These improper applications have caused much confusion as to what branding is and how it works. As such, “brand” has become a bit of a buzzword. But, what does it really mean and how does it work? Where did it all start and how can it create value? To benefit from the effects of branding, a common understanding of “brand” must first be established.

Pioneered by P&G

Procter & Gamble pioneered the business strategy of “Brand Management”. Brand management focused attention on product specialization and differentiation instead of business function. By distinguishing the qualities of each brand from all other P&G brands, each would avoid competing with one another by targeting different consumer markets with a different set of benefits. This was especially important in product categories that the company manufactured several competing brands, like laundry detergent.

Over the years, P&G and the companies that embraced the brand management concept became extremely successful. The most successful brands — those that lead their category and produced the highest ROI — used what Rosser Reeves termed the Unique Selling Proposition or “USP.” 

The concept of “USP” has three guiding principles:

- The proposition must be clearly stated to the consumer: “Buy this product, and you will get this specific benefit.”

- The proposition itself must be unique. It must express a specific benefit that competitors do not, will not, or cannot offer.

- The proposition must be strong enough to pull new customers to the product.