A brand is a combination of name, symbol or design intended to identify the goods and services of one seller and differentiate it from that of other seller designed to satisfy the same need. The differences can be in sense of product performance (functional, tangible) or about what brand represents in abstract sense (emotional, symbolic, and intangible). E.g.: Artists signing their work. Brand is the ‘bait’ used to attract customers to extract value. Brands role:
1. For Consumers: It acts as a promise between firm and consumer and acts as a basis to set consumer expectations and reduce their risk. Consumers learn about brands through past experiences and its marketing program. Brands can also take personal meaning to consumers and express who they are or who they want to be.
2. For Firms: A brand’s name, manufacturing processes, packaging, etc. can be legally protected through trademarks, etc. It also helps in simplifying product handling by organizing accounting records and inventory. Brand loyalty provides security of demand and creates barriers to entry for other firms. It can also lead to more willingness to pay. Competitors can match the processes and other things but they can’t match the experience and image of the product.
A strong brand commands a great product or service and intense customer loyalty which helps in improving the financial value of firms. Strategic brand management refers to design and implementation of marketing activities to build and manage brands for maximizing their value. Branding is the process of endowing products with the power of brands. Branding clarifies decision-making and teach customers ‘who’ the product is, what it does, etc. It is possible to do branding of a product, a service, a store, a person, a place, an organization or an idea.
Brand Equity is the added value endowed to product and services with consumers. It may be reflected in the form of prices, market share, profitability or how consumers think or act for brand. It is different from Brand Valuation which is the assessment of financial value of the brand. Consumer-based brand equity is the differential effect brand knowledge have on customer response to marketing of that brand (positive when consumer reacts more favorably when brand is identified). If no difference in customer response occur, brand is essentially a commodity and competition is based on price. Differences occur based on Brand Knowledge (thoughts, feelings, experiences associated with the brand). It is enhanced by creating unique brand association with customers such as Toyota (reliability) and Amazon (Convenience and wide selection). Thus, marketing expenses acts as an investment in building customer’s brand knowledge which will act as a bridge from past to future. Customer’s perception of brand decides brand extensions. E.g.: Cracker Jack cereal and Frito-Lay Lemonade failed. A brand promise is the marketer’s vision of what the brand must be and do for consumers. E.g.: Virgin’s brand promise is to enter categories where customers’ needs are not well met like Virgin America Airlines.