The first decision is whether to develop a brand name for a product. In the past, producers and intermediaries sold their goods out of barrels, bins, and cases, without any supplier identification. Buyers depended on the seller’s integrity. The earlier signs of branding were the medieval guilds’ effort to require craftspeople to put trademarks on their products to protect themselves and consumers against inferior quality. In the fine arts, too, branding began with artists signing their works. Today, branding is such a strong force that hardly anything goes unbranded. So-called commodities do not have to remain commodities. Salt is packed in distinctive containers, oranges are stamped with growers’ names, nuts and bolts are packaged in cellophane with a distributer’s label, and automobile components – spark plugs, tires, filters – bear separate brand names from the automakers. Fresh food products such as chicken, turkey, and salmon are increasingly being sold under strong advertised brand names. Even bricks do not have to be seen as commodities.
Why do sellers brand their products when doing so clearly involves costs? Branding gives the seller several advantages:
• The brand name makes it easier for the seller to process orders and track down problems.
• The sellers’ brand name and trademark provide legal protection of unique product features.
• Branding gives the seller the opportunity to attract a loyal and profitable set of customers. Brand loyalty gives seller some protection from competition.
• Branding helps the seller segment markets. Instead of P&G’s selling a simple detergent, it can offer eight detergent brands, each formulated differently and aimed to specific benefit-seeking segments.
• Strong brands help build the corporate image, making it easier to launch new brands and gain acceptance by distributors and customers.
Case Study [Acme Brick]
Acme Brick Acme Bricks of Fort Worth, Texas, has managed to brand its bricks, with the result that it is able to charge 10% more and enjoy the largest market share in several of its metro markets. It makes high-quality bricks. It offers a 100-year guarantee (the norm is five years for bricks). Every time a home is built with Acme bricks, Acme contributes to the Troy Aikman Foundation for children. Acme has also donated bricks to 30 homes through Habitat for Humanity. A telephone survey in four major Acme markets revealed an 84% preference for Acme bricks, with no other supplier getting more than a 10% preference.
Distributors and retailers want brand names because brands make the product easier to handle, hold production to certain quality standards, strengthen buyer preferences, and make them identify quality differences and shop more efficiently.