Branding is the skill of giving a product or service distinctiveness.
- Types of branding:
- Manufacturer brands – brands created by the producers of goods and services where the goods bear the producers name (e.g Kellogg’s Corn Flakes, Gillette razors).
- Own label brands – manufactured for wholesalers or retailers who then sell the products under their own name (e.g. Tesco Baked Beans).
- Generic brands – products that only contain the name of the product category or product name. e.g. carrots or paracetamol.
Ways to build a strong brand
|Exploiting a unique selling point – if a product has a USP it’s much easier to differentiate the product and make it stand out from the pack.|
|Advertising – this can be used to introduce a new brand, or to spread the word about a brand. The more people familiar with the brand the greater the firms market power. (In 2013 over $500 billion was spent on advertising worldwide)|
|Sponsorship – helps to raise brand awareness and create a positive image for the company.|
|Using social media – a business may place its ads in strategic positions on Facebook, Twitter and Instagram. Social media helps businesses know their customers better and enables them to communicate with them effectively. A social media presence suggests a business cares about its customers as it’s easily contactable and customers can air their views to them directly.|
Benefits of Strong Branding:
- Adding value – gaining a competitive edge as the brand has a desirable image. (e.g perfume manufacturers may use powerful TV ads with celebrities to suggest if you buy the product, you will belong to a group of elegant sophisticated consumers too)
- Ability to charge premium prices – products with strong brands can be priced more highly than competitors as due to the customer loyalty a strong and top brand brings. (e.g Heinz generally changes more for its products as its seen as the best in their market)
- Reduced price elasticity of demand – firms prefer their products have less price elasticity of demand so a price increase has less impact on demand due to the strong brand created.
Businesses are under constant pressure to keep up to date with trends, patterns fashions and new technology. The pressure extends to the methods they use to promote and brand their products.
For example, some businesses use Viral Marketing, which involves any strategy that encourages people to pass on messages to others about a product or business electronically.