Brands - introduction to Brands

A brand is a product with unique character, for instance in design or image. It

is consistent and well recognised.
The advantages of having a strong brand are:

Inspires customer loyalty leading to repeat sales and word-of mouth

recommendation
The brand owner can usually charge higher prices, especially if the
brand is the market leader
Retailers or service sellers want to stock top selling brands. With limited
shelf space it is more likely the top brands will be on the shelf than less
well-known brands.

Some retailers use own-label brands, where they use their name of the
product rather than the manufacturers like Tescos Finest range of meals and
foodstuffs. These tend to be cheaper than the normal brands, but will give the
retailer more profit than selling a normal brand.
Some brands are so strong that they have become global brands. This means
that the product is sold in many countries and the contents are very similar.
Examples of global brands include: Microsoft, Coca Cola, Disney, Mercedes and
Hewlett Packard.
The strength of a brand can be exploited by a business to develop new
products. This is known as brand extension a product with some of the
brands s characteristics. Examples include Dove soap and Dove Shampoo (both
contain moisturiser); Mars Bar and Mars Ice Cream
Brand stretching is where the brand is used for a diverse range of products,
not necessarily connected. E.g. Virgin Airlines and Virgin Cola; Marks and
Spencer clothes and food.
The logo on a product is an important part of the product. A logo is a symbol
or picture that represents the business. It is important because it is easy to
recognise, establishes brand loyalty and can create a favourable image.

Brands - Brand names

Introduction
How should brand names be chosen? Is the name important?
Marketing theory suggests that there are three main types of brand name:

(1) Family brand names:

A family brand name is used for all products. By building customer trust and
loyalty to the family brand name, all products that use the brand can benefit.
Good examples include brands in the food industry, including Kelloggs, Heinz
and Del Monte. Of course, the use of a family brand can also create problems if
one of the products gets bad publicity or is a failure in a market. This can
damage the reputation of a whole range of brands.
(2) Individual brand names:
An individual brand name does not identify a brand with a particular company.
For example, take the case of Heinz. Heinz is a leading global food
manufacturer with a very strong family brand. However, it also operates many
well-known individual brand names. Examples include Farleys (baby food),
Linda MacCartney Foods (vegetarian meals) and Weight Watchers Foods
(diet/slimming meals and supplements).
Why does Heinz use individual brand names when it has such a strong family
brand name? There are several reasons why a brand needs a separate identity
unrelated to the family brand name:
The product may be competing in a new market segment where failure could
harm the main family brand name
The family brand name may be positioned inappropriately for the target
market segment. For example the family brand name might be positioned as an
upmarket brand for affluent consumers.
The brand may have been acquired; in other words it has already established
itself as a leading brand in the market segment. The fact that it has been
acquired by a company with a strong family brand name does not mean that
the acquired brand has to be changed.
(3) Combination brand names:
A combination brand name brings together a family brand name and an
individual brand name. The idea here is to provide some association for the
product with a strong family brand name but maintaining some distinctiveness
so that customers know what they are getting.
Examples of combination brand names include Microsoft XP and Microsoft
Office in personal computing software and Heinz Tomato Ketchup and Heinz Pet
Foods.

What are the features of a good brand name?

Brand names should be chosen carefully since the name conveys a lot of
information to a customer. The following list contains considerations that
should be made before making a final choice of brand name:
A good brand name should:

Evoke positive associations

Be easy to pronounce and remember
Suggest product benefits
Be distinctive
Use numerals when emphasising technological features
Not infringe existing registered brand names

Brands - Building a Brand

What factors are important in building brand value?
Several factors are crucial in building successful brands, as illustrated in the
diagram
below:

Quality
Quality is a vital ingredient of a good brand. Remember the core benefits
the things consumers expect. These must be delivered well, consistently. The
branded washing machine that leaks, or the training shoe that often falls apart
when wet will never develop brand equity.
Research confirms that, statistically, higher quality brands achieve a higher
market share and higher profitability that their inferior competitors.
Positioning
Positioning is about the position a brand occupies in a market in the minds of
consumers. Strong brands have a clear, often unique position in the target
market.
Positioning can be achieved through several means, including brand name,
image, service standards, product guarantees, packaging and the way in which
it is delivered. In fact, successful positioning usually requires a combination of
these things.
Repositioning
Repositioning occurs when a brand tries to change its market position to reflect
a change in consumers tastes. This is often required when a brand has become
tired, perhaps because its original market has matured or has gone into
decline.
The repositioning of the Lucozade brand from a sweet drink for children to a
leading sports drink is one example. Another would be the changing styles of
entertainers with above-average longevity such as Kylie Minogue and Cliff
Richard.
Communications
Communications also play a key role in building a successful brand. We
suggested that brand positioning is essentially about customer perceptions
with the objective to build a clearly defined position in the minds of the target
audience.
All elements of the promotional mix need to be used to develop and sustain
customer perceptions. Initially, the challenge is to build awareness, then to
develop the brand personality and reinforce the perception.

First-mover advantage
Business strategists often talk about first-mover advantage. In terms of brand
development, by first-mover they mean that it is possible for the first
successful brand in a market to create a clear positioning in the minds of target
customers before the competition enters the market. There is plenty of
evidence to support this.
Think of some leading consumer product brands like Gillette, Coca Cola and
Sellotape that, in many ways, defined the markets they operate in and
continue to lead. However, being first into a market does not necessarily
guarantee long-term success. Competitors drawn to the high growth and
profit potential demonstrated by the market-mover will enter the market
and copy the best elements of the leaders brand (a good example is the way
that Body Shop developed the ethical personal care market but were soon
facing stiff competition from the major high street cosmetics retailers.
Long-term perspective
This leads onto another important factor in brand-building: the need to invest
in the brand over the long-term. Building customer awareness, communicating
the brands message and creating customer loyalty takes time. This means that
management must invest in a brand, perhaps at the expense of short-term
profitability.
Internal marketing
Finally, management should ensure that the brand is marketed internally as
well as externally. By this we mean that the whole business should understand
the brand values and positioning. This is particularly important in service
businesses where a critical part of the brand value is the type and quality of
service that a customer receives.
Think of the brands that you value in the restaurant, hotel and retail sectors. It
is likely that your favourite brands invest heavily in staff training so that the
face-to-face contact that you have with the brand helps secure your loyalty.

Brands - Brand extension and brand stretching

Marketers have long recognised that strong brand names that deliver higher
sales and profits (i.e. those that have brand equity) have the potential to work
their magic on other products.
The two options for doing this are usually called brand extension and brand
stretching.

Brand extension
Brand extension refers to the use of a successful brand name to launch a new
or modified product in a same broad market.
A successful brand helps a company enter new product categories more easily.
For example, Fairy (owned by Unilever) was extended from a washing up liquid
brand to become a washing powder brand too.
The Lucozade brand has undergone a very successful brand extension from
childrens health drink to an energy drink and sports drink.
Brand stretching
Brand stretching refers to the use of an established brand name for products in
unrelated markets.
For example the move by Yamaha (originally a Japanese manufacturer of
motorbikes) into branded hi-fi equipment, pianos and sports equipment.
When done successfully, brand extension can have several advantages:
Distributors may perceive there is less risk with a new product if it carries a
familiar brand name. If a new food product carries the Heinz brand, it is likely
that customers will buy it
Customers will associate the quality of the established brand name with the
new product. They will be more likely to trust the new product.
The new product will attract quicker customer awareness and willingness to
trial or sample the product
Promotional launch costs (particularly advertising) are likely to be
substantially lower.

Brands - Positioning and Market mapping

Once an entrepreneur has identified an appropriate segment of the market to
target, the challenge is to position the product so that it meets the needs and
wants of the target customers.
One way to do this is to use a market map (you might also see this called by
its proper name the perceptual map).
The market map illustrates the range of positions that a product can take in
a market based on two dimensions that are important to customers.
Examples of those dimensions might be:

High price v low price

Basic quality v High quality
Low volume v high volume
Necessity v luxury
Light v heavy
Simple v complex
Lo-tech v high-tech
Young v Old

Lets look at an illustrated example of a market map. The map below shows
one possible way in which the chocolate bar market could be mapped against
two
dimensions

quality
and
price:

How might a market map be used?

One way is to identify where there are gaps in the market where there are
customer needs that are not being met.
For example, in the chocolate bar market, Divine Chocolate (a social
enterprise) successfully spotted that some consumers were prepared to pay a
premium price for very high quality chocolate made from Fairtrade cocoa.
Green & Blacks exploited the opportunity to sell premium chocolate made
from organic ingredients. Both these brands successfully moved into the high
quality / high price quadrant (see above) before too many competitors beat
them to it.
The trick with a market map is to ensure that market research confirms
whether or not there is actually any demand for a possible gap in the
market. There may be very good reasons why consumers do not want to buy a
product that might, potentially, fill a gap.

B ran d s - Typ e s o f B ran d

Types of brand
There are two main types of brand manufacturer brands and own-label
brands.

Manufacturer brands
Manufacturer brands are created by producers and bear their chosen brand
name. The producer is responsible for marketing the brand. The brand is owned
by the producer.
By building their brand names, manufacturers can gain widespread distribution
(for example by retailers who want to sell the brand) and build customer
loyalty (think about the manufacturer brands that you feel loyal to).
Own label brands
Own-label brands are created and owned by businesses that operate in the
distribution channel often referred to as distributors.
Often these distributors are retailers, but not exclusively. Sometimes the
retailers entire product range will be own-label. However, more often, the
distributor will mix own-label and manufacturers brands. The major
supermarkets (e.g. Tesco, Asda, Sainsburys) are excellent examples of this.
Own-label branding if well carried out can often offer the consumer
excellent value for money and provide the distributor with additional
bargaining power when it comes to negotiating prices and terms with
manufacturer brands.
Why should businesses try to build their brands?
There are many advantages to businesses that build successful brands. These
include:

Higher prices
Higher profit margins
Better distribution
Customer loyalty

Businesses that operate successful brands are also much more likely to enjoy
higher profits.
A brand is created by augmenting a core product with distinctive values that
distinguish it from the competition. This is the process of creating brand value.
All products have a series of core benefits benefits that are delivered to all
consumers. For example:
Watches tell the time
CD-players play CDs

 Toothpaste helps prevent tooth decay

Garages dispense petrol.
Consumers are rarely prepared to pay a premium for products or services that
simply deliver core benefits they are the expected elements of that justify a
core price.
Successful brands are those that deliver added value in addition to the core
benefits.
These added values enable the brand to differentiate itself from the
competition. When done well, the customer recognises the added value in an
augmented product and chooses that brand in preference.
For example, a consumer may be looking for reassurance or a guarantee of
quality in a situation where he or she is unsure about what to buy. A brand like
Mercedes, Sony or Microsoft can offer this reassurance or guarantee.
Alternatively, the consumer may be looking for the brand to add meaning to his
or her life in terms of lifestyle or personal image. Brands such as Nike, Porsche
or Timberland do this.
A brand can usefully be represented in the classic fried-egg format shown
below, where the brand is shown to have core features that are surrounded (or
augmented) by less tangible features.

Brand Equity
The value premium that a company realizes from a product with a
recognizable name as compared to its generic equivalent. Companies can
create brand equity for their products by making them memorable, easily
recognizable and superior in quality and reliability. Mass marketing
campaigns can also help to create brand equity. If consumers are willing to
pay more for a generic product than for a branded one, however, the brand is
said to have negative brand equity. This might happen if a company had a
major product recall or caused a widely publicized environmental disaster.
The additional money that consumers are willing to spend to buy Coca Cola
rather than the store brand of soda is an example of brand equity.
One situation when brand equity is important is when a company wants to
expand its product line. If the brand's equity is positive, the company can
increase the likelihood that customers will buy its new product by
associating the new product with an existing, successful brand. For example,
if Campbells releases a new soup, it would likely keep it under the same
brand name, rather than inventing a new brand. The positive associations
customers already have with Campbells would make the new product more
enticing than if the soup had an unfamiliar brand name.