had decades - and big budgets - to establish themselves. But what about the smaller business? Nothing is different. A brand is a brand.

Whether you're a car dealer, public golf course, homebuilder, bank, college, law firm, nonprofit or widget manufacturer, building a brand name is critical to your survival - even in hard times - and it will add value to your business.