An Important Business Issue: Branding - Term Paper Example

VP Branding/Creative Design Senior Operations Associate Branding 23/10 The main aim of this memorandum is to give somelimelight to the new VP Branding/Creative Design on some aspects of branding. As a Senior Operations Officer, it is my duty to inform any new personnel on matters pertaining to the achievement of the company’s goals. This document gives a detailed explanation of what branding is, its benefits and gives some strategies for developing strong brands. The business world is becoming very competitive and as a company we need to embrace new ideas of branding to match up with the competition. Products and services offered by the company need to be branded in the right and attractive way. This is vital because as a company we need more customers to purchase our products and services. Executive Summary Branding is not a new concept in the marketing world. For many years companies and businesses have branded their products or have a brand name that makes them unique. Changing and having a new brand name is always welcomed by a lot of resistance but to what extent can it be beneficial or harmful. Even the meaning of branding is varied in the business world; many people have failed to agree on what it means. This document will explore what branding is and how it can be beneficial to the company and the strategies used in branding. Purpose Statement There are terms and definitions that are difficult to understand for some people. There are often misinterpreted and hence the person gets a wrong perception about the concept. Wrong perception can affect the well-being of the individual or the company. Having a clear definition of these concepts will affect the company’s performance positively. Branding may not be a new idea in the business market but very few people know what it is. Discussion Branding Definition Branding deals with creation and building of a brand. A brand has many definitions and they include: an identification mark made on skin by burning, an identifiable thing, a product or service name, a figure of shame, a burning piece of wood and the last definition is a long blade weapon used for cutting (Glaser 6). Branding is a marketing practice that involves creation of a name, symbol or design that is used for identification and differentiation of a product from other products (“Branding” 1). There are other definitions of branding and they are: A brand is a trade name, trade symbol and trademark that a company develops and legally protects it as a means of differentiating the company from other competitors in the marketplace. A logo becomes a brand when it is associated with positive provision of good products and good services (Fojt 27). Branding involves a domain name, written copy, packaging, product design rights and advertising. This definition explains more of the visual elements of branding, it includes intangible marketing tools. These intangible market tools can be registered and legally protected. Property rights take into account other assets that are used to deliver the promises of the brand such as specific knowledge and expertise. Specific knowledge and expertise include things such as business models, manufacturing techniques and supply chain configurations. Intangible assets also refer to market position intangibles such as licenses, government permits, contracts and production quotas. A larger bundle of trademark has a major role in customer loyalty and maintaining brand integrity and quality (Fojt 27). A company’s brand includes all the protected visual elements and intellectual property rights, people, culture and programs that make a company unique from the other (Fojt 27). Types of Brands Classification of brands is on the basis of who owns them. There are two types of brand categories. A manufacturer or a producer brand is a brand owned by a manufacturer. Many items in the market such as food, automobiles, clothes and gasoline are owned or have a manufacturer’s brand name, for example, Honda is a brand name for automobiles and Frosted Flakes is a brand name for food. Most of the consumers prefer manufacturers’ brands because they are nationally known, widely available and offer consistent quality commodities (Pride, Hughes and Kapoor 374). A store brand or a private brand is a brand owned by an individual retailer or wholesaler. Owners of these brand names assert that they can offer low prices on commodities, earn bigger profits and maintain customer loyalty with their brands. Some private companies that manufacture also produce their own manufacturer’s brand. Such operations are profitable because they can use excess capacity and avoid majority of the marketing costs (Pride, Hughes and Kapoor 375). A generic product or a generic brand is a product that lacks a brand. Its package carries the name of the product only. Sometimes these products are made by manufactures that have brand names. Purposes of Branding There are three main purposes of branding and the main goal of branding is to stimulate repeat sales. The first purpose is to create awareness of the brand and its identification. The second purpose is to assure a particular level of quality, quantity and satisfaction to the consumer. The last purpose is to help in the promotion of the commodity (Onkvisit and Shaw 310). The most important purpose is brand awareness and identification. Benefits of Branding Brand Equity This is the value of the company and brand names. In other words, it is the financial and marketing value of the brand and it is closely linked with the brand strength in the market. A brand with perceived quality, brand loyalty and high awareness among consumers is considered to have high brand equity. A brand that has strong brand equity is a valuable asset to the company. Examples of companies with high brand equity are Dell, Coca-Cola and Volvo (Lamb, Hair and McDaniel 290). Brand awareness makes the brand familiar to the consumer and it is most likely that a buyer will buy a familiar brand than an unfamiliar brand. It is linked with the personality type or a lifestyle of a particular brand, for example, De Beers’s diamond brand is linked with a loving and long-lasting relationship “A Diamond is Forever”. When consumers are unable to judge the quality of a product, they usually rely on their perception of the quality of the product by the brand name (Pride, Hughes and Kapoor 376). Brand royalty makes the brand less vulnerable to competitors and the need to spend huge sums of money to attract new customers. It makes the brand more visible and encourages the owners to carry the brand. It requires much work for new companies to establish a new brand and to compete with well known brands in the market (Pride, Hughes and Kapoor 376). Brand Royalty This is the preferable choice of a specific brand by a customer and is willing to purchase it. A customer will tend to obtain products and services from a company with a strong brand loyalty (Pride, Hughes and Kapoor 375). Recognition, preference and insistence are the three levels of brand loyalty. Brand recognition – is the level at which the customers are aware that the brand exists. The consumers will purchase them when their preferred choices are unavailable or when they are unaware of the available brands. In brand royalty, this is the weakest level. Brand preference – in this level the consumer prefers one brand over the competing brands. When the preferred brand is unavailable, the customer is very willing to substitute it with another brand. This level of brand loyalty is stronger than brand recognition. Brand insistence – in this level of brand loyalty, the customer prefers to buy a specific brand and when the brand is unavailable, there is no substitution with another brand. It is the least common type of brand loyalty. It is the strongest level of brand loyalty. Brand loyalty is declining due to increased market dependence on coupons, discounted prices and short-term promotions (Pride, Hughes and Kapoor 375). Branding Strategies There are six global branding strategies. These strategies are used by companies to give them an upper hand in the increasingly competitive markets. The first strategy is to cultivate established local brands. This involves developing a national brand into an international brand. The value of the brand is transported to many countries. An example of a company that was originally a national brand and now an international brand is Coca-Cola (Mooij 34). The second strategy is global concept, local adaptations. This involves developing one formula of a local product with a local value and selling the concept to the world, example, McDonald’s. The third strategy is to create new brands. Check the global needs or wants and create products that will meet those needs or wants. Examples include recent technology brands such as Nokia, Google and Samsung (Mooij 34). The fourth strategy is to purchase local brands and internationalize. This is a strategy mostly used by major food packaging companies such as Unilever, Kraft and Nestle. Their strategy is thriving on local brands first then adding international brands names or harmonizing local brand names into international brand names (Mooij 34). The fifth strategy is to develop brand extensions. This involves extending brand names into other categories. An example is a German company called Beiersdorf, in 1911 it started with an all purpose cream called Nivea and since then it has extended Nivea brand across other personal care products (Mooij 34). The sixth strategy is to employ a multilocal strategy. Companies use different strategies to develop brands for both local and international recognition (Mooij 35). An example is Nestle; the company name is used as an endorsement for quality assurance. Examples of Brands The Coca-Cola Company has more than 3, 300 brand portfolios around the world. These brands range from diet to regular sparkling beverages such as waters, energy drinks, sport drinks, teas and coffees, 100% fruit juices, fruit drinks and milk-and-soy-based beverages. Examples of the brands include; Inca Kola – a sparkling beverage from North and South America, Samurai – an energy drink found in Asia, Vita – an African juice drink, BonAqua – water found on four continents, Coca-Cola Zero and other brands. Among the recent brands developed are Coca-Cola Citra, Coca-Cola Light Sango and Coca-Cola Orange. In 2009, Coca-Cola Zero sold more than 600 million cases globally making it the most successful product in the Coca-Cola Company history (The Coca-Cola Company). Conclusion and Recommendations Branding involves a lot of things and its definition varies from one place to another. Despite the definition variations, the main purpose of branding is to stimulate resale. In order to get more resale and customer loyalty to products and services, a number of issues have to be taken care of. During my internship period, issues pertinent to the company were addressed first and solutions encompassed all the stakeholders. Success of any branded product depends on the consumer’s confidence. A brand identifies a particular commodity and customers will only repurchase such a product that provides consistent satisfaction, quality and performance. Products that do not meet these qualifications are easily ignored. A number of strategies are applied in branding products and services. These strategies are used by companies to give them an upper hand in the increasingly competitive markets. The current market is very competitive and there is need to devise new ways of branding. Understanding branding and branding strategies is very crucial for any company that wants to survive in the market. Works Cited “Branding.” Marketing. n.d. Web. 18 Oct. 2010. Fojt, Martin. Marketing. Emerland Group Publishing, 2005. Print. Glaser, Isabel. Churin – Village Destination Branding in the Peruvian Andes. GRIN Verlag, 2010. Print. Lamb, C. W., Hair, J. F. & McDaniel, C. Marketing. Cengage Learning, 2007. Print. Mooij, Marieke. Global Marketing and Advertising: Understanding Cultural Paradoxes. California: SAGE, 2009. Print. Onkvisit, Sak & Shaw, John. International Marketing: Analysis and Strategy. London: Routledge, 2004. Print. Pride, W. M., Hughes, R. J. & Kapoor, J. R. Business. Cengage Learning, 2009. Print. The Coca-Cola Company. Products. Web. 23 October 2010. Read More