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.
Definition of Brand
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.
Brand Equity
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 €Ÿs 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 €Ÿ 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.
There is a Price Paradise
The standard model of advertising and the brand suggests that a strong brand is less sensitive to price than a weaker one. When advertising increases sales, the average sensitivity to price also increases. In other words, a seemingly successful campaign has made buyers more sensitive to price, where as we would expect our brand buyers to be, if anything, less sensitive.
What can Promotion Do?
Like advertising, promotion can do more things than just affect sales. First it can induce consumers to try a product ; because trial is hugely important in producing market share, anything that increases it is invaluable. A successful promotion that induces new triers to buy is therefore a vital weapon. It is then upto the performance of the product itself — and the subsequent actions of the rest of the marketing mix — to persuade that buyer to continue buying.
Promotion can also create excitement. In any crowded market place, you need to stand out. One way of doing this apart from advertising is having occasional creative promotions. Finally promotions can produce a trade push ; if advertising produces consumer pull, the trade promotion ought to produce channel push i.e. pushing products into the distribution chain and relying on the channel members to sell them on.
There is a potentially much more deadly long-term effect of too much promotion — the subconscious, message that constant promotion sends to consumers. Constant promotion may devalue the brand, sending almost the opposite message to the one you want to send.
Integrating Advertising and Promotions
The answer to the problem of conflicting communications must be to integrate advertising and promotion. There are two common sense reasons for integration.
The first reason is that integration creates synergy. This is a much — abused word, but the evidence shows clearly that advertising and promotion can work together to produce a greater effect. In addition, the integration of advertising and promotion gives the consumer a coherent message. If advertising and promotion are to achieve synergy and to build a cumulative effect in consumers €Ÿ minds, they must be mutually consistent.
Planning Advertising and Promotion
The advertising and promotion plan is only one part of the overall marketing plan and must fit within it. In order to start the advertising plan, we need some background — which is not a very formal restrictive planning, but for a process of thinking through what the advertising and promotion are trying to achieve.
From the brand plan we should expect to find the following elements.
- a situation analysis (where we are and why)
- objectives (what the brand is aiming for in sales, share and other targets)
- positioning (how the brand is positioned in the consumer’s mind, and how we wish to change this);
- strategy (how the brand is going to compete in this market)
- advertising strategy (what role advertising has next period with in the overall strategy) and
- budget (what moneys are available to spend on advertising promotion).
Advertising objectives must include long-term brand building. They may of course also include shorter-term tasks such as announcing a new variation or promotion. Promotions should be integrated into the overall marketing process. Irrelevant promotions may harm the brand. Good practice sees the objectives of promotions set at the beginning and in the context of the communications strategy, so that suitable, relevant promotions consistent with the brand’s values can be planned. Promotions agencies are very good at coming up with ideas, as are advertising agencies, but the ideas must contribute to, and express, the brand’s values.
Leveraging Brand Values for Business and Non-business Contexts
The reputation of the brand is a source of demand and lasting attractiveness, the image of superior quality and added value justifies a premium price. A dominant brand is an entry barrier to competitors because it acts as a reference in its category. The brand can enter other markets when it is well known, is a symbol of quality and offers a certain promise which is valued by the market. The Palmolive brand name has become symbolic of mildness and had been extended to a number of markets besides that of soap, for example shampoo, shaving cream and washing up liquid.
In determining the financial value of the brand, the expert must take into account the sources of any additional revenues, which are generated by the presence of a strong brand. Additional buyers may be attracted to a product which appears identical to another but which has a brand name with a strong reputation. If such is the company’s strategy the brand may command a premium price in addition to providing an added margin due to economies of scale and market domination. Brand extensions into new markets can result in royalties and important gearing effects. To calculate this value it is necessary to subtract the costs involved in brand management; the costs involved in quality control and investing in r & d, the cost of national, indeed international sales force, adverting costs, the cost of a legal registration and the cost of capital invested.
The financial value of the brand is the difference between the extra revenue generated by the brand and the associated costs for the next few years, which are discounted back to today. The number of years is determined by the business plan of the values. The discount rate used to weigh these future cashflows is determined by the confidence or the lack of it that the investor has in his forecasts. However, a significant fact is that the stronger the brand, the smaller the risk. Thus future net cash flows are considered more certain the stronger the brand.
The following are the three generations of profit of the brand ;
- The acceptable price premium
- The differential of alteration and loyalty and
- The differential of the margin
These gearing effects work on the original market for the brand but they can be offered subsequently in a variety of forms on other markets and for other product categories, either through direct brand extension or through licensing from which the manufacturer benefits from royalties.
Once these generations are measured in rupees or any other currency they may serve as a base for evaluating the marginal profit which is attributable to brand management. Now-a-days a key element of brand equity is understanding and adapting to the logic of distributors and developing good relations with the channels.
The value of the brand and the legitimacy of a company implementing brand policy, depends on the difference between the marginal revenues coming from the generators of profitability and the necessary marginal costs associated with brand management.
Brand Values for Non-business Organizations
Most of the marketing examples are generally drawn from the business sector. Starting in 1990s, there has been a broadening of marketing to cover all organizations. All organizations have marketing problems and need marketing skills. The non-profit and public sectors account for more than a quarter of the Indian economy and are in great need of management and marketing skills.
Many non-business organizations — college, hospitals, social service organizations, charities, museums, government agencies, trusts — are experiencing difficult times. They are losing clients on the one hand and finding it more difficult to raise public and private funds on the other hand.
Many are being forced to charge fees for formerly free services to earn extra income. In certain cases, commercial businesses are complaining about unfair competition from the non-profits.
All of this has increased the interest of non-profits in the area of marketing. Many non-business organizations are vying with each other to promote their brand value in the market. They use brand as a tool to mobilize finds from the public to fulfill their objectives.