IB Docs (2) Team
Aspects of branding
Aspects of branding (AO2)
"It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently."
- Warren Buffett (b. 1930), CEO of Berkshire Hathaway
Branding is a marketing technique used to give a product or business a unique name or identity. Examples include: Amazon, Nestle, Lego, IKEA, Apple, McDonald’s, Nintendo, and Volkswagen.
The role, or purpose, of branding includes:
To create an original identity for a good, service or organization
To differentiate a business and/or its products from those of rivals in the industry
To build brand awareness (knowledge and recognition of a particular brand)
To build brand loyalty (customer devotion to a particular brand)
To create a particular or desired corporate image.
A good brand name (good brand reputation) helps an organization to gain or sustain competitive advantages. Research has consistently shown that customer purchasing habits are affected by branding to a very large extent; and in many cases branding is more important to customers than prices.
Case Study 1 - Did you know...?
Adobe was named by one of the co-founders, John Warnock, who lived close to Adobe Creek, a river in Los Altos, California, USA.
BMW was originally an aircraft manufacturer. After Germany's defeat in World War I, BMW was facing bankruptcy so diversified to producing motorbikes, and then cars in 1928. The BMW logo is a tribute to its aviation heritage.
Expedia, the online travel group headquartered in Seattle, USA, got its brand name using a combination of the words “exploration” and “speed”.
M&M's comes from the names of Mars and Murrie, the co-founders of M&M Limited that launched the chocolate brand in 1941. Today, the brand is owned by Mars Inc.
Microsoft was co-founded by Bill Gates and Paul Allen who combined the words microcomputer and microprocessor with software to create the infamous brand name.
Japanese car maker Mitsubishi started as a shipping firm back in 1870.
Nokia was actually established in 1865 (mobile phones did not become a commercialised product until the late 1980s). The Finnish company originally produced paper. Nokia is named after the town Nokia, a town on the banks of the Nokianvirta River in Finland.
The pogo stick bouncy toy was trademarked back in 1919, with “pogo” coming from the combination of the inventors’ names, Max Pohlig and Ernst Gottschall.
The brand name Rolex does not actually mean anything. The creator, Hans Wilsdorf, wanted a 5-letter word that could be pronounced by anyone on the planet. Rolex was chosen as Hans Wilsdorf said it was simple (to say) and sounded expensive. Rolex was established in London in 1905, not in Switzerland.
Samsung, South Korea's largest consumer electronics manufacturer and the world's largest producer of mobile phones, was originally founded as a grocery trading store in 1938. The company did not enter the electronics industry until 1969.
Smart, the tiny motor vehicles made by Mercedes-Benz, comes from the cooperation of the Swiss company Swatch with Mercedes-Benz (creating "Swatch Mercedes ART").
Starbucks is named after the character Starbuck in Moby Dick, authored by Herman Melville. Starbuck was in charge of the ship's cargo and deck crew in the novel.
TIME magazine is so called as the brand is an acronym for "The International Magazine of Events."
Volkswagen is Europe's largest car maker. Other European car brands include Audi, Bentley, Bugatti, Lamborghini, Porsche, SEAT, and Skoda. These perhaps seemingly unrelated brands have one major thing in common though - they are owned by the Volkswagen Group.
Case Study 2 - The importance of a band's brand name?
Does the name of a music band really matter for its commercial success? Music experts and marketer believe so - they question whether "On a Friday", "Starfish", or even "The Quarrymen" would have been so iconic had these bands not changed their names.
What do you think the original of these band brand names were later changed to?
| Original band name | Band name |
| Monkeys | |
| Naked Toddler | |
| Iris | |
| Spice | Spice Girls |
| Seymour | |
| The Hype | |
| The Rain | Oasis |
| On a Friday | |
| The Quarrymen | |
| Starfish | Coldplay |
| The Tea Set | Pink Floyd |
There are four aspects of branding specified in the IB Business Management syllabus:
Brand awareness
Brand development
Brand loyalty, and
Brand value.
As a starter activity, watch this introductory video clip titled ‘What is branding?’:
"Your brand is what other people say about you when you are not in the room."
- Jeff Bezos, Founder of Amazon
Brand awareness is about the extent to which potential and existing customers know about, recognise and remember an individual brand. It is an important aspect of any product strategy because all businesses strive to gain new customers. Knowledge, awareness and familiarity of a particular brand can lead to increased sales.
For some companies, the use of acronyms or abbreviations that stand for the name of a business helps to improve brand awareness. For example, multinational clothing company French Connection, United Kingdom uses the acronym FCUK. Other examples include D&G (Dolce and Gabbana), BMW (Bavarian Motor Works), KFC (formerly Kentucky Fried Chicken), CNN (Cable News Network) and HSBC (Hong Kong & Shanghai Banking Corporation). Long brand names are harder for people to remember. However, this strategy doesn't always work as vague abbreviations may mean little to customers. Hence, having well designed acronyms and brand names can help a business to get around this potential problem.
Promotional strategies, using both above and below the line promotion, are used to enhance brand awareness. As Jeff Bezos, founder of Amazon.com, said “A brand for a company is like a reputation for a person. You earn reputation by trying to do hard things well.”
ATL Activity 1 - Brand awareness
How well do you know your brands? Try these online quizzes to find out:
Guess the logo quiz - A timed, multiple choice logos quiz.
Brand logos quiz - Students have 4 minutes identify and type their answers to this logos quiz - who can be the quickest to complete this?
Case Study 2 - Formulating brand names
Many brands are simply named after their founder. Examples of such brands include:
Alfred Nobel
Ann Summers
Charles Rolls & Henry Royce
Coco Chanel
Dick McDonald & Mac McDonald
Enzo Ferrari
Ferruccio Lamborghini
Frank C. Mars
Henri Nestlé
Henry Ford
Ferdinand Porsche
Gerard Philips
James L. Kraft
Jamshetji Tata
John Boyd Dunlop
John Cadbury
J.P. Morgan
Lars Magnus Ericsson
Levi Strauss
Louis Vuitton
Michael Dell
Michael Marks & Thomas Spencer
Ralph Lauren
Sara Lee
Shozo Kawasaki
Soichiro Honda
Walt Disney
Walter Chrysler
Will Keith Kellogg
William Fox
William Boeing
William Colgate
William Harley & Arthur Davidson
William Hewlett & David Packard
William Procter & James Gamble
William Wrigley Jr.
Case Study 3 - What's in a name?
Did you also know...?
Adidas is named after its founder Adi Dassler. The German sports company's large rival, Puma, was set up by his sibling Rudolf Dassler - the two brothers never saw eye to eye in their personal or professional lives.
Precision Optical Industry was founded in 1937 in Tokyo, Japan. A year later, the business produced its first camera, the Kwanon. In 1947, Precision Optical Industry changed its name to Canon, and the rest is history.
Google was originally branded as "BackRub" - you can 'back rub' that to check(!)
Best-selling tissue brand Kleenex, owned by the Kimberly-Clark Company, was originally called "Kotex" when the firm was founded in 1924.
The Kmart Corporation (better known as Kmart) is one of the largest retail brands in the USA. The multinational company was founded in 1899 as the "S.S. Kresge Company" in Detroit, USA, but changed its name to Kmart in 1977.
Nike (named after the Greek goddess of Victory) was originally branded as “Blue Ribbon Sports”.
Nintendo was formerly called "Marufuku Company", when the company was founded in 1889 as a manufacturer of playing cards, but the Japanese company needed a brand name that would thrive in international markets when it diversified into the games console market.
Nissan was originally called "Datsun". Datsun originated from the Japanese word ‘dat’, which means lightning fast.
PayPal was formerly called "Cofinity". The first version PayPal's electronic payments system was launched in 1999.
Pepsi-Cola was formerly branded as "Brad’s Drink", after the surname of its creator, Caleb Bradham.
Founded in 1946 as "Tokyo Tsushin Kogyo", this company was rebranded as Sony in 1958. The name comes fro the Latin word ‘Sonus’, which means sound or noise.
Subway was formerly known as "Pete’s Super Submarines". The brand name was inspired by Dr. Peter Buck, a family friend of the company's founder Fred DeLuca, who had originally suggested that he opened a submarine sandwich shop.
Visa was originally called Bank Americard in 1958 by the Bank of America. However, it needed a new brand name when the credit card company expanded its services to other countries. In 1970, the Bank Americard was renamed to Visa, a word that was easy to pronounce internationally, and a name associated with the idea of travel visas to suggest international acceptance.
Amancio Ortega, founder of clothing retail giant Zara came up with the brand name after discovering that the original name he had come up with (Zorba) had already been taken by a bar in the neighbouring area A Coruña, in Spain.
Case Study 4 - Brand or Product?
Some brands become so well-known and successful that the brand name and product become interchangeable. These brands are known as generic trademarks or genericized trademarks. Due to its popularity or significance, the brand name becomes the generic term for, or synonymous with, the product itself. Examples of such brands include:
Aspirin - A trademark owned by German multinational pharmaceutical company Bayer for its acetylsalicylic acid pain reliever medication, sold in over 80 countries.
Astroturf - A brand name owned by the Monsanto Company. The generic product is called artificial turf.
Band-Aid - A widely used term across America, Canada, Australia and New Zealand for an adhesive bandage. It is actually a registered trademark owned by Johnson & Johnson.
Biro - The product is disposable ballpoint pens but the brand name belongs to Biro is actually owned by French company Société Bic.
Bubble Wrap - The brand is owned by the Sealed Air Corporation. Its product has become synonymous with air cushioned protective wrapping.
Coke - A registered trademark of the Coca-Cola Company. The product is actually called cola.
Duck Tape - A registered brand name of the German company The Henkel Group, which first produced duct tape products in 1978. The Duck Tape brand was launched in 1980.
EpiPen® - The market leading brand of medical autoinjector devices for injecting epinephrine (adrenaline) and most often used for the treatment of anaphylaxis. The EpiPen was commercialised in 1983. It is manufactured by Meridian Medical Technologies, and marketed by Mylan.
Escalator - Inventing in 1897, the moving staircase that uses a circulating belt of steps driven by a motor, is a trademark brand name of the Otis Elevator Company.
Frisbee - Technically called a flying disc, the Frisbee brand is owned by American toy company Wham-O.
Hula Hoop - Another trademark from Wham-O for the generic product called a toy hoop.
Jacuzzi - The registered brand name, owned by the company also called Jacuzzi, for what is generically known as a hot tub or whirlpool bath.
Jeep - This trademark is commonly used to describe any SUV (sports utility vehicle) even though the brand is owned by Chrysler.
Jet Ski - This product is actually known as a personal watercraft, as Jet Ski is owned by Japanese multinational company Kawasaki.
Memory Stick - This brand is owned by Sony, the Japanese consumer electronics manufacturer. The generic product name is rather long-winded: a flash memory storage device.
Plasticine - This putty-like modelling material is actually a trademark of British toy makers Flair Leisure Products. The generic name if modelling clay.
Post-it - The sticky note or adhesive paper note brand is owned by 3M, the American multinational conglomerate corporation.
Pot Noodle - The instant noodle brand is owned by Unilever, the British multinational consumer goods company.
Rollerblade - This is the trademark of Italian company, Nordica. For all other manufacturers, they are legally required to refer to product as inline skates.
Sellotape - This brand of clear adhesive tape is owned by Henkel, a German chemical and consumer goods company.
Vaseline - Like Pot Noodle, this brand of petroleum jelly is also owned by Unilever.
Velcro - A globally known generic term, but which is a brand owned by the Velcro Company. The generic product name is hook and loop fasteners!
Essentially, brand awareness is about ensuring a brand name is recognized or well-known to its potential market audience. Brand leaders (market leaders) have a high degree of brand awareness in their respective industries.
- Stephen King (b. 1947), author
Brand development is part of a firm’s marketing strategy in communicating the value of a brand and what the brand stands for. It is ultimately about building sales by making more people attracted to the brand.
Common steps in the development of a brand include:
Conducting relevant market research
Identification of the target market / market segments
Creating and selecting an appropriate brand name, logo, and slogan
Developing a distinctive or unique selling point (USP) for the brand
Consideration of the brand in relation to the overall business strategy
Creating a focused marketing mix and marketing strategy for the brand.
Brand development can create an image or perception of a business or its products that enables it to have a competitive advantage over its rivals. An example is Kellogg’s, which uses its brand name in order to market its cereal products, e.g. Kellogg’s Corn Flakes, Kellogg’s Coco Pops, Kellogg’s Fruit ‘n Fibre, Kellogg’s Rice Krispies, and Kellogg’s Special K.
The downward to a brand development strategy is that it can prove to be highly expensive (such as the costs of using celebrities to endorse and develop a brand), yet there is no assurance that the strategy will succeed.
Nevertheless, effective marketing requires organizations to invest in their brands for longevity. A popular brand today will not necessarily be popular tomorrow. Brands that were once highly popular included: Blockbuster (video rental), Concorde (airline), Kodak (cameras and camera film), Sony Ericsson (mobile phones), and Saab (cars).
Kodak lacked brand development in the era of digital camera technologies
Brand development is particular important for businesses that sell multiple products or brands. A multi-brand strategy is a marketing strategy that involves a business developing more than one brand as part of its overall product strategy. For example, the Coca-Cola Company's multi-brand strategy will include appropriate product strategies for its brands such as Fanta, Sprite, Dr. Pepper, Schweppes, Minute Maid, and Costa Coffee.
- Scott Talgo, management consultant
Brand loyalty exists when customers repeatedly and habitually buy the same brand. A high degree of brand loyalty means that customers do not (like to) switch to a rival brand. It is the result of an organization’s successful brand development strategy. Ultimately, brand loyalty means that customers prefer a certain brand.
Brand loyalty is about retaining customers so that they make repeat repurchases. Ideally for a business, customers stick to buying its branded products irrespective of price or convenience. Apple for example, has a high degree of brand loyalty for its iPhones as a significant proportion of their customers upgrade to a newer version of the iPhone once available, rather than considering switching to rival brands such as Samsung and HTC.
Brand loyalty is important in literally all industries, but one particular market that stands out is technology. For example, many smartphone users tend to gravitate towards Apple or Samsung. There is a common belief that Apple products in particular are of superior quality, but are they or are consumers buying the brand name rather than the (i)phone? Brand loyalty is less common in markets such as fast fashion because most customers just buy what they like at the time of purchase, maybe because the fashion products are relatively cheap (or affordable) and usually indistinguishable from each other.
Many businesses, especially those in the retail industry, use loyalty programmes (rewards programmes) as part of its branding strategy to improve the degree of brand loyalty. Loyalty programmes create incentives for customers to make repeat purchases in order to gain benefits, such as price discounts.
Reward programmes are commonly used to build brand loyalty
As marketing expert Jack Trout (the creator of perception mapping) said: “Marketing is not a battle of products; it’s a battle of perceptions.”
Box 1 - The benefits of brand loyalty
Trust (which helps to improve customer relations and increase sales revenue)
The ability to charge premium (and hence ability to earn higher profit margins)
Repeat customers (and hence higher sales revenues)
Lower chance of brand switching (customers are less likely to buy a rival brand)
Word of mouth promotion (recommendations made to family and friends)
Higher brand value (because brands are intangible fixed assets).
| (a) | Define the term brand loyalty. | [2 marks] |
| (b) | Explain two advantages of brand loyalty to businesses. | [4 marks] |
Teacher only boxAnswers
(a) Define the term brand loyalty. [2 marks]
Brand loyalty measures the degree to which customers consistently repurchase the same brand of a product over time rather than buying from rival suppliers.
Award [1 mark] for an answer that shows some understanding of the term brand loyalty.
Award [1 mark] for a definition that shows a clear understanding of the term brand loyalty, similar to the example above.
(b) Explain two advantages of brand loyalty to businesses. [4 marks]
Possible advantages of brand loyalty to businesses include:
Brand loyalty can help to give an organization a competitive advantage over its competitors
Repeat customers help the business to enjoy continued sales growth
Brand loyalty helps to improve a firm’s market position.
Loyal customers mean that the demand for a firm's goods and/or services is price inelastic (less sensitive to changes in price), so the business is able to charge customers a higher price (thereby improving its profit margin).
It aso helps the business to remain profitable.
Accept any other relevant and explained advantage of brand loyalty to a business.
Award [1 – 2 marks] if the answer shows some understanding of the benefits of brand loyalty, although the explanation lacks some detail and/or clarity. Award up to 2 marks if only one advantage is explained.
Award [3 – 4 marks] if the answer shows a clear understanding of any two benefits of brand loyalty for a business, with detailed explanations. There is good use of relevant business management terminology throughout the answer. Award the use of appropriate examples.
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