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You are here: Home > Current Topics > Mind your Business > 24 November 2003 |
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Brands: Nike, for example, is what has been referred to as a 'Networked Company'. Nike is one of the world's biggest names, internationally recognised as a major sports and fashion business. You would think that this company would be very big - employing many thousands of people world wide yet in reality it only directly employs 22,000 people. To put this into some sort of context, there are around 350,000 teachers employed in the UK alone, Tesco employ in excess of 180,000 staff. Very few, if any of the employees of Nike actually have anything to do with the manufacture of training shoes, this operation is carried out through a range of 'networked' suppliers throughout the world, many of whom produce products for other rival firms as well! The company's most important asset is 'the tick'. Sew that on to any pair of trainers or a tee-shirt or some underwear and immediately you are in a position of being able to charge a price above that which the same item would command without the magic 'tick'.
Building a brand takes many years and, in many cases, a very large sum of money. No wonder that many businesses jealously guard information about their brand - sales volumes, recipes, ingredients and so on. Most businesses are not generally recognisable by their 'official' name but by the 'names' of their products. United biscuits for example manufacture 'Penguin' biscuits. The product was launched in 1932 and was one of the first biscuits to be launched under its name rather than the manufacturing company and so represents an early example of a brand. It is worth £40 million ($64 million) in sales every year. It is not surprising that when other companies try to use the success of one brand to help their own business that conflicts arise. The issue of Intellectual Property Rights (IPR) is now a key business issue. Who owns what and when did that ownership come into being? When did a brand become recognised as being a 'brand'? For example, 'easy Jet' have argued that they own the term 'easy' and other firms should not use it to sell products, so I might have difficulty is setting up a CD retail shop called 'easy CD'! All these issues are now a major part of the process of managing and promoting brands in many businesses. Just to demonstrate how important and all pervasive global branding has become note this interesting story. Consumers have become so engaged with brands that babies are even being named after famous brands. Research by a psychology professor in the United States has highlighted an increasing prevalence of branded names being used for children. Names such as Chevrolet, Celica, Armani, Timberland, Courvoisier, Denim, L'Oreal and even ESPN! |
A Brand is a method of product differentiation. The aim of the process is to make the price elasticity of demand more inelastic through encouraging consumers to identify with the product and to associate the brand with the way that they want to live and the image they wish to present of themselves. A brand therefore promotes an identity and an image that sets it apart in some way from its rivals. The name chosen could be related in some way to the product or could be evocative of the product or service. Businesses will seek to create an image or identity in the brand that it feels meets customers needs. Those needs could be physical or mental. Businesses will talk of creating a 'personality' for a brand that reflects what it wants the brand to be associated with; such a 'personality' could refer to the characteristics of the product (for example Yorkie bar is chunky reflecting its 'masculine' links) the packaging, the lifestyle it reflects, the ingredients or contents, where it is sold and so on. Developing brands can take many years. Most businesses launch products that never become established brands whilst some have been with us for a long time and have managed to survive changes in lifestyle and consumer need through evolving along with those needs. The ability to establish a brand allows a business to extend the product life cycle in that the growth and maturity stage can be extended significantly.
The building of a successful brand may allow the maturity stage of the product life cycle to be extended indefinitely.
Branded products may be prevalent in market structures that are oligopolistic. The competition between a few large sellers in the market may manifest itself, not in the form of price competition, but in seeking to establish and build on brand loyalty. Such brand loyalty can help a business in many ways.
Total 60 Marks
For each product think about who the product is aimed at, its use, value, quality, reputation and what type of image you have of the product - what does it mean to you? Such a consideration will be fairly reflective of the general view that the company would like to reflect in the product. Thinking about the way the products are advertised is often useful clue!
This question is asking you to make a link between the product and the classification of the market by businesses. Such a classification could be by segment - age, sex, gender etc - or through the more traditional socio-economic groupings (see Business mind map. It is also useful to think about what sort of lifestyle you would expect users of such a product to have?
The answer to this will depend very much on how you have answered question 2. Consider the full range of promotional activity - remember it is not just advertising so you might need to think about various promotional strategies - user testing, exhibitions, leaflets, special offers, deals, direct mailing and so on. Remember the promotional strategy is designed to increase sales and market share as well as awareness of the product, so you will have to think of how best this can be achieved, given the product and the promotion under consideration. You need to ensure that the strategy will target the people who are likely to buy your product.
First of all, it would be useful to identify the product being considered and the nature of the competition. The competition may be in the form of price, product quality, promotion, after sales service and customer support and so on? Once you have done this, you can think about what strategy would be appropriate to counter the possible threat.
This question is seeking to assess your higher order skills. Firms argue that they spend many millions of pounds and a great deal of time and effort building brands over a number of years and as such have a right to protect that 'investment' from firms who are seeking to 'copy' their product or gain benefit through using the brand name of another firm. The issue of intellectual property rights may be of relevance here - who owns the right to use a brand, name, image and so on. Some firms are seeking to gain the right to use more abstract brands - is 'cloning' or a genetic engineering technique a brand name for example? Others would argue that such firms are seeking to gain control over the market so that they can exploit the consumer, charge higher prices, add value, limit choice and thus make abnormal profits. Using relevant examples will help to build your understanding of the issues - the example of the row between 'Penguin' and 'Puffin' is given as a link to help in this respect but there are others that you could use. As usual with an evaluation question such as this, seek to give balance and support for the points you raise.
http://www.britishbrandsgroup.org.uk - Web site of the British Brands Group with some useful links about the nature and marketing of branded products
http://www.interbrand.com - Web site of large branding consultancy company - lots of useful links especially to the report on the Business Week top 100 brands. Search out 'News and Publications; Annual Surveys; Business Week Special report.
http://www.brandchannel.com/images/home/bgb_2003.pdf - direct link to the top 100 brands
