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categories: search goods, experience goods and credence goods.There is difficulty in assessing and interpreting product attributesand benefits so with experience and credence goods, brands maybe particularly important signals of quality. Brands can reduce therisk in product decisions. These risks involve functional, physical,financial, social psychological and time risk.
From manufacturer’s point of view:
Means of identification to simplify handling
Means of legally protecting unique features
Signal of quality level to satisfied customers
Means of endowing products with unique associations
Source of competitive advantage
Source of financial returnsBrands help manufacturers to organize inventory and accounting records. Abrand also offers the firm legal protection for unique features of the product. Abrand can retain intellectual property rights, giving legal title to the brand owner.Brands can signal a certain level of quality so that satisfied buyers can easilychoose the product again. This brand loyalty provides predictability and securityof 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 by
andBusiness Week, indicates that the market value of companies often consistslargely of brand equity. Research by McKinsey & Company, a global consultingfirm, in 2000 suggested that strong, well-leveraged brands produce higherreturns to shareholders than weaker, narrower brands. Taken together, thismeans that brands seriously impact shareholder value, which ultimately makesbranding a CEO responsibilityCompanies sometimes want to reduce the number of brands that they market.This process is known as "Brand rationalization." Some companies tend to createmore brands and product variations within a brand than economies of scalewould indicate. Sometimes, they will create a specific service or product brandfor each market that they target. In the case of product branding, this may be togain retail shelf space (and reduce the amount of shelf space allocated tocompeting brands). A company may decide to rationalize their portfolio of brandsfrom time to time to gain production and marketing efficiency, or to rationalize abrand portfolio as part of corporate restructuring.