The contribution of trademark and the brand they signify to the economic growth can also be analysed in terms of a brand as a marketing resource. When used as a marketing tool, a brand bears some significance and is viewed in different angles by the marketers, who are also the owners. A brand is a trademark, symbol, design, a term, a name or a combination of all whose main intention is to identify the goods or service of a particular seller or a group of sellers and distinguish them from other goods. It attracts value termed as brand equity. Brand equity refers to indirect and the direct worth accumulated to the profit connected with the brand.
The value of the brand is appreciated when the consumer gains the knowledge of the same through marketing efforts. Brand knowledge refers to feelings, descriptions, familiarity, discernment’s, and beliefs that are linked to the brand in consumers’ brain. To achieve comprehensive brand knowledge, various components of the brand knowledge should be considered. Brand awareness and brand image forms the components of brand knowledge. The ability of the customer to identify the brand is referred to as brand awareness. Brand image is the consumers liking and perception of a brand. It is important to note that brands exist in the eyes of the beholder and the consumer.
Brands signify an improvement and growth in an economic activity when viewed in terms of its equity and the subsequent components of equity realized during marketing. As seen above, brand equity is the sum of profit that a brand is expected to generate over a given period of time. This implies that a brand is seen as a source of equity. When marketing a brand, the owner will ensure comprehensive efforts are made to preserve the image of the brand. The comprehensive efforts by marketers are accomplished through the four components of brand equity: brand awareness, brand loyalty, brand image, and premium price.
Brand awareness is a vital component in advertisement as it has an economic significance on global scene as a marketing tool. Marketers concentrate on making their presence felt by the consumers. Consumers should be aware of the product in order to associate themselves with it. Marketers therefore ensure that consumers are able to recognize the brand of the product in order to make appropriate purchases.
Brand awareness can be defined as the ability of a consumer to identify a brand from a list of various products. Strong brand awareness is when a consumer is in a position to identify a brand without any assistance. Marketers emphasize on brand awareness to increase sale of the brand. Consumers will only recall the brand that is dominating the market. In order to make the brand dominant, suppliers will do more than television advertisements. They will ensure the awareness is physically done implying that they will expand production capacity and distribution network to give the product a global awareness; this is an expansion and growth of economy.
Brand loyalty is another component emphasized in marketing. It refers to the ability of the consumer to choose the same brand when buying the product. If consumers buy products basing on their price, feature and convenience then the existence of brand equity is very little. The degree of brand loyalty varies because even loyal customers may switch to other brands if they do not derive satisfaction from preferred brands. Brand loyalty is influenced by one’s money, time, and risk associated with switching brands. The changes in retention rates of customers and average customer lifetimes are good indicators of brand loyalty which is a very important indicator of brand equity.
Market leader brands have high brand loyalty built on positive experiences. This means the producers have to ensure their brands have a good image on global scene. To achieve such loyalty, competitive offers in terms of low prices, high quality, and right quantities have to be provided. As a result, producers or suppliers have greatly enhanced economic growth through conscious efforts of ensuring they maintain brand loyalty. At the same time, the consumers have been guarded against substandard products from malicious producers.
Brands as marketing resources commands an economic significance through the equity component of premium price. Marketers aim at making their brand fetch the best price for them and at the same time be able to command a wide and consistence brand loyalty from customers. Brands that have positive equity should be able to have a premium price though they should compete more on dimensions than price. There is need to differentiate between the capability to command a premium price and a price premium. To command a premium price, brands should have a value viewed in terms of the product they signify.
This implies that marketers ought to look for suitable resources to increase the brand value. The resource in this case is extensive market research and conscious production process that focuses on quality and taste of customers. They do so knowing that failure to achieve the value that matches the premium price will be viewed as a weakness to the marketing strategies. Marketing therefore aim at making the brand to own the business and add some value in the business. It does so by providing intelligence or human resource capability that helps in the allocation of various market investments in several places with potential for the same.
The main aim of strategic brand management is to maximize sales. High profits generated imply that the brand is of great value. An instance in this case is LG products. The company has managed to achieve a premium price for its products as result marketing efforts that was coined around the phrase ‘everyday goodness.’ To ensure there is goodness in its products, LG has eliminated possible areas of weakness that could make their product fail. They have also made sure the product is well decorated to match prestige status. Price premium strategies are a gigantic step towards an economy where customer needs are well taken care of.
Brands as marketing resources is utilized in several ways to ensure the product command a large market. One way is through brand extension. Brand extension, also referred to as brand stretching, is a marketing strategy where a marketer of a product uses a similar brand name in various product category. The concepts of brand extension were employed in 1990s whereby 80% of the product was introduced to the market through the concept.
Brand extension is a development policy which when used leads to reduction in the risks associated with finance. It is mainly achieved through products extension. Product extension refers to similar products used as a segment of the target marketplace. To illustrate the same “Coke” and “Diet Coke” can be used. Diet coke was introduced through extension of Coke making consumer to trust Diet Coke based on their trust in Coke. Brand extension is mainly focused on evaluation of the extension by the consumer. Three dimensions are used to assess brand extension. First is the complement which refers to complementary products.
Subsequent to compliment is the substitute products which can serve the same purpose meaning that they can be swapped. Third is transfer, which illustrates the relationship between the manufacturer and brand extension licensed. Brand extension is a major marketing strategy that has had a great economic value to the customers. Through brand extension, customers have been exposed to varieties of products utilizing the same level of products art. This has been the case because the extension process is cautiously done to ensure the extension does not taint the image of the brand in relation to the existing products. As a result, an extension is always at an elevated market position than the existing product.
Brands also have further economic significance. Through branding, the working of the market is facilitated. In economic perspective, making the best choice from the array of product is an expensive undertaking on the consumer. To find a product that will satisfy his or her needs, a consumer has to undertake an intensive market survey including the analysis of the available product to determine the best alternative from the available goods. Such an undertaking is time and money consuming for the customer. However, branding ensures that the customer has all the information concerning the product. This means branding offsets the cost of the consumer. A customer is supposed to walk into the supermarket and pick the product based on the marketing information available for the same.