Understanding Branding


By

Vivek Joshi
Senior Lecturer
Department of Business
Manipal University Dubai Campus
Block #7 International Academic City Dubai
United Arab Emirates
 


What is a brand?

Brands were originally developed as labels of ownership: name, term, design, and symbol.

In functionality and contextually they are proprietary visual, emotional, rational, and cultural image that you associate with a company or a product. When you think Volvo, you might think safety. When you think Nike, you might think of an advertising campaign prompting "Just Do It." When you think IBM, you might think "Big Blue." Or "Yeh Dil Mange More" of Pepsi. The fact that you remember the brand name and have positive associations with that brand makes your product selection easier and enhances the value and satisfaction you get from the product.

With time, the definition, the functions, or the essence of brand has changed. However, today it is what they do for people that matters much more, how they reflect and engage them, how they define their aspiration and enable them to do more. The objective of brand has become more of emotional and psychological than that of mere recognition and differentiation for which the concept of brand came into existence.

Powerful brands can drive success in competitive and financial markets, and indeed become the organization's most valuable assets. Marketers engaged in branding seek to develop or align the expectations behind the brand's experience, creating the impression that a brand associated with a product or service has certain qualities or characteristics that make it special or unique.

Brand Management

A powerful tool like a brand cannot be created in a vacuum or from thin air. It requires to follow certain principles and should have a developed procedure along with well-supplemented research base.  All these discussed issues make branding a real art, which uses well-defined and established principles but can be refined as well as mastered by practice. It is something that influences all of us in several ways and leaves a deepening impact on all of us. 

This art of creating and maintaining a brand is called brand management. Brand management is a philosophy and a total approach to managing companies, and as such includes much about changing minds. Brand management starts with understanding what 'brand' really means. This starts with the leaders of the company who define the brand and control its management. It also reaches all the way down the company and especially to the people who interface with customers or who create the products that customers use. Brand management performed to its full extent means starting and ending the management of the whole company through the brand. It is a comprehensive effort and requires commitment, support and contribution from everybody in the company.

One of the key tasks of Brand Management is development of brand's image. A brand image may be developed by attributing a "personality" to or associating an "image" with a product or service, whereby the personality usually a celebrity or image is "branded" into the consciousness of consumers. A brand is therefore becomes one of the most valuable elements in an advertising theme. The personality and theme, visuals and even the appeal selected revolves around the image and helps in integrating, promoting and communicating the image to the targeted audiences.

What makes up a brand identity?

Brand identity includes brand names, logos, positioning, brand associations, and brand personality. A good brand name gives a good first impression and evokes positive associations with the brand.

A positioning statement tells, in one sentence, what business the company is in, what benefits it provides and why it is better than the competition.

Brand personality adds emotion, culture and myth to the brand identity by the use of a famous spokesperson (Sharukh Khan – Hyundai Santro), a character (the Nirma Girl or Amul Girl), an animal (the Merrill Lynch bull) or an image (Hum Hai Na - ICICI).

Brand associations are the attributes that customers think of when they hear or see the brand name. McDonalds television commercials are a series of one brand association after another, starting with the yellow arches, a family entering the restaurant, a children's party, lots of fun and following with associations of Good Quality reasonably priced Burgers, Ronald McDonald, kids, Happy Meal, consistent food quality, etc.

How do we determine our brand identity?

Brand has been called the most powerful idea in the commercial world, yet few companies consciously create a brand identity. It is advised to senior executives, CEOs and small-scale enterprise owners to research their customers and find the top ranked reasons due to which customers buy their products rather than their competitors. Then, pound that message home in every ad, in every news release, in communications with employees and in every sales call and media interview. By consistent repetition of the most persuasive selling messages, customers will think of you and buy from you when they are deciding on whether to buy from you or your competitor.

The brand can add significant value when it is well recognized and has positive associations in the mind of the consumer. This concept is referred to as brand equity.

What is Brand Equity?

Brand equity is an intangible asset that depends on associations made by the consumer. There are at least three perspectives from which to view brand equity:

  • Financial - One way to measure brand equity is to determine the price premium that a brand commands over a generic product. For example, if consumers are willing to pay Rs. 100 more for a branded product over the unbranded product, this premium provides important information about the value of the brand. However, expenses such as promotional costs must be taken into account when using this method to measure brand equity.
  • Brand extensions - A successful brand can be used as a platform to launch related products. The benefits of brand extensions are the leveraging of existing brand awareness thus reducing advertising expenditures, and a lower risk from the perspective of the consumer. Furthermore, appropriate brand extensions can enhance the core brand.
  • Consumer-base - A strong brand increases the consumer's attitude strength toward the product associated with the brand. Attitude strength is built by experience with a product. The consumer's awareness and associations lead to perceived quality, inferred attributes, and eventually, brand loyalty.

Strong brand equity provides the following benefits:

  • Facilitates a more predictable income stream (higher profitability).
  • Increases cash flow by increasing market share, reducing promotional costs, and allowing premium pricing.
  • Brand equity is an asset that can be sold or leased.

However, brand equity is not always positive in value. Some brands acquire a bad reputation that results in negative brand equity. Negative brand equity can be measured by surveys in which consumers indicate that a discount is needed to purchase the brand over an unbranded product. Continuous fall in sales is the biggest indication of negative brand equity. This may happen due to out-dated product, low quality of product, poor image or communication and better brand and image of competitor's product.

Brand Elements

Brand elements are the components or constituents of brand that are designed and put together to strengthen brand's image. Any brand will consists of following elements:

  • Brand name and logo
  • Symbol and character
  • Packaging
  • Slogan
  • There are five criteria to judge whether these are good brand elements:

  • The recall value of Brand name should be high. It should be simple, easy to pronounce and easy to understand. It should create a connection between the need of the consumer and the product. The brand name should also connote what does product stands for.
  • The symbol and character being used as brand elements should also gel well with product features and characteristics and they should be in good term to identify the product with.
  • In addition, the transferability of brand elements should be high. It should provide company with a viable option to create brand extension or brand line expansion or it should generate sufficient recognition for the company.
  • The logo, symbol, packaging, slogan all should be catchy and flexible over time. They should not look time beaten neither they should be changed frequently. There should be some consistency and they should be used for several years before they are changed. They should represent what the company, the brand stands for, and they should communicate a unified message that depicts or supports the brand image. The elements should have adaptability and should be able to change as per demand of time and consumers.
  • Brand name, logo, symbols, packaging indentations etc. all should be protected, use of registered trademark. Intellectual property protection is the fifth criteria.

Brand Attributes

Brand attributes are functional or emotional associations that are assigned to a brand by its customers and prospects. Brand attributes can be either negative or positive and can have varying degrees of relevance and importance to different customer segments.

Examples of Brand Attributes:

  • Influential
  • Innovative
  • Inclusive
  • Relevant
  • Connecting
  • Leadership
  • Humane

Is branding just for large companies?

NO! It is one of the myths that only large business house or the player in an industry with excess competition needs a brand.  Branding is something that every one needs and can be applied to any business, organization or product. The techniques of branding have been kept secret for many years because it provided a competitive advantage to those companies that used it or devoted regular cash flow streams towards this effort. Retailers, service businesses, manufacturers and businesses of all types and sizes, can use this process rather they should do it and they should consider branding expenditure as long-term investment or a capital investment, which will fetch them hefty returns in long time frame.

BRAND ENCOUNTERS and STRATEGIES of WAR

Established brand manufacturers are facing increasing challenges from competitors entering the market with extremely aggressive prices. Whether imports from the Far East or store brands from major retail chains, the no-name players can pose a severe threat. All of them put branded manufacturers' margins under pressure. Further, high-quality no-names can decrease the perceived value of the branded entries, while poor-quality no-names can taint consumers' perception of the entire category. Either way, the brand name alone can no longer justify any price differences unless there are some significant physical or attributive differences visible. Game of positioning using Unique Selling Preposition (USP) as a tool is no longer validated.

Brand manufacturers traditionally have reacted by significantly reducing their prices or by taking no action-both of which are hard to sustain for an extended period of time. The no-reaction strategy can lead to a situation where the branded manufacturers are pushed into a high quality, high-price niche while ceding the bigger part of the market to the price competition. However, lately a third alternative is gaining popularity: a two-product, or even a two-brand, strategy. By adding a lower-priced "fighting" line targeted directly at cost-conscious consumers, the manufacturers aim to drive the low-price competitors from the market, or at least weaken their position.

To bring home the point we can look at case of competition between Coke and Pepsi where to compete against Coke Pepsi has launched Mountain Dew, a less recognised brand of the time which made mockery of Coke's advertising and later Coke retaliated with Sprite, using punch line "Sprite sirf bujhaye pyaas baki all bakwaas."

Before this HLL to safe, its brand 'Surf' from powerful and low-priced detergent player 'Nirma' launched another brand called 'Wheel.' This has helped Hindustan Lever Limited to protect its loosing market share.

To pull off that trick, manufacturers must take care to differentiate the two products enough to minimize cannibalization. If the lower-positioned product is sold under the same brand as the top product, its price can be 10-15% above the no-names' price. In most cases, the price difference between the two products is 30-40%.

For devising such effective strategies Marketing Information Systems and research agencies are very helpful certain tools such as conjoint measurement can provide data that, once fed into market simulation models, can be used to set the correct pricing strategy by taking into account possible competitive reactions, different product alternatives and other factors.

The fighting line also must be of lower quality than the top product, without moving below either the acceptance barrier or the no-names' quality level. The performance reduction in factors such as product life, warranty, power, packaging and service is necessary to justify the price difference, insure that the fighting product has significantly lower cost, and limit the threat of cannibalization.

Where no-names already have conquered a significant share of the market, it often makes sense to sell the fighting line under the same brand as its higher-value sibling. Effective example for this game plan is Nestlé's NESCAFÉ and Lifebuoy's brand extensions.

However, this strategy must be executed by sharply differentiating the low-end brand from the premium brand without slipping low enough to jeopardize the overall brand equity. Using the premium brand for both products will also work if each product is the premium product in its specific segment.

By contrast, it may be more effective to employ a different brand for the fighting line to combat no-names that are just entering the market, or to discourage them from entering in the first place. A two-brand strategy also reduces market transparency, making strategic marketing moves harder to identify and thus hindering competitive reactions, and it increases flexibility and reduces cannibalization between the two lines.

Conclusion

Brands are good for businesses, big or small but they are needed to be cultivated with patience. They need proper care and conviction from the top management. Brands may help in generating incremental revenue and in creation of an identity for the business or market offering of the company. Brand is a small word but with big connotations to it and it brings brand personality, brand attributes, brand equity, brand elements etc. in its purview and this makes brand management a difficult task.

Brands are attacked in order to gain market share and this battle is dangerous yet rewarding and interesting if fought with well chalked out strategy. A word of caution brands are good for businesses though presenting a challenging task but they need to be managed well and well invested into as any mistake by organization may create a negative impact and a good potential brand may end up being a tainted brand.

References

Aaker, David A. (1991), Managing Brand Equity. New York, NY: The Free Press.

Aaker, David A. (1996), Building Strong Brands . New York, NY: The Free Press.

Dyson, Paul, Andy Farr, and Nigel S. Hollis (1996), "Understanding, Measuring, and Using Brand Equity," Journal of Advertising Research, 36(6): 9-21.

Lehmann, Donald R. and Yigang Pan (1994), "Context effects, new brand entry, and Consideration sets," Journal of Marketing Research, 31(August): 364-374.

Gourville, John and Dilip Soman (2005), "Over choice and Assortment Type: When and Why Variety Backfires," Marketing Science, 24(3) 382-395.
 


Vivek Joshi
Senior Lecturer
Department of Business
Manipal University Dubai Campus
Block #7 International Academic City Dubai
United Arab Emirates
 

Source: E-mail January 17, 2008

          

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