In late 1990s, for unknown reasons, the word `brand' suddenly became a verb. Headlines such as A Brand New World, Brands Bite Back, Branding God, and Branding Tall were attracting marketers.
However, branding as a phenomenon started way back in the 18th century, when the English artisan Josiah Wedgwood [1730-95] built the first modern business brand1. Wedgwood was able to stimulate demand for his more profitable tablewares and command premium price over comparable tableware and other products. Post-industrialization corporate world felt the need of branding. Companies across industries were trying out the best possible ways to brand their products.
Irrespective of the theories of the origin of branding and its evolution, academicians and marketers unanimously agree that in the beginning the market was commodity driven. Everything offered in the market was the base commodity - rice, lentil, sugar, coffee, tea, steel, plastic and a host of other basic items - that served our daily life purpose. But the customers were not happy with the base commodities and they wanted something else with which they could associate as the best product available in the market. It is natural tendency for the people to desire for newer products and also seek the best. This latent desire of possessing the best in the world could be seen as the driving force behind branding. Procter & Gamble [P&G] is one of the first companies to identify the latent desire of customers and address it.
In 1931, Neil McElroy, P&G's marketing manager, devised specialized marketing strategies for each brand. In May 1931, Neil presented a three-page internal memo and argued that P&G should shift to brand-based management. This is how P&G's brand management system was born. He rose to head P&G in 1948, and his memo became the guiding rule for companies, including P&G, to manage brands. The case "P&G's Brand Management System" discusses P&G's brand management system, its evolution and growth.
Seven decades since Neil presented his famous memo, the corporate world still abides by it. With increasing competition, the importance of branding has increased over the years and companies across industries globally are consistently looking for innovative ways to brand their products and services.
Importance of branding in the last two decades has increased in the light of realization that brand drives nearly two-thirds of customer purchases and impacts nearly every functional area of the business.2 Branding has gained prominence in market with the evolution of increasingly complex new business models, challenging organizations to revisit the brand-customer relationship.
Basics of Branding
Branding, for years, played an important role in establishing the product's [in few cases even firm's] reputation in the marketplace, among customers, retailers and other market players. Today, it has become extremely important for management to attract attention of supply chain partners, media, the stock market, venture capitalist, and other investors.
Though the dimensions of branding and strategy of developing a successful brand have changed in recent years, the basics of brand remain unchanged. A brand needs well-defined brand architecture. It defines and structures the relationship among brands, the corporate entities, and families of products and services. The key drivers that affect brand architecture are - the pace of technological change, the ever-increasing channels of communication, and the growing sophistication in the way companies view brand equity and manage their brand development.
The brand architecture of an organization at any given point is based on a legacy of past management decisions and the competitive realities it faces in the marketplace. Brand architecture is the way in which companies organize, manage and market their brands. It is often seen as the external face of business strategy and must align with, and support, business goals and objectives. The success of brand architecture is also based on well-established brand position, brand image, brand personality, brand loyalty, brand strategy, brand activation and brand valuation.
Brand Positioning
The basic approach of positioning is not to create something new and different, but to manipulate what's already there in the mind of customers and to strengthen the connections that already exist. Positioning is an act of seeking, placing and optimizing something in relation to the competition in surrounding environment. For example, Volvo is synonymous with safety and Ivory Soap with purity.
The leader owns the high ground - the No.1 position in the prospective customer's mind, the top rung of the product ladder. To move up the ladder, management must follow the rules of positioning. Basic qualities of brand positioning include: relevance, clarity, distinctiveness, coherence, commitment, patience, and courage3.
Relevance: Positioning of brand must focus on benefits that are important to people or reflect the character of the product.
Clarity: Brand should be positioned in such a way that it is easy to communicate and quick to comprehend.
Distinctiveness: In current market situation there are reasonably good number of players vying for a share in the market, forcing them to compete on the basis of price or promotion. To overcome such a situation, company needs to offer distinctiveness in its products or services.
Coherence: A brand should speak with one voice through all the elements of the marketing mix.
Commitment: Management should be committed to the position it has adopted. Once a position is adopted, it takes commitment to see it through.
Patience: Patience plays an important role in the success of brand as branding is not a one-day wonder - it takes years to position a brand in consumers' mind.
Courage: Adopting a strong brand position requires courage as it is much easier to defend an appeal rather than generate sales pitch.
To achieve the benefits of brand positioning, it is necessary to identify the market position of the brand. Management must understand that not all brands, present in the market, are competitors. A consumer may be presented with a dozen brands and he may consider only three out of them as a purchasing choice.
Brand Identity
The journey of Malboro's cowboy, the most valuable brand identity ever created, started years back with a name, logo and slogan, and developed trust and long-term brand equity. Brand identity is a unique set of associations that the brand strategist aspires to create or maintain. These associations represent what the brand should stand for and imply a potential promise to customers. It is marketers' perspective of how to project brand publicly. Brand identity offers a point of differentiation. It is an attempt to make brand unique so that people readily identify what the brand stands for and what they are purchasing.
Brand Loyalty
Brand loyalty is a crucial goal and is a result of successful marketing programs, sales initiatives and product development efforts. Moreover, brand loyalty is the consumer's conscious or unconscious decision, expressed through intention or behavior to repurchase a brand continually. It occurs because the consumer perceives that the brand offers the right product features, image, or level of quality at the right price. It is a strongly motivated and long standing decision to purchase a particular product or service.
Brand Extension
Brand extension is not a new phenomenon. It gained importance in the 1980s when more than half of the brands marketed were extensions of existing products that marketed under existing product names. The phenomenon of brand extension gained momentum with success of extensions like Diet Coke, Dove Haircare, Caterpillar Clothing & Footwear, Gillette Deodorant, and Mars Ice Cream. The 1990s were the heydays for brand extension. Eighty-one percent of new products [launched in market] were extensions.4 Brand extension is a strategy of using a successful brand name to launch a new or modified product in a new category.
Brand extension makes great sense to customers and companies. Firms use it as a tool to develop a positive association, and save promotional cost, while customers see it as delivery of the same emotional benefits in another category. For example, the famous soap brand, Dove, extended its presence to hair care. Lever Faberge launched a hair care variant of Dove in January 2002, supported by £ 35million campaign. At the end of three months period, it gained 10.3% share of shampoo market. The success of the Dove shampoo could be attributed to the fact that it piggybacked on the established brand Dove soap. By piggybacking on the Dove, Dove shampoo moved beyond the realm of functional product to the realm of values. Virgin started its journey as a music record shop and today it is a multi-product brand.
Brand Valuation
Nestlé took over Rowntree Macintosh by paying three times its market value. The purchase price was twenty-six times the earnings generated by Rowntree Macintosh. The reason behind such a deal was high brand valuation.
Brand value is closely associated with brand strength that is derived from brand identity, brand personality and brand image. Ford, for instance, paid Euro 6.2 billion for the Jaguar brand. The high brand value established by IBM, Nike, and GM can only be enjoyed by a company that enjoys brand identity and motivates consumers to accept a higher price, remain loyal to the brand, and recommend it to others. The case "Building Brand Equity in Wine Industry" discusses brand equity methods - dollarmetric approach, conjoint analysis and multiple regressions. It also explains entire process of branding in wine industry.
Total Brand Management
Brand in the new millennium is viewed as an asset, some of the Indian and global companies that take brand as an asset, viz., Kodak, BMW, Coca-Cola, and ICICI. Branding strategy in the new market structure has changed. Today, brand strategies may focus on three key dimensions: developing superior product through continuous innovation; creating, building, maintaining and delivering consumer values that cannot be matched by others; and emphasizing on strong positioning.
Branding in recent years has emerged as central to a company's overall business strategy. It has taken the form of business systems and is no more proprietary to marketing managers. It has implications across functions and business processes and is central to a company's overall business strategy. For companies to survive in the changed business scenario, total brand management is a must.
Total Brand Management can assume a variety of forms - brand extension beyond the actual product, well-crafted umbrella brand, and entire retail system as a brand. They also recommend that companies for success of total brand management must concentrate on three key activities:
Maximizing synergies across a coherent brand portfolio
Strengthening brand portfolio through innovation
Securing brand through close relationships with customers and trade.
Total brand management is a way to leverage success, expand marketshare, and drive down competition. Indeed, companies with established brands often penetrate markets or defend core markets.
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