Brand Identity: What It Is and How To Build One

Definition
Brand identity is the outward-facing aspects of a company brand, including consumer perception, colors, design, and its logo.

Brand identity is every manner in which customers experience and perceive a company, from visual (such as logos) to customer service interactions and advertising communications. While examples such as Apple Inc. (AAPL)’s simple design or NIKE, Inc.’s (NKE) “Just Do It” slogan illustrate the potency of brand identity, there is much more to it than simply developing the coolest logo.

Whether a firm is a start-up or a mature company, knowing how it can create and sustain a successful brand identity as part of a greater business strategy may mean the difference between success and merely existing—or even failing—in the current competitive environment.

Key Takeaways
Brand identity fuels financial performance by allowing firms to achieve higher prices and retain customers even in bad market times.
Successful brands develop their brand identity strategically over time and keep it at their core recognizable.
A brand identity needs to be constantly rechecked with regard to market shifts, competitor actions, and changing customer expectations.
A unified brand identity can turn a firm into its most priceless asset, as witnessed by private equity buyouts of large firms just for the usage of their branding.

What Is Brand Identity?

Brand identity is more than a firm’s visual business card—it’s also a strategic instrument that has the ability to make a real impact on its bottom line.

Think about the ways brands influence your own purchasing decisions. Suppose you’re choosing between two hotels on Expedia.com. You’d be comparing lots with roughly the same prices, and your choice would probably depend on your view of a brand’s dependability, service level, and total experience. These impressions aren’t simply the result of your past experience with a hotel chain. They are constructed through repeated messaging and delivery in every touch point. Executed properly, this should yield concrete results for a business.

Here’s what a well-developed brand identity can do:

• Allows premium pricing by delivering perceived value above utilitarian benefits
• Lowers customer acquisition costs by increasing recognition and recall
• Bolsters survival in market downturns by building loyalty
• builds entry barriers for competitors by filling differentiated market spaces
• Enhances employee commitment through giving clear purpose and direction

 

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Fast Fact
Brand identity is more than a corporation’s design business card—it’s a strategy that can make a noticeable impact to its bottom line.

Think about how brands influence your own purchasing decisions. Imagine you’re selecting two hotels on Expedia.com. The economic value of brand identity can be significant. In Forbes’ 2024 rankings, top brands such as Apple Inc. (AAPL; $241.2 billion) and NIKE, Inc. (NKE;$39.1 billion) have immense monetary value. However, they would be worth far less if Apple and Nike were deemed not to deliver on what their branding indicated.

For small companies, the impact of brand identity may be less but is nonetheless essential. A restaurant’s homogenous service style, decorating schemes, and social media are able to engender loyal patrons who will pay a premium, even in a saturated marketplace. If you operate a small company, the most important thing is to make your brand identity genuinely represent your operational capability while making you stand out relative to alternatives for your desired customers.

Forbes 2024 Top 50 World’s Most Valuable Brands

Forbes’ annual ranking of the world’s more valuable brand takes into account revenue performance, earnings power, and brand impact specific to an industry to estimate how much a brand itself—apart from tangible assets—adds to company worth.

The below rankings show a fascinating trend: while technology brands lead the pack, businesses across industries from luxury to consumer goods have developed multi-billion dollar brand values based on unique market positions.

Building a Brand Identity

Developing a worthwhile brand identity involves systematic investment and prudent implementation throughout a company’s media (social media, in-store promotions, etc.—even receipts printed out). The globe’s most valuable brands have similar patterns in how they develop and sustain their market positions:

Strategies Are Research-Driven

Market research involves analyzing both your prospective customers and competitors to identify gaps and opportunities. For instance, when L’Oréal ($22.8B brand value) engages in market research, it examines the following:

• Customer beauty habits and pain points
• Price sensitivity among various market segments
• Competitor products and positioning
• New trends in beauty and skincare
• Regional and cultural preferencesThis study influences everything from product creation to advertising copy, serving to justify its $10.3B 2024 ad budget.

 

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The Core Building Blocks of Branding

Visual Identity

The visual infrastructure that makes your brand instantly recognizable:

• Logo: Nike’s swoosh ($39.1B brand value) functions internationally without text
• Color palette: Coca-Cola Co.’s (KO) ($64.4B) control of red in drinks
• Typography: Apple’s ($241.2B) minimalist, modern typeface demonstrates their design credo
• Product design: Mercedes-Benz’s ($28.5B) iconic grill and star

Verbal Identity

The way your brand sounds and talks:

• Brand voice: The Walt Disney Company’s (DIS; $61.3B) friendly, family-oriented tone
• Communication style: Goldman Sachs Group, Inc.’s (GS; $8.9B) voice of confident financial acumen
• Customer service language: Amazon.com Inc.’s (AMZN; $135.4B) focus on offering solutions
• Key messages: BMW’s ($25.9B) “Ultimate Driving Machine”

Experiential Elements

How customers experience your brand:

• Service protocols: Starbucks Corporation’s (SBUX; $17.8B) customized ordering process
• Digital interfaces: PayPal Holdings, Inc.’s (PYPL; $11.3B) focus on security and ease of use
• Product functionality: Microsoft Corporation’s (MSFT; $162.9B) integration between devices
• Employee contact: Home Depot Inc.’s (HD; $19.2B) knowledgeable employee support

 

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Investment and Resources

Creating brand identity takes serious investment:

• Marketing budget: Generally 5% to 15% of revenue for established brands
• Team composition: Brand management, design, communications experts
• Technology: Customer relationship management technology, social media software
• Training: Employee integration and constant brand training

Branding Identity Best Practices

1. Clear Positioning

Precisely define where you fit in the market. Hermès ($21.6B) positions itself as the ultimate luxury brand, with prices comfortably higher than anyone else’s.

2. Matching Operational Capability

Make sure you are able to fulfill what you are promising. Amazon Prime’s two-day shipping commitment necessitated huge infrastructure investments before it could be sold.

 

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3. Employee Training

Employees need to represent the brand. Disney theme park staff receive intensive “Disney University” training to ensure consistent guest interactions.

4. Touchpoint Consistency

Each touchpoint counts. Apple brand valuation ($241.2B) partially derives from consistent experience across retail stores, website, packaging, and customer support.

5. Monitoring Performance

Companies monitor their brand’s performance through the following:

• Customer satisfaction ratings
• Market share metrics
• Social media sentiment
• Price premium compared to competitors
• Employee satisfaction rates

 

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Common Branding Pitfalls

1. Inconsistent Execution

When brand elements are not aligned across channels. A look at A luxury brand with high-end packaging but a poorly designed website.

2. Promise-Capability Gap

Promising more than you can deliver. Tesla, Inc.’s (TSLA) promises on autonomous driving versus ability to deliver have impacted trust.

3. Not Enough Training

When employees can’t interpret or implement brand standards. A case of High-end stores where workers fail to deliver luxury-quality service.

4. Failing To Adapt to Market Shifts

Failure to adapt to customer requirements. Kodak’s failure resulted from staying with film too long in the face of digital photography.

5. Surface-Level Focus

Prioritizing logos and advertisements at the expense of customer experience. Numerous retailers spend money on store decor but do not spend enough on employee training.

United Airlines: Brand Identity in Context

When United Airlines Holdings, Inc. (UAL) came out of the pandemic, it didn’t merely do a routine refresh on its logo—it revolutionized its customer experience, from social media replies to text alerts. United’s post-pandemic evolution holds important lessons on the power and limitations of brand identity.

United launched its “Good Leads The Way” campaign in 2022, along with an overhaul of its customer experience. United assembled a 35-member social media team, revised its customer comms strategy, and made significant investments to make its brand more responsive and customer-focused.

 

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“Gone are the days when we simply have two major advertising pushes a year,” United’s head of global advertising and social media, Maggie Schmerin, said then. “We’re all about how we can be relevant and do a better job in social media and advertising.”

The results seem to have worked: By 2024, premium revenue was up 10%, corporate revenue was up 7%, and revenue from its basic economy seats was up 20% year-over-year. Customer satisfaction scores improved significantly, and their app became the most downloaded in the industry.

 

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Still, United was not the only airline to experience significant revenue growth over the past several years. To what extent is it due to a fresh emphasis on brand rather than changes in the underlying structure of the industry or tangible improvements for the customer?

United CEO Scott Kirby posited that it was all three. “United had a distinctive strategy after COVID and our employees have delivered to customers resulting in a structurally and permanently altered industry,” he stated.

This subtle observation implies that whereas strong brand identity by itself does not often contribute to success, weak brand identity can certainly restrict it.

The Bottom Line

The best companies approach brand building as a part of business strategy, and not as a distinct marketing function. Brand identity can be one of the most valuable compound assets of a company.

While flagship brands such as Apple ($241.2B) and Alphabet Inc. (GOOGL; $207.5B) reveal the tremendous financial potential of powerful brand reputation, their success stems from positioning brand promises alongside the offering of services and products customers desire within marketplaces that can shift rapidly.