Importance Of Building A Band For An Organisation - Essay Example

Brands are, and always have been, of utmost importance and value to organisations. Indeed, any consideration of an organisation’s most valuable assets, or evaluation of its existent assets, must include the brands owned by the firm in question. Further to the stated, the proliferation of globalisation, implying the intensification of competition over both domestic and global markets, has only contributed to the importance of brands to organisations. Adopting the position that brands are critically important to organisations, this essay will try to establish the aforementioned by elucidating on the value of brands through a definition of the concept, an analysis of the implications of brand equity, a discussion of the benefits of brands and a clarification of the relationship between brands and firms. Brands are firm-owned products which have undergone a process of branding. It is “the means by which a company aims to differentiate its products from competition and-through marketing-protect its position in the market. profitably over time” (White 1999) It is recognized as “the sum of ail elements of the marketing mix” (Ambler and Styles 1996). The most commonly accepted definition of brand is a distinguishing name and/or symbol (such as a logo. trademark or package design) intended to identify the goods or services of either one seller or a group of sellers and to differentiate those goods or services from those of competitors (Aaker 1991. p. 7). Other relevant brand concepts include brand associations, brand image, brand identity and brand equity. Brand associations are “anything that connects the customer to the brand.” They include “user imagery, product attributes, use situations, organizational associations, brand personality, and symbols” (Aaker and Joachimathaler 2000. p. 17). Brand strategies, the set of “perceptions about a brand as reflected by the brand associations held in consumer memory” (Herzog 1963). Brand identity is defined as the totality of the brand associations that the marketer wishes to create or maintain for the brand: Brand identity is a unique set of brand associations that the brand strategist aspires to create or maintain, These associations represent that the brand stands for and imply a promise to customers for the organisation members (Aaker, 1996, p. 68) It represents “what the organization wants the brand to stand for” (Aaker and Joachimathaler 2000. p. 40). Brand identity is thus contrasted to brand image, where brand image is a “receivers side” concept while brand identity is a “senders side” concept. Brand image is the result of, or a “decoding of,” brand identity (Kapferer 1992. p. 37). Accordingly, if brand image is the set of consumers current associations, then brand identity is the set of associations the marketer would like them to have and keep. The value of brands to firms largely emanates from perceived brand equity. Brand equity is “a function. Largely of brand [to] consumer relationships” (Ambler 1997). It is “a set of associations and behaviors on the part of a brands customers, channel members and parent corporations that permits the brand to earn greater volume or greater margins than it could without the brand name and that gives a strong, sustainable and differential advantage” (Srivastava and Shocker 1991: cited in Ambler and Barwise 1998). The sources of brand equity are brand loyalty, name awareness, perceived quality, brand associations, and other proprietary brand assets (Aaker 1991. p. 17). Brand equity can also be seen as “a set of assets (and liabilities) linked to a brands name and symbol that adds to (or subtracts from) the value provided by a product or service to a firm and/or that firms customers (Aaker 1996, p.7-8). The implication here is that brand equity refers to the perceived value of a brand as determined through the consumer market’s perception of its utility and benefits, as compared to its price. Within the context of the stated, therefore, the branding of products is ultimately about creating perceptions of value. Given that the creation of brands is the creation of value, the implication is that brands offer firms a variety of benefits. According to Aaker (1991. p. 270), brands provide value to firms by enhancing the efficiency and effectiveness of marketing programmes; brand loyalty: prices and margins: brand extension success; trade leverage: and competitive advantage. Indeed, in their analysis of the brand-management system, Low and Fullerton (1994) assert that “branded goods have become the bulwarks of modem high level dynamic economies.” To the extent that brands are the primary way for firms to earn superior returns through their marketing efforts, not only are they truly central to marketing theory and practice but represent value. Much of the value of brands to firms arises because brands are valuable to consumers. The incremental price and margin that a company can obtain for a brand; the improved loyalty to a brand; and the success of brand extension are all due to the value that consumers place on brands. Several researchers have attempted to enumerate the benefits of brands to consumers. Aaker (1996, p. 270) notes that brands provide value to consumers by enhancing their interpretation/processing of information, confidence in the purchasing decision, and use satisfaction. Arguing that the value of brands to firms derives from the value of brands to consumers and their perceptions of utility and equity, Ambler (1997), offers a precise identification of the benefits of brands to consumers, arguing that value emanates from the said benefits. The benefits of brands are divided into economic, functional and psychological reasons. He notes that although many of these benefits are still questioned, on the whole the picture is a positive one. The economic benefits that brands provide include: promote competition: ensure value for market: insure consumer risk; help avoid uncertain outcomes; and provide wide range of choice. The list of functional benefits includes: creating horizontal differentiation by offering a variety of added values, creating vertical differentiation by offering a variety of price points; providing reliability and reassurance; brands are fit for the use for which they are advertised; wide availability; subsidy of media and events. The psychological benefits are that brands simplify consumer problem-solving and information processing; help consumers feel good about their purchases; and identify and/or gain self-esteem with various types of social groups (Ambler 1997. p. 170-188). Given that the consumer market ascribes multiple benefits to brands and perceives of them as valuable, the implication here is that firms derive their value from the brands they own. In other words, a firm’s standing and position in the consumer market is predicated on market perceptions of the brands it owns. Product branding and marketing, despite their being the most popular and effective strategy for brand and value creation, are problematic for one reason. Quite simply stated, they tend to obscure the firm behind the brand because brands are promoted and marketed as distinct goods and not as goods which are associated with a particular and identified firm. According to Thomson (2002), while this does not detract from the value of the brand in question or from its financial worth to an organization, it certainly does from its overall value. Quite simply stated, and as confirmed by McAlexander, Schouten and Koening (2002), brands have both financial and non-financial value to an organization, all of which combine to increase an organization’s overall, cumulative value and market standing. The failure to identify an organization with a particular brand detracts from the said overall value. Proceeding from the above-stated, the importance of identifying the company that owns the brand appears to be increasing. The relevance of "organizational associations" (brand associations that relate directly to the company) has been recognized for some time (Aaker 1996). More recently Kapferer (2001) has noted a shift in the relative emphasis of the two aspects of the definition of "brand," differentiation and identity. A brand differentiates a product from other products and it also identifies the brand with a source. Kapferer claims that until recently most brand management theory and practice was focused on differentiation, almost to the exclusion of identification. He believes that the limits to the benefits of the differentiation focus have been reached, and that companies are now exploring the benefits of "unveiling the company behind the brand" in order to provide greater credibility and authenticity (Kapferer 2001, p. 9- 10). In other words, the drive towards identification is instigated by the goal of maximising the benefit of brands to an organization. In the final analysis and as the foregoing essay has tried to establish, brands are synonymous with value. Within the parameters of the consumer market, brands promise several advantages and benefits which extend beyond the immediate use of the product. For example, the purchase of a BMW is not simply the purchase of a car, but of reliability, status symbol among others. As far as the consumer market is concerned, therefore, the value of brands is assessed from several perspectives. Turning to organizations, the value of brands is similarly incontrovertible. Quite simply stated, brands comprise one of the organization’s most valuable assets and it is through its brands that organizations make their profits. Nevertheless, the current value of brands to organizations, although significant, is constrained by failure of identification. It is within the context of the stated that despite existent, and considerable value, it is believed that value can be maximised through identification, as in the association of a firm with its brands. Bibliography Aaker, D. A. (1991) Managing Brand Equity. New York: The Free Press. Aaker, D. A. (1996) Building Strong Brands. New York: The Free Press. Aaker, D.A. and Joachimathaler, E. 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(2002) Building Brand Community. Journal of Marketing, 66, 38-54. Thomson, K. (2002) Stomach-churning strategies. Brand Strategy. White, R. (1999) What can advertising really do for brands? International Journal of Advertising, 18(1), 3. Read More