A brand with strong brand equity is a very valuable asset.
Perhaps the most distinctive skill of professional marketers is their ability to create, maintain, protect, and enhance brands.
Measuring the actual equity of a brand name is difficult. However, the advantages of having it include:
1). High consumer awareness and loyalty.
2). Easier to launch brand extensions because of high brand credibility.
3). A good defense against fierce price competition.
4). It is believed to be the company’s most enduring asset.
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Selecting a brand name is an important step. The brand name should be carefully chosen since a good name can add greatly to a product’s success. Desirable qualities of a good brand name include:
1). It should suggest something about the product’s benefits and qualities.
2). It should be easy to pronounce, recognize, and remember.
3). It should be distinctive.
4). It should be extendible.
5). It should translate easily into foreign languages.
6). It should be capable of registration and legal protection. Once chosen, the brand name must be protected.
Major Branding Decisions:
A manufacturer has four sponsorship options:
1). A manufacturer’s brand (or national brand) is a brand created and owned by the producer of a product or service (Examples include IBM and Kellogg).
2). A private brand (or distributor or store brand) is a brand created and owned by a reseller of a product or service.
3). A licensed brand (a company sells its output under another brand name).
4). Co-branding occurs when two companies go together and manufacture one product (General Mills and Hershey’s make Reese’s’ Peanut Butter Puffs cereal).
At one time manufacturer’s brands were the most popular and profitable. Today, however, an increasing number of private brands are doing well. Though hard to establish and maintain, private brands can yield higher profit margins. “The battle of the brands” (the competition between manufacturer’s and private brands) causes resellers to have advantages, and they charge manufacturer’s slotting fees (payments demanded by retailers from producers before they will accept new products and find “slots” for them on the shelves). As store brands are improving in quality, they are posing a stronger threat to the manufacturer’s brands. This is especially true in supermarkets.
Licensing of brands has become big business. Annual sales of licensed products totals more than $71 billion. The Looney Tunes license generates over $4 billion in annual sales all by itself.
Co-branding is the practice of using the established brand names of two different companies on the same product.
1). Advantages include:
a). Combined brands create broader customer appeal and greater brand equity.
b). It may allow a company to expand its existing brand into a category it might otherwise have difficulty entering alone.
2). Disadvantages include:
a). Complex legal contracts and licenses are involved.
b). Coordination efforts are often difficult.
c). Trust is essential between partners. It is often hard to come by.
A company has four choices when it comes to brand strategy. It can:
1). Introduce line extensions. Existing brand names are extended to new forms, sizes, and flavors of an existing product category. A company might introduce line extensions as a low-cost, low-risk way of introducing new products in order to:
a). Meet consumer desires for variety.
b). Meet excess manufacturing capacity.
c). Simply command more shelf space.
2). Introduce brand extensions. Existing brand names are extended to new or modified product categories. Advantages include:
a). Helps a company enter new product categories more easily.
b). Aids in new product recognition.
c). Saves on high advertising cost.
3). Introduce multi-brands. New brand names are introduced in the same product category. Advantages include:
a). They gain more shelf space.
b). Offering several brands to capture “brand switchers.” The company can establish flanker or fighter brands to protect its major brand.
c). It helps to develop healthy competition within the organization.
d). Each brand can have a separate following.
4). Introduce new brands. New brand names in new categories are introduced.
Advantages include:
a). Helps move away from a brand that is failing.
b). Can get new brands in new categories by corporate acquisitions.
c). Large consumer-product marketers are now pursuing mega-brand strategies where weaker brands are weeded out and resources are focused achieving number-one or -two market share positions in their categories.
Packaging
Packaging decisions are the third set of decisions that must be made about individual products.
1). Packaging is the activity of designing and producing the container or wrapper for a product.
2). The package may include the primary container (what the product is in—a tube full of toothpaste); the secondary package (the box the tube came in); the shipping package (a cardboard case).
3). Traditionally, packaging decisions were based on cost and production factors. Packaging now has promotional value. To enhance this aspect of the package, the marketer should:
a). Establish a packaging concept.
b). Decide on specific elements of the package.
c). Tie together elements to support the positioning and marketing strategy.
Labeling
Labeling is also part of packaging and consists of printed information appearing on or with the package. Labeling performs several functions:
1). It identifies the product or brand.
2). It might describe several things about the product.
3). It might promote the product through attractive graphics.
There has been a long history of legal concerns about labels.
1). There are numerous laws enacted to regulate labeling and protect the public.
2). Recently, the aspects of unit pricing, open dating, and nutritional labeling have effects on labeling practices.
Product Support Services
Product support services are the services that augment actual products.
1). Good customer service is good for business.
2). Monitor customer complaints.
3). Work at designing products that need less service.
4). Determine the best way to deliver product support services.
5). Set up strong customer service departments to truly give excellent service.
6). One of the keys to successful Internet marketing is to have excellent support services.
Companies use product support services as a major tool in gaining competitive advantage.
How?
Step 1. Survey customers to assess the value of current services and to obtain ideas for new services.
Step 2. Assess costs of providing desired services.
Step 3. Develop a package of services to delight customers and yield profits to the company.
Product Decisions and Social Responsibility
When making product decisions, companies must observe and take into account public policy and regulations (areas of concern include: acquiring or dropping products, patent protection, product quality and safety, and product warranties).