Make Your Brand Great Again - surviving tariffs through brand equity

As President Trump imposes tariffs on imports from various countries, businesses across multiple industries find themselves facing higher costs and will be faced with the conundrum of maintaining prices and losing profitability, or passing on to the consumer and over-pricing the products. But there’s a better way to handle pricing pressure in a bonkers world of tariffs and trade wars... build a brand that reduces price sensitivity!

The real cost of tariffs: Price Sensitivity

Tariffs function like a tax on imported goods, driving up costs for businesses and, ultimately, consumers. When prices rise, consumers react in one of two ways: they either seek cheaper alternatives or accept the price increase based on brand loyalty and perceived value.

Companies that rely purely on cost competition face an uphill battle when tariffs hit. Without strong brand equity, customers see their products as interchangeable with lower-cost alternatives. The only way to maintain sales in this scenario? Keep prices low, which eats into margins and threatens profitability.

Why strong brands are tariff-proof

The strongest defence against price sensitivity is brand equity—the sum total of a brand’s awareness, distinctiveness, and perceived value in the market. Or to put it another way, it's what's left when you remove the commodity you sell. When you build brand equity, you can maintain pricing strength even in turbulent economic conditions. Here’s why:

1. Emotional loyalty "Trumps" rational pricing
   A well-built brand creates an emotional connection with customers, making them less likely to abandon it over minor price increases. Apple, for example, doesn’t lose customers every time it raises prices on iPhones, because its brand loyalty is deeply ingrained.

2. Perceived value offsets cost increases
   Strong brands command higher prices because they offer perceived value beyond just the product itself. Luxury brands like Louis Vuitton don’t dominate their categories due to lower costs, but because of their strong brand equity.

3. Distinctiveness reduces the threat of substitutes
   Brand equity is built on differentiation and distinctiveness—standing out in a crowded market. Being more than just a commodity! If your brand is strong, alternatives seem less appealing and customers will hesitate before switching to a cheaper competitor.

How to build a "Trump-proof" brand

The key to mitigating the impact of any economic "shock event" is to strengthen your brand and reduce price sensitivity:

• Invest in brand equity – Focus on increasing brand awareness, distinctiveness, and perceived value to make your brand less "substitutable".

• Double down on customer experience – A premium experience creates loyalty. Make every interaction—online, in-store, and post-purchase—memorable and positive.

• Differentiate with meaning – Identify what emotional attributes you can own relatively to your competitors and communicate it at every customer touchpoint. Don’t just be another commodity to choose from; be the option that resonates with customers.

• Leverage brand consistency – Strong brands maintain a recognisable identity across all touchpoints, from advertising to packaging to customer service.

• Create brand advocacy – Loyal customers are your best defence against price sensitivity. People who get into a pattern of buying your brand are much less likely to switch.

Final Thoughts: Tariffs are a test — Strong brands pass it

Tariffs are an economic obstacle, but they don’t have to be a death sentence for profitability. Businesses that rely on price alone will always struggle when external factors drive costs up. However, companies that have invested in their brand equity can, and will, weather these storms ; not through cost-cutting but by brand building.

Make your brand great again, and price sensitivity will shrink in the face of even the toughest economic headwinds.