A company’s branding is basically its packaging: How it presents itself on the outside is how it entices consumers to learn more and, hopefully, to “look inside” and become customers.

Packaging can attract customers, inform them, provide ease of use and generally satisfy them. Packaging should be the prelude to an extraordinary experience.

Like packaging does for products, a company’s branding message creates a context for what’s inside.

“Brand is a promise that the company makes to the customer or consumer,” as Minnesota newspaper The Star Tribune recently put aptly.

This is crucial because brand relationships drive customer decisions, according to Brand Identity Guru. “People who make decisions often seek a level of security (trust) that outweighs all the other buying factors. This concept uses emotions as a device in the decision-making process.”

Fear of failure and the unknown can drive a buyer to use a more trusted, though possibly more expensive, supplier, for instance.

“The trend today is brand slutting,” according to JoAnn “The Packaging Diva” Hines at Packaging University. “Marketers have spent big bucks trying to ensure product commitment, but consumers are moving from loyalty purchases and trying new products.” (For JoAnn’s guest editorial this issue, check out 5 Things Every Business Needs To Know About Packaging.)

Is brand loyalty dead?

The exponential growth of private-label packaging over the past six or seven years is partially driving this trend. “Across retail channels and product categories, private-label brands have grown at a rate double that of leading national brands, to the point that private label now accounts for more than 15 percent of all grocery sales,” according to Brand Packaging.

Indeed, a study by ACNielsen last year found that globally 69 percent of consumers believe private-label goods are an extremely good value for the money, with 62 percent considering their quality to be at least as good as the big brands. Nielsen reported that generic offerings, coupled with aggressive price positioning, have evolved to become almost equivalent in quality and closer on pricing in the minds of consumers, particularly the highly developed markets in Europe, the Pacific and North America.

These days, store brands are increasingly moving away from copycat design. Instead, they are defining themselves through packaging that matches the quality of national brand packaging — a shift that has raised the bar and stepped up the challenge for national brands, who, rather than simply differentiate, must now work harder than ever to justify a price premium.

Innumerable companies, large and small, have made substantial investments to refine their message and attempt to surpass the clutter of many advertisements trying to persuade buyers that by selecting their product or service, life will be better.

If the term “substantial investments” seems vague, consider that advertising in the U.S. alone was nearly a $300 billion industry last year, growing about 5.6 percent to $286.4 billion, according to experts at Universal McCann. Worldwide advertising revenues were $602.4 billion, Plunkett Research estimates.

Outside of the U.S., as BrandChannel.com recently noted, “China’s economic boom is creating some of the globe’s fastest growing brands that nobody has ever heard of.”

Yet, as the news media point out, consumers feel very strongly about product safety issues. And brand management, reputation and respect all result from producing and selling safe, quality items.

For instance, Toyota and its Lexus luxury division recently finished first and second in J.D. Power’s annual customer retention study. And analysts say a solid record of quality and reliability combined with clarity and consistency of advertising keeps customers coming back.

Or consider Apple — which doesn’t have a user base so much as it has a cheering section. Whereas Apple was once being badly beaten in the marketplace, it was the company’s die-hard, brand-loyal fans who eventually came to the rescue.

It isn’t just money that’s at stake. A company’s brand can be irrevocably tarnished by rip-offs. The expense of poor reputation — particularly due to poorer-quality and sometimes dangerous knockoffs — is so great that some companies are further investing in anti-counterfeiting technologies to protect their standing investment.

Following an extremely productive 2006, United States government agencies continued to seize large shipments of counterfeit goods throughout 2007. Counterfeiting cost the world economy about $512 billion in 2005,” according to the World Customs Organization (via Packaging Digest).

Yet even a great product (i.e., business) with superior packaging (i.e., branding) may not succeed in connecting with consumers, garnering profits and gobbling up market share. And, of course, it is entirely possible for a product to have great packaging but sit on the shelf if customers feel let down by the product.

Despite an ever-expanding array of advertising platforms and sources, consumers around the world still place their highest levels of trust in other consumers, according to a recent global Nielsen Internet survey.

Is your business’ branding as it should be?

David R. Butcher contributed to this post.

Earlier:

Private Labels Continue to Gain Ground

Private Label vs. Branded Goods

Brands Will Be Shed

Embattled Car Brands Try to Bounce Back

Resources

Creating a Brand with Spunk
by Todd Nelson
Star Tribune, Nov. 25, 2007

Brand Strategy Company
Brand Identity Guru

10 Packaging Trends That Will Make Consumers Buy in ’07
by JoAnn Hines
Packaging University

Competing Against Private Label: New Insights from Packaging Research
by Scott Young
Brand Packaging, August 2005

Geely Automotive
by Abram Sauer
BrandChannel.com, Dec. 3, 2007

J.D. Power and Associates 2007 Customer Retention Study

Introduction to the Advertising and Branding Industry
Plunkett Research Ltd.

Brand Security
by John Kalkowski
Packaging Digest, November 2007

Word-of-Mouth the Most Powerful Selling Tool: Nielsen Global Survey
Nielsen, Oct. 1, 2007