What is a brand?
Put simply, a brand is the difference between a bottle of sugared, flavored, carbonated water and a bottle of Coca-Cola. It is the sum of the functional and emotional characteristics, both tangible and intangible, that a consumer attributes to a product or service. These characteristics are embodied in a name, trademark symbol, or design, or any combinations of these.
However, this definition is being increasingly stretched. As the Internet grows evermore pervasive, many online brands have virtually no brand attributes. It could be argued that brands such as Google and Facebook exist purely in virtually reality. Moreover, the concept of branding can no longer be restricted to products and services. Movie stars, politicians, and company executives are all realizing that success is dependent on their ability to market themselves as brands.
The Organization As A Brand
Many companies, especially those that have system brands are realizing that creating a successful brand franchise involves mobilizing the entire organization. Every aspect of the organization, from the premises through the behavior of the employees (particularly those who work in customer-facing roles, to company letterheads and formal marketing communications, should reflect and reinforce the values of the organization. A good example of an organization is Dangote Industries Limited in Nigeria.
Dangote Industries Limited is a diversified and fully integrated conglomerate based in Nigeria, with significant operations across various sectors in Africa. Established by Aliko Dangote, the company reported an annual turnover exceeding US$4 billion as of 2016. Its business interests include cement manufacturing, sugar refining, and salt refining, crude oil refining, among others, making it one of the largest and most influential companies in Africa. Dangote Cement, the largest cement production company in Africa, with a market capitalization of about US$14 billion on the Nigeria Stock Exchange, has subsidiaries in Benin, Cameroon, Ghana, Nigeria, South Africa and Zambia.
Why Are Brands Important?
For most companies, brands are their primary source of competitive advantage and their most valuable strategic asset. Without brands, we’d lived in a world of commodities – undifferentiated products that are traded solely on price, according to the laws of supply and demand. Branding enables companies to actively influence the demand side of the equation by encouraging consumers to base their purchase decisions on factors other than price.
Brands are also important for consumers. They enable consumers to make informed purchase decisions and help them to navigate their way through the bewildering number of alternatives that exist in any product category. It can also be argued that brands enrich our lives. In a world in which our basic needs have been satisfied, brands give us something to which we can aspire and help in defining our identities. This, however, is a question of ideology, and many would disagree.
Sources of Differentiation
Differentiation is the most important concept in the creation of powerful brands. Essentially, brands can be differentiated in terms of products and/or service, leading to four generic types.
- One in which an offering is differentiated neither in terms of product nor service, it is a commodity. Precious metals and staple food products are still traded as commodities (though the increasing demand for organic produce is changing this).
- One in which an offering is differentiated in product, but not in service terms, it is a product brand. Product brands can be further differentiated in terms of intrinsic (or functional) benefits or extrinsic (or emotional) benefits. In practice, most consumer goods are products brands, and most contain elements of intrinsic and extrinsic differentiations. Hi-fi manufacturers focus primarily on the functionality of their products, while most mainstream soft drink brands are differentiated in terms of image. The marketing of automobiles, one of the most potent symbols of status and way of life, plays on both functions and emotions.Â
- An offering based on providing an intangible service is a service brand. Financial services are classic examples. Creating service brands can prove difficult, because unlike packaged goods, delivering a service to the consumer relies heavily on humans and humans are a lot less standard than products. Service brands are most often measured in terms of their perceived value and/or perceived quality of the experience.
- An offering differentiated in both product and service terms is a system brand. McDonald’s experience is based on a combination of the quality of the food, the speed of the service, and the cleanliness of the restaurant.
Part 2 continues in next article
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