What is a Brand?
Brand is a name, symbol or a combination of symbols (words, music, colors, logos, packaging type and design, and so on) that communicates values or ideas to various consumer groups. We can say that it is the identity of a company, product or service.
Example of Brands: Samsung, Sony, Apple, Toyota, Coca-Cola, Cadbury and others.
Brands have emerged as a way to enable product manufacturers to help their customers recognize their products and buy them by being consistent and reliable in an age of adulterated products and poor quality control.
So if it were a person, a brand would always wear the same clothes and would have the same hairstyle. She can change that hairstyle and clothes, but even when that happens it is still possible to identify her, usually this change will come with a story or motives behind it.
Brands have a powerful meaning for both consumers and non-consumers. They alone can classify an individual as adventurous, brave, macho, inquisitive, free, cheerful, philosophical and so on. Brands like Mercedez-Benz, Audi, Tesla, Apple, Gucci, Prada and Rolls Royce have a strong meaning, even a person who has never used these brands personally, knows a lot about them. Brands are part of our urban culture.
A Rolex watch can be a well made jewel with the ability to tell the time, but the Rolex brand is a symbol of boasting and perhaps extravagant wealth.
A brand can be seen as a private club and whoever buys a brand’s product buys a ticket to enter such club and be a part of it, and even represent it. It is not surprising when we hear that some brands like Ferrari have waiting lists for people interested in purchasing their vehicles and make an assessment of the buyer, there are cases in which even if he has the money to buy the car he can be rejected by Ferrari for not representing what they expect from people who are part of their “club”, who are allowed to use their brand.
This symbolic value of brands is nourished and appreciated by brand owners through Public Relations, product placement and branding in media and entertainment, sponsorships and packaging.
A Brand’s image is today a source of consumer interest, the ways in which a brand can be portrayed and its image controlled become central to brand management issues.
Decisions about price, design, packaging, distribution and even raw materials are taken taking into account the core values of the brand and how they can be perceived in the brand’s coverage by the media.
If Brand A was better designed, is more attractive, easier to use, or more useful than Brand B, is rarely something that can be decided in a final and objective way. It is usually up to a certain point, a matter of opinion. And it is exactly here where advertising acquires its power to persuade minds, since consumers are constantly seeking suggestions for their consumption that have social value to them.
In competitive markets it is difficult to make a product or service look distinctly different from the rest. Innovations in design, manufacturing, price and distribution can be quickly copied. This implies that a tangible competitive advantage is difficult to achieve and even more difficult to maintain for long periods under competition. Fortunately the competitive advantage that companies can not maintain by other means can be maintained through branding and brand positioning.
Positioning
Positioning is to make a product occupy a unique and different place in the mind of the consumer in relation to competing products.
In Positioning: The Battle for Your Mind, Al Ries and Jack Trout delve into the limited slots consumers have in their brain for products and services, and the importance of positioning one’s business in the ideal slot.
For example, Kit Kat has been positioned for many years as a prize for hard work with the famous tagline: “Have a break, have a kit kat.”
On the other hand, the rival Cadbury has positioned itself as a sensual pleasure that the consumer gives himself.
A clear example of Positioning is the rivalry between Hertz and Avis. Seeing that the number one car rental position was already taken and that it would be difficult to face Hertz because they practically had a market monopoly, Avis positioned itself as number 2 with the famous slogan: “We are number 2, so we work harder. “
So positioning is: – not what you do to a product – it’s what you do to the prospect’s mind or potential consumer to condition how he or she thinks about the product. What you do to “get heard”.
Avis saying it’s number 2 and so it tries harder, has not necessarily changed the product they offer, the cars, what changed is how the consumer sees them. If the consumer does not want to go to Hertz he will tell himself, I will go with Avis, the guys who try harder. This positioning is already inside the head of the consumer, and the funny thing is that who put it there was Avis itself.
Therefore, Positioning is also the process of dealing with the mental position that a larger and more established competitor occupies since there is a market overload of products and product information in the market today. A person is able to receive only a limited amount of sensation. In addition to a certain point, the brain goes blank and refuses to function normally. It is your duty to simplify the message. Less is more. To deal with complexity, people have learned to simplify almost everything. Hence in a nutshell you should tell the consumer how you want to be seen.
Another important aspect of successful placement is that it requires consistency. You can not say today that it’s grandma’s soup and tomorrow it’s the modern instant soup, people will think they can not trust you, and that you’re just taking up space in their minds.
Advertising agencies spend huge amounts of time and research looking for positions or holes in the market that can work.
Anyone can use positioning strategy to win. If you don’t understand and use the principles of positioning, your competitors undoubtedly will.
The easy way to get into a person’s mind is to be first. (first one to fly the Atlantic solo, etc. etc.. is the person or product that is remembered) Get there first and then be careful not to give customers a reason to switch. First into the brain usually means twice the sales of being number 2. However, it is very difficult to be first, unless you invent a new category of products in which you can be first.
Example: suppose you want to open a grill house, the only problem is that in the street where you got a place, there are 4 other grill houses, and all of them older and better established. To have a clear and different positioning and be first you can invent a new category, for example, set up the grill in the middle of each table and let the customers do the grilling, just supplying the sauces, and you could use this in your marketing with great success: The first grill house where you are the chef. Your competitors could copy, but they could no longer say they are the first. You would always have that advantage.
To be good at positioning, you must have a thorough understanding of the positioning of the competition.
Example: Honda entered the motorcycle market against Harley Davidson by introducing off-road minibikes aimed at pre-teens – and being very patient. Overtime, Harley lost and recouped only by positioning itself at the “high end” for the serious, adult motorcycle fan. In other words, they also had to position themselves in relation to Honda that had positioned itself in relation to them.
Although it is anti-competitive for the manufacturers to force prices to sellers, luxury brand owners do not like to see their products being discounted because consumers’ perception of the quality and rarity of the product is a potential threat to their brand. The high price of prestigious brands is an essential part of their brand positioning.
Example: You want to open a clothing store and everyone on the street is selling the cheapest possible and lowest quality shirts. You can very well sell only the highest quality t-shirts at higher prices. When people see your prices compared to other stores and see the quality of your product and how luxurious your store is, they will be curious, and you will be able to make sales. But of course this also depends on the financial capacity of the public.
Brand Equity
The goal of Brand Equity is to measure a brand’s value. A brand covers the name, logo, image and perceptions that identify a product, service or provider in consumers’ minds. It takes shape in advertising, packaging and other marketing communications, and becomes a focus of the relationship with consumers. Over time, a brand comes to incorporate a promise about the products it identifies – a promise of quality, performance or other dimensions of value, which can influence consumer choices among competing products. When consumers trust a brand and find it relevant, they can select the offers associated with that brand from their competitors, even if the offer is priced higher. When the promise of a brand extends beyond a specific product, his owner can take advantage of it to enter new markets. For all these reasons, a brand can have tremendous value, which is known as Brand Equity.
Brand Equity is best managed with the development of Brand Equity Goals, which are then used to track progress and performance.
The factors that contribute to Brand Equity are: familiarity of brand name with consumers, perceived quality, brand loyalty, consumer associations with brand, brand copyright, packaging and presence in the media and other marketing channels.
Brand equity refers to the value of a brand. In the research literature, brand equity has been studied from two different perspectives: cognitive psychology and information economics. According to cognitive psychology, brand equity lies in consumer’s awareness of brand features and associations, which drive attribute perceptions. According to information economics, a strong brand name works as a credible signal of product quality for imperfectly informed buyers and generates price premiums as a form of return to branding investments. It has been empirically demonstrated that brand equity plays an important role in the determination of price structure and, in particular, firms are able to charge price premiums that derive from brand equity after controlling for observed product differentiation.
Some marketing researchers have concluded that brands are one of the most valuable assets a company has, as brand equity is one of the factors which can increase the financial value of a brand to the brand owner, although not the only one. Elements that can be included in the valuation of brand equity include (but not limited to): changing market share, profit margins, consumer recognition of logos and other visual elements, brand language associations made by consumers, consumers’ perceptions of quality and other relevant brand values.
Consumers’ knowledge about a brand also governs how manufacturers and advertisers market the brand. Brand equity is created through strategic investments in communication channels and market education and appreciates through economic growth in profit margins, market share, prestige value, and critical associations. Generally, these strategic investments appreciate over time to deliver a return on investment.
Stélio Inácio
This text is part of the book Escaping Poverty – 5 Steps to Start your Own Business