Branding Strategy

As we discussed in the Product Decisions tutorial, branding is an important decision designed to enhance the identity of the product through the use of unique brand names, symbols and other distinctive measures. With competition growing more intense in almost all industries, establishing a strong brand allows an organization’s products to stand out and avoid potential pitfalls, such as price wars, that have befallen many products. Therefore, a clear understanding of branding strategy is essential in order to build solid products and product lines. In particular, marketers should be aware of various branding approaches that can be pursued.

By branding approach we are referring to different product identification strategies that can be deployed to establish a product within the market. As we will see, the purpose of these approaches is to build a brand that will exist for the long term. Making smart decisions up front is crucial since a company may have to live with the decision for a long time.

Approaches to Branding

Branding approaches include the following:

• Individual Product Branding – Under this branding approach new products are assigned new names with no obvious connection to existing brands offered by the company. Under individual product branding the marketing organization must work hard to establish the brand in the market since it cannot ride the coattails of previously introduced brands. The chief advantage of this approach is it allows brands to stand on their own thus lessening threats that may occur to other brands marketed by the company. For instance, if another company brand receives negative publicity this news is less likely to rub off on the company’s other brands that carry their own unique names. Additionally, as mentioned in the Product Decisions tutorial, brands can create financial gains through the concept known as brand equity. Under an individual branding approach, each brand builds its own separate equity which allows the company, if they choose, to sell off individual brands without impacting other brands owned by the company. The most famous marketing organization to follow this strategy is Procter and Gamble, which has historically introduced new brands without any link to other brands or even to the company name.
• Family Branding – Under this branding approach new products are placed under the umbrella of an existing brand. The principle advantage of this approach is that it enables the organization to rapidly build market awareness and acceptance since the brand is already established and known to the market. But the potential disadvantage is that the market has already established certain perceptions of the brand. For instance, a company that sells low-end, lower priced products may have a brand that is viewed as an economy brand. This brand image may create customer confusion and hinder the company if they attempt to introduce higher-end, higher priced products using the same brand name. Additionally, with family branding any negative publicity that may occur for one product within a brand could spread to all other products that share the same name.
• Co-Branding – This approach takes the idea of individual and family branding a step further. With co-branding a marketer seeks to partner with another firm, which has an established brand, in hopes synergy of two brands on a product is even more powerful than a single brand. The partnership often has both firms sharing costs but also sharing the gains. For instance, major credit card companies, such as Visa and MasterCard, offer co-branding options to companies and organizations. The cards carry the name of a co-branded organization (e.g., University name) along with the name of the issuing bank (e.g., Citibank) and the name of the credit card company. Besides tapping into awareness for multiple brands, the co-branding strategy is also designed to appeal to a larger target market, especially if each brand, when viewed separately, does not have extensive overlapping target markets with the other brand. Thus, co-branding allows both firms to tap into market segments where they did not previously have a strong position.
• Private or Store Branding – Some suppliers are in the business of producing products for other companies including placing another company’s brand name on the product. This is most often seen in the retail industry where stores or online sellers contract with suppliers to manufacture the retailer’s own branded products. In some cases the supplier not only produces product for the retailer’s brand but also markets their own brand so that store shelves will contain both brands.
• No-Name or Generic Branding – Certain suppliers supply products that are intentionally “brandless.” These products are mostly basic commodity-type products that consumer or business customers purchase as low price alternatives to branded products. Basic household products such as paper products, over-the-counter medicines such as ibuprofen, and even dog food are available in a generic form.
• Brand Licensing – Under brand licensing a contractual arrangement is created in which a company owning a brand name allows others to produce and supply products carrying the brand name. This is often seen when a brand is not directly connected with a product category. For instance, several famous children’s characters, such as Sesame Street’s Elmo, have been licensed to toy and food manufacturers who market products using the branded character’s name and image.