Half the battle of getting anyone to do business with you is gaining their trust. If you could get someone to have total confidence in your product or service immediately, what would you be willing to pay for that? If you didn’t have to invest in marketing campaigns that messaged your reliability or value and people just showed up at your doorstep, eager to do business with you, what would that be worth to you?
Smart Marketing: $900 Million Worth of Consumer Trust
For Stanley Black & Decker, Inc. they decided that it was worth $900 million. That’s how much they paid Sears for their Craftsman brand. To some, that may seem like an exorbitant price tag. but what Stanley Black & Decker is really paying for is decades of consumer trust and familiarity with the Craftsman brand. True, they are also purchasing all the capabilities of the company but, honestly, they already have those.
The Craftsman brand has been woven into American culture for more than 90 years through commercials, radio ads, billboards, and countless customer experiences. Throughout those decades of offering quality tools and customer service, Craftsman built a reputation of reliability–something every tool buyer prizes. Just as you’d be hard pressed to find any camper who doesn’t know the Coleman brand, tool buyers know Craftsman. That kind of brand familiarity and consumer trust is very valuable.
Competitive Marketing Strategy: Purchasing Less Competition
You can spend nearly 100 years and hundreds of millions on marketing to build that kind of reputation or you can acquire it for nearly a billion dollar. In addition to purchasing trust, they also bought less competition on the store shelves. Similar to when you go to the supermarket and deliberate between Cheerios, Chex or Wheaties, you aren’t really shopping between competitors (because all these brands are owned by General Mills.) By buying Craftsman, Stanley Black & Decker will own more of the product choices in the tool aisle of the hardware store. Consumers may think they are buying a different brand but they are simply buying an extension of a corporation’s brand holdings. The more sub-brands a large brand offers, the less chance the consumer will actually buy from a competitor.
Marketing a Brand: How Brands Began
The ability to dominate a store shelf isn’t why brand delineations started. During the Industrial Revolution, companies began burning their names into the wooden barrels used to transport their goods. It was a means of differentiating one company’s product from another. Over time, the brand became a symbol for particular product attributes. Today, “customer-based brand equity occurs when the consumer has a high level of awareness and familiarity with the brand and holds some strong, favorable, and unique brand associations in memory (Keller, 2001). Awareness, familiarity, and favorable associations take time, resources and lots and lots of marketing.
Marketing ROI: The Value of A Brand
Now, brands are shorthand for a myriad of ideas, information, and emotional references. Pick a big brand, let’s say, Coca-Cola. You immediately have certain associations that jump into your mind. Those mental constructs are built from years and years of advertising imagery, experiences, and personal consumption. Everything you have seen and heard about Coca-Cola filters through your neurons when you think of it. And you aren’t alone. Billions of people also have mental associations that come to mind about Coke. Those mental associations are the reason Coca-Cola is one of the most valuable brands in the world. Over and above their secret formula, Coke’s value comes from the mental shelf space the brand owns in billions of minds.
Marketing Outcomes: What Is Your Brand Worth?
In the end, your brand is what people think about you. It’s shorthand for the value you offer, how you are different from your competitors, and what your consumers can expect from you. (If you’re not sure what your brand stands for, maybe it’s time for a brand audit.)
Considering that Sears bought Craftsman in 1927 for $500, I’d say they made a pretty smart move by selling it to Stanley Black & Decker. Meanwhile, Stanley Black & Decker just added a legacy brand to their portfolio. Win-win, right? Well, only time will tell if the Sears brand can survive without Craftsman and all the positive brand equity it built for its parent company over the years.
(And just for fun, here are the 10 oldest brand logos.)