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How to Put a Price On Your Fashion Brand
Thomas Brownlees
CEO and Founder,
440 Industries
Introduction
When addressing the business of fashion it’s necessary to understand the value brought to the picture from the tangible and intangible elements of your product. If one the one hand, the physical nature of your garments will have a clear cost (associated with its production), on the other hand, the real markup you will be able to put on a collection is given by something intangible: your brand equity.
Developing a brand with a high equity value allows companies to:
- Add a premium markup to their products.
- Expand on their product line and access new revenue streams
- Leverage the relationship with its customer base to influence the market.
The intangible value of your brand is extremely relevant to your profit but at the same time, it can be difficult to appraise it or value it correctly. In this post, we are going to compare and contrast different models that can help you correctly identify how your brand creates value, and how much of it.
These models have been developed by focusing on customers, by running interviews and questionnaires designed to understand how brands affect our perception of products.
Here are the topics we are going to address:
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1. Customer-based Brand Equity
Our starting point is taking into account the fact that a brand adds an intangible value to the existing sum of a product’s tangible assets.
A first, effective way to look at your brand is in the context of your customer base. According to branding theory, a brand is a “promise of consistency”, and in this sense, a first approach to appraising your brand consists of understanding the size of your loyal customer base.
The brand value will be in fact be connected to its notoriety, and its familiarity within its market.
In this sense, we can start by breaking down the concept of brand knowledge into its constituent components.
Brand knowledge is the sum of brand awareness and brand image.
- Brand awareness. Brand awareness can be considered both as recognition, or simple familiarity or association to a category of products, and recall. By recall, we indicate the idea that a brand can have a “first-to-mind” effect when a particular need or thought comes to the customer’s mind.
- Brand image. A brand image, on the other hand, is strictly connected to its associations. As such, marketers will work towards embedding into the brand positive reinforcements and associations which will spark an emotional reaction in the customers’ minds.
This first approach to breaking down the value of a brand allows us to see its value broken down into more manageable chunks, as well as creating useful concepts to elaborate on this topic further. After this first, intrinsic reflection we can move forward to discuss brands in a more layered perspective.
2. Values and Benefits: the Brand Value Pyramid.
In this second angle of view, we can appreciate the value of a brand through the symbolic representation of Davis’ (2002) Brand Value Pyramid.
In this model of branding assessment, we have three layers that comprise the stratified structure of a brand’s value.
- Features and Attributes. Features and attributes represent for a brand, its most tangible, practical component, which is comprised of the features and processes that must be demonstrated to customers. This is the foundational element of the pyramid.
- Benefits. This layer of brand value instead relates to the functional and emotional benefits which are provided to customers. In this intermediate layer, the practical utility leaves room for an emotional component.
- Beliefs and Values. At the top of the pyramid, we are able to see the emotional, spiritual, cultural values which are being addressed by the brand. At the stage purchasing a brand is not anymore about having, as much as being.
This shows how all brands will have a connection to the most foundational element of the brand value pyramid but at the same time, as we climb up the pyramid, fewer and fewer brands will be able to maintain a more intellectual, or better yet, existential appeal. In the next section, as we move towards more complex and intellectual representations of the equity stored in a brand we are going to address the Brand Asset Valuator.
3. The brand as an asset: The Brand Asset Valuator.
The brand asset valuator has been designed by Young and Rubicam, and it’s a very useful tool designed to take another look at the way we should appraise our brand’s equity.
This model tends to provide a more practical, market-oriented approach to appraising brands in terms of how they can assist products in penetrating a crowded market.
It revolves around 4 fundamental concepts:
- Differentiation. This element is designed to measure how a brand stands out in its own market, how unique it appears to the customer’s eyes.
- Relevance. This is a more practical feature that relates to how customers perceive the brand, and what kind of functionality is associated with a product’s use, and the ability to respond to customer’s needs.
- Esteem. This element focuses on the way the brand is perceived by the customers, and specifically on the way it is taken into consideration in the purchase decision. A brand’s consistency and promise is value in this category.
- Knowledge. This element pertains to how popular a brand is, and how much it is part of a people’s everyday life.
A complementary perspective on the Brand Asset Evaluator is provided by the BrandZ (Millward Brown) model which is focused on appraising the strength of the relationship with its customers.
4. The brand as a relationship with your customer: BrandZ.
According to BrandZ there are in fact five levels to understand the power of a brand:
- Presence. This first level pertains to a brand’s reputation, as presence represents the consistency of the promise made to previous customers.
- Relevance. This element pertains to how a brand is taken into consideration for the intent of the purchase. Relevance is about the persuasiveness of the promise of delivery towards future customers.
- Performance. This is an element that testifies that because of a product’s performance, it becomes a go-to solution for a customer’s problems.
- Advantage. This element relates to how a product provides additional benefits than comparable competitors.
- Bonding. This element lastly pertains to how a brand is able to create loyal customers.
This model provides additional insight into our analysis but moving the focus of our reflection from the product itself to the relational dynamic happening between a brand and its customers.
So far, however, we were not able to specifically indicate that mysterious factor that makes certain brands loved by customers and create a devotional affection that all other firms can’t create. In the pursuit of this love factor, in the next section, we are going to discuss an additional perspective, the one provided by LoveMarks.
5. The brands you Love: LoveMarks.
The Lovemarks approach has been designed by Kevin Robert, by Saatchi and Saatchi to focus on that intangible factor that makes the customer love a brand.
To approach the topic of loving a brand we start from the following assumptions:
- A brand you love is the best in all respects, both in terms of quality and experience.
- A brand you love creates a deep emotional connection, which pertains to the self-realization of the customer.
- A brand you love provokes the customer to maintain closeness to the product.
- A brand you love stimulates the customer to dedicate time to the brand.
After having set the tone to discuss how a brand can be loved, let’s look at the Lovemarks model. According to this approach, there are four types of brands:
- Products. Low love, low respect.
- Fads. High love, low respect.
- Brands. Low love, high respect.
- Lovemarks. High love, high respect.
This model really assists us in understanding the journey an item must go through in order to gain affectionate attributes.
The final stage of growth of a brand is represented by Cult and Iconic Brands, which will be discussed in the next section of our post.
6. Cult and Iconic Brands.
Brands who gain the appeal of a cult brand or that become iconic share a set of similar characteristics and management choices.
Cult brands tend to:
- Attract customers by operating through selective communication.
- They are aware to “sacrifice” their appeal towards larger markets in order to resonate specifically with a limited set of customers.
- A cult brand is accessed through rituals, almost putting customers in the position of accessing the brand through some effort.
Iconic Brands, just like cult brands, are aware of the tradeoffs connected to their own communication and as such pursue values and goals which many other brands would not, in the same way, pursue. For instance:
Iconic brands instead tend to:
- Interpret and express social tensions
- Create a narrative which describes a different world
- They focus on some foundational legends that celebrate the brand.
Many fashion brands are focused on this brand typology, with the nuance of creating a heritage brand.
The development of a strategy aimed towards the achievement of this iconic status is usually carried out through the creation of a narrative revolving around strong cultural roots, creating a highly recognizable style and developing a compelling narrative.
After having discussed branding in a variety of perspectives, we can now move towards some reflections and conclusions.
7. Conclusions
As we delved into the intricacies and complexities of brand equity appraisal, we can summarise some of our findings as follows:
- The value of the brand is not to be intended as market share but as mind share, where the space occupied by a brand is in the mind of its customers.
- There is no effective pursuit of higher-end emotional goals unless brands are able to start from an operational perspective: fulfilling their promises.
- Once the fundamental, practical benefits of a brand are provided to the customers, then, a firm can work towards leveraging emotional and social benefits.
- The goal of a brand is to become a symbol, when symbolic values are achieved, then the potential value of a brand is achieved as well.
If you are interested in understanding and learning branding in fashion in greater depth, by clicking on this link you will access more free resources from our blog.
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Sources and Further Research
- Lifestyle Brand – A Guide to Aspirational Marketing – Pelgrave Macmillian
- Made in Italy Industries – Bocconi University Press
- Managing Fashion and Luxury Companies – Rizzoli Etas
- Fashion Collections – Bocconi University Press
- Global Marketing – Pearson
- The Fundamentals of Fashion Management – Ava Publishing
- The Cult of the Luxury Brand: Inside Asia’s Love Affair in Luxury – Brealy International
Thomas Brownlees
I am an Anglo-Italian business lecturer and consultant based in Florence, Italy. In 2017 I started 440 Industries, an education and training company focused on fashion, music, and technology. Our mission is to help students, entrepreneurs and managers in overcoming the challenges of starting, developing and scaling their business in the creative industries. When there's a will, there's a way!
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