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Joseph Arthur Rooney
Introduction Organizations are using branding as a strategy tool in today’s business environment with increasing regularity. Although brands and branding are not new ideas, firms are applying them to more diverse settings where the role of branding is becoming increasingly important (Wentz and Suchard, 1993). The traditional role for brands is also experiencing rejuvenated interest. Market analysts generally agree that this trend will continue and be part of a formula for successful firms in the future (Norris, 1992). Brand definition One definition for a brand has been offered in the Journal of Marketing Management by Professor Peter Doyle of Warwick University: “A name, symbol, design, or some combination which identifies the product of a particular organization as having a substantial, differentiated advantage” (O’Malley, 1991, p. 107). To many, a brand suggests the best choice (Ginden, 1993), while others see a brand as something the customer knows and will react to (The Economist, 1988). Despite the formal definition, the purpose of branding is essentially to build the product’s image (Cleary, 1981). This image will influence the perceived worth of the product and will increase the brand’s value to the customer, leading to brand loyalty (The Economist, 1988). Organizations develop brands as a way to attract and keep customers by promoting value, image, prestige, or lifestyle. By using a particular brand, a consumer can cement a positive image (Ginden, 1993). Brands can also reduce the risk consumers face when buying something that they know little about (Montgomery and Wernerfelt, 1992). Branding is a technique to build a sustainable, differential advantage by playing on the nature of human beings. Only humans can attach meaning and feeling to inanimate objects and a random collection of symbols, which suggests the appeal of branding is not entirely rational (O’Malley, 1991). Once consumers become accustomed to a certain brand, they do not readily accept substitutes (Ginden, 1993). Organizations seek ways to take full advantage of this human trait – thus the popularity of branding. Market awareness and acceptance Branding is not the answer to all the problems facing businesses today. There are substantial negatives to branding that must be considered. However, if branding is carried out correctly, the advantages outweigh the problems (Lorenzini and McCarthy, 1992). A good brand will give the customer value for the dollar and give employees the satisfaction and confidence in their products (O’Malley, 1991). Strong branding can also accelerate market awareness and acceptance (Berry et al., 1988) of new products entering the market. Background As previously mentioned, the use of branding by big business is not a new idea. Business historians agree that branding itself is over 100 years old,
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with the majority of countries having trademark acts to establish the legality of a protected asset by 1890 (The Economist, 1988). It was from 1800 through 1925 that was known as the richest period of name-giving (Hambleton, 1987). From these beginnings, branding has evolved as a major component of marketing strategy. Its uses and applications continue to grow and diversify. Although the focus of branding has shifted over the last two decades, its importance to the business community and the consumer has not diminished. In his book, Great American Brands, Cleary (1981) writes that without trademark brands, there would be no trustworthy marketplace and no sure, simple way to know what to reach for and what to avoid. Main focus of the 1980s The main focus of the 1980s regarding brands was takeovers. This trend made successful brands very valuable on the open market. Large organizations felt and often still believe that the brand is more important than the product itself (Magrath, 1993). Many thought the only way to have a successful brand was to buy one. Karel (1991) says that there are many advantages to investing in a brand and company name simultaneously. Many feel the development of new megabrands would be impossible in the future and money would be better spent on acquisitions than on research and development. The fact that 90-95% of all new products failed strengthened the argument that takeovers made more sense than trying to develop new successful brands (Dagnoli, 1990; The Economist, 1988). It was during this period that many brands began to suffer. With the changing management associated with takeovers and acquisitions, brands failed to maintain a clear image in the consumer’s mind. Consumers were becoming confused about what a brand represented. The high turnover of brand managers coupled with a preoccupation with short-term earnings has led to inconsistencies with brand equity (Baum, 1990). Some feel that brands themselves are doomed because of years of inconsistent advertising and agency management, generic marketing, look-alike advertisements, undistinctive products, and the proliferation of promotions (Liesse, 1990; Wentz, 1993). The strategy of the 1980s has influenced, but not dominated, the strategy for the 1990s. Firms are beginning to realize the shortcoming of the previous decade and are changing their focus on branding. The importance of the product itself is beginning to be emphasized. In her article, “What’s in a name”, Zbytniewski (1992) writes: “95% of consumers buy with their eyes. It’s what’s underneath the label that matters. The label is secondary” (p. 11). Brands are not static O’Malley (1991) goes a step further by suggesting that what is underneath the label should be in line with the personal values of today’s consumer and firms should reposition their brands to reflect those values. Brands are not static and need to change with their environment (Berry, 1993a). The thrust for companies in the 1990s will not be toward new brands but to strengthening and expanding those which already exist (Baum, 1990). Basically, the new focus of branding is to create mutually beneficial situations. Creating these situations is difficult. Finding the right brand mix for the consumer while generating adequate sales is a challenge for marketers in the 1990s. As consumers become more price sensitive, the brand itself loses some importance (Allen, 1993).
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During the last decade, companies were concerned primarily with financial considerations. They wanted brands that would make their businesses more valuable. Today, however, the issues are more practical, such as focussing on sales and profits. Berry (1993a) suggests that companies are concerned with what the customer is willing to pay for their product, not with Wall Street. Three challenges for branding In the same article, Berry (1993a) suggests three challenges for branding today. First, branders must understand the price elasticity for their product. Next, adequate price controls must be in place. Finally, the organization must have effective and efficient brand building activities. These activities should focus on current and new products. According to a recent survey, the number one brand in a line enjoys a 20% return while the number two brand earns a 5% return and all the rest lose money Effective and efficient brand building activities are crucial with this information in mind. In the future, large companies will continue trying to expand into markets abroad. More standardized global brands will be tried but are not yet close to being perfected (The Economist, 1988). Companies will continue trying to enhance their brand’s relevance to their customers and focus on the brand’s personality to build an emotional bond between the brand and its consumer (Baum, 1990). Overall, with branding entering new diverse areas, the future looks good (Liesse, 1990). Alan MacDonald, president and chief executive officer of Nestlé Foods Corp. is quoted in the Liesse (1990) article as saying, “Branding will be the continual and pivotal concern for the seeable future”. Yahn (1993) echoes this sentiment by saying that building greater brand identity is a major factor in the rebuilding of America. Issues/problems Brand naming Perhaps the most fundamental problem regarding the issue of branding is what name to use. Berry et al. (1988) go as far as to say that a well-chosen name can give a company a marketing edge over comparable competitors. They concede that a name may not make or break a company but it may be a key factor in its success or failure. Ginden (1993) points out that the point of a name is to have consumers link it to quality. Early in the period of branding, products were given distinctive names to differentiate them (The Economist, 1988). These were usually the last names of the inventor, founder or investor. However, today the trend is toward more descriptive titles (Hambleton, 1987). Six-step method Shipley and Howard (1993) suggest a six-step method for naming industrial products that branders can use for other products as well. It starts with setting the brand objective followed by specifying branding criteria, generating name ideas, selecting name ideas, and finally, selecting a name. Berry et al. (1988) have set criteria for formulating service brand names that can also be adopted for naming other types of products. They suggest a name should have four characteristics, including distinctiveness, relevance, memorability, and flexibility. All products should avoid generic sounding names and should convey the essence of the product through indirect connotations. Names should be simple, brief, and easy to pronounce and read. They should not rely on cuteness or gimmicks and should be broad enough to change over time. The use of geographic references and purely
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descriptive terms are not recommended. Effective graphics and logos are recommended, however, to support the name. Naming guidelines are helpful and effective These naming guidelines are helpful and effective. However, there are exceptions to these rules that have been successful. The point is, it is easier to be successful in branding if the product does not have to overcome the disadvantage of a bad name. Brand advertising After spending resources on naming a product, it is imperative to support it through advertising and communication (Berry et al., 1988). For a product to succeed, the brand owner must dedicate more resources to promoting it through advertising. O’Malley (1991) writes that advertising is a key to sustaining appeal of brands. It is also a key to developing that appeal in the first place. Gregory (1993) says that the first job of advertising is to build brand awareness and corporate brand approval. Through advertising, marketers expose the potential consumer to the brand and give them the opportunity to accept it. Advertising should be thought of as an investment in the brand it is promoting. Just as a company would invest in technology and innovation, it must also invest in advertising and promotion if it is to succeed (Wentz, 1993). Gregory (1993) suggests there is a correlation between the level of advertising investment and the level of brand awareness achieved. Advertising, marketing and promotion In Liesse’s (1990) article, John S. Bowen, chairman emeritus of D’Arcy Mesius Benton & Bowles says, “Brands that offer consumers a consistent ad message and regularly updated product will lead their industries” (p. 52). He goes on to say that companies which believe in outstanding advertising are those which will build leadership brands. The commitment to the brand’s success is encompassed in its advertising. In the increasingly competitive marketplace, advertising, marketing, and promotion may be the only things that differentiate extremely similar products (Coonan, 1993). Brand research and development Once a brand has successfully entered the marketplace and has achieved status as a leading brand, marketers must be concerned with keeping it there. O’Malley (1991) points out that strong brands cannot rest on their laurels and brand owners must constantly review the appeal of their brands to ensure that they remain contemporary and relevant. Although it has been suggested that killing a brand leader is difficult (O’Malley, 1991; The Economist, 1988), companies which neglect their brands increase the risk. Formal tracking method Market research should be used to monitor consumers, competition, and changes in the environment that may affect a company’s brand (O’Malley, 1991). This gives the company the advantage of knowing how its brand compares with the competition’s and how it fits into the big picture. Berry (1993a) also recommends a formal tracking method be in place to monitor the value of a company’s brands. It is important for a company to know if consumers have the same perception of its product as itself.
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Corporate, industrial and service branding Corporate, industrial, and service organizations are new forums for branding techniques. It was previously believed that these areas were not conducive to branding but this mentality has changed. In his article, “Strong brands stick out in a crowd”, Gregory (1993) calls corporate branding proactive, visionary, directional, targeted, and a totally controlled means of creating a particular impression. This is the same philosophy that the more traditional consumer product branders prescribe. Gregory (1993) goes on to write that corporations use branding to link their name with favorable attributes in order to form a relationship with their main constituents and move them in a positive direction. He summarizes his views as follows:
Studies show there is a strong, positive correlation between corporate reputation – or corporate brand awareness – and the level of supportive customer action (p. 39).
There is little doubt that corporations are beginning to realize that branding has many positive benefits for them. In fact, it has been suggested that corporate branding may be the only new area for successful brand building in the future (Berry, 1993b). Effective marketing method Industrial branding is also beginning to receive attention as an effective marketing method. There is a growing belief that brands do have value in industrial markets. Industrial products do not tend to vary so the best way to differentiate may be through branding. Businesses agree that an effective name will not result in long-term industrial marketing performance without an effective product offering. However, they do understand that once an industrial brand satisfies an organization, it is possible to become a permanent supplier (Shipley and Howard, 1993). In their extensive study, Shipley and Howard (1993) concluded that industrial companies value and use brand names widely. They also decided that manufacturers of industrial products feel brand names and brand naming are important because they enhance their success and become major assets to the company. Finally, the authors suggest that by not developing effective brand names, a company subjects itself to unnecessary risks by giving the competition an edge. It is this type of risk that Baum (1990) warns must be better managed in the 1990s. Service organizations are becoming common users of branding strategies. The company name is the brand name for service companies and most of their offerings tend to be grouped together by consumers as one product (Berry et al., 1988). Consequently, services must work to create the proper image of their brand to ensure customers see them as the best choice. Brand extensions and ingredient branding Two of the most utilized applications of branding are ingredient branding and brand extensions. Although other trends in branding exist, these represent the most enduring and popular in today’s market. Brand extensions are one of the oldest branding application techniques used. Many organizations are tempted to extend a popular, successful brand into new markets. In some cases, this has been very effective, while in others it has been disastrous.
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The company name is the brand name
An operator who wants to extend a brand into new markets should make sure the link is obvious. In other words, it should be obvious to consumers why a company is using the brand name on a new product. It is dangerous to use a name where it simply does not fit (The Economist, 1988). If an organization truly knows what the brand means to its customers, it will also know what it does not mean. If the product and the brand do not mesh, customers will not buy. There are many examples of organizations which have overextended their brands, some at the expense of the core brand. Others have extended their lines in a way that has radically altered the personality of the core brand (Dagnoli, 1990). These are the main dangers associated with brand extensions. However, there are some very good reasons to extend that lead to profits and success. Currently, it is much harder to build new successful brands than to defend old ones (The Economist, 1988). There are also many failures associated with new product introductions. When a company uses a brand name that has already been established, some risk associated with new products may be eliminated. A newer idea Ingredient branding is a newer idea that is gaining momentum in the marketplace. The idea of using an established name to promote a new product or merge successful products together is attractive. There has been a variety of good reasons given for using branded ingredients in a product (Norris, 1992). Essentially, it comes down to a new product acquiring some consumer awareness by using a well known branded ingredient. Berry (1993b) suggests that ingredient brands can have a positive impact on a host brand. Many manufacturers see the benefits of ingredient branding outweighing the negatives. Manufacturers of the branded ingredient have also been enthusiastic about the additional exposure their brand will receive. However, there are legitimate concerns associated with ingredient branding. The strategy may backfire If the branded ingredient and the host products are not perceived to be complementary in status, the strategy may backfire. In these cases, sales have gone down. Other problems with the strategy include the cost of promotion, loss of purchasing control, customer confusion, and others (Mullich, 1993; Norris, 1992). Generally, there are as many potential problems with this strategy as there are benefits. It is up to the parties involved to make sure the match works and that a win-win scenario can be worked out. Brand management It has been suggested earlier that poor brand management was a key element that had negatively affected brands in the 1980s. The loyalty of brands was beginning to wane because of this misdirected management. Although it was generally accepted that brand loyalty led to profits (The Economist, 1988), many brand managers did not generate either. Their brand strategy, which is the key to business strategy (Berry, 1993a), was to promote the financial value of the brand rather than making it a better product that the customer wanted.
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One of the first steps in maintaining customer loyalty and earning profits is to build and sustain a positive brand image. The image is based on a total product concept that includes colors, symbols, words and slogans, with a clear consistent message and not simply a name (Berry et al., 1988). Once an organization establishes this image, it should remain consistent (The Economist, 1988). While firms admit that this is a difficult job, it is necessary (Yovovich, 1993). Creating a brand image Creating a brand image involves getting customers to know that the brand exists. Once a brand has been separated from the crowd, it is easier to develop its image. The branding process itself may be the starting point for product differentiation (Allen, 1992). Many brands are similar. Brand leaders are often close to being identical. The image a top brand develops may be the only way for the consumers to tell the difference (Carey, 1991). The difference will exist primarily in the mind of the consumer. The consumer will perceive one brand as more desirable than its competitor’s and purchase it based on those perceptions. In his article, “The new you”, Carey (1991) lists several criteria to decide if a brand has an identity, based on how well it has been differentiated. He suggests that if the brand has a recognizable identity, then it should be aimed at opportunity markets to yield maximum success. Companies must manage the image and identity of a brand and tie it to the total business strategy. Each organization must decide how branding fits into its general strategy because one strategy does not work for all (Carlino, 1991). Some brand managers agree that the most effective way to use branding is by matching specialized products with specialized markets (Carey, 1991) but this philosophy has its exceptions. The point is, business strategy and brand strategy should be relevant to the goals of the organization. Although there are specific directions for matching a brand with a certain strategy (Dodson, 1991; Liesse, 1990; Lorenzini and McCarthy, 1992; Magrath, 1993; Wentz and Suchard, 1993), the individual operations must create a unique strategy that works for them. Discussion and conclusion Branding can be an effective and powerful tool for all types of business organizations. If brand owners use their product correctly, the payoffs can be substantial. However, if brands are mismanaged, the results can be damaging. There are many ways to ensure success with branding. Choosing the right name, using the right advertising, applying the best strategy, and using the most relevant application techniques are some ingredients needed to make a branding effort successful. As stated earlier, this is not an easy function. Brand owners and marketers must deal with the changing environment and other factors that affect their ability to be effective. Branding is evolving Branding is not a new idea, although the way companies use branding is evolving. The applications for branding strategy will continue to change. As the marketplace becomes more global, new branding opportunities will develop. Consumers’ tastes and preferences will also change with the values and norms of the time. Brand owners and marketers must continue to monitor these situations if they hope to be successful in the future.
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References Allen, R.C. (1993), “Home Depot nails down diner deal”, Nation’s Restaurant News, Vol. 27, pp. 1, 4. Allen, R.L. (1992), “ARA’s olympic endeavor: feeding the hungry masses”, Nation’s Restaurant News, Vol. 27, pp. 12-13. Baum, H. (1990), “Shock treatment needed to revive brands in the ‘90s”, Marketing News, Vol. 24, p. 12. Berry, J. (1993a), “Brand value isn’t about stocks, it’s sales and profits”, Brandweek, Vol. 34, p. 14. Berry, J. (Ed.) (1993b), “Brand equity”, Brandweek, Vol. 34, pp. 20-4. Berry, L.L., Lefkowith, E. and Clark, T. (1988), “In services, what’s in a name”, Harvard Business Review, Vol. 66, pp. 28-30. Carey, W.R. Jr (1991), “The new you”, Inc., Vol. 13, pp. 50-3. Carlino, B. (1991), “Long road ahead for contract feeders”, Nation’s Restaurant News, Vol. 25, p. 34. Cleary, D.P. (1981), Great American Brands, Fairchild, New York, NY. Coonan, C. (1993), “Coke battles Pepsi”, Business & Finance, Vol. 30, p. 30. Dagnoli, J. (1990), “Beware line extensions”, Advertising Age, Vol. 61, p. 62. Dodson, J. (1991), “Strategic repositioning through the customer connection”, The Journal of Business Strategy, Vol. 12, pp. 4-7. Ginden, R. (1993), The name game”, Cheers, pp. 59-62. Gregory, J.R. (1993), “Strong brands stick out in a crowd”, Business Marketing, Vol. 78, p. 39. Hambleton, R. (1987), The Branding of America, Yankee Books, New York, NY. Karel, J.W. (1991), “Brand strategy positions products worldwide”, The Journal of Business Strategy, Vol. 12, p. 16. Liesse, J. (1990), “Endangered species: brands”, Advertising Age, Vol. 61, p. 62. Lorenzini, B. and McCarthy, B. (1992), “The branding evolution”, Restaurants & Institutions, Vol. 102, pp. 87-106. Magrath, A. (1993), “A brand by any other name”, Sales and Marketing Management, Vol. 145, pp. 26-7. Montgomery, C. and Wernerfelt, B. (1992), “Risk reduction and umbrella branding”, Journal of Business, Vol. 65, pp. 31-50. Mullich, J. (1993), “Brand still holds edge in battle with price”, Business Marketing, Vol. 78, p. 9. Norris, D.G. (1992), “Ingredient branding: a strategy option with multiple beneficiaries”, The Journal of Consumer Marketing, Vol. 9, pp. 19-31. O’Malley, D. (1991), “Brand means business”, Accountancy, Vol. 107, pp. 107-8. The Economist (1988), “The year of the brand”, The Economist, No. 309, pp. 95-100. Shipley, D. and Howard, P. (1993), “Brand-naming industrial products”, Industrial Marketing Management, Vol. 22, pp. 59-66. Wentz, L. (1993), “Unilever brands ‘alive and kicking’ chairman assures”, Brandweek, Vol. 64, p. 39. Wentz, L. and Suchard, D. (1993), “Euro ad execs pay homage to the brand”, Brandweek, Vol. 64, p. 39. Yahn, S. (1993), “Hallmarks of the ’90s: Branding and ingredient marketing”, Business Marketing, Vol. 78, p. 2. Yovovich, B.G. (1993), “Firm attacks market on several fronts”, Business Marketing, Vol. 78, p. 22. Zbytniewski, J. (1992), “What’s in a name”, Progressive Grocer, Vol. 71, p. 115.
Joseph Arthur Rooney is Academic Dean at the American College, Dublin, Ireland.
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