Advantages of Brands

A strong brand provides a marketing organization with a number of important advantages, which may result in the marketer obtaining certain competitive benefits. Listed below are the key advantages of brands with discussion of how these advantages can benefit marketing strategy:

Enhances Product Recognition

Brands provide multiple sensory stimuli to enhance customer recognition. For example, a brand can be visually recognizable from its packaging, logo, shape, etc. It can also be recognizable via sound, such as hearing the name on a radio advertisement or talking with someone who mentions the product.

Helps Build Brand Loyalty

Customers who are frequent and enthusiastic purchasers of a particular brand are likely to become brand loyal. Cultivating brand loyalty among customers is the ultimate reward for successful marketers since these customers are far less likely to be enticed to switch to other brands compared to non-loyal customers.

Helps With Product Positioning

Well-developed and promoted brands make product positioning efforts more effective. The result is that upon exposure to a brand (e.g., hearing it, seeing it) customers conjure up mental images or feelings of the benefits they receive from using that brand. The reverse is even better. When customers associate benefits with a particular brand, the brand may have attained a significant competitive advantage. In these situations the customer who recognizes he needs a solution to a problem (e.g., needs to bleach clothes) may automatically think of one brand that offers the solution to the problem (e.g., Clorox). This association of “benefit = brand” can provide a significant advantage for the brand.

Aids in Introduction of New Products

Firms that establish a successful brand can extend the brand by adding new products under the same “family” brand. Such branding may allow companies to introduce new products more easily since the brand is already recognized within the market (for more see Approaches to Branding).

Builds Brand Equity

Strong brands can lead to financial advantages through the concept of brand equity in which the brand itself becomes valuable. Such gains can be realized through the outright sale of a brand or through licensing arrangements. For example, Company A may have a well-recognized brand (Brand X) within a market but for some reason they are looking to concentrate their efforts in other markets. Company B is looking to enter the same market as Brand X. If circumstances are right, Company A could sell to Company B the rights to use the Brand X name without selling any other part of the company. That is, Company A simply sells the legal rights to the Brand X name but retains all other parts of Brand X, such as the production facilities and employees. These other parts can then be redirected to the production of other Company A brands. In cases of well-developed brands, such a transaction may carry a very large price tag. Thus, through strong branding efforts Company A achieves a large financial gain by simply signing over the rights to the name. But why would Company B seek to purchase a brand for such a high price tag? Because by buying the brand Company B has already achieved an important marketing goal ? building awareness within the target market. The fact the market is already be familiar with the brand allows the Company B to concentrate on other marketing decisions.

We provide more detail on branding in the Managing Products Tutorial with a special emphasis on the strategies marketers follow in order to build a strong brand.