Value of Having a Strong Corporate Brand - Essay Example

Importance of Having a Strong Corporate Brand: McDonald’s Total Number of Words: 2,572 Table of Contents I. Introduction ……………………………………………………………….. 3 II. Definition of Brand ………………………………………………………. 3 III. Basic Information Related to Establishing a Brand …………………… 4 IV. Ways in which McDonald’s is Managing its Corporate Brand ….……. 5 a. Effectively Addressing Cultural Differences and Language Barriers of its Target Consumers ………………. 6 b. Taking Advantage of Global Advertisements in terms of Strengthening its Brand Name ……………………………….. 7 c. Preserving the Brand Equity of the Company …………….. 8 V. Importance of Branding within the Hospitality Industry ………………. 9 VI. Benefits of Having a Strong Brand Equity on the part of McDonald’s and its Consumers ……………………………..…………... 9 a. On the part of McDonald’s ……………………………………… 9 b. On the part of the Consumers …………………………………. 11 VII. Conclusion …………………………………………………………………. 12 References ……………………………………………………………………… 13 - 16 Introduction Back in 1940, McDonald’s was established by Dick and Mac McDonald in California. (McDonalds Corporation, 2006) Eventually, McDonald brothers introduced the idea of a modern fast-food restaurant in the market in 1948. Today, McDonald’s is considered as the world’s No. 1 fast-food company with more than 31,000 restaurants across 120 countries particularly in US, Europe, APMEA, Latin America, and Canada. (Bramhall, 2008; Euromonitor International, 2004) Aside from continuously expanding its retail store outlets globally, the success of McDonald’s in the global market is believed to be the result of having a strong brandname. (McDonalds Corporation, 2008; Brand Republic, 2002) For this study, the student will first define the true meaning of brand followed by the basic information related to the establishment of a brand. After discussing how McDonald’s have been managing its corporate brand over the years, the student will examine the importance of branding within the hospitality industry. Prior to the conclusion, the student will enumerate the benefits attached with having a strong brand on the part of McDonald’s and its consumers. Definition of Brand Brand is defined as the “name, term, sign, symbol, design, or a combination of these” (Kotler, 2000: 404) such as the yellow coloured ‘M’ sign of McDonald’s. Basically, the main purpose of a brand name is to enable the consumers to identify the products or services of one company from a similar product that is being offered by other companies. Aside from using a simple brand name, it is also possible for McDonald’s to have a brand extension such as in the case of ‘McDonald’s Happy Meal’ or ‘McDonald’s land or playplace’ used in targeting children (Gidman, 2008; Roberto & Roberto, 2004) A brand is not limited to the definition provided by Kottler (2000) since it can also be used in referring to: (1) the attributes, quality or characteristics of products and services offered by the company; (2) the physical and emotional benefits the consumers get out of patronizing the company’s product and services; (3) the values of the company in terms of its capability to render a high quality product to its target consumers; (4) the corporate culture such as being organized in terms of delivering its services to the public; and (5) the kind of consumers that patronizes the products and services offered by the company. (Aaker, 1997; Kapferer, 1992: 38) Basic Information Related to Establishing a Brand There are many ways on how to establish a brand. Marketing managers or a company owner(s) has the option to use the founder’s name(s), location, the quality of a product, the lifestyle of a company’s target market, an artificial name, a culture or a heritage. (Urde et al., 2007; Kotler, 2000: 413) In line with establishing a brand, Keller (1993) views brand image as the consumers’ perceptual beliefs about a brand’s attributes, benefits, and attitude associations, which are frequently seen as the basis for an overall evaluation of, or attitude toward the brand. Corporate branding is one of the most common strategic ways that will enable marketing managers to attract its target consumers and enable them to become more aware and acquainted with the company including its wide-range of products and services. Once a brand name has been officially defined, a company can protect its corporate brand name from copycats or imitators under the trademark law. (Kotler, 2000: 404) Over the years, the positive result of the marketing manager’s effort in marketing and strengthening the company’s brand name would eventually increase the company’s brand equity or the company’s value and power within the market place. (Kotler, 2000: 405) Basically, a good brand equity reflects the positive consumer behaviour towards the company and its products and services. According to Aaker (1991), brand equity is a set of brand assets and liabilities that are directly linked to the company’s brand. Among the common dimensions of a brand equity includes brand loyalty, brand awareness, perceived quality, brand awareness, brand associations, including other proprietary brand assets such as store image, advertising spending, and price deals which could either positively or negatively affect a corporate brand. (Pullig, Netemeyer, & Biswas, 2006; Yoo, Donthu & Lee, 2000) Aside from making it easier for the company to attract more investors, having a strong brand will make its target consumers more loyal to the company even if the company would sell its products and services at a premium price. (Urde et al., 2007; Kotler, 2000: 406 – 407) As a result, the company is able to protect itself from the existence of tight competition within the domestic and international markets. Ways in which McDonald’s is Managing its Corporate Brand There are many ways in which McDonald’s has successfully established its corporate brand over the years. In line with the different strategies that contributed to the brand of McDonald’s, everything started when its founder decided to name the company after them. (McDonalds Corporation, 2006) Effectively Addressing Cultural Differences and Language Barriers of its Target Consumers There are a lot of challenges associated with regards to McDonald’s effort in terms of penetrating the global market. Given the cultural differences and language barriers between a western based restaurant and the ethnic background of its target consumers, there is a huge possibility for McDonald’s prospective consumers to be unable to connect with what the company is trying to communicate with them. To become successful in establishing or making the brand of McDonald’s accepted in other countries, it is advisable for the marketing managers to carefully study the relationship between brand and the culture and tradition of its target country. (Eckhardt & Houston, 2002) Basically, knowing the cultural differences of McDonald’s target market will enable the marketing managers of McDonald’s to effectively design and develop an effective marketing campaign that can attract its target consumers to the brand of McDonald’s as they become aware of the different product-line offered by the giant fast-food company. As a result, it becomes so much easier on the part of McDonald’s target consumers all over the global market to associate themselves with the brand of McDonald’s as well as the food products the company is serving. It is crucial on the part of marketing manager to carefully examine the culture and brand perception of its prospective country since each country has a different ways of perceiving brand. For example: some culture considers brand name as purely a company name whereas for some it is about the product the company is selling in the market. In the case of China, Chinese consumers are more concern with the social relationship or social value associated with a brand. (Eckhardt & Houston, 2002; Yan, 1997) By knowing how the target consumers perceive brand, McDonald’s was able to directly address the specific needs and wants of its prospective customers. Because of the marketing managers of McDonald’s ability to address the cultural differences and language barriers in each of its target global consumers, the company was able to establish as much as 30,000 restaurants throughout 119 countries. (Nurton, 2007; Parker, 2007; The Hub, 2004) Taking Advantage of Global Advertisements in terms of Strengthening its Brand Name McDonald’s is also constantly investing on new commercials which aim to communicate the company’s brand to its modern consumers. Since 1980s, McDonald’s had been strongly promoting the importance of family values as a strategic way of increasing the company’s profitability. (Leonhardt, 1998) In relation with giving priority on family values, the company launched its most recent global television commercials and newspaper print advertisement on “I’m Lovin’ It” global brand campaign since 2003. (The Hub, 2004; PR Newswire, 2003) Despite the cultural differences of each of McDonald’s target country, the fact that the theme used in “I’m Lovin’ It” campaign reflects the importance of family get together makes the global brand campaign applicable and appealing to its target consumers around the world. Aside from serving as an effective public relations with its target consumers (McDonalds, 2003), this type of global brand campaign not only increases consumers’ awareness and values associated with the company but also the publicity behind the quality of McDonald’s food items. To prevent language barrier behind the “I’m Lovin’ It” television advertisement in Hong Kong, the company managed to produce a cantonese-language version wherein the commercial vocals was headed by Eason Chan and Joey Yung. (McDonalds, 2003) The same strategy applies when it comes to solving issues related to language-related problems in each country with McDonald’s fast-food restaurants. In line with the success of McDonald’s previous brand campaigns, Larry Light – McDonald’s chief marketing officer (CMO) revealed that most of McDonald’s franchised stores have experience a significant increase in the company’s sales and profitability. (Cabell, 2003) Preserving the Brand Equity of the Company In line with preserving the brand equity of McDonald’s, the company has exerted a lot of effort protecting McDonald’s brand and corporate logo under the trademark law. In line with this matter, McDonald’s have been maintaining the value of its global brand name by legally suing companies, restaurants or individuals who has intentionally or unintentionally used a logo and/or brand name similar to what McDonald’s is officially using. (Workman, 2006) Importance of Branding within the Hospitality Industry Despite the cultural differences of McDonald’s consumers in the global market, maintaining and preserving the quality of its hospitality or the warmth welcome of McDonald’s staffs toward each customer that enters the fast-food restaurants creates a universal culture that is widely accepted by its domestic and foreign consumers. Once McDonald’s have successfully implemented the practice of hospitality throughout its thousands of fast-food chains in the global market, its target customers would unconsciously develop a positive perception with regards to the brand image of the company. For this reason, branding in commercial hospitality industry, such as in the case of commercial food and drink businesses like McDonald’s, is one of the key factors that contributes to the global success of the company. Not only does branding increase the competitive advantages (Neal, 2006) of McDonald’s as the largest global fast food company, it also makes McDonald’s restaurants one of the most preferred places where its loyal customers could enjoy their food as a leisure purposes (Bell et al., 2007). As part of making McDonald’s a successful business in the global market, having a good brand image makes it possible for McDonald’s consumers to react positively with its promotional and other global brand activities like the ‘I’m Lovin’ It’ campaign. Benefits of Having a Strong Brand Equity on the part of McDonald’s and its Consumers On the part of McDonald’s Having a strong brand equity enables McDonald’s to easily penetrate the global market despite the cultural values and language differences of its target consumers since brand equity increases the efficiency of the company’s marketing communication in television and print advertisements. (Eckhardt & Houston, 2002) It also adds up to the profitability of the company since a strong brand equity increases the willingness of its target consumers to pay premium prices for the food and services the company offers in the global market. (Yoo et al., 2000; Pitta & Katsanis, 1995; Barwise, 1993; Keller, 1993; Simon & Sullivan, 1993; Smith & Park, 1992; Farquhar et al., 1991) Since brand equity makes the customers have a positive attitude towards the brand name McDonald’s (Farquhar, 1990), the company is able to minimize the negative effects of competition and negative publicity in the marketing activities including its business profitability. For example: In relation to the increasing rate of obesity throughout the United States, McDonald’s was legally attacked for its “deceptive food advertising campaign” in the case of Pelman v. McDonald’s back in early 2000s. (Dunne, 2004; Kramer, 2004) Even though the case was eventually dismissed by the court (BBC News, 2003), the existence of negative publicity on obesity issues did not prevent McDonald’s loyal customers from patronizing the company’s product and services. Based on the study that was conducted by Aaker (1991), a good brand equity is highly associated with brand loyalty, brand awareness, perceived quality, and a strong brand association. Given that customers are satisfied with the quality of product and services they receive from McDonald’s, these group of individuals are most likely to become loyal with the brand which can be traced and monitored by considering the actual purchasing patterns of the consumers such as repeat orders. For this reason, the marketing expenses of McDonald’s is reduced since the existing brand awareness the company has invested over the years is sufficient to convince its target consumers to patronize the products and services offered by McDonald’s. Aside from brand loyalty, a strong brand equity also increases the perceived quality and brand awareness. Zeithamal (1988) stated that a perceived quality is a strong componenet of brand value in the sense that a high-level of perceived quality makes the consumers choose McDonald’s over other similar competing brands. On the other hand, a strong brand awareness means that the company’s target consumers are able to easily recognize and recall the brand name McDonald’s. Basically, having a positive brand image combined with brand awareness and perceived quality could significantly influence the purchasing activities of McDonald’s target consumers. (Keller, 1993; Aaker, 1991: 91) On the part of the Consumers A good brand equity gives McDonald’s consumers a reason-to-buy the food products offered by the company. Not only does a good brand equity enables the target consumers to become attracted with the brand name McDonald’s, it also enable the consumers to develop and establish a strong relationship or a brand association with McDonald’s. For this reason, consumers are unconsciously able to build a long-term brand loyalty with McDonald’s. For example: Despite the fact that McDonald’s is selling its food items at a premium price, the company is still able to attract its target consumers to purchase its food items. This is possible because of the strong sense of brand awareness, brand association, and perceived quality that McDonald’s loyal consumers have over the company’s brand name. In exchange of the sense of social belongingness that the customers have with the brand, most of its target consumers are more than willing to purchase McDonald’s food items at a price higher than some of its competitors. To show the impact of brand over the taste of McDonald’s food products, an experimental test was conducted by Dr. David Katz on children between 3 to 5 years old. Using the same sources of hamburgers, the research team wrapped the food with McDonald’s and generic wrapper. Even though same hamburgers were used in the research experiment, majority of the kids revealed that food items with McDonald’s wrapper taste better than the ones with generic wrapper. (Pronet Advertising, 2008) Conclusion One of the secrets behind the success of McDonald’s is the company’s ability to develop and establish strong corporate brand. Not only does strong brand equity builds a long-term relationship between the company and its target global consumers, a high-perceived quality together with a strong brand awareness and brand association enables the company to have the power to withstand the impact of negative publicity and slow economic growth over the entire profitability of the business. McDonald’s strong brand equity contributes a lot to the increase in the business profitability as well as the company’s ability to successfully penetrate the global market. 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