FormalPara Definition

According to the American Marketing Association, a brand is a ‘name, term, sign, symbol, or design, or a combination of them intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of competition’. By virtue of their ability to identify and differentiate, brands create value to consumers and organizations.

Branding has been in place for centuries as a means to distinguish the goods of one producer from those of another. In an increasingly complex world, individuals and businesses are faced with more and more choices, but seemingly have less and less time to make those choices. The ability of a strong brand to simplify consumer decision-making, reduce risk and set expectations is thus invaluable (Erdem 1998). An increasing number of firms and other organizations have therefore come to the realization that one of their most valuable assets is the brands associated with their products or services.

Creating strong brands that deliver on that promise and maintaining and enhancing the strength of those brands over time is thus a management imperative, but at the same time a major challenge (Keller 2002; Keller and Lehmann 2006; Loken et al. 2010). Accordingly, the purpose of this article is to review some branding fundamentals and key concepts to help provide a foundation to such efforts.

Brands

According to the American Marketing Association (AMA), a brand is a ‘name, term, sign, symbol, or design, or a combination of them intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of competition’. By virtue of their ability to identify and differentiate, brands create value to consumers and organizations.

Technically speaking, whenever marketers create a new name, logo or symbol for a new product, they have created a brand. It should be recognized that many practising managers, however, refer to a brand as more than that – defining a brand in terms of having actually created a certain amount of awareness, reputation, prominence and so forth in the marketplace. In some sense, a distinction can be made between the AMA definition of a ‘small “b” brand’ versus the occasional industry practice of a ‘big “b” brand’ – that is, a ‘brand’ versus a ‘Brand’. It is important to recognize this distinction, as disagreements about branding principles or guidelines can often revolve around the definition of what is meant by a ‘brand’ as much as anything.

Why are brands important? What functions do they perform that make them so valuable to marketers? Figures 1 and 2 display some of the key roles that have been ascribed to brands from the perspective of the consumer and the firm, respectively (Hoeffler and Keller 2003).

Brand, Fig. 1
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Roles of brands to consumers

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Brand, Fig. 2
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Roles of brands to firms

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Branding

Brands clearly provide important benefits to consumers – both individuals and firms. An obvious question then is, how are brands created? How do you ‘brand’ a product? Although firms provide the impetus to brand creation through their marketing programmes and other activities, ultimately a brand is something that resides in the minds of consumers. A brand is a perceptual entity that is rooted in reality but is more than that and reflects the perceptions and perhaps even the idiosyncrasies of consumers.

To brand a product, it is necessary to teach consumers ‘who’ the product is – by giving it a name and using other brand elements to help identify it – as well as ‘what’ the product does and ‘why’ consumers should care. Branding involves creating mental structures and helping consumers organize their knowledge about products and services in a way that clarifies their decision-making and, in the process, provide value to the firm.

For branding strategies to be successful and brand equity to be created, consumers must be convinced that there are meaningful differences among brands in the product or service category (Keller et al. 2002). The key to branding is that consumers must not think that all brands in the category are the same. Strong, favourable and unique brand associations are the foundation to positive brand equity.

Brand differences often are related to performance attributes or benefits of the product itself. For example, brands such as Gillette, Merck, Sony, 3M and others have been leaders in their product categories for decades due, in part, to continual innovation. Other brands create competitive advantages through non-product-related imagery. For example, Coca-Cola, Calvin Klein, Chanel No. 5, Marlboro and others have become leaders in their product categories by understanding consumer motivations and desires and creating relevant and appealing images surrounding their products.

The challenge for marketers in building a strong brand is ensuring that customers have the right type of experiences with products and services and their accompanying marketing programmes so that the desired thoughts, feelings, images, beliefs, perceptions, attitudes, behaviours and so on become linked to the brand. Consumer knowledge is what drives the differences that manifest themselves in terms of brand equity. This realization has important managerial implications. In an abstract sense, according to this view, brand equity provides marketers with a vital strategic ‘bridge’ from their past to their future, as follows.

Brands as a Reflection of the Past

In this light, the dollars spent each year on manufacturing and marketing products should be thought of less as ‘expenses’ than as ‘investments’ – investments in what consumers learned, felt and experienced. About the brand. If not properly designed and implemented, these expenditures may not be ‘good’ investments, in that the right knowledge structures may not have been created in consumers’ minds, but they should be considered investments nonetheless. The quality of the investment in brand building is the most critical factor, not necessarily the quantity of investment, beyond some minimal threshold amount.

Brands as Direction for the Future

At the same time, the brand knowledge that has been created over time by these marketing investments dictates appropriate and inappropriate future directions for the brand. Consumers, be they individuals or organizations, will decide, based on their brand beliefs and attitudes where they think the brand should go and grant permission (or not) to any marketing action or programme.

At the end of the day, the true value and future prospects of a brand rests with consumers and their knowledge about the brand and their likely response to marketing activity as a result of this knowledge. Understanding consumer brand knowledge – all the different kinds of things that become linked to the brand in the minds of consumers – is thus of paramount importance as the underpinning and foundation of brand equity.

Building Strong Brands

Marketers build strong brands by creating the right brand knowledge structures with target consumers (Keller 2001). As noted above, there are a whole host of beneficial associations that may become linked to the brand, such as thoughts, feelings, images, beliefs, perceptions, attitudes, behaviours.

In particular, building a strong brand requires creating a brand that consumers are sufficiently aware of and with which consumers have strong, favourable, and unique brand associations. This knowledge-building process depends on all brand-related contacts – whether marketer-initiated or not. From a marketing management perspective, however, there are three main sets of brand equity drivers:

  1. 1.

    The initial choices for the brand elements or identities making up the brand (e.g., brand names, URL’s, logos, symbols, characters, slogans, jingles, packages, and signage). In establishing its brand elements, Red Bull chose a unique brand name and symbol, an unusually shaped can as packaging, and an evocative slogan ‘Red Bull Gives You Wings’.

  2. 2.

    The product and service and all accompanying marketing activities and programmes. Starbucks’ marketplace success has resulted from a series of well-designed and executed marketing activities and programmes that include a wide variety of high-quality coffee products and variations; controlled retail distribution; motivated and trained employees; the provision of a rich sensory retail experience; and positive word-of-mouth and publicity.

  3. 3.

    Other associations indirectly transferred to the brand by linking it to some other entity (e.g., a person, place, or thing). Subaru used the rugged Australian Outback and actor Paul Hogan of Crocodile Dundee movie fame in ads to help craft the brand image of their Subaru Outback line of cars and sports utility wagons.

Although the second factor is the central driver of equity, the first and third approaches are critical contributors since they typically represent potentially much less expensive options.

Managing Brands

Given the importance of brands as intangible assets for organizations, the ability to strategically manage those brands is critical (Aaker 1991, 1996; Aaker and Joachimsthaler 2000; Kapferer 2008; Keller 2008; Levy 1999). An effective branding strategy can provide a product roadmap to the future for a brand, clarifying where it can go and how it can get there. It is virtually impossible to manage and maximize the value and equity of a brand without a clear, compelling brand strategy, whether explicitly written down or not.

Long-Term Perspectives

Effective brand management requires taking a long-term view of marketing decisions – the ability to think at least 1–3 years down the line if not longer. Any action that a firm takes as part of its marketing programme has the potential to change consumer knowledge about the brand in terms of some aspect of brand awareness or brand image. These changes in consumer brand knowledge from current marketing activity also will have an indirect effect on the success of future marketing activities.

Brand equity must be actively managed over time by reinforcing the brand meaning and, if necessary, by making adjustments to the marketing programme to identify new sources of brand equity. Brand equity is reinforced by marketing actions that consistently convey the meaning of the brand to consumers in terms of: (1) what products the brand represents; what core benefits it supplies; and what consumer needs it satisfies; and (2) how the brand makes those products superior and which strong, favourable, and unique brand associations should exist in the minds of consumers.

In managing brand equity, it is important to recognize the trade-offs that exist between those marketing activities that fortify the brand and reinforce its meaning and those that attempt to leverage or borrow from its existing brand equity to reap some financial benefit. At some point, failure to fortify the brand will diminish brand awareness and weaken brand image. Without these sources of brand equity, the brand itself may not continue to yield as valuable benefits.

Reinforcing brand equity thus requires consistency in the amount and nature of the supporting marketing programme for the brand. Although the specific tactics may change, the key sources of equity for the brand should be preserved and amplified where appropriate. Product innovation and relevance is paramount in maintaining continuity and expanding the meaning of the brand.

Brand Architecture

An important aspect of brand management is the branding strategies the firm adopts to launch new products and services. Branding strategies can be defined broadly in terms of how the products or services offered by a firm are branded both in terms of the brand elements (e.g. names, logos, symbols, packaging, signage) involved, as well as how those different products or services are given meaning in terms of how they are positioned (Aaker 2004).

Branding strategies are often described in terms of the concept of brand architecture. Formally, brand architecture refers to the number and nature of common or distinctive brand elements applied to the different products sold by the firm. Brand architecture involves defining both brand boundaries and brand relationships across products and services.

Specifically, three key dimensions of brand architecture are: (1) brand assortment in terms of brand portfolios and the number of distinctive brands a company sells; (2) brand depth in terms of line extensions associated with any one brand in a category that a company sells; and (3) brand breadth in terms of category extensions and the number of different categories associated with any one brand a company sells.

From a brand strategy standpoint, growth requires a well-thought-out and well-implemented brand architecture strategy that clarifies three key issues (Aaker 2004; Keller 2012): (1) the potential of a brand in terms of the breadth of its ‘market footprint’ (Keller and Lehmann 2009); (2) the types of product and service extensions that would allow a brand to achieve that potential (Keller and Aaker 1992; Völckner and Sattler 2006; Wernerfelt 1988); and (3) the brand elements and positioning that identify and are associated with the offerings of a brand as part of that extension strategy.

Conclusion

Brands are one of a firm’s most valuable intangible assets. The power of a brand, however, resides in the minds of consumers. The value of a brand is ultimately derived in the marketplace from the words and actions of consumers. Consumers decide with their purchases, based on whatever factors they deem important, which brands are more valuable than others. Marketers, in turn, must build and manage their brands by creating the right brand knowledge structures.

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