6. Characteristics of branded goods. Brand strategy options.

A brand is a product, service, or concept that is publicly distinguished from other products, services, or concepts so that it can be easily communicated and usually marketed.

A brand is immaterial and exists in the mind of the consumer.

Products can be sold as unbranded commodities. Raw materials are still treated in this way, but increasingly branding is becoming dominant, even in the supply of industrial components and vegetables for example.

What is the power of brands? Branding saves us much time as consumers. A simple word or two comes to represent a lot of associations, and can offer detailed expectations, so that we do not need to think about the possibly dim channels used by the trader in obtaining supplies of the perfume. Consumers learn to place some reliance upon brand names when evaluating competing products. In services, too, branding can serve the consumer by offering consistent, identifiable services, which might reduce confusion and save on search time.

There are several options in brand strategy. A company can sell its own brand or under that of another company. In the latter case it is often a retailer’s own label In using the company’s brand a choice will be needed between using a “family” brand name for all that firm’s brands, as opposed to giving each product an individual brand name.

Some companies attempt to obtain the benefits of both strategies by family branding and at the same time having several “sub-brands”. Ford puts its name on all its cars that also have individual brand names.

When it comes to fast moving consumer goods (FMCG), more and more customers tend to switch to own-label products of supermarkets leaving behind their loyalty to heavyweights like Nescafe or Pepsi. Producing own-labels is different from producing look-alikes. The latter mean products whose package reminds the silhouette or color of famous brands.

Many companies would wish to use their successful brand names and develop products in different categories under the same brand name. This practice is called brand stretching. It may serve as a good solution to avoid.

And it’s very important to remember the main target of a company after creation of the brand is to maintain and protect it. Also brand is always means manufacturing in contrast with trademark which is only a sign or indicator used by business organization. Finally, initially brands are built on the consumer trust to the brand.

7. Outsourcing production. Its impact on quality.

Outsourcing is a process of contracting a business function to someone else. There are couple of reasons on which companies decide to outsource their production. And there are some benefits:

The most common reasons why companies decide to outsource include cost reduction and cost savings, the ability to focus its core business, access to more knowledge, talent and experience, and increased profits.

Cost savings – in third world countries, for example, there is too cheap labor and company must not pay high taxes and duties for air pollution. The reason of it is simple – such countries have not sign any agreements with the developed countries - UN Convention of the Environment protection for example.

Many companies decide to outsource because it cut costs such as labor costs, regulatory costs, and training costs. Foreign countries tend to have workers who will complete the same amount of work as in the United States, but for less than half the salary that an American employee will make. This motivates companies to outsource overseas to find foreign workers who are willing to work for these lower wages. The company can spend up to half the usual cost to train these workers to become experts in a different country. Lower regulatory costs are an addition to companies saving money when outsourcing. Comparing the costs to employing a worker in the United States to a worker in China, it is noticed that an employer in the U.S. has to pay higher taxes (social security, Medicare, safety protection and also taxes).

In the case of outsourcing, firms may find that workers in other countries can provide better customer support than their domestic counterparts. For example, an online coffee shop owner who moved his calling center to the Philippines found that his customers received better customer support from workers in this country.

Revenue and profit plays a large role in the reason for a company outsourcing. Since the costs are cheaper in different countries for a corporation to run it, as well as to train the employees, this saves the company a large sum of money. More profit comes in when the producers are able to purchase products at a less expensive rate and continue to sell them at a reasonable price for consumers. The prices are reduced for services as well as products when purchased at a cheaper price.

Risks

When companies offshore services, even though it may not be the core parts of the business, those jobs leave the home country for foreign countries. Outsourcing may increase the risk of leakage, reduce confidentiality, as well as introduce additional privacy and security concerns.

Advantages

Companies are able to provide services and products to consumers at a cheaper price while still having a large margin for profit. This profit margin benefits both the company as well as the consumer. The cheaper prices lead to an increase a company’s economy. Although losing jobs hurts the economy because more citizens become unemployed, the cheaper prices allows customers to purchase more products and services which helps to rebuild an economy.

And in a conclusion I want to say about the biggest disadvantage of outsourcing. This topic became very popular political issue in the USA during the 2004 US president elections. The political debates centered on outsourcing’s consequences for the domestic US workforce and one of the candidates for president blamed from tribune American companies in avoiding paying taxes with outsourcing. But in my opinion outsourcing has a big amount of pluses for the company and the low number of disadvantages, so they must to try outsource their production to cut costs, get other’s countries knowledge and etc.