What does branding mean for medical device manufacturers?

Introduction

To understand the branding of medical device manufacturers, I will summarize the basic concepts.

1. What does a brand mean for medical device manufacturers?

Generally, a corporate brand is composed of both tangible and intangible elements. Tangible elements include the company name, product names, logos, designs, and words that distinguish a company’s products or services from others. Intangible elements include the images and values associated with the company.
Depending on the business model, branding is available for B2C (business-to-consumer), B2B (business-to-business), and B2B & B2C (business-to-business and business-to-consumer).

In the medical device industry, products for general consumers, such as blood pressure monitors, fall under B2C, while products for hospitals, such as MRI machines, fall under B2B.

Brands have a hierarchy, with the corporate brand (company or organization) at the top, and product brands (products or services) below it.

2. Branding for medical device manufacturers

In the medical device industry, companies enhance their brand value by demonstrating a consistent approach in all corporate activities to all stakeholders, including customers, shareholders, and employees, to realize their purpose and direction of contributing to society.

Healthcare is directly connected to human lives, and any medical device ultimately contributes to maintaining and improving patient healthcare. Therefore, patient-first branding is implemented.

3. The difference between ‘Brand Equity’ and ‘Brand Value’

Although ‘brand equity’ and ‘brand value’ are similar, they are not the same. To explain their differences, I will quote David Aaker, who is referred to as the father of modern branding.

Brand Equity vs. Brand Value: What’s the Difference?Brand Equity vs. Brand Value: What’s the Difference?

Brand equity refers to the importance of a brand in the customer’s eyes, while brand value is the financial significance the brand carries. Both brand equity and brand value are educated estimates of how much a brand is worth.

Brand Equity vs. Brand Value: What’s the Difference?

What is Brand Equity?

Brand equity is a set of assets or liabilities in the form of brand visibility, brand associations and customer loyalty that add or subtract from the value of a current or potential product or service driven by the brand. It is a key construct in the management of not only marketing but also business strategy.

Brand Equity vs. Brand Value: What’s the Difference?

What is Brand Value?

Brand value, on the other hand, is the financial worth of the brand. To determine brand value, businesses need to estimate how much the brand is worth in the market – in other words, how much would someone purchasing the brand pay?

It is important to note that a positive brand value does not automatically equal positive brand equity.

Brand Equity vs. Brand Value: What’s the Difference?

4. Industry Differences in Brand Equity Value

Industries with low Brand Equity

Industries with low brand equity, where the impact of brand assets on corporate value is small, include ‘public utilities and heavy industry.’ This is because business value predominates, and there are few alternatives with similar value within the industry.

Industries with moderate Brand Equity

Industries with moderate brand equity include ‘pharmaceuticals and automobiles.’

In the pharmaceutical industry, significant efforts are put into developing new drugs and medical devices, so the value of the development department and brand equity are about the same. The number of alternatives with similar value within the industry is also increasing.

In the automotive industry, while driving is a common factor, the power of the brand comes into play when it comes to whether it suits you or matches your preferences.

Industries with high Brand Equity

Industries with high brand equity, where brand power significantly influences management, include ‘beverages and apparel.’ In the beverage industry, differentiating tastes within the same category, such as tea or beer, isn't easy.

The luxury industry has the highest brand equity. Historical luxury brands (fashion, restaurants, etc.) that offer high-priced items and services have brand value that constitutes the majority of their corporate value, more so than the functionality of their products."

5. Methods of Evaluating 'Brand Value'

There is no industry standard for evaluating brand value, but the following three methods are well-known:

1. Cost Approach: Evaluate the cost incurred to build the brand.

2. Market Approach: Evaluate the value based on similar brands bought and sold in M&A transactions.

3. Income Approach: Evaluate the discounted future cash flows generated by the brand.

Interbrand, a UK-based branding company, has established “methods and procedures for evaluating the monetary value of brands” and has received ISO 10668 certification. They recommend the Income Approach.