The Importance Of Branding Important To Consumers

This assignment stresses the fact that how important Branding is to consumers and to various organizations. The assignment focuses on the fact that how Branding impacts the mindset of consumers and organizations on the whole. The assignment further details the concept of Branding, defines Branding and explains the concept of Brand Equity, importance of consumers and customers in the process of Branding and also how important is Branding to professional marketers. “I would like to acknowledge and thank Dr Mark Venables for his kind guidance and advice during the course of this assignment” Branding has always been around for centuries as a means to differentiate between the goods of one firm from those of another. In fact, the word brand is derived from the Old Norse word brandr, which means “to burn,” Branding is a major issue in product strategy. As Russell Hanlin, the CEO of Sunkist Growers, observed:”An orange is an orange….is an orange. Unless….that orange happens to be Sunkist, names 80% of consumers know and trust.”Well Known brands command a price premium (Kotler P 2003). At the same time, developing a branded product requires a great deal of long term investment, especially for advertising, promotion and packaging. Branding can be defined as the “Entire process involved in creating a unique name and image for a product (good or service) in the consumers’ mind, through advertising campaigns with a consistent theme. Branding aims to establish a significant and differentiated presence in the market that attracts and retains loyal customers” (Businessdictionary.com 2009). Branding is the process which involves decision making which facilitates the establishment of an identity for a product with the goal of differentiating it from others. In the economic markets where there is fierce competition and consumers may select from among many products, the creation of an identity in the form of a brand is very important from the firm. It is very important as it helps in the positioning of the product in the minds of the consumer. Companies dealing with consumer products have not since long recognized the value of branding, it has only been since the last 10-15 years that organizations in the business-to-business market have started focusing on brand building strategies. The most famous company to brand components is ‘Intel’ One of the most distinctive skills of professional marketers is their ability to create, maintain, protect and enhance brands. It is the cornerstone of Marketing. The American Marketing Association defines a brand as: a name, term, sign, symbol, or design, or a combination of them, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors (Kotler P 2003).

In simple words a brand helps the consumer in identifying the seller or the maker. Under the trademark law, the seller is granted the exclusive rights to use the brand names..However brands are different from other assets such as patents and expiry dates. The major difference being expiry dates. A brand is primarily important to the consumer as it conveys up to six levels of meaning, namely it brings to mind certain ‘attributes’ of the product, these attributes must be translated into ‘benefits’. The Brand signifies the ‘value’ of the product, it may represent a culture of the organization, it projects a certain personality of the organization and most importantly a brand suggests the kind of consumer who buys or uses the product. The obvious next question as suggested by the essay title is, ‘that why are brands and branding important in today’s world’? What functions do they perform that make them so valuable to firms and consumers? For a company to be successful in today complex and fierce marketing dominated world it is important that the organization build’s up a strong Brand Equity. More positive the ‘Brand Equity’ better it is for the organization. It explains that why are there different outcomes resulting from the marketing of a branded product and service than if it was not branded. Fundamentally this concept stresses on the fact that how important the brand is in marketing strategies. Clearly ‘Brand Equity’ is an asset to the company as it helps it in creation of more customers as a result increasing the company’s market share. ‘Brand Equity’ can be defined as the positive differential effect that knowing the brand name has on customer response to the product or service. Brand equity results in customers showing a preference for one product over another when they are basically identical. The extent to which customers are willing to pay more for the particular brand is a measure of brand equity (Kotler P 2003).Another accurate definition given by Netmba.com is as follows “A brand is a name or symbol used to identify the source of a product. When developing a new product, branding is an important decision. The brand can add significant value when it is well recognized and has positive associations in the mind of the consumer. This concept is referred to as brand equity” (Netmba.com 2007). Brand equity is an intangible asset that depends on the interactions made by the consumers. It is the built up value that a brand possesses. There are three perspectives from which Brand equity can be viewed, the first being ‘financial’. One way to measure brand equity is to determine the price premium that a brand commands over the product. Secondly, brand extensions as the benefits are the leveraging of existing brand awareness. The third perspective is ‘consumer based’, as a strong brand increases the consumers attitude strength towards the products associated to the brand. It is built by experience with a brand. Strong brand equity provides the organization with a more predictable income stream and source. It increases the cash flow for the firm by helping it to increase its market share, reducing promotion related costs and allows premium pricing. Most importantly ‘Brand Equity’ is an intangible which can be ‘leased and sold’ by the firm. Another important concept related to the organization in the context of branding is the concept of ‘Brand Loyalty’. It is very important for organizations to have loyal constomers.Branding and brands are only successful if after they’re implementation they retain ‘loyal’ customers. It is an integral part of building a brand, as consumers usually have a choice of products in the same market segment, and so a successful company will come up with a way to keep consumers re-buying their product or coming back to their location rather than going to a competitor.

‘Brand Loyalty’ can be defined as the “Extent of the faithfulness of consumers to a particular brand, expressed through their repeat purchases, irrespective of the marketing pressure generated by the competing brands” (businessdictionary.com 2009). Brand loyalty has been proclaimed by some to be the ultimate goal of marketing (Reichheld and Sasser 1990). True brand loyalty implies that the consumer is willing, at least on occasion, to put aside their own desires in the interest of the brand (Oliver).Brand loyalty is more than simple repurchasing, however. Customers may repurchase a brand due to situational constraints, a lack of viable alternatives, or out of convenience (Jones, Mothersbaugh, and Beatty 2002). Consumers have varying degrees of loyalty of loyalty to specific brands, stores and companies. Oliver denies loyalty as “A deeply held commitment to re-buy or re-patronize a preferred product or service in the future despite situational influences and marketing efforts having the potential to cause switching behavior” (Kotler P 2003).On the basis of the following definition we can broadly divide buyers into four groups according to brand loyalty status. Namely, hard core loyals who only buy one brand all the time, split loyals who are loyal to two or three brands, shifting loyals who shift brands and switchers who show no loyalty to any brand. Each existing market consists of varying number of the four types of buyers. A ‘brand loyal’ market is the one with a high percentage of hard core brand-loyal buyers. Existing companies have a hard time in increasing they’re market share where as new firms entering the market has a tough time entering and settling in. A company can learn a great deal by studying they’re degrees of brand loyalty. By studying the hard-core royals a firm can analyze its strengths, by studying the split-loyals can target and identify competitive brands and by looking at customers which do not purchase they’re brands a company can strengthen its marketing weaknesses and as a result correct them. Most importantly it is interesting to know that what looks like a brand-loyal purchase pattern may simply reflect habit a low price etc.Thus a company must carefully analyze and interpret what is behind the observed purchase patterns. Brands provide consumers with important functions. They identify the source of the product and allow consumers to look at specific manufacturers more responsibly. Most importantly brands take special meaning to consumers. From an economic perspective brands help consumers in lowering their search costs for products. “Consumers offer their trust and loyalty with the implicit understanding that the brand will behave in certain ways and provide them utility through consistent product performance and appropriate pricing, promotion and distribution programs and actions” (Keller K 2008). Brands are also symbolic as they help individuals in projecting their style statement. Certain brands exhibit certain quality traits. In summary the special meaning a brand has can change with varying products. Brands take on personal significance to consumers in their day-to-day life. As a consumer’s life becomes more complex by the day it the ability of the brand to simplify decision making that makes it so invaluable. Branding is perhaps the most important facet of any business–beyond product, distribution, pricing, or location. A company’s brand is its definition in the world, the name that identifies it to itself and the marketplace. A brand provides a description in the form of a name or service to distinguish the product it sells from its competitors. Brands provide a number of functions to firms. Fundamentally they serve the purpose of identification. They help in organizing a firm’s inventory and also help with the company accounts. It also looks into the legal issues of the organization and provides it with legal protection. A brand can retain its Intellectual Property Right (IPR) giving the title a legal status to the brands owner. Brands indicate towards the quality of the product an organization trades in. Branding is seen as a powerful means to secure an advantage over the organization’s competitors. To sum it all up to an organization brands represent valuable legal property which can influence consumer behavior and buying patterns. For this specific reason large sums of money have been invested in brands in mergers and acquisitions, starting with the early years on the 1980s.To conclude for an organization most of its value lies in its intangible assets and goodwill and 70 percentage of intangible assets can be made available in the form of ‘Brands’.

REFERENCES

Kotler, P (2003) Marketing Management (11th edn), Prentice-Hall Publication, Delhi. Keller, K (2008) Strategic Brand Management (3rd edn), Prentice-Hall Publication New Jersey. Chernatony, L and McDonald, M (2003) Creaintg Powerful Brands (3rd edn), Butterworth-Heinemann Oxford.

URLs

http://www.businessdictionary.com/definition/brand-loyalty.html

http://www.netmba.com/marketing/brand/equity/

http://www.businessdictionary.com/definition/branding.html