Understanding the critical role of branding in marketing

August 28, 2015
Source: Prince Kodua
Understanding the critical role of branding in marketing

Businesses exist to satisfy the needs of their customers through the offer of brands. It is therefore not surprising that brand management is assuming the centre stage in today’s competitive physical and virtue market space.

Although the origin of the concept of branding and brands cannot be traced to a specific date in history, several contributors have given an idea of how and why the practice of branding started in the field of commerce or business. For instance, brick-makers in ancient Egypt practiced branding mainly as a tool for identifying their bricks from that of the bricks of other competing brick makers.

These brick makers who were also traders in effect understood and applied the idea of a trademark which is a common business practice nowadays. Researchers have also observed that ancient merchants who traded in whisky as far back as the beginning of the sixteen century differentiated their barrels of whiskies with various marks, signs, and drawings before shipment to the consignee.

During the turn of the nineteenth century, businessmen used branding in ways that enhanced a product perceived value through the principle of association. This principle of association is premised on the assumption that, when a given brand is directly associated with another element such as a brand, person, event, ideas or place, or music that is liked or favourably perceived by the target audience, the consumer is likely to transfer that likeness or positive perception unto the brand in question. It has also been pointed out that branding evolved even further in the twentieth century with new purposes and strategies. Several scholarly contributions indicate the growing awareness among marketers on consumers’ preference for branded products as against non-branded ones.

What then is the meaning of the term “brand” or “branding”? The American Marketing Association (AMA) defines a brand as 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 other sellers. In essence, branding is done by businesses with the view to differentiating or positioning their offers from those of competitors in a way that is valuable to their target market or customers.

Although efforts at branding can sometimes be financially burdensome, smart companies see branding as a management activity that is crucial in the sense that it helps businesses to clearly deliver messages to their target audience. Branding can also serve as a stamp of credibility thereby making consumer choice easier in today’s marketplace which is characterised by proliferation of alternative or rival brands in almost all product categories.

A well-positioned brand holds the promise of eliciting emotional attachment from customers to the brand. “All things being equally”, such customers are motivated to patronise the firm’s products or services. Where customers become satisfied through the acquisition, possession or consumption of the said brand, it is expected that certain benefits will accrue to the firm.

Thus, there are several bottom-line benefits that can accrue from developing strong brands. A strong brand can lead to improvement in the perceptions of product performance among customers. It can also lead to enhance customer loyalty. Marketers have also come to understand that a strong brand reduces the vulnerability of the firm and its products to challenges and threats in the environments. Firms with such brands also witness increase margins. Strong brands leads to more elastic customer responses to price decreases and inelastic customer response to price increases. The firm is likely to benefit by way of receiving cooperation and support from the trade or intermediaries. Suffice to say that a firm’s marketing communication efforts is likely to hit the responsive code of the target market. Strong brands can also enable the company grow its product portfolio through licensing and brand extension opportunities. It is thus expected that in the pursuit of branding, different outcomes can be achieved due to a products unique brand identity as compared to if that same product or service was not uniquely identified by that brand.

The argument from the foregoing discussion is that, a brand’s equity has an economic function. Brand equity is essentially the value that the brand derives from its capacity to generate an exclusive, positive, and prominent meaning in the minds of a large number of consumers. In essence, businesses that pay attention to branding recognise that loyal customers make repeat purchases; they make recommendations to friends and other persons or entities within their social and professional circles thereby giving meaning to the concept of customer life-time value.

When businesses think of what one satisfied customer can generate in terms of revenue or profit. Customer life-time is a prediction of the net profit attributed to the entire future relationship between a company and a customer which includes all the customers who come to do business with the company as a result of recommendations made by the said satisfied. In particular, loyal customers are likely to pay premium prices to acquire the brand and are less likely to be swayed by offering from competing brands. It is equally important to recognise that achieving customer loyalty through effective branding also means that, the firm will spend less time, effort and money on promotion.

It must be noted that effective branding starts with a clear understanding of consumer needs which includes basic physiological needs (such as sex, food, clothing, shelter), safety needs, love and belonging needs, esteem needs and the need for self-actualization. Understanding consumer motives or needs is sometimes a major challenge to the marketing effort.

Where the business has not got the expertise to properly gauge these needs, the services of professionals in advertising and market research become relevant. The advice here is that businesses need to invest in research in the quest to clearly define and build their brands - after all, a company’s brand is the source of promise to consumers.

A brand is the foundational piece in marketing communication and therefore requires all the necessary human and financial attention. It is however interesting to note that in-spite of the importance of branding in the achievement of a firm’s business objectives as highlighted above, it was not until recent years that managers gained the appreciation that branding is the responsibility of all the functional areas of the business operation and not the preoccupation of the marketing department in the organization. Smart businesses must therefore get their entire internal and external customer to appreciate the essence of branding.

The author is a lecturer and Doctoral Candidate, University of Ghana Business School, Contact email: pkodua10@gmail.com)