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tige. Brands are complex assets, and like people they possess, to some
degree, distinguishing features. One increasingly popular method of
managing brands is to view them as having personalities . The Rolls-
Royce brand has a high-class, high-quality appeal throughout the world,
and retailers such as Wal-Mart and K-Mart built their reputations on
homely convenience and low price. It is this concept of brand personal-
ity that highlights their power.
The advantage of brands
Before considering decisions that can build and strengthen brands, it is
helpful to understand what advantages they offer. The value of a brand
lies in the understanding or trust of customers. This leads to the first
advantage: pricing. A successful and established brand can command a
price premium that exceeds any extra cost in terms of production and
marketing, derived from the element of trust that a brand provides.
Research in the UK has shown that in many cases consumers would be
prepared to pay 30% more for a new product from a trusted brand than
for an unnamed one. This is particularly true in the highly competitive
food industry.
Distribution advantages are another benefit, as an established brand
can ensure that manufacturers get the best distributors in terms of quan-
tity and quality. This is because the distributors are more likely to be
receptive to a new product from an established brand, in much the
same way (and for similar reasons) as their consumers. This is particu-
larly useful for new products. Again, this is because of the element of
trust and reliability associated with brands.
The concept of brand identity or image is valuable as it reinforces the
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product s appeal. For example, the Rolls-Royce brand has a stately iden-
tity and is associated with the values of craftsmanship, tradition and
prestige. Volvo has a different brand identity and set of associated
values, including safety, functionality and family-orientation. These
identities reinforce their appeal to their particular market segments.
When markets decline, however, brand identity can become a handi-
cap, linking the product to an unfashionable past.
This links with the next advantage: the ability of brands to build cus-
tomer loyalty, again because of the trust and even affection that they
can generate. Customer groups can identify preferred brands easily,
becoming repeat purchasers. A classic example is the old adage no one
ever got fired for buying ibm . In this extreme case, even when con-
sumers did not necessarily like the product, they still respected the
brand.
Another advantage of brands is that businesses can launch profitable
new products with a flying start by exploiting the popularity and
strength of an established brand. Cherry Coke and Diet Coke are exam-
ples of this approach, where the strong, established Coca-Cola brand
(probably one of the strongest commercial brands in history) under-
pinned the launch of these two new drinks. This reinforced the brand
still further by attacking the competition, adding another dimension to
the brand (innovation) and developing new markets (such as the diet
soda market). There are two benefits: brands often make it easier to
introduce new products by exploiting brand equity ; and they provide
opportunities to open up new market segments. For example, food man-
ufacturers often exploit their position to create sub-brands of diet ver-
sions (such as an established yogurt manufacturer successfully
launching a low-fat product).
Furthermore, a strong brand can enable the product to overflow from
one market into another, allowing the brand to spread in popularity.
This is particularly the case in industries that are affected to a greater or
lesser degree by fashion. For example, the strength and popularity of
coffee houses such as Starbucks grew during the 1990s, spreading from
the American north-west to the whole of the country and then to
Europe.
Brands can extend the life of a product, as by their nature they com-
bine trust, respect, profile and marketing spend. This can often be used
to inject new life into a stagnating product or even a whole industry.
The example of Danish toymaker Lego producing toys linked with films
is an example of this trend. Lastly, brands provide a valuable, market-
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SALES, MARKETING AND BRAND MANAGEMENT DECISIONS
oriented focus around which firms can organise themselves. The brand
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