Software BrandingBefore we go any further looking into how we can build brands it’s important to understand why building your software brand is important.

I hope you have had a chance to check out the first part in this series; Software Branding: Introduction, and have an understanding of what I mean by brand and branding. To make a long story short I am not referring to the company/product, logotype or slogan. What’s really important is the brand identity, or the associations and expectations that are connected to a brand.

There are several important reasons as to why you should work with building your brand or brands. In this article I have included 6 major reasons why it is vital to build your software brands.

The reasons are…

1) Create Repeat Clients by Brand Recognition

With a strong brand you will have bigger chances to attract clients back to you when it is time to upgrade, crosssell or upsell your products. You can read more about up-selling and cross-selling software here.

2) Competitive Advantage – Differentiate Yourself

Few products are truly unique. In most software niches there are several strong competing brands, at least in the niches that are worth existing in.

If you can do what it takes to stand out you gain credibility and competitive advantage. Your products may be chosen before the competitors solely because of your brand.

2B) Protect Yourself

Reverse engineering, copying of software products – face it, anything you can develop most likely your competitors can too, but copying a well built brand identity is far more difficult.

3) Retain Increased Sales Price

A strong brand increases the perceived value of your product and with a higher perceived value you can charge higher prices. This also means that you have a better defense against competitors trying to compete by lowering their prices.

4) Transfer Value Between Products

If you have built a strong company brand and you are launching a completely new product under a new brand you can transfer value from your other products as they are already connected to your company brand. Thus your new products can get a flying start.

5) Decrease Marketing Costs

It costs money to build a brand. It doesn’t need to cost lots but you will need to invest. But when your brand image is memorable, you can actually invest less and still trigger the impulses you want. So a stronger brand can mean a higher ROI on your marketing campaigns.

And last, but not least…

6) A strong Brand Has An Economic Value

Have you ever pondered about selling your software company in the future and perhaps work with something else? Microsoft’s brand was valued to 56.9 Billion US$ in 2006 according to Business Week. A software company on the second place of Top 100 Global brands Scoreboard.

The actual value of a brand is calculated based on: “reports from analysts at J.P. Morgan Chase, Citigroup and Morgan Stanley. Interbrand projects five years of earnings and sales for the brand. It then deducts operating costs, taxes, and a charge for the capital employed to arrive at the intangible earnings. The company strips out intangibles such as patents and management strength to assess what portion of those earnings can be attributed to the brand.”

Furthermore “the brand’s strength is assessed to determine the risk profile of those earnings forecasts. Considerations include market leadership, stability, and global reach—or the ability to cross both geographic and cultural borders. That generates a discount rate, which is applied to brand earnings to get a net present value. BusinessWeek and Interbrand believe this figure comes closest to representing a brand’s true economic worth.” (Internbrand)

When researching this article I did a quick scan to find articles on this subject and there is no end to articles covering the fact that it’s important to build brands.

But when it comes to why I should spend my time building brands I came up surprisingly short. I admit I just spent a few minutes searching, but in this time I didn’t come up with one single in-depth article on the subject.

The closest I came was comments such as brands build loyalty and drive sales. Please do comment on this post if you have any good articles on the subject. Also, please don’t hesitate to post any comments or questions you have in the matter.

Recommended reading: Interbrand and BusinessWeek Rank the Best Global Brands by Value for 2007.

You may reprint or distribute this article as long as you leave the content and this information intact. This Article was written by Peter Gillberg and published at