Brand loyalty also means that companies achieve a greater consistency of demand through customer retention. Over time, good brand strategies generate the production volume which gives the economies of scale necessary to have a favourable impact in unit costs. In turn, this allows companies to achieve higher margins, putting them in a winning situation. And, because of the magnetic influence they have over purchasing behaviour, successful brands allow companies to charge premium prices for their products and services, which of course generate higher profits. Surveys indicate that brand leaders can return a margin four to six times that of the closest competitors.
Brands can even assist moves across industries to penetrate new markets.
Dunhill is an excellent example of this. Formerly based in the declining-image industry of tobacco, Dunhill is now firmly established internationally in upmarket clothing, toiletries and fashion accessories. The Asian challenge Consumers in Asia are much more powerful in the '90s and this trend will continue into the next century. They have better knowledge, greater curiosity, are more discriminating and exercise their right to choose more carefully and ruthlessly than ever before. Successful global companies recognise that the source of their prowess in world markets is branding, and that investment in plant, technology and people is no longer enough to guarantee long-term sustainable profits.