Explain why it is important for marketers to understand the concept of branding. Discuss in detail concepts branding, brand positioning and brand equity and explain some brand strategies such as brand extension or brand stretching.
It is imperative for marketers to understand the concept of branding as it is the process which will identify and differentiate a company's product or service from the competition (Jobber, 2010). In our developed economy the competition and the offer is so intense that it is fundamental to build a close relationship with both consumers and customers. That is what a brand does. Jobber (2010) defines a brand as “a distinctive product offering created by the use of a name, symbol, design, packaging, or some combination of these intended to differentiate it from the competitors”. Brands affect consumer's perceptions and preferences, a brand is a quality certification and it creates trust and loyalty. Trough this essay we will explore why brand is important for marketers but also why it is important for consumers, we will then take in consideration the components of a strong brand and how to assess it. Finally we will have a look at the brand stretching strategy and its benefits and disadvantages . This essay will draw upon example from the soda market.
The American Marketing Association (AMA) defines a brand as ''name, team, sign, symbol or design, or a combination of them intended to identify the goods and services of one seller or group of seller and to differentiate them from the other sellers''.
Firstly, brands are now recognised as a key asset for a company and having a strong brand will ultimately add value to it by giving a platform on which to build a reputation. For example, the stock market value of the Coca-Cola company was around $136 billion in the beginning of 2008 and by the end of the year, in spite of the global financial crisis, it remained close to 140 billion while the net asset value of the business was only $11,8 billion (Brands and Branding). A brand in addition, will help the company to attract more investors because the high value means the company is successful and reliable.
Secondly, marketers should also try to understand consumer behaviour and therefore how a strong brand will affect consumer perceptions and preferences and ultimately the customer's purchasing decision. To highlight this concept. The following consumer testing example is referenced: Two matched samples of consumers were asked to taste Diet Coke, the market leader in diet soda drinks, and Diet pepsi. The first group tasted the drinks blindfolded and were asked to state a preference. The procedure was repeated for the second group, except that the test was with the recognisable brand. (Jobber,2010). The findings from the test made for interesting results: Of the 100 or so test subjects who were blindfolded, 51 of them preferred the Diet Pepsi and 44 the Diet Coke ( 5 person did not find any difference) but for the group where the brand were identifiable, only 23 test subjects preferred the Diet Pepsi and 65 Diet Cola. This findings clearly demonstrated the level of influence a strong brand name could have on customer perception of a product and therefore the final purchasing decision.
In order to succeed, marketers need to understand the concept of branding to face the competition (Marketing Theory). New entrants in a market such as the cola soda market would have to compete with the most famous red can in the world and the founder of the Cola drink, Coca-Cola. Besides, this is what happened to Virgin Coke who failed to break Coca-Cola's domination (Jobber,2010),for the reason that Coca-Cola inspires trust and let the customer shop with confidence because he knows that a can of Coke will satisfy his desires. In addition, it will embraced the competition by making the distribution easier for the brand and more difficult for the entrants.
Marketers have to...
References: -Company, 20 october 2012, www.redbull.com/cs/satellite/en-Intcompany/001242939605518
-David Jobber, 2010, Principles and Practice of Marketing, sixth edition, New York, Mr Graw-Hill Education Ltd.
-Kevin Lane Keller, 1993, Measuring and managing customer-based brand equity, Journal of Marketing, Vol.57, No 01, pp. 1-22.
-Leslie de Chernatony, 2009, Towards the holy grail od defining 'brand ' , Marketing Theory.
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