Mobile phones are an example of a modern product, but Apple is an example of a brand. What is the difference? Is there anything that distinguishes typical smart phones from the iPhone made by Apple?
What is a brand?
A brand refers to a name that is identifiable with a product of a particular business.
A brand can be a name, term, logo, symbol, sign, phrase, font, design or color – or any combination of these – that identifies the product (items or services) of the seller service within particular markets.
For example, Microsoft’s brands include Windows, Hotmail, Explorer, MS Word, MS Excel and MS PowerPoint.
A brand is used to identify and to differentiate the products of one seller from products of competitors. Therefore, brands distinguish some products from other products.
A brand can be expressed in the following ways:
- Brand Name: Brand name is the unique name of a product that distinguishes it from other brands.
- Trade Name: It is a commercial, legal name under which a company does business. For example, the Campbell Soup Company is the trade name of that firm.
- Trademark: It identifies that a firm has legally registered its brand name or trade name, so the firm has its exclusive use, thereby preventing others from using it. A trademark gives legal protection to the owner to have exclusive use of the brand name.
In other words, a brand is mixture of tangible and intangible attributes symbolized in a trademark.
Example 1: The FedEx logo appears to be very simple, but if you look at the white space between the ‘E’ and ‘x’ in ‘Ex,’ you will find it is more complex than you thought. Can you spot the arrow?
Example 2: Amazon.com has become a go-to source for electronic commerce. Clearly there is an arrow under Amazon, but have you ever thought about its significance? Take a look at where the arrow begins and ends: a and z. This secret message seems to convey that Amazon offers everything from A to Z!
Example 3: In the Toblerone logo, there is a slightly obscured bear within the Matterhorn Mountain, if you look closely. That’s because the candy bar hails from Bern, Switzerland, a city supposedly named for a bear.
The rule of thumb among communications specialists is that about 80% of all human communication is non-verbal, and indeed, much of the meaning of verbal language itself is determined by nonverbal cues. Research shows that approximately 93% of the meaning contained in any message is non-verbal.
Furthermore, visual representations are processed differently than verbal messages and are not subject to the same logical scrutiny and counter arguments and as a consequence, brand images such as logos and symbols are more likely to be internalized, with the increased potential of affecting attitudes and behavior.
This is why firms are prepared to spend so much money of rebranding exercises and updating and modernizing logos.
What is branding?
The term ‘branding’ originated when cowboys were using of a hot iron to leave a mark on livestock to prove ownership into a particular landowner.
Branding differentiates the brand name from the competitors’ brand names.
Branding is the process by which companies distinguish their product offerings from the competition. It is the way in which a firm differentiates itself and its products from those of their rivals.
Branding usually focuses on the qualities of the product. Branding is a form of differentiating a firm’s products from those of its competitors.
Roles of branding
There are many roles of branding which are both important and necessary for marketing managers to recognize and acknowledge:
- Legal instrument. Brand names create a legal identity for a product by giving it a unique and recognizable name and image to differentiate it from other products. Therefore, branding gives lawful ownership to the business and protects it from imitations as the name and logo may not be copied by competitors.
- Product identifier. The brands with a strong visual identity allow customers to identify products quickly in a market environment. So people can visually recognize the brand from its name, term, logo, symbol, sign, phrase, font, design or color. Brands can also provide sensory stimulation and auditory recognition to enhance customer awareness through sound, conversations with other customers who talk about the brand or slogans.
- Risk reducer. Brands can give new products a better chance of survival in the marketplace as they can create a sense of value for money. Brands also help to prolong the life cycle of a product because customers tend to remain devoted to the purchase of brands that they know and have positive brand associations. As branding encourages loyalty – loyal customers are less likely to switch to competing brands – increased revenues and market share are based on brand loyalty. Branding also reduces the level of perceived risk proving that it is a genuine product; therefore it is easier to determine product quality.
- Image enhancer. Some businesses use branding to create luxury image for their products permitting premium pricing as as customers are prepared to pay for the added value that the high-end brands carry, such as superior quality, unique design, personalized service, or exclusivity. Purchasing decisions are very often not simply based on the price or functions of a product, but on the feeling of being associated with owning a particular brand. Good image also allows the business to attract and retain high quality employees who like to be associated with a successful brand, and therefore successful organization.
- Revenue earner. When customers perceive the brand as superior to other brands, they will not tend to buy substitute products. Hence, branding can encourage brand loyalty meaning that customers have a preference over buying other brands. This allows charging a proportionately higher price without losing customers. Consequently, this means that the business is able to earn higher sales revenues. Branding as a sales generator reduces the price elasticity of demand as the demand from consumers for the firm’s product is less sensitive to changes.
Example 4: Maintaining a strong brand presence can have very beneficial results in terms of the perceived value of a product, customer loyalty and therefore sales. Careful monitoring and investment can allow the maintenance of brand leadership even as a product moves through it product lifecycle. A good example of a product that has maintained a high profile brand is KitKat, maintaining market leadership for over 60 years.
Benefits of branding
There are many benefits associated with building strong brands. The main four benefits of branding include:
- Price advantages. Businesses that sell commodities – homogeneous products such as wheat, bananas or potatoes – can only charge low prices for their product as there are plenty of substitutes. However, as branding adds value to unbranded products, it allows a business to charge higher prices because customers are willing to pay a substantially higher price for goods brands. Additionally, when customers are prepared to pay a premium price for a perceived additional benefit of the brand over its competitors, hence they have lower price sensitivity which reduces Price Elasticity of Demand (PED).
- Higher profitability. When businesses are able to effectively charge premium prices for branded products, they gain from improved profitability because the business is able to earn higher profit margins. High-class image as well as the option to extend distribution into overseas markets can ultimately boost sales of the business leading to increased profitability.
- Recognition and loyalty. Customers feel more comfortable buying brands that they are familiar with. Brand recognition and brand awareness are source of competitive advantage as there is a greater chance of the products being sold. Brand loyalty encourages repeated purchases serving as a high barrier to entry making it difficult for new firms to enter the market.
- Distribution advantages. Successful branding improves placement of a firm’s products. When retails space is limited, vendors insist on stocking only the best-selling brands. They convey information and value for the buyers reducing search time and shopping time when customers can easily identify preferred products.
What happens without branding?
Without the brand, the product is just a commodity. Businesses that invest in and sustain leading brands prosper whereas those that fail are left to fight for the lower profits available in commodity markets.
However, developing a well-known and respectable brand is very expensive for the firm and may take many years. Honestly, most brands actually fail to ever become established in the marketplace, whilst many other existing brands constantly need regular investment and must keep evolving to survive.
In summary, the main functions of branding are to differentiate the product from rivals, aid identification, segment the market, reduce the amount of persuasive selling effort required and create customer loyalty.
And the precise marketing function of brands provides the product with identity and aids identification by the customer, is a shorthand summary of all info customers hold about the product and provides a sense of security, reassurance of quality of the goods.
Additionally, it adds to the value giving it more appeal and is intended to help create and sustain loyalty
