In today’s borderless world, taking your product or service into new markets doesn’t have to be daunting. This is particularly relevant to brands in Central and Eastern Europe, where export-led growth is driving the economy. If done strategically, expansion can lead to faster growth — and the opportunity to open untapped revenue streams.
But how do consumers choose a brand? It may be a challenge convincing shoppers you’re the right fit for them. A good place to start is by looking at what factors affect how consumers decide which product or service best suits them.
Measuring the importance of a brand name
We analysed one industry — cybersecurity — to discover the importance and weight a brand name holds in the consumer purchase journey. The survey looked at Germany and the United States, two key export markets for companies in Central and Eastern Europe. And while it may look like a niche vertical, our research unearthed findings that can easily be transferred to other product categories and industries.
We began by asking consumers which attributes are most important when choosing antivirus software. ‘Brand’ showed up at or near the bottom of each ranking.
However, decision-making isn’t a fully conscious process. It’s extremely difficult for consumers to estimate the weight of each factor when making a final purchase decision. And that makes measuring the role of a brand, and by extension brand equity, a complex task, since consumers aren’t reliable witnesses of their internal decision processes.
So instead of asking questions directly, we presented them with different situations. We tested hypothetical ‘what-if’ scenarios and included an unknown brand in our study to see what impact ‘pure’ product attributes have, without unconscious benefits that are conveyed by the brand.
Here, we share what marketers should consider when looking to take their product beyond borders, either as an established name, or as a new face in need of a brand equity boost:
1. Brand equity features strongly in consumer purchase decisions
The charts below show how much each product feature contributes to the consumer's decision-making process. Brand makes up almost one-third of the customer’s final decision. We see that it is even more important to shoppers than price, especially in the U.S. Though other factors, like performance, are influential as well.
2. Consumers will pay more for brand equity, but lower prices can level the playing field
To measure the influence of brand equity further, we put two products side-by-side and asked consumers which one they preferred to buy. The first was a well-known brand in the U.S., the second an unknown brand we created for the research. All other product features, including price, were the same.
The vast majority of consumers preferred the brand they were already familiar with, which isn’t surprising. However, when we increased the price of the well-known brand by $10 (from $34.95 to $44.95) — a jump of almost 30% — a number of consumers changed their mind and switched to the unknown brand. This wasn’t the case for all shoppers though, with 54% willing to pay the extra $10 for brand equity. But when we increased the price for the well-known brand by $30, more consumers chose the unknown brand. We saw a difference of just 8% between interest in the well-known and unknown brands — highlighting that a competitive price point can help lesser known brands attract consumers when breaking into new markets.
3. Strong performance attributes can close the gap on brand equity
In the research we started both brands with equal performance ratings, so it was no surprise to see the market leader hold a significant advantage over the unknown brand. But when we boosted the performance rating of the unknown brand to ‘excellent’, over a third of shoppers preferred the unknown brand.
This underlines that while the trust that comes with brand recognition is a major consideration for consumers, performance is also top of mind. And it can be a competitive lever for companies entering new markets with little to no brand equity to their name.
Businesses looking to break ground in new markets, should keep the following in mind:
- Brand matters. Strong branding allows consumers to distinguish you from competitors. But be patient — building brand equity takes time.
- The first step to brand equity is building awareness. Getting your name out there helps consumers know what you’re all about. You’ll need a strategy centred on making your product or service top of mind for shoppers — and time to test ideas to see what makes an impact.
- Use levers like price and performance. If you’re not there yet brand-wise, they can help you be competitive in the meantime. Level up against more established market names with lower pricing and a strong performance.