WHEN Imperial Tobacco, the world’s fourth-largest cigarette-maker, said in July that it would spend $7.1 billion to expand its business in America, its chief executive, Alison Cooper, was adamant on one point: it will not be buying companies. Instead, in a three-way deal with Reynolds American and Lorillard, it will pick up a factory, a sales force and, above all, a collection of brands. Two of them, Winston and Blu (an electronic-cigarette brand), will be “the focus for the lion’s share of time and money invested”.
No management expert would think it strange that Imperial would spend the best part of $7 billion on something as ethereal as brands. They are the most valuable thing that companies as diverse as Apple and McDonald’s own, often worth much more than property and machinery. Brands account for more than 30% of the stockmarket value of companies in the S&P 500 index, reckons Millward Brown, a market-research company. Everyone knows that a Ralph Lauren Polo shirt costs more than a polo shirt; Coke without the logo is just cola. Ms Cooper hopes to exploit Winston’s “untapped brand equity”.
Yet arguments rage about how much brands are worth and why. Firms that value them come to starkly different conclusions. Most of the time they do not appear as assets on companies’ balance-sheets (see article). One school of thought says brands succeed mainly by inspiring loyalty. “Consumers would die for Apple,” believes Nick Cooper of Millward Brown. Others take a cooler view. Bruce McColl, who as the chief marketer of Mars oversees Snickers chocolate bars, Whiskas cat food and other brands, is on record as saying that “consumers aren’t out there thinking about our brands.” And however much brands may have been worth in the past, their importance may be fading.
Brands, of course, vary. Some identify products that are distinctive (like The Economist, we hope). Others confer distinction on products that are otherwise hard to tell apart, such as cola. The brands of banks and insurers are shaped less by advertising and marketing (the usual ways of building a brand) than by customers’ experiences, points out Simon Glynn of Lippincott, a consulting firm. In such cases, consumers get the message only if employees do.
The idea of brand equity arose in America in the 1980s after a bout of cut-throat discounting by consumer-goods companies, which prompted them to look for less-savage and more enduring ways to boost sales. Patiently building brands became the preferred alternative. They would allow companies to hold on to customers, win new ones and provide launching pads for new products. David Aaker, a business-school professor who helped spread the idea, identified three main components of brand equity: consumers’ awareness of a brand, the qualities they associate with it (BMW summons up German engineering, Ryanair says “cheap”) and loyalty. The arguments now are partly over how important each element is.
What’s love got to do with it?
Loyalty is what excites marketers and advertising folk. So-called “lovemarks” such as Apple and Coca-Cola are trademarks that inspire “loyalty beyond reason”, says Saatchi & Saatchi, an advertising agency; the firm runs a website that lists hundreds of them. They have legions of fans, command a price premium and, most important perhaps, are forgiven when they fall short. The “emotional bond puts credit in the bank,” says Mr Cooper. Brands are a promise to consumers, it is often said; they also serve as an insurance policy to cover the cost of breaking it.
Much marketing gospel flows from this view, such as the idea that brands must differentiate, appeal to distinct groups of consumers and foster fidelity. Loyal consumers “really drive brand profitability,” believes Millward Brown, which is part of WPP, a big marketing group. Loyalty and “emotional connection” also figure in the Brand Strength Index devised by BrandFinance, a competitor. Some companies even link pay to indicators of brand health. At HSBC, part of top executives’ bonuses depend on Brand Finance’s valuation.
A second view holds that brands are “a shorthand for choice”, in the words of Martin Glenn, chief executive of United Biscuits, producer of McVitie’s. They make it easier for shoppers to cut through the information bombardment that rains down upon them. On this analysis, awareness matters more than loyalty or passion.
Apple’s computers, for example, may have a strong brand; but they command only a little more loyalty from buyers than do customers of less-ballyhooed makes of computer, argues Byron Sharp, a marketing expert at the University of South Australia. Their slightly higher tendency to stick with Apple probably comes from the hassle of having to convert to a different operating system, rather than love of the brand, he reckons. Harley-Davidson, a motorcycle company, is well known to have a devoted fan base. But in fact such fanatics account for only a tenth of its customers and just 3.5% of its revenue.
On this view, companies that strive to differentiate themselves from their competitors’ brands are mostly wasting their time. Take fizzy drinks. Mr Sharp’s data show that less than one-fifth of the people who quaff them think there is anything unique or special about Coke, Pepsi and the like. Many products marketed mainly to women are largely bought by men, and vice versa. A consumer-goods brand that aimed its marketing at its most fervent fans would lose sales: a typical Coke drinker buys one or two bottles a year.
Forget me not
What constitutes brand equity, Mr Sharp contends, is “physical and mental availability”, by which he means the opportunity for consumers to find products in shops and their propensity to think of the brand when shopping. That is achieved through traditional methods of mass marketing, such as television advertising, packaging and celebrity endorsements, rather than through the fashionable targeted sort made possible by the internet.
Kellogg’s takes this point of view. The cereal-maker thinks its tried-and-tested imagery, such as Rice Krispies’ Snap, Crackle & Pop, has proved its worth by planting brands in consumers’ minds. “Hopefully, we’re smarter about retaining things over time,” says Jane Ghosh, Kellogg’s commercial-marketing director in Britain. Loyalty is real, but does not vary much, or show that consumers are passionate about brands. They are loyal to stuff they can find easily in shops and in their memory banks.
Even this argument is too starry-eyed for Itamar Simonson and Emanuel Rosen, authors of a recent book, “Absolute Value: What Really Influences Customers in the Age of (Nearly) Perfect Information”. They argue that consumers are becoming more rational and need brands less.
The original job of brands was to assure consumers about the quality of a product or service. Some, such as Sony in electronics, and over-the-counter remedies such as Tylenol, still seek to do this. But now customers can review products on shopping websites, talk to each other through social media and consult reviews websites like cnet.com and TripAdvisor. Brands thus have “a reduced role as a quality signal,” write Messrs Simonson and Rosen. Shopping websites also make it easier for consumers to find the sort of product they like and filter out the sort they don’t. So brands are less needed as a mental shortcut. “Brand equity is simply not as valuable as it used to be,” the authors contend.
People have been predicting the death of the brand since the birth of e-commerce. It has not happened, Mr Sharp says, because people are lazier, and reviews less useful, than the seers assume. Consumers have come to expect decent products at good prices. Brands guide them to the ones they want. They are likely to survive the age of (nearly) perfect information, though experts will continue to debate why.
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Before going into the brand image of NIKE, there is an importance to know what exactly Brand and Brand image is. Brand is a name, term, sign, symbol, design or combination of all these which identifies the goods or services of one seller or the group of sellers and to differentiate them from those of competitors (Armstrong & Kotler, 2003: 288). From a world of branded goods we have moved to world of branded companies, branded services, branded organizations-even Governments. Life is now branded. Not only have brands changed, so has our relationship with them (Baskin & Earls, 2003). As said by Clifton et al, 2003: 18 in the twenty-first century, branding ultimately will be the only unique differentiator between the companies. The ingredients in a brand comprise of the product itself, the packaging, the brand name, the promotion, the advertising and the overall presentation.
Today everything in the market is branded and consumers prefer the branded products. They even prefer the daily products like milk and fruits with a particular brand. Consumers know more about the brands they buy, and see more aspects of them and the context they operate in. They feel different relationships to different brands, depending on the type of subjective needs which the brands do or don't satisfy. Consumers who always purchase the same brand know that they can acquire the same features, advantages and quality each and every time they purchase. There was a quotation by Group Chief Executive of United Biscuits like "Buildings age and become dilapidated. Machines wear out. People die. But what live on are brands" (Feldwick, 2002: 3). Consumers perceive a brand as taking into account a set of values which they can specify that they will reject, or tend to reject, it's their point of view how they accept the brands. Therefore brands are the lasting assets as long as they are kept in good shape and continue to offer consumers the values they require. The reason that consumers believe in brand is because, on the whole, they keep their promises. Most successful brands continually improve or update their products to remain competitive or to meet changed market requirements.
In order to answer the question what is the importance of Branding to customers we can say that the most powerful brands don't come from marketing but they come from great customer experiences. Product quality, consistency, creativity, performance, value, features, design and style are the main drivers of today's conspicuous consumer. Consumers require branding as it helps them differentiate a product from the thousands available in the market. They are so overwhelmed by the variety of products available to them that making the right choice on the basis of quality, price, and stylishness becomes difficult.
The way how a brand is perceived and the impression person have of the brand, and therefore of the corresponding company, product(s) or service(s) is known as Brand Image or how a company's product is perceived (seen) by the consumer. Keller (2003: 66) defines brand image as perceptions about a brand as reflected by the brand associations held in consumer memory. Yastrow (2003: 4) says to a company that "Your brand is not what you say you are....Your brand is what your customers think you are."
Brand image is generally carefully developed by the brand owner through marketing campaigns or product positioning. The image of a brand may develop spontaneously through customer responses to a product and it can be seriously damaged through inappropriate advertising or association with somebody or something that has fallen from public favour.
The brand and image of a business are vital to its success. Strong brands can generate customer trust, which is particularly important in e-commerce where there are often concerns over privacy and security.
In truth brand image is every customer/prospect's interaction with the company that creates an impression. It is the company's character. It's a conglomeration of interaction and observation by people outside the organization: how the phone is answered, the quality of customer service, how the trucks look, or even how the web site looks. It's what makes a particular company unique among the hundreds of competitors.
The brand image of a company should communicate the difference between itself and the competition� the reason for being, it should reinforce the company's corporate message so that it helps make the company stand out in a crowd of look-a-likes. It can create perceptions but to create that brand image requires branding and this is confirmed by Scott M. Davis when he says "Image and perception help drive value; without an image there is no perception". A brand image should be positive. It should reflect the character of a company. It should look like what a company is, what it feels, and smells like the company--it must be a reflection of the best traits. We often hear from some companies that they would like to build their brand image after they have been in business for a number of years. It is great if the company is thinking about their brand image, but it would be better if they had considered that brand image from day one!It is better to take positive steps in developing a positive brand image rather than letting it just happen.
For a company to identify its brand image it has know why it is in business, what makes its business unique, what can customers get from them where they can't get elsewhere whether it is their price or quality or service or guarantee or the product, Is there something about the service that the customers actuallyenjoypaying the company money to do? Which part of their business are they passionate about, what is their target market? Do they have a clearly defined service? Customer profile? Prospect demographic? And at last what do they offer to their customers? If the company is well perfect in answering all these questions it can identify its brand image. There are three branding image elements like Logo, Slogan and image identifier. A company has to check whether its logo reflects the company's image and how good its slogan is and what does it say about their business.
In many business markets the company's reputation has a strong influence on buying decisions which may differ from the more specific product related influence of the brand's image.
The Nike logo was purchased for $35 in 1971 from Portland State University graphic design student, Carolyn Davidson. According to Davidson, Phil Knight, company founder, said at the time: "I don't love it, but it will grow on me."The Nike swoosh has undergone very few modifications. Today the famous swoosh is synonymous with quality sports gear. Nike is seen as a high profile example of a company that cares more about its brand image. Nikepays close to a billion dollars each year to promote itsbrandimage.
Armstrong, G. & Kotler, P. (2003) Marketing An Introduction. 6th edn. New Jersey: Prentice Hall.
Baskin, M. & Earls, M. (2003). Brand New Brand Thinking. London: Kogan Page.
Clifton, R., Simmons, J., Ahmad, S. & Anholt, S. (2003). Brands and Branding. Wales: Creative Print and Design.
Cretu, A. E. & Brodie, R. J. (2007) 'The influence of brand image and company reputation where manufacturers market to small firms: A customer value perspective'. Industrial Marketing Management. 36(2). Pp. 230-240.
Feldwick, P. (2002). What is Brand Equity, Anyway?. Great Britain: Page Brothers Ltd.
Keller, K. L. (2003). Building, Measuring, and Managing Brand Equity. 2nd edn. New Jersey: Prentice Hall.
Yastrow, S. (2003). Brand Harmony. 1st edn. New York: SelectBooks.
Source: Essay UK - http://www.essay.uk.com/free-essays/marketing/brand-and-brand-image.php
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