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Assignment on Why do brands matter ?

Submitted to: Mr. Zia Ul Haq Dept of management studies Submitted by: Akshay Patidar 110103

The Importance of Branding

One of the truths of modern business is that there is almost nothing that your competitors can't duplicate in a matter of weeks or months. If you have a great idea, you can be certain that somebody will copy it before long. And not only will they follow your lead, but they may also be able to do a better job or sell the product or service at a lower price. The question then becomes, "What competitive edge do I have to offer that cannot be copied by anyone else?"

The answer? Your brand.

Creating a strong brand identity will build mind share one of the strongest competitive advantages imaginable. As a result, customers will think of your business first when they think of your product category. For example, when you think of tissues, more likely than not, you think of the Kleenex brand. And when you're looking for tape to wrap a present, Scotch is the brand that springs to mind. Likewise, when your child wants a hamburger, he will often say he wants to go to McDonald's. The reason behind these strong brand-product associations is that these companies have built rock solid brand identities.

"A brand is the one thing that you can own that nobody can take away from you," says Howard Kosgrove, vice principal of marketing at Lindsay, Stone and Briggs Advertising in Madison, Wis. "Everything else, they can steal. They can steal your trade secrets. Eventually, your patents will expire. Your physical plant will wear out. Technology will change. But your brand can go on and live. It creates a lasting value above and beyond all the other elements of your business."

That value is often called brand equity, or the worth of the brand. Brand equity, unlike other abstract marketing notions, can be quantified. For instance, if you owned the Marlboro Company and wanted to sell it, you would begin to value the firm by looking at the assets tied to the Marlboro brand. You would then identify the cost of the factories, patents, trucks, machines and staff." They are worth a small fraction of what you can sell that brand for," says Kosgrove. "The value of that brand is huge compared to those actual physical assets." The importance and value of branding becomes apparent when an entrepreneur wants to sell his or her company or take it to Wall Street for a public offering or other infusion of capital. It is often the brand that a business owner has to sell in such cases.

II. When Should You Brand?

Because of the competitive nature of business today, nearly all industries can benefit from a branded product. All of the traditionally brand-conscious industries, including fashion, restaurants and consumer goods, are being forced to continue to brand heavily perhaps even more strategically than they ever have in the past. Financial services, which were one of the last frontiers, are even beginning to see the importance of branding by tagging banking packages and even mutual funds with catchy names. Even industrial markets, where cost is usually more of a loyalty building factor, has seen brand names creep in. For example, Tyvek, a DuPont fiber, improbably one of the best known industrial branded products.

Other industries in which branding is a must include:

Fast food High-tech Beverages Packaged Goods Petroleum Entertainment Retail Auto Pharmaceutical

III. Types of Brands A brand cannot be all things to all people. By definition, no one brand is going to appeal to all customers. On the contrary, branding is based on the concept of singularity targeting individuals in a personal manner and therefore precludes the concept of universal appeal. This is why many brands broaden and widen their appeal by creating tertiary brands or line extenders. Although most industries and products or services can benefit from a brand, not every product needs its own stand-alone brand. Brands can be separated into three categories: primary, secondary and tertiary.

Primary Brands - This is a company's core brand or umbrella brand. Primary brands typically garner a large percentage of a company's revenue potential and therefore need to be given priority and have a sufficient amount of advertising in order to root them firmly. Secondary Brands - These are often line extenders, or "flankers," for a core brand. Secondary brands don't need to have their own name; usually a modifier to the brand name will suffice and strengthen the core brand. Take, for instance, a toothbrush called the Crest Deep Sweep. Crest is the core brand, and Deep Sweep is the secondary brand. Line extenders are characterized by having a descriptive term that allows the base brand to be the true selling proposition and the flanker to really designate to the audience what that particular product's key feature or benefits are. Tertiary brands - These brands typically have insignificant revenue potentials or expectations, but they contribute to the company's overall image in some way. Therefore, they sometimes don't sport registered brand names, but just descriptors. For example, a garbage bag manufacturer may make a generic-brand bag in addition to its flagship brand. The generic line may bring in minimal revenue for the company, but it fills a need within a niche market so the company continues to manufacture it under the unregistered name Household Trash Bags. Therefore, the generic line is considered a tertiary brand for this company.

IV. What Goes Into a Brand? If your product or service is new or unique, thetas of branding is made easier. Since there are no preexisting biases toward the product or service, it will be easy to manipulate customer attitudes. More often, your product or service will have been in existence for a while and have direct competition. And if it doesn't, it probably soon will. Therefore, products that may be roughly equivalent in terms of their features need to have a brand identity that will impact consumer choice. Brand identity is comprised of:

Pricing - a component of value; higher prices may signify to consumers higher quality, and lower prices may suggest decreased value. Distribution - availability; limited distribution of a product or service may imply exclusivity to discerning consumers. Quality - which impacts satisfaction; obviously, higher quality will translate to more satisfied customers who come back again and again to purchase your offerings. Presence - prominence in the paid and unpaid media; products or services with a high-profile market presence will lead to brand recognition and increased sales. Awareness - top-of-mind awareness, residual awareness and recognition, which are directly related to presence; the higher your offering's awareness, the better your sales results will be. Reputation - enduring public opinion of brand character, which is built over time and difficult to change once established. Image - perceptions of brand traits or prototypical buyers; often represented by qualities the consumer relates to. Like reputation, image is difficult to change once established. Benefits - consumers may equate certain positive and negative consequences with use of your product or service; these may be warranted or unwarranted. Positioning salience - differentiation from the competition, which is established by a combination of all elements of the brand. Preference - a predisposition to buy displayed by consumers who are establishing brand loyalty. Share of market - increased market share is a direct result of a successful branding campaign. Customer commitment - loyalty is built through long-term branding and close consumer contact.

V. What's in a Name? The foundation of your brand is its name. After its uniqueness wears off, it will be your brand name against the brand names of your competitors in the marketplace. So, how can you create a name that will stand the test of time? "First, it should be able to communicate on its own without a lot of advertising," says James Dettore, president of the Brand Institute in Boston. "It has to be easy to pronounce and have neutral to positive associations around the world, or at least in various languages. Because of the high ethnic influences here in America, you still have to have a name that crosses over many ethic and language barriers." Some extremely successful brand names include Google, Calvin Klein, Evian, McDonald's and Nordstrom. Many companies have committed translation faux pas when they failed to cross reference the brand's name in other languages or cultures. One of the most popular instances was the marketing mishap with the Chevy Nova. The car didn't go over well when the Latin consumers, as the vehicle's name in Spanish means" It doesn't go." More recently, marketers at Reebok obviously didn't do their homework when they named their women's running shoe "Incubus." Apparently, no one at Reebok was aware of the nightmarish nature of the name: An evil mythological spirit believed to descend upon and have sexual intercourse with women as they sleep. The company was mortified and looked into ways it could wipe out the offending name, which didn't appear on the $57.99 shoes, but on boxes. Besides making sure that people from all or most ethnic backgrounds will accept your brand's name, it should also be memorable and easy to communicate in packaging and advertising. If possible, the name should also complement the overall core values of the company. For instance, Pampers was a perfect name for the diaper line that Procter & Gamble launched in the late 1970s. The name is easy to say, has positive associations, and links to the performance of the product. Besides that, the brand came out at a time when cloth diapers were still largely popular with mothers. By the name alone, mothers could make the switch to disposable diapers that were more convenient without feeling that the product would compromise the comfort, or pampering, of their child. In cases of large companies, a brand name can help propel a product or service through the marketplace. In other instances, particularly with younger brands, the descriptiveness of the name can have a strong influence on how well it's accepted (i.e., Aleve, America Online, Performa). For others, the name has no meaning at all until broader identity building programs are built around the name (such as ESPN, Foster's Lager, Tide laundry detergent).