Brands are not some marketing trick to rip off irrational consumers. If you think you can build a successful long-term business by focusing only on irrationally over-spending customers I wish you good luck. Let me explain the dilemma of such a strategy: people dumb enough to pay you too much money are rarely smart enough to have too much money. Unless your brand delivers value to your customers, your brand can not deliver value to your company.

Yet, in the many discussions on the importance of branding for Chinese companies today, the value of brands for customers is rarely mentioned. So let me discuss here on the ways brands deliver value to your customers.

First, a brand can make decision-making easier for customers. McDonalds is not a premium fine dining restaurant. But McDonalds is nonetheless probably the strongest restaurant brand in the world. When I go to Beijing sooner or later I will eat at McDonalds because I recognize the logo and know what they have for me. When you go to Paris, sooner or later you too, and for the same reason, will eat at McDonalds. McDonalds as a brand, and its various sub-brands such as Big Mac and Happy Meal, reduce the cost of decision making when you wish to eat outside of your home. We eat at McDonalds not because we necessarily love the food, but just because it is easier. The brand delivers convenience.

Second, for many products I can not easily judge the quality, maybe not even after I purchased and used the product. So when I need a lawyer to keep me out of jail or a surgeon to remove a brain tumor, I will insist on getting the most expensive lawyer or surgeon I can afford in order to reduce my risk of getting a bad lawyer or surgeon. The same is true to a degree when we buy wine or cosmetics or medicine. When I buy from a famous company I assume I run less risk of being cheated with a bad product because I assume that the owners of the famous brand will want to protect the value of their famous brand. The brand serves to reduce risk.

Third, for some products the simple fact that the product is more expensive and that other people know that it is more expensive is valuable to me. I carry my Louis Vuitton bag, I wear my Rolex and my Armani, and everybody can see I am successful (assuming they don't think I bought all fakes). In nature, animals allocate resources to having beautiful feathers, etc., to signal their success and strength. In human society we do the same thing by buying luxury brands. As a result, just like animals in nature, we get better treatment from all around us because they respect us more. For example, when you step out of the back seat of your Mercedes Benz wearing an expensive three piece suit you get more respect from a police officer than if you step off your bicycle in dirty working clothes. The brand enhances me.

Fourth, for some products, perception creates reality. Meaning that if I drink a wine that I think is expensive it will taste better to me than if I think it is cheap. When I smell perfume that I think is expensive it smells better than if I think it is cheap. When I use medicine that I think is expensive it will work better than if I think it is cheap. In such cases, perception creates the reality. The brand creates the performance.

How can branding help your company? Do not ask that question. Ask how branding can help your customers. Then do everything you can do to make sure your brand helps your customers. Measure the quality of service and product performance. Ensure your brand keeps its promise. It is a lot easier to destroy a brand than it is to build a brand. Protect your brand and your brand will protect you.