The importance of brand from a customers’ point of view

The role of branding in commercial success of a business venture is nothing new and its vital importance is widely acknowledged by virtually all entrepreneurs. The understanding of the crucial role of brand protection efforts however continues to be quite limited. This paper draws on the insights gained through our large-scale consumer survey (N = 10,000), survey among SMEs (N = 924) and additional insights gained from secondary sources as well as our existing clients, with the goal of inspiring and encouraging brand protection efforts among entrepreneurs.

By

Jan Buza

When asked about the role of a brand in shaping their buying decisions, consumers participating in our survey revealed that brand alone accounts for 29% of the decision taken. The perceived importance of brand however varies considerably between individual industry sectors, with the highest importance being reported for the sectors of entertainment (47%), IT (38%) and education (38%). However, even in the context of the low ranking industry sectors - furniture (21%), health & beauty (22%) and construction (23%), brand bears a significant value over the consumer decision making process.

Perceived importance of brand in influencing consumer decisions (by industry sector)

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From the consumer perspective, branding goes well-beyond influencing the choice of products and services as consumers display a strong affinity towards their favourite brands. In fact, 93% of the consumers participating in our survey revealed that they are willing to pay premium prices for the brand of their choice. This is by no means surprising as it is the brand that communicates quality, credibility and trust, allowing companies to differentiate their products in the eyes of the consumers. In line with this finding, the outcomes of the analysis carried out by The Economist revealed that over 20% of the market value of the 10 most valuable brands is derived from the brands themselves [1]. Estimates provided by Millward Brown, a market-research company, go even further, suggesting that brand alone is responsible for more than 30% of the market value of companies [2].


How much are consumers willing to pay extra for their favourite brand?

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When it comes to how much are consumers really willing to pay extra for their favourite brand, the average value derived from our survey revolves around 12%. Education (18%), fashion (17%) and health & beauty (16%) represent the industry sectors characterised by the most significant willingness of consumers to pay premium prices and popular retailers can charge up to 18% more than their competitors without losing their customers.


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Despite the undeniable role of branding in shaping consumer decisions as well as influencing company’s profitability, effective brand protection remains elusive for a vast majority of companies. Only 13% of SMEs participating in our survey have taken steps to protect their brand through trademark registration and 32% of these companies started with brand protection efforts only after experiencing first copycat attempts, regretting not having considered it sooner.

Infringement cases are more common than you may think, with over 85% of large companies having experienced a case of infringement in the last year [3]. The very act of registering a trademark acts as a deterrent for copycats, with the ® symbol clearly communicating the level of protection for your brand. Furthermore, by registering the trademark you retain the sole right to issue “cease and desist” letters that effectively discourage any copycat attempts. Even in cases when it comes down to an infringement lawsuit, a registered trademark provides you with a level of protection that allows for a quicker and cheaper resolution of disputes. This means that by the end of the day, the initial investment into a trademark will allow you to save a considerable amount of effort, concerns and lawyer fees.

Need more proof about the crucial role of brand protection and trademark registration? Listen to our clients who have often learnt the hard way about the need to protect their most valuable asset.

  • “I have to admit that we only started thinking about trademark once the competitors starting copying our products. It was extremely frustrating to see our effort of building a strong brand based on firm values go to waste just because of these copycat attempts.” (EMI)

  • “I was well-aware of the crucial importance of intellectual property and its protection in signalling prestige and driving performance.” (OVERCOME your limits)

  • “It would be great if people dealt with brand protection right from the start of their business. This should provide the foundations for avoiding possible complications in the future.” (Kickresume)

  • “Brand is what resonated in people. The logo and name are the first things they see on a website and social media. It is important for us that the name of our brand continues to be associated with a good reputation. Trademark registration allows us to achieve this goal.” (ForZet)


[1] The Economist (2020), “It has never been easier to launch a new brand”, https://www.economist.com/business/2020/01/23/it-has-never-been-easier-to-launch-a-new-brand

[2] The Economist (2014), “What are brands for?”, https://www.economist.com/business/2014/08/30/what-are-brands-for

[3] CompuMark Research (2020), “Trademark infringement rising year-on-year, says CompuMark report”, https://www.prnewswire.com/news-releases/trademark-infringement-rising-year-on-year-says-compumark-report-300986014.html

Jan Buza

Jan Buza

Product Mind

Helped scale portfolio firms for a VC fund

CEMS Prague

Gain more insights about the importance of brand in your industry through our selection of indicators and case studies.

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