Main branding decisions

In modern-day marketing, brand equity is generally highly sought-after. Brand equity can deliver financial benefits to the firm – primarily through greater market share, price premium, and increased customer loyalty.

There are multiple decisions to be made however, when introducing a new product into the marketplace. This particular article provides an overview of this process, while there are other articles on this website that look at these issues in more detail.

The key branding decisions are:

  • Does the product need a brand?
  • The brand name selection
  • How should the brand be structured/sponsored?
  • Should we run a multi-brand strategy?

Does the product need a brand?

This question sounds a bit silly at first, because as consumers we typically associate all products as having a brand, but this is not always the case.

For example, in the financial services sector the Bank may introduce some form of mortgage loan. Some banks will create a brand name for a loan – such as “the Wizard loan”, which is designed to communicate some sort of benefit and/or differentiated in the marketplace.

However, some other banks will also introduce a similar loan facility, but decide NOT to create an individual brand – it is simply another loan product offered by the bank.

The brand name to be selected

Brand names generally have some impact in the marketplace, especially in their early days when their brand equity is not high – and the brand name may help communicate what the company does and/or the main benefit that they provide.

For example, Microsoft tends to suggest ‘small software’, which is ideal for businesses and even individual use. But Apple is just a name and does not help communicate anything about what they do/offer, other than being distinctive.

Therefore, one of the key decisions – which is often debated within a firm – is whether or not the brand name should be reflective of the offering and benefits or simply be unusual and interesting?

Please refer to the separate article on brand name selection in this website.

How the brand should be structured (sponsored)?

There are multiple possibilities in structuring an overall brand – sometimes referred to as a brand sponsor decision.

The brand could be structured as a manufacturer brand – which is the most common form that we see for products in a supermarket. A manufacturer brand is sometimes called the national brand as well. It is simply a brand that is owned by the manufacturer, such as Colgate or Gillette.

An alternative to a manufacturer brand is a private brand (or private label brand). Private-label simply means that the product/brand is only available in one retailer – it is essentially an exclusive brand. A number of retailers – particularly in the supermarket sector – like to have products branded under their own name (or a generic supermarket name relative to them) – as this gives them a set of products that can only be purchased at their stores.

Another alternative to how a brand can be structured is brand licensing. Licensing refers to renting/using an existing brand on for a new product for a fee.

For example, the TV show The Simpsons licenses their brand to many children’s products throughout the world. In this case, a company would pay a license fee to the owners of The Simpsons and then use their name, logo and characters on products they sell. To the end-consumer it appears to be a Simpson’s brand. This means that the company gets the benefit of the Simpson’s brand equity, without needing to build a new brand.

Co-branding is another branding option. Co-branding is when two brand names – that are generally unrelated and perhaps having different ownership – place their brand together on the same product.

We commonly see this in computers with the name Intel. We also see on certain credit cards that might be co-branded with a sports team or an airline. And sometimes we see on food products and even McDonald’s sometimes brand the ingredients in their offerings.

New or existing brand?

The final decision is: do we use existing brand or do we create a new brand. It is usually an expensive task to create a new brand, but in the long term it may create a significant asset for the organization.

But remember that many new products tend to be product line extensions and generally sit under an existing brand name. However when there is a significant new product being brought to market, there is often an incentive to create and build a new brand. Please refer to the article on the four branding choices on this website.

Related topics

Individual product decisions

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