From: alexhormozi

Branding is a critical, yet often misunderstood, aspect of business success that directly impacts profitability and customer behavior [01:59:00]. While many definitions of branding exist, they often remain vague and don’t provide actionable steps [03:59:00]. A practical understanding reveals that branding is the deliberate pairing of things through an outcome [05:21:00].

Defining Good Branding

Good branding specifically involves the deliberate pairing of a business or product with positive outcomes for its ideal customers [10:09:00]. This means consciously choosing what associations customers make with your brand [10:17:10].

Distinguishing from Advertising

It’s important to differentiate branding from advertising. Advertising is primarily about letting people know about your product [06:40:00]. Branding, on the other hand, is the pairing that occurs as a result of those communications and experiences [06:44:00].

Examples of Branding in Action

Brands demonstrate their power by influencing customer decisions and loyalty.

  • Yeti: Can charge significantly more for similar products due to its brand recognition [00:53:00].
  • Harley-Davidson: Fosters extreme customer loyalty, where customers remain dedicated for life [01:06:00].
  • Apple: Generates virtual guaranteed sales for new products because customers trust the brand implicitly [01:17:00].

Case Study: Bud Light

The recent Bud Light campaign featuring Dylan Mulvaney serves as a clear example of both good advertising and bad branding [06:15:00].

  • Good Advertising: The campaign successfully increased awareness of the Bud Light product [06:31:00].
  • Bad Branding: For a significant portion of its existing customer base, the specific pairing was disliked, leading to a loss in sales [06:51:00].

To recover, Bud Light then paired its product with figures more aligned with its ideal audience, such as comedian Shane Gillis and the UFC, leading to sales recovery [07:11:00]. This illustrates that good branding makes more money because it resonates positively with the target audience [08:03:00].

Why Good Branding Makes Money

The earliest forms of branding, like searing symbols onto livestock, served to dictate ownership and influence how others treated the animal [11:10:00]. Similarly, in business, a brand influences customer behavior [12:17:00].

A strong brand can transform commoditized products (like a $5 white T-shirt) into premium, higher-value items [14:07:00]. Customers are willing to pay more because they want to associate themselves with the outcome or values the brand represents [14:19:00]. For example, buying a Nike shirt allows a customer to associate with ideals like winning and competition [14:44:00].

Good branding provides several financial benefits:

  • Premium Pricing: It allows a business to raise prices significantly without losing customers to competitors [17:39:00]. Warren Buffett highlights that the power to raise prices without losing business is a sign of a very good business [17:41:00].
  • Improved Advertising: Branded products achieve higher click-through rates and better response rates in advertising, leading to cheaper customer acquisition and higher returns [18:10:00].
  • Customer Loyalty: Good branding fosters customer loyalty, encouraging repeat purchases and lifetime value [18:58:00].
  • Competitive Advantage: A strong brand creates a lasting competitive advantage that is difficult for rivals to replicate [19:44:00].

How to Build a Strong Brand

Building a brand is like curating a garden or assembling a bouquet [20:54:00]. You start with a brand that means nothing [15:36:00].

The Process of Deliberate Pairing

  1. Start with a meaningless brand/logo [15:36:00].
  2. Pair that brand with something or someone your ideal customers like [15:48:00]. For example, Nike paired itself with champions like LeBron James and Tiger Woods, associating with sports and competition [15:48:00]. Dolce & Gabbana paired with Kim Kardashian to associate with fame, beauty, and wealth [16:22:00].
  3. Your brand begins to embody what customers like [15:52:00].
  4. Customers want to associate themselves with that desired thing [15:57:00].
  5. They buy your product as a “tiny sliver” of that association, exchanging money for the desired feeling or identity [16:03:00].

Good branding happens on purpose, not by accident [22:57:00]. The more positive pairings a brand makes with its target customers, the stronger it becomes [23:34:00].

Addressing Branding Mistakes

One bad pairing can significantly hurt a brand [23:56:00]. To recover, a business must overwhelm customers with more good pairings until the negative association shrinks into irrelevance [24:31:00]. Kanye West is cited as an example, where new desirable products and music helped overcome past controversies [24:48:00].

The Role of Product Quality

While external pairings build initial impressions, the product itself significantly contributes to long-term branding. Customers have far more experiences with the product after purchase than with any advertisement [25:51:00]. If a premium brand delivers a poor-quality product, it can damage the brand’s perception and prevent repeat purchases, even if the initial sale occurred [27:01:00].

Measuring Brand Strength

Brand strength can be measured by three key metrics [27:45:00]:

  1. Influence: How likely the brand is to change someone’s behavior [27:49:00].
  2. Direction: Whether the behavior changes in the desired direction (towards the brand) or away from it [28:03:00].
  3. Reach: How many people the brand influences [28:09:00].

A strong brand (like Taylor Swift or Apple) often has a large reach, strong influence, and a generally positive direction, meaning the majority of people move towards it [30:00:00]. While some strong brands can be polarizing (e.g., Donald Trump), it’s possible to build a strong, positive brand without seeking controversy [29:45:00].

Applying Branding Principles

The concepts of branding apply regardless of audience size [31:05:00]. Even with a small audience, high influence can lead to behavioral change [31:09:00]. When expanding a brand, every new pairing carries risk, as some audience members might not like the new association [32:22:00]. However, the goal is to “net an increase” in reach, influence, and positive direction, meaning more people gained than lost [32:51:00].

The speaker’s own personal branding strategy exemplifies these principles, focusing on associating himself with business value and making money for small business owners through content and books [33:52:00]. This deliberate pairing leads to customers consuming more of his offerings and recommending him to others, thereby growing the brand [35:01:00]. This illustrates the role of authenticity and delivering value.