From manufacturer’s point of view:
Means of identification to simplify handlingMeans of legally protecting unique featuresSignal of quality level to satisfied customersMeans of endowing products with unique associationsSource of competitive advantageSource of financial returnsBrands help manufacturers to organize inventory and accounting records. A brand also offers thefirm legal protection for unique features of the product. A brand can retain intellectual propertyrights, giving legal title to the brand owner. Brands can signal a certain level of quality so thatsatisfied buyers can easily choose the product again. This brand loyalty provides predictabilityand security of demand for the firm and creates barriers of entry that make it difficult for otherfirms to enter the market.
The annual list of the world’s most valuable brands, published byInterbrand and
Business Week,indicates that the market value of companies often consists largely of brand equity. Research byMcKinsey & Company, a global consulting firm, in 2000 suggested that strong, well-leveragedbrands produce higher returns to shareholders than weaker, narrower brands. Taken together, thismeans that brands seriously impact shareholder value, which ultimately makes branding a CEOresponsibilityCompanies sometimes want to reduce the number of brands that they market. This process isknown as "Brand rationalization." Some companies tend to create more brands and productvariations within a brand than economies of scale would indicate. Sometimes, they will create aspecific service or product brand for each market that they target. In the case of productbranding, this may be to gain retail shelf space (and reduce the amount of shelf space allocated tocompeting brands). A company may decide to rationalize their portfolio of brands from time totime to gain production and marketing efficiency, or to rationalize a brand portfolio as part of corporate restructuring.
Customer Based Brand Equity
Customer based brand equity model is that the power of a brand lies in what customers havelearned, felt, seen, and heard about the brand as a result of their experience over time. Customer-based brand equity is defined as the differential effect that brand knowledge has on consumerresponse to the marketing of that brand. There are three key ingredients of this definition: (1)
(2) “brand knowledge,” (3) “consumer response to marketing.”
Brand Equity as a Bridge