Brand Companies Sales and Business Law - Essay Example

For companies to adapt and adjust their own brand messages, when consumers share the information produced, brand managers need to devise new strategies meant to rectify any dissatisfaction. Moreover, consumers expect brands to be honest and be transparent in their communications. When discovered, the misleading brands will be punished by consumers. As much as a product might meet the federal standards, some consumers may sue the company citing allergic reactions or other negative effects because of the misleading labeling.

In case the particular consumer suing is able to prove the negative effect arising from the misleading labeling, the company will end up using a lot of money, if they decide to settle out of court to avoid further bad publicity.  The court decision is bad for the company as obviously, there is the bad publicity and it might lead to a decrease in sales for a certain product or even in all their products, as consumers will question their honesty in all their products, regardless of meeting the federal standards (Herbst, Kenneth, Hannah & Allan 297).

Brand equity is one of the most valuable assets a company possesses. One popular strategy that companies use to build and leverage equity is using brand extensions that launch new products with the original brand names, in this case Coca Cola. Successful extensions can provide benefits, such as reducing cost of introduction, gaining distribution and customer trial and minimizing the risk of new product failures.