Role of Brands and Scope of Branding (Philip Kotler Summary)

The American Marketing Association defines a brand as “a name, term, sign, symbol, or design, or a combination of them, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors.” Lets see, in detail, the role of brands and scope of branding.

Role of Brands

A brand is a product or service which help the organisation differentiate their products or services from others. The role of brand come in critical for the organisation as it translates into loyalty and higher margins in the long run.

The differentiation of a brand can be:

1. Related to Product Performance : e.g. Gillette, Merck, Sony, 3M
   1. Functional
   2. Rational
   3. Tangible

2. Related to Brand Identity: e.g. Coca-Cola, Calvin Klein, Gucci, Tommy Hilfiger, Marlboro
   1. Symbolic
   2. Emotional
   3. Intangible

Building a Brand helps both the consumer and the manufacturer creating a win-win situation for both the parties.

Benefits of Brand for the consumer

1. It helps to identify the source of manufacturer of the product and simultaneously assigns a responsibility towards an organization for the branded product.
2. Experience of customers with products of same brand help them to quickly decide whether they will want to go with their purchase decision or not making their decision easier.
3. Brands bring with them a certain level of quality assurance.

Benefits of Brand for the firm

1. For a firm, the brand provides legal protection towards unique features or aspects of the product.
2. Brand loyalty helps organization to retain their existing customers when diversifying from one line of products to other. It provides security of demand and creates barrier for other manufactures to easily tap existing customers.
3. Firms can charge a premium for owning a brand boosting profit on every sale.
4. Product can be copied, but brand cannot. Once a brand is established, it’s the invaluable asset for an organization.
5. A well established brand adds towards the overall value of the firm while calculating its net worth.

Scope of Branding

A brand is a perceptual entity that is rooted in reality but reflects the perceptions and perhaps even the idiosyncrasies of consumers. Ultimately a brand is something that resides in the minds of consumers. Therefore the scope of branding expands beyond boundaries.

To successfully brand a product it is necessary to teach consumers:

1. Who the product is.
2. What the product does.
3. Why consumers should choose that particular brand.

A branding strategy shall be considered successful only when the consumers have an answer to the above three questions which is strong enough to make them believe that there are significant differences in the products or services provided by a brand than others. Making sure the above three takes deep understanding of consumer and therefore the scope of branding becomes critical

The concept of branding can be applied to:

1. Physical Goods – e.g. Parle-G biscuits, Tata Tea, Maruti SX4 etc-
2. Services – e.g. Indigo Airlines, ICICI Bank etc-
3. Stores – e.g. Future Retail, Central, 99 Store, Amazon etc-
4. Person – e.g. Sachin Tendulkar, Amitabh Bacchhan etc-
5. Place – e.g. Gujrat Tourism, Incredible India etc-
6. Organization – e.g. The Rolling Stones
7. Idea – e.g. abortion rights, free trade, or freedom of speech

Read more on Brand Identity as put forward by Kapferer