Contemporary Branding Perspectives - Report Example

CONTENTS Introduction………………………………………………………………………2 2. Background of the Report……………………………………………………….3 2 Definition and Scope of Branding……………………………………..3 2.2. History and Development of Branding………………………………..3 2.3. Branding in Contemporary Marketing……………………………….4 2.4. Firms’ perspective on Branding……………………………………….4 2.5. Consumers’ perspective on Branding…………………………………8 3. Evaluation and Application of Branding in Contemporary Marketing………9 3.1. Arts versus Science……………………………………………………..9 3.2. Theory versus Practice…………………………………………………9 4. Challenging, Revelations and Future Development…………………………….10 4.1. Marketing Myopia………………………………………………………10 5. The Development Trends of Strategic Marketing Management……………….11 5.1. Product Concept versus Market Concept……………………………...11 6. Conclusion………………………………………………………………………….12 References…………………………………………………………………………….13 Branding as a Marketing Strategy from the point of view of Customers and Competition 1. Introduction Marketing is the fundamental concept associated with the existence of marketing strategies in contemporary time. There are varying marketing strategies, including but not limited to understanding consumer orientation and competitor focus and other relevant generic strategies (Schnaars, 1998, p.60). Branding is not far from this consideration. In contemporary time, from the point of view of the firm, brand is not just a value added to a certain product or service offering, but it is also substantially enjoyed as an asset of the company (Verma, 2011, p.3). As such, brands are therefore considered as important aspects in achieving superiority and dominance in the marketing concept. With that, firms find a remarkable opportunity to consider branding as a remarkable strategy for their competitive advantage. Brands are therefore adding opportunities for the firms to compete and reach their competitive advantage and ensure further its sustainability in the long run. As a matter of fact, there are myriads of brands in the market that are achieving dominance because of their strategic moves linked to branding as a strategic tool for the firm. For instance, Adidas, Sony, Nescafe, Toyota are some of the known and recognised innovation brands (Haig, 2011). These brands are known for their ability to go for innovation and ensure to come up with something new that would turn out a cutting edge above the other. Considering the point that branding is contemplated a remarkable way by the firms as a strategic tool for competition, the report aims to explicate the following points. What is branding from the point of view of the competition and customers? Is branding an art or science? Does brand management an essential strategic tool to be reasonably considered as marketing strategy for competitive advantage? In line with the above objectives, this report tries to investigate the managerial implications of the relevant theories associated with branding as a marketing tool and strategic marketing activity. Backed by the idea of marketing strategy, marketing management, brand management and generic strategies for competitive advantage (Peter and Donnelly, 2001; Hutt and Speh, 2013; Haig, 2011; Verma, 2011; Schnaars, 1998, Porter, 1980; Cravens and Piercy, 2010), branding is considered an important economic aspect of the firm while it is potentially viewed as something having vital managerial implications on obtaining sustainable competitive advantage on the part of the firm. 2. Background of the Report 2.1. Definition and Scope of Branding “Branding is about creating and delivering a promise to target consumers, which is about functional satisfaction, experiential enrichment, or aspirational fulfillment” (Keller, 2008). Landor (2010) mentions that “the purpose of branding is to ensure that your product or service is the preferred choice in the minds of your key audiences (whether customers, consumers, employees, prospective employees, fans, donors, or voters).” 2.2. History and Development of Branding The branding in contemporary marketing refers to the utility that consumer gains from the particular products. Originally, the word “brand” is from the English word "brand" or "trademark" (Batey, 2002). However, due to language barriers and backward propagation methods, early research on related theory of branding is regional and nonsystematic. Branding in the field of marketing originated with the appearance of packaged goods in the 19th century. In the early 20th century, the observations on marketing started focusing on customer orientation and branding (Levy & Luedicke, 2013). Later, Keller (1993) developed the concept of branding and related ideas focusing on brand equity and brand strategy management. 2.3. Branding in Contemporary Marketing From the idea of brand image, branding has significantly reached the level of considering the concept of brand loyalty in contemporary time. “Brand loyalty, in marketing, consists of a consumers commitment to repurchase or otherwise continue using the brand and can be demonstrated by repeated buying of a product or service, or other positive behaviors such as word of mouth advocacy” (Dick and Basu, 1994). The AMA (2011) defines brand loyalty as “the degree to which a consumer consistently purchases the same brand within a product class.” 2.4. Firms’ perspective on Branding Welfare economists agree that perfect competition is capable of promoting economic efficiency (Verma, 2011). Branding has become a substantial tool in order to compete. Therefore, various firms are trying to create and deliver a promise to their target consumers, not only to satisfy them, but to remarkably create brands for their service or product offerings. The promise can be relevant to “functional satisfaction, experiential enrichment, or aspirational fulfilment” (Keller, 2000; Keller, 2008). This promise is essential for making a certain brand to become the preferred choice of the consumers. This is another remarkable idea associated with branding (Keller, 2003). However, there is an existing idea that marketing is concerned about the transactions that are not limited to goods, but including abstract exchanges of ideas, emotions, services and so on (Hunt, 1976). Branding as an essential part of the marketing activity can be strategic in its essence and therefore a way of allowing exchange to take place. Firms believe that the satisfaction of the customers received from the brands will be necessary in order for them to create a remarkable market share. In the presence of tough competition, firms are after of achieving sustainable competitive advantage. This is a corresponding thought linked to Porter’s competitive strategy, which has considerable impact on the relevant forces working in the marketing environment. Based on Figure 2.4a, industry competitors are subjected to various competitive forces like the potential entrants, suppliers, buyers and substitutes. It therefore makes sense why various firms are strengthening their brands and other product and service offerings, because the ultimate goal is to ensure that potential entrants will not be successful in penetrating the market or industry. Furthermore, this is also to discourage the target market from appreciating whatever there may be that the substitutes are trying to promise for the open market. In other words, firms are trying to establish a sustainable competitive advantage that will provide them a protective shield against the prevailing forces that at some point will try to attempt to put them down. Branding could be a remarkable protective shield. Porter believes that brand loyalty is a special strength of a firm. It gives them the ability to consider a high market share. Customers who are loyal to a certain brand will definitely patronize it at a considerable span of time, provided that their experience with the product is consistently meeting their prevailing needs, satisfaction or gratification. Figure 2.4a. Porter’s Five Forces Model Source from: Porter (1980) Competitive Strategy Considering that branding may play a significant role in the making of the firm’s competitive advantage, ensuring effective brand identity has become crucial to various managers. This is remarkably observed based on the identity model of De Chernatony et al (2011), explaining the process of managing brands for companies based on their vision and culture (see Figure 2.4b). Brand identity is important consideration because this is what would make the customers consider a certain brand a satisfactory one. Firms believe that there is a vital process to follow in order to successfully generate a brand identity. It is a strategic leap or a way to move forward to competitive edge to allow the firm to generate a sustainable one in the process. This is evident in the case of various iconic brands that have become successful in motivating the target market to choose them as the primary choices on the list. In the first place, if branding does not have potential impact or it does not make sense at all on the part of the firm, then the existing model of De Chernatony which is exactly based on the prevailing trends in various industries would not have made sense at all in the first place. The model depicts the actual process that every firm does, which is a prerequisite to a successful creation of a brand image for their product and service offerings. It significantly has its inception from the brand vision or culture. Therefore, a firm trying to establish a remarkable brand should have a specific culture which essentially consists of the mental model, in order to effectively link it to the personality of the target markets, and then to simultaneously associate it with positioning strategy and building of relationships within both the internal and external environment. The process may be complex at some point, but look at how the various firms with renowned brands made it to the top today. Competing brands like Pepsi and Coca Cola are good at establishing their brands. However, at the bottom line, each of these brands has substantial brand vision and culture to consider not only at present, but in the future, for them to be consistent enough in creating their image. Changes are necessary, for as long as each firm is studying the dynamic personality of each individual, and for as long as the brand identity is linked to other necessary information like the actual relationship among and between the internal stakeholders and the customers. The concept of positioning, for instance, as depicted in Figure 2.4b, reveals that marketing management is a necessary requirement in order to establish successful creation of brand identity. This concept has long been employed in the marketing concept, and in the contemporary time, various firms are trying to evaluate their marketing potential based on their ability to initiate successful positioning of their product or service offerings. In this scenario, it would not be harder for them to establish their brand identity and explore further possibilities to generate a competitive advantage thru their created brands alone. Figure 2.4b. A Process For Managing Brands Source from: De Chernatony et al (2011) Creating Powerful Brands 2.5. Consumers’ perspective on Branding There are evidently logical and emotional reasons linked to why customers prefer a certain brand over the other. This is evident in the prevailing treatment towards attitude and iconic brands. Coca Cola for instance (see Figure 2.5) has long existed in the grocery stores for quite a number of decades and it has become a chosen brand in some part of some cultures in the world. However, not only this brand, but there are quite other number of them out there that have already established a strong connection with the lives of the consuming public. From the point of view of the consumers, branding is a specific marketing communication. For this reason, they always are eager to know what the brand actually is, its purpose, its actual function or role, its ability that it can do for them, its benefits, the difference it has from the other existing brands, and the worth that it implies relevant to its long-term usage (Dahlen et al., 2010, p.198). In this perspective, branding from the point of view of the consumers is about finding the benefits. There is a particular value for branding from the customers’ perspectives especially in a complex and crowded marketplace. Considering that branding is a form of communication for them, the brand names and the associated images only facilitate customers’ ability for brand recall, location and identification of the required products (Cant et al., 2009, p.215). Figure 2.5. Attitude and Iconic Brand Source from: Wikipedia (2014) Available from: http://en.wikipedia.org/wiki/Brand 3. Evaluation and Application of Branding in Contemporary Marketing 3.1. Arts versus Science Just as marketing receives substantial issues like whether it is an art or science, branding as a significant component of the marketing activity gets the same attention. While the thin line between arts and science is clear, there is a prevailing difficulty to identify whether branding is simply an art, a science or a combination. Brand strategy is a special component of the business strategy of a firm. This remarkably shows that there is an essential depiction of art and science in branding. After all, brand management is an old practice, but a very young science (Franzen and Moriarty, 2008). The implementation of strategy is an old practice, but the integration of scientific inquiries in understanding customers’ behaviours is a vital component of understanding brand management as a science. After all, the contemporary marketing is evidently seeing the importance of marketing research, which eventually employs both art and science in reality. After all, the market research evidently comes from the discipline and influence of classic social science methodologies (Mouncey and Wimmer, 2009, p.6). 3.2. Theory versus Practice In theory, as discussed, it implies that branding is a remarkable component of product management and vital marketing process. However, in practice, branding itself receives remarkable managerial extensions and implications. From the management context, branding has become an essential turning point for corporate branding (Schultz et al., 2005, p.42). Branding has therefore found its way not only in the marketing arena, but eventually in the actual context of setting corporate goals or objectives such as defining the context of market share. This is evident in the case of Walmart, where there is a need to define the market share, by which the strategic expansion is necessary, but along the way, corporate branding was the key to success. The thing happens to Apple. Product development was the key at first, but later the popularity receives by the brand extends further to corporate branding. There is remarkably a special extension of the product’s brand popularity to corporate branding in particular, which is a significant observation that has substantial managerial implications at some point. Figure 3.2. Walmart: The scale brand Source from: Rob Port (2013) Available from: http://www.sayanythingblog.com 4. Challenging, Revelations and Future Development 4.1. Marketing Myopia There is a prevailing viewpoint that marketing eventually focuses on the product development rather than the needs of the customers (Levitt, 1960). This evidently sounds like a relevant justification of the product concept, which heavily relies on the extension of product development disregarding the actual needs or requirements of the target market. Remarkably, product branding would mean excessive costs at some point (Kazmi, 2007, p.294). It therefore does not make sense to invest heavily in it without any relevant benefits in return on the part of the firm. Therefore, it also makes sense to consider branding as a remarkable marketing activity which primarily focuses on the firm’s absolute advantage at first rather than seeing the possibility of considering it as a remarkable move to ensure higher customer satisfaction. More of this issue is discussed in the next section. 5. The Development Trends of Strategic Marketing Management 5.1. Product Concept versus Market Concept In the area of strategic marketing management, there is an existing argument relevant to the existence of product concept and market concept. In either of these two sides, branding in contemporary marketing can be depicted in both the idea of product concept and market concept. However, there is a strong argument revealing that a brand concept may go beyond the product concept. After all, unlike a product, a brand offers additional values which add emotion to rational choice (Moss, 2007, p.20). In strategic marketing management, branding may therefore be a form of adding high value for customers. In this case, if that is the actual point of branding then formulation of brands is a relevant point associated with the market concept. However, some justifications may strongly argue that a brand may just be an elaborate version of a product idea, so it cannot be far from the product concept in reality. In the case of Walmart, its corporate brand identity was generated via employing low prices. Production-based strategies theorize that consumers will desire products that are priced low (Schnaars, 1998, p.8). Walmart adheres to the importance of a low-price strategy. In reality, this strategy is based on the production concept, where the most important thing that matters is the incurring of costs and gaining that much at the end. In response to the above argument, a counter argument also prevails. The proponents of the market concept believe that the formulated products should substantially meet the needs of the customers so as not to end having no market at all (Schnaars, 1998, p.8). In the same way, the formulated brand should therefore adhere to the notion of satisfying customers’ existing wants and needs. While the two points may have specifically emphasised vital arguments, the bottom line is that the two concepts have important managerial implications as pointed out earlier in the discussion in the preceding sections of the work at hand. 6. Conclusion Branding from contemporary marketing can be considered a marketing strategy. While customers potentially see it as a way of communication, at the other side of it, they also identify brand as a potential instrument to satisfy their needs and wants. From the point of view of the firm, branding may vary depending on which concepts they prefer the most. The existence of product concept may reveal that branding may just be an extension of the production concept. However, the market concept counter argues that branding itself is just a broad extension of the product idea, which essentially has to significantly root from the prevailing customers’ needs and wants and so otherwise it might end up losing a potential market in the end. The above viewpoints have been found to potentially create relevant managerial implications. Marketing managers and other business-individuals alike should primarily consider branding as a remarkable consideration in the contemporary strategic marketing management, for them to be able to create something that will make a difference in the future. References AMA (2014) “American Marketing Association: Definition of Branding”. [Online] Available from: https://www.ama.org/Pages/default.aspx. [Accessed: 10th April, 2014]. Cant, M. C., Strydom, J. W., Jooste, C. J., and du Plessis, P. J. (2009) Marketing Management. Cape Town: Juta and Company Ltd. Cravens, D. W., and Piercy, N. F. (2010) Strategic Marketing. 9th ed. New York: McGraw-Hill. Dahlen, M., Lange, F., and Smith, T. (2010) Marketing Communications: A Brand Narrative Approach. West Sussex: John Wiley & Sons. De Chernatony, L., McDonald, M., and Wallace, E. (2011) Creating Powerful Brands. Burlington: Routledge. Dick, A. 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