A brand is a term used to identify its products; while branding is the practice of identifying a product or line of products by a special name or symbol. Its use goes back to the middle ages for promoting sales. It is said that Egyptians were using some or other identification to market their pottery. The continued use of brands to the present times in business has been largely due to:
- Growth in competition.
- Growth of national and local advertising.
- Growth of packaging and
- The development of consumer brand consciousness.
Such sales promotion devices are intended:
- To gain recognition for their products.
- To bring about a certain amount of consumers preference and
- To so firmly fix the product in the mind of the buyer that he will believe that it is the only one which will satisfy his wants and as a result will refuse to accept a substitute.
A brand is a name, term, symbol, or design, or a combination of them which is intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of the competitors. – American Marketing Association
A brand name consists of words, letters and/or members which may be vocalized; and refers to products. Ambassador, Tata, TCS are examples of brand names.
Brand names should not be confused with trade names, where brand refers to product, trade name refers to company. The name of the firm is its trade name. The brand name can come from its trade name.
In recent years, the debate about the value of brands has been crystallized in the phrase “brand equity” except that crystallized is probably the wrong word, since the concept is anything but sharp and crystal clear.
The phrase is used in varying ways, and seldom precisely.
Let us start then one attempt to be clear. Aaker defines brand equity as: a set of assets and liabilities linked to a brand, its name and symbol, that add value or subtract from the value provided by a product or service to a firm and/or to that firm‟s customers. He explains further that these assets and liabilities can be grouped under five categories:
- Brand loyalty
- Name awareness
- Perceived quality
- Brand associations in addition to perceived quality and
- Other proprietor y brand assets – patents, trademarks and channel relationships.
Concepts and criteria
It should not be forgotten that branded goods, to be useful, must be distinctive. Its name must only be used in connection with one grade, quality and style of product. Unless strict similarity in these in maintained, the buying public will soon find out that the brand name or trade mark has no particular meaning and will always be suspicious in future.
A brand therefore has got some value. Its value must come from the article. Advertising simply makes it popular and gives it permanent value. When a man buys a branded article, especially one that is new, he is critical. He uses it and forms his own opinion of it. If he likes it he will continue to purchase and he if he dislikes it, he will avoid further buying and will tell his friends not to waste money on it. This is called self-advertisement of a particular brand.
For consumers brands make it easy to identify goods or services. They aid shoppers in moving quickly through a supermarket, discount outlet or other retail store and in making purchase decisions. Brands also help assure consumers that they will get consistent quality when they reorder. 209
For sellers, brands can be promoted. They are easily recognized when displayed in a store or included in advertising. Branding reduces price comparisons. That is, because, brands are another factor to be considered in comparing different products, branding reduces the likelihood of purchase decisions based solely on price. The reputation of a brand also influences customer loyalty among buyers of services as well as business and consumer goods. Finally branding can differentiate commodities.
Not all brands are widely and favorably recognized by their target markets. And among those that are, many are unable to maintain a position of prominence. However as a result of such activities as aggressive promotion and careful quality control a few brands retain their leadership positions over a long time. Consequently, enormous amounts of money are spent to purchase companies that have widely recognized brands.
Criteria for measuring brand loyalty
Brand loyalty could be measured simply by the number of purchases that a brand obtained in a certain number of purchase occasions. More modern measures are also available that involve models that examine the pattern of purchases one brand receives versus another. The following criteria is used to measure brand loyalty.
- number of times the same brand is purchased by the buyer.
- popularity of the brand.
- frequency of the buyers in making repeat purchases.
- word-of-mouth communication in spreading the name of the brand.
Managing a portfolio of brands
Most companies have more than one brand; often they have more than one brand in a single product field. Each brand needs to be managed separately, but they also need to be managed together to avoid sub optimization.
The ideal situation is that each brand takes as many sales as possible away from competitors, but takes as few as possible from, other brands. If each brand appeals to a completely separate segment from all others, there is no problem. Unfortunately, segments are rarely watertight and targeting is at best an inexact science.
Careful segmentation and positioning are the usual approach, and with constant refinement they can work well. Normally a firm with several brands in a product field will offer :
- A premium brand i.e. One that offers high quality and price ;
- One or more “flanker brands” offering either a value proposition (i.e., lower price for slightly lower quality) or a different set of benefits; and
- Possibly a “fighting brand” to compete with the own label.
The main brand should occupy the center of the defined market, in the segment containing the most consumers. Other brands can then be used either to increase total market share – by appealing to other segments – or as blockers to present competitors taking over those positions. If the central position is already occupied by a very strong competitor, it may not take sense to attack it head on, but to use flanking brands as the main assault.
A more recent name for arranging the portfolio is “category management”. This means developing a strategy for the category as a whole rather than for individual brands separately and may include own label products packed for retailers. This has some appeal, and is often welcomed by the retailers themselves. This should make any company suspicious and indeed one of the dangers of category management is that, in the short term, it is usually easier to maintain or increase sales by meeting retailers demands than by concentrating on owned brands.
There is a tendency for the own label or brands designed especially for the retailer, to be given greater prominence than the manufacturers brands. Unless this tendency is resisted, the brands will gradually decline. The retailer is also not being entirely altruistic in accepting the manufacturers‟ offer of help in category management; since it involves considerable data collection, analysis, planning and monitoring, it is useful to have someone on the supplier’s pay roll do it rather than attempting it on one’s own.
Advertising, promotion and the brand
By now it is clearly understood that the role of advertising and promotion in fast moving consumer good markets. Advertising has been seen as one of the primary tools of brand building. The high cost and difficulties of mass advertising are seen as one of the major challenges to fast moving consumer good brands.
Do all brands need advertising?
The basic assumption is that brands need advertising but some strong brands apparently do not. Spencer used to spend almost nothing on advertising, yet it was an enormously powerful brand. The body focus seems to have built up a distinct brand personality without heavy advertising. Of course, both these are retailers; they have stores which people pass by go into. The stores themselves are – in their way – advertising, and it is difficult to think of major brands other than retailers that have done without advertising.
It is extremely difficult to adjust brand reputations without controlled communications – both. It is noticeable that in early 1990s when Spencer was in serious trouble, it started to use advertising to help recover its reputation. There are niche brands that have built up a reputation by word of mouth, or by making sure that they were newsworthy. Sometimes they achieve this through public relations, at other times they achieve it just by being controversial and there are many ways in which a brand can try to become famous.
We can safely make three statements about brand communication :
- Every brand must have some means of communicating with its buyers. This may not be advertising, but it must be direct if it is to be controllable.
- Many other methods of communication are available, and can be used to gear up and multiply the effects of advertising. Newsworthiness and fame can be achieved, but the message has to be one that is really new and interesting.
- All the means of communication and the messages transmitted must be co-ordinated to make some that they are saying the sense thing, confused consumers don’t buy.
What can advertising do ?
So much money is spent on advertising, by so many bright people, that it is not surprising that theories abound as to what it does and how it does it. Sadly, most of these are based on myth and personal experience rather than hard, scientific evidence.
Large, sophisticated companies – the Hindustan lever, Procter and gamble – have been working for decades on the problem. Any firm that really wishes to find out how advertising works for them must commit itself to the same sort of long-term experimentation, data collection and model building that the organisations have. Ready – mode solutions are not likely to be of more than general help.
Advertising elasticity’s – that is the measure of how sales change in response to a change in advertising spend – are low. There are significant in 35 per cent of cases for established brands and 55 per cent of cases for new brands. The findings show that :
- In two-thirds of campaigns for existing brands and almost half those for new brands, the advertising does not significantly affect sales and
- Short term advertising elasticities can be measured but they are likely to be very small.
Advertising effects are weaker in unambiguous product fields and stronger where products are new and / or ambiguous.
Long term effects may last two or three years after the initial campaign, so where advertising does produce a sales effect, its profitability should be measured over that period. Even if advertising produces no sales increase, it may be contributing to the maintenance of brand share or building up brand equity.