Impact of Branding on Financial Services - Literature review Example

Impact of Branding on Financial Services Introduction Brand development and management is essential for companies offering related products and services because the brand distinguishes goods and services of the rival businesses. Brand is a name, design, a symbol or their combination aimed at identifying retailers’ products in order to differentiate them from those of opponents (Ferrell et al. 2014). It involves getting your prospects to perceive your products or services as the only ones that can offer solutions to their problem (Gupta & Donald, 2005). Good brand management strategies should be able to achieve various objectives such conveying message precisely, validate credibility of the organization, motivate buyers, create customer loyalty and bond the company’s prospects emotionally (Epstein & Yuthas, 2014). In order for business to achieve these objectives, they should focus on needs of clients. The brand exists in the mind and hearts of the clients, customers and prospects and is an aggregate of their views and experiences some of which can be transformed (Romaniuk et al., 2007). The competitiveness of a company depends on how it portrays its image to the target market. In order for a business to establish a strong brand image, they spend time and resource on researching defining and building brand and communicating their promises to the target market (Gupta & Donald, 2005). This indicates that a business should come up with an image that positions it strategically with a view of improving popularity and usefulness of product or service. However, studies have shown that a strong brand has severe financial implications to the business. This study examines the impact of brand on financial services of an organization. This will be achieved by establishing a relationship between branding and profitability of the brand and by determining the financial implications of developing an effective brand. Objectives The analysis focuses on determining the impact of brand on financial services of an organization. It involves establishing the influence of brand on profitability. Also, it will evaluate the financial implication of establishing a reliable brand. Literature Review According to Blattberg, et al. (2009,p. 159),“Branding is the process of creating relationship between company’s products and emotional perception of the customer for the purpose of generating segregation among competition and building loyalty among customers.” Greenland et al., 2012, 102) argues that having a strong brand is crucial for the organization because it acts as a “silent salesmen” even in the absence of sales persons. Since the strength brand image determines the profitability of the business many organizations invest many resources in building and managing brand. Wang (2013) reiterated that developing a brand involves an expensive process that requires financial outlay and commitment of the brand owner. According to Slotegraaf and Koen (2008, p. 298), brand loyalty and customer satisfaction generates long-term market benefits for the business. Organizations can engage in conscious brand marketing strategies, word of mouth and as well as product and service experience to promote positive brand imprint of customers (Mizik & Robert Jacobson, 2008). Brand awareness, perceived product or service quality and perceived extended brand image are the basic building blocks for building brand equity. For example, the Coca-Cola Company has built a strong brand in the cola market, and customers identify with that brand across the globe (Wang, 2013). The company’s products are identified with particular feature or functions that make clients distinguish the goods and services from those of other firms (Romaniuk et al., 2007). Some of the characteristics that impact the brand name of the business include the mission statement, vision objectives, etc. However, Eggers & Macmillan, (2013) argues that developing such features involves financial resources that increase the cost of business operations. Building reliable and authentic product features require expertise and thorough market research (Mizik & Robert Jacobson, 2008). Furthermore, it involves legal issues because infringing the rights of other traders can result in several financial consequences (Romaniuk et al., 2007). Therefore, building a strong and reliable brand require many efforts and investigation to avoid conflict of interests. According to Donald (2003), Brand equity refers to the cost of having a renowned brand name guided by the believe that the owner of a well-established brand name can create more income from the product with the eminent brand name than other products which are uncommon. On the other hand, Kotler and Kevin (2009) argue that companies can create brand equity by making their products easy to recognize, memorable, reliable and of superior quality. Also, businesses can make create brand equity through massive marketing campaigns (Lehmann et al., 2008). However, the product must have positive brand equity in order for customers to be ready to pay more for branded products than generic products. Leone (2006) argues that consumers will be prepared to pay higher for generic product than branded products with negative brand equity. Therefore, in order to establish positive brand equity, the brand owner must spend many resources in publicizing its products and promoting corporate social responsibility (Keller 2008). According to Slotegraaf and Koen (2008), brand management is a communication marketing function that uses techniques to examine the positioning of brand in the market and intensify the alleged value of products line or brand over time. Successful brand management results to escalation product prices and creation of brand loyalty among the consumers through positive brand association and images or high brand awareness (Mizik & Robert Jacobson, 2008). The effectiveness and successfulness of brand management are determined by the profitability of that brand. Brand management involves both tangible and intangible components. The tangible components include the products attributes such as appearance, price, packing, etc. while the intangible aspects includes the knowledge that consumer obtains from the brand and the relationship they establish with that brand (Peppers & Martha, 2004). Such aspects familiarize the company to the buyers because they differentiate it from the products of other traders. However, producers must incur some cost to ensure their products have unique features to differentiate them in the market (Ferrell et al. 2014). According to (Romaniuk et al., 2007), developing and maintaining brand involves creating an image or brand name for the company or product. Producers must be selective on characteristics of their products in order to achieve the desired familiarity in the market. However, marketers should focus on traits that will be appealing to the clients in order to establish a brand loyalty with the company (Ehrlich & Fanelli, 2012). Therefore, it involves additional expenses for the traders to achieve the desired characteristics (Katherine & Barak, 2003). According to Romaniuk, et al. (2007, p. 49), Branding of business products and services involves creating features of products of services that triggers image memory and make customers associate organizations products or services with specific characteristics engraved in the memory. Blattberg et al. (2008) argues that in order for the consumers to associate with the specific brand there is the need for a business to provide prospects and consumers with adequate information about the product or services. However, according to Ehrlich and Fanelli, 2012), retailers must conduct market research to establish the customers’ view of the products, services, and the company. Creating brand awareness requires massive advertisement to various market segments. However, Greenland et al. (2012) argues that mass promotion involves sufficient financial services for the marketers and market research. Furthermore, marketers spend many funds to determine the competitor’s production and marketing strategies as well as the degree to which they have penetrated the market. Lista (2013) stated that brand management is an essential administration and communications functions that influences how a business positions its product in the market in order to affect the earnings the product can generate for the owner. In order for the marketers to attain these goals they should evaluate various market divisions and employ appropriate communication tools for respective market sections. That will ensure that the intended message gets to the appropriate recipient (Andenas et al., 2013). Furthermore, marketers should manage the brand in order to make the product more attractive the consumers and be able to generate more income for the business (Andenas et al., 2013). However, it is worth noting that the process for creating and sustaining brand involves huge capital outlay in order to accomplish the intended objectives (Greenland et al., 2012). Establishing a simple to recognize brand is an essential process towards achieving effective brad management. Creating and sustaining reliable brand should a routine practice of every business. However, the process of forming a business culture that constantly develops and review market needs and create products to satisfy those needs continuously require adequate financial services (Eggers & Macmillan, 2013). According to, Farris et al. (2006), the main task involved in managing brand is the establishment of value of the brand. The brand value depends on the worth of other intangible resources involved in the establishing and sustaining brands such as human capital. Businesses engage in research activities in order to determine the customer needs and develop products with the desired quality that suits customer perceptions (Gupta & Donald, 2004). Furthermore, marketers must create awareness among the customers about the existence of quality products. The process of creating product value and customer awareness requires substantial finances. Also, the customer needs and wants are customer needs, and wants are dynamic while retailers continue to experience significant pressure from the rivals across the globe (Katherine & Barak, 2003, p. 203). Therefore, this implies that businesses are constantly reviewing their goods and services in order to match the global competition and keep their products’ images in the customers mind. In addition, establishing a reliable brand will involve experts who have adequate knowledge about the target market and industry trends (Peppers & Martha, 2004). This increases the cost of operating the business and consequently affects the price of the products. Increase in cost of production requires company to add more capital outlay in order to cater for the additional cost (Gupta and Donald, 2004). However, a competent brand can make the consumers ignore high price of the product in relation to competitors’ products in the market (Sethurman et al., 2011). Therefore, despite the high cost of establishing reliable brand the brand owners are willing to incur that cost because they anticipate greater earnings over the outlays. According to Gupta and Donald (2005), various consumers and prospects have different needs and wants. What appeals to one category of clients is different from what appeals to another class of customers. The varying consumer needs establishes the necessity of market segmentation (Reibstein & Donald, 2006). Traders identify different market segments based on user needs and want and consequently develop different products for specific market segments (Lista, 2013, p. 67). The implication of various market segments is that organizations have to establish brands in various market segments. In order for retailers to satisfy various market segments, they have to use various strategies or labels for different market segments. Whether a company uses different marketing strategies or different brands for different market segments they require extra financial services to establish the brand in respective market segments (Epstein & Yuthas, 2014). There is a cost implication in developing brand, creating consumer awareness, identifying different market segments, researching and learning competitors’ techniques, maintaining product quality, etc. for various market segments. Conclusion Establishing a reliable brand in the market is necessary for the business focussing on increasing earnings and expanding operations. The brand creates relationship between traders and their prospects and it creates a sense of identity for the business. Being in touch with clients and prospects all the time not only increases their loyalty, but also it gives them an assurance about continuous existence of the company and its products or services. Developing and sustaining brand name is an expensive process that requires thorough knowledge about the existing market, competitors’ products, analysis of consumer trend, etc. There is additional cost involved in market research and cost of expertise involved in market analysis and brand development. Furthermore, businesses incur great expenses to create familiarize their brand in the market. Therefore, it is wise for businesses to minimize cost of building, marketing and managing a brand in order to increase profitability. 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