Benefits of Creating a Strong Brand (AQA Paper 3 2018, Q1)

Here is an example answer to the 12-mark question on the benefits of strong branding in Paper 3 (2018).

One benefit of Hopps Clothing creating a strong brand is that it should enable the business to achieve higher selling prices per garment, thereby increasing the contribution per unit sold assuming that the variable cost per unit does not rise too. This is important to Hopps as a small business where gross margins are currently low, and the business has not yet made significant profits. A stronger brand would imply that demand for Hopps garments would be relative inelastic to changes in price, enabling Hopps to achieve an overall increase in sales despite charging higher prices.

Another benefit of having a strong brand is that it should increase the effectiveness of Hopps’ social media marketing campaigns and build customer awareness ahead of the new product launch at Crepe City. Strong brands are more likely to find that their social media content is shared more widely, particularly by so-called “influencers”, thereby increasing the number of potential customers in Hopps’ target segment of 15-30-year-olds. It is important for Hopps to make the most effective use of its promotional spending as the business does not yet have the resources to invest and take more risks in advertising and other promotion.

Note: the question required students to analyse "two benefits" - so the required range for a level 3 response should be two relevant benefits (not a benefit and a drawback), developed in context.