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The importance of branding

The importance of branding (AO3)

"A brand for a company is like a reputation for a person. You earn reputation by trying to do hard things well."
- Jeff Bezos (b.1964), Founder and CEO of Amazon.com

Starter activity 1

Take a look at the image below. Which one is the odd one out and why?

Most responses would suggest that the odd one out is Pepsi. This is because Sprite, Fanta, and Coca-Cola are brands owned by the Coca-Cola Company.

Furthermore, the Coca-Cola Company claims that "Coke" (a registered trademark of the company) is the second most understood word or term in the world, after "OK".

The Coca-Cola Company understands the importance of branding, especially in a highly competitive market, so invests appropriately in its branding strategy.

Starter activity 2

You can download this A - Z Brands quiz that I developed with Tutor2u a few years ago. It is totally editable, and a great lesson activity for branding. You'll need to have "Macros" enabled on PowerPoint, but the rest should be intuitive. I hope you enjoy using this.

Download the PPT file here.

Branding is vital to the survival of an organization. The brand reputation for a business is similar to the reputation of a person at work; it can determine whether s/he keep their job and qualifies for promotional opportunities for growth within the organization.

Reasons why branding in vital to all businesses include the following:

  • Branding creates a unique and original identity for a business and its goods and services. Such product differentiation enables customers to recognise and distinguish the brand from competing products.

  • Branding helps to foster customer loyalty. Repeat customers are important for the continued revenue streams and longevity of a business.

  • Brands can help to build trust in an organization and its products.

  • The purchase, ownership and consumption of certain brands can add an emotional value for customers, giving them a sense of wellbeing (the ‘feel good factor’).

  • Businesses can charge premium prices for products with a good brand. Being able to charge higher prices helps to improve the organization’s profit margins.

Global brands are highly recognized brands in overseas markets. Firms use a unified approach to their global brand strategy to increase its brand recognition as well as to support its brand awareness and brand development in new markets. These successful brands are sold using the more or less same marketing strategies in overseas markets.

 This short video clip shows a time lapse of the world's most valuable global brands from 2007 to 2020.

 Case Study 1 - The Walt Disney Company

Coming up with the right brand name for a business can be a challenging task. The Walt Disney Company is the world's largest entertainment company. Founded in 1923, the company was originally called "Disney Brothers Cartoon Studio" (1923 - 1926). It has since changed its legal name numerous times, to "The Walt Disney Studio" (1926–1929) and "Walt Disney Productions" (1929 - 1986).

The Walt Disney World Resort Theme Park, Orlando, USA

Brands owned by The Walt Disney Company include:

  • Walt Disney Pictures

  • Walt Disney Animation Studios

  • Pixar

  • Marvel Studios

  • Lucasfilm (including Star Wars)

  • American Broadcasting Company (ABC)

  • 20th Century Studios

  • ESPN

  • National Geographic

  • Touchstone Pictures

Branding creates an intangible aspect to, or an association with, a good or service. For example:

  • LEGO doesn’t sell plastic building bricks; it sells the ability to create and tell your own stories.

  • Honda doesn’t sell cars; it sells ‘the power of dreams’.

  • See’s Candies doesn’t sell chocolates; they sell a way to say ‘I love you’.

Businesses strive to achieve brand loyalty (a particular consumer preference for a particular brand of a good or service). Marketers try to achieve brand loyalty through schemes such as customer loyalty cards and making the costs of switching (to rival brands) more difficult. If there are high costs involved for customers to switch between brands or products, then customers are more likely to stick to the same brand and be less sensitive to changes in price. For example, smartphone subscribers are bound by lengthy and often confusing contracts, thus switching between rival services is made less easy.

Businesses try to make it difficult for customers to switch to rival brands

 Case Study 2 - Customer loyalty card schemes

A common way that businesses compete is through the use of customer loyalty cards (or rewards programmes). It is a strange paradox that petrol stations (gas stations) around the world post their prices for all to see on the roadside yet have customer loyalty cards which then change that price (members of the rewards programme may qualify for discounts and other special offers).

The idea behind this is called price-masking. If the petrol station were to lower its price as advertised on its external digital display boards, the firm's competitors would simply just do the same. However, through the use of customer loyalty programmes, where the discount depends on the number of points accumulated, it is not possible for competitors to see the real price that is charged to each customer.

 ATL Activity 1 (Thinking skills) - A to Z Branding Quiz

Some businesses spend millions of dollars a year to promote their brands. How many of these companies can you identify from their brands? Hint: the answers are in alphabetical order from A-Z.

Brands

Company

AirPod, iPhone, iTunes, iMac, iPod

Apple

325, 520, 635, M3, X5, Z4, i8

BMW

Bonaqua, Sprite, Qoo, Fanta, Sprite

Coca-Cola

Pixar, Marvel, Touchstone Pictures, ESPN

Disney (Walt Disney Company)

Bobbi Brown, Clinique, DKNY Fragrances, Tommy Hilfiger Toiletries

Estée Lauder

GT, Mustang, Focus, Fiesta, Ranger

Ford

Gmail, YouTube, Android, Chrome

Google

Civic, Accord, Type R, Jazz, CR-V, NSX

Honda

McAfee, Celeron, Core i7

Intel

Band-Aid, Neutrogena, Acuvue, Calpol, Benylin

Johnson & Johnson

Pringles, Coco Pops, Corn Flakes, Fruit 'n Fibre, Rice Krispies

Kellogg's

The Body Shop, Lancôme, Kiehl's, Diesel, Garnier

L'Oréal

Happy Meal, Snack Wrap, Big Mac, McNuggets, McMuffin

McDonald's

Nespresso, Nescafé, Kit Kat, Smarties, Vittel, Maggi

Nestlé

Zuiko, Stylus, E-620, PEN E-PM1

Olympus

Mountain Dew, Gatorade, Tropicana, Lipton, 7 Up, Aquafina

Pepsi

The Flying Kangaroo, Jetstar Airways, Australian air Express

Qantas

Clio, Espace, Mégane, Scénic

Renault

Bravia, VAIO, Cyber-shot, Xperia, PlayStation, Walkman

Sony

Indica, Harrier, Jaguar, Land Rover

Tata Motors

Ben & Jerry’s, Dove, Lipton, Vaseline, Magnum, Knorr

Unilever

T-Roc, Tiguan, Touareg, Tiguan, Golf, Polo, R32

Volkswagen

Sam’s Club, Dr. Thunder, Bonobos, Asda

Walmart

Mi Note, Mi Pad, Redmi Note

Xiaomi

Flickr, Tumblr, Mash

Yahoo!

Pull & Bear, Home, Stradivarius, Bershka

ZARA

Download the PDF version here for classroom use.

Challenge your students to create their own A-Z Brands Quiz. Alternatively, they can create an A-Z Slogan's Quiz, e.g. A = Impossible Is Nothing, B = The Ultimate Driving Machine, C = It's The Real Thing, etc.

 Watch this short 2-minute video about the importance of branding:

 Did you know?

Did you know that back in 1971, Nike hired a student to create a logo for the comany? Carolyn Davidson (b.1943) was a graphic design student at Portland State University in Portland, Oregon. She was offered $2 an hour for her work, so having spent about 17 hours to create the logo design, she was paid $35.

However, in 1983, Carolyn Davidson received 500 shares after Nike’s IPO, which she yet to sell. She had first met Phil Knight, Co-founder of Nike, who was teaching an accounting class at the university.

 Watch the moment that Carolyn Davidson receives her shares from Nike during a company reception.

 Case Study 3 - Branding gone wrong

Not all brand names are ‘good’ nor would they succeed in overseas markets. Some branding mishaps include the following:

  • Crapi Apartments – not the best of brand names for an Australian property developer

  • Gumpert – a very nice German supercar, super expensive and super fast, but with a silly name

  • Meta Facebook's announcement in Oct 2021 that it changes its name to Meta caused a stir in Israel where the word is pronounced like the feminine form of the Hebrew word for "Dead"

  • MP4-12C – a very nice British supercar; super expensive at £175,000 with its Formula One 600bhp McLaren V8 engine; but a shame about its name

  • Nova brand name for small car manufactured by Vauxhall (General Motors), although the word 'nova' in Spanish means "no go" or "does not go"

  • Pee Cola – Ghanaian brand of coca (Ghana is an English-speaking nation)

  • Pees Boy Club – maybe not a family-friendly Ukrainian restaurant chain

  • Pity – a brand of Japanese toilet tissue

  • Stiff Nipples – air conditioning service company in the UK

  • Terra Bal – terrible choice of brand name for this Japanese driving school company

  • Wong Kee Bikes – ride carefully when hiring bicycles from this company in Hong Kong

  • Woori Bank – you might be a little concerned about leaving your cash at this South Korean bank.

 Case Study 4 - How much for those grass-stained jeans?!

In September 2020, during an economic crisis caused by the prolonged coronavirus pandemic, luxury brand Gucci launched its grass-stained overalls for US$1,400 and grass stained jeans for US$1,200(!) Gucci's website described its new products as "denim... crafted from organic cotton and specifically treated for a stained-like, distressed effect."

Only a brand as recognised and reputable as Gucci could demand such a premium price during a time when the world witnesses the greatest global recession in living memory.

 Watch this short 3-minute video to recap on the importance on branding for all businesses:

 Watch this full-length documentary about the power of branding in the fashion industry, from the BBC Three documentary Secrets of the Superbrands (Fashion):

 ATL Activity 2 - The meaning behind famous brand logos

Some of the most well-known brand logos were purposefully designed to indicate something much more than simple beauty. In many cases, marketers have put a lot of energy, time and money into designing logos, paying attention to every line, curve, and colour to add meaning to the logos. Watch this video that examines the meaning behind 16 infamous logos - did you know the meaning behind the designs of these logos?

Logos covered in this video include the logos of Adidas, Apple, BMW, Coca-Cola, and Toyota. Students should make note of the meaning behind the 16 brands covered in the above video.

 Teacher only box

Teachers' notes

Video times are shown for reference only

Hyundai 0:33
The letter ’Н’ symbolizes two people – a client and a representative of the company – shaking hands. It also looks like the first letter of the company brand name, of course.

Adidas 0:52
The current logo is three stripes at an angle which together form a triangle. This symbolizes a mountain, which in turn represents the challenges that all sportsmen have to overcome day after day.

Apple 1:21
Rob Janoff, the designer who came up with the world-famous Apple company logo, explained his idea in one of his interviews. He bought a bag of apples, placed them in a bowl, and spent time drawing them for a week, trying to break the image down into something simple.

Vaio 1:58
The first two letters of the Sony Vaio logo symbolize an analogue wave. The last two are similar to the numbers 1 and 0 — that is, symbols of a digital signal.

Amazon 2:14
The orange arrow is similar to a smile because the company wants its customers to be satisfied. The arrow is also stretched between the letters ’A’ and ’Z’, in a hint that the company sells absolutely every product you can imagine.

Baskin Robbins 2:40
The pink-coloured parts of the "BR" section make up the number 31, which is how many ice cream flavors Baskin Robbins used to famously sell.

Toyota 2:56
The logo represents a stylized image of a needle eye with a thread passing through it. This is a hint at the company’s past – they used to produce weaving machines.

Continental 3:28
Continental, a famous car tyre producer, has a logo in which the first two letters depict a car wheel.

Formula 1 3:41
If you look carefully at the white space between the letter ’F’ and the red stripes, you can see the number 1.

Pinterest 3:59
On Pinterest, people collect images they like from across the Internet and ’pin’ them to their online boards. That’s why the image of a pin is hidden in the letter P.

Beats  4:17
Beats, an audio equipment producer based in the USA, uses a logo in which the letter ’B’ looks like headphones on a person’s head.

Toblerone 4:32
The famous chocolate company based in Bern, Switzerland, has a silhouette of a bear in its logo. That's because Bern is sometimes called the "city of bears".

BMW 4:55
The Germany carmaker's logo is simply a part of the Bavarian flag, the area of Germany where the company originated.

LG 5:18
The South Korean company's logo is a stylized image of a person’s face. According to the company, this represents its aspiration to have human relations with their customers.

Evernote 5:34
The corner of the elephant’s ear is folded over in a similar way how people fold the corner of a page to make notes.

Coca-Cola 5:57
In the space between the letters ’O’ and ’L’, you can see the Danish flag. It’s purely a coincidence. Nevertheless, Coca-Cola has used this as part of its marketing campaigns in the Scandinavian country.

 Case Study 5 - The world's most valuable brands (2022)

The 10 most valuable brands worldwide 2022

RankBrandBrand
value ($bn)
1Apple355.08
2Amazon350.27
3Google263.43
4Microsoft184.25
5Walmart111.92
6Samsung107.28
7Facebook101.2
8ICBC75.12
9Huawei71.23
10Verizon69.64

Source: Statista

 Key concept - Change

At times, businesses may need to change the perception that customers have of a brand or product. This can occur when a product is marketed to a different target audience (e.g., Listerine) or when the focus of a business totally changes (e.g., Wrigley’s). To do so requires the skills of creativity and innovation. Some examples are outlined in the table below:

Product / Brand

Original purpose

Repositioned product

7-Up

Mood-stabilizing drug

Carbonated soft drink

Bubble Wrap

Wallpaper

Protective packaging material

Coca-Cola

Headache and fatigue medication

Carbonated soft drink

Kleenex

Make-up remover

Tissue

Listerine

Floor wash

Mouthwash

Play-Doh

Wallpaper cleaner

Toy modelling clay

Vans

Skateboard shoes

Fashion and casual footwear

Viagra

Lower blood pressure

Correcting erectile dysfunction

Rebranding is a difficult, risky and challenging task, especially as it cannot be completed overnight. Nevertheless, if a firm’s current brand position is not working, it needs to change. 

Exam Practice Question

Market leaders such as Apple, Nike, Coca-Cola, McDonald's, Samsung, and Mercedes Benz enjoy a high degree of customer and brand loyalty. This can be measured by the number of repeat customers and the value they contribute to an organization's overall sales revenue per time period. Businesses use a range of marketing strategies to retain the loyalty of their customers, such as by using loyalty card schemes, special offers, VIP launches, and unique discounts.

According to Visual Capitalist, the best-selling car (excluding trucks and SUVs) of all time in the USA is the Toyota Camry. In fact, the Camry has been the best-selling branded car in America for every year of the 21st Century, except in 2001 when it was pushed to second place by the Honda Accord.

(a)Explain why brand loyalty is important for a business organization.[4 marks]
(b)Explain three advantages of successful branding for a business organization.[6 marks]
 
 Teacher only box

Answers

(a)  Explain why brand loyalty is important for a business organization.  [4 marks]

Brand loyalty is a measure of the degree to which customers continually and frequently repurchase the same brand of a product over time instead of buying substitute products from rival firms. A high degree of brand loyalty exists when customers are committed to a certain brand and make repeat purchases time and time again.

Businesses such as Apple, Nike, Coca-Cola, McDonald's, Samsung, Mercedes Benz, and Toyota enjoy a high degree of brand loyalty. This clearly helps to ensure their sales revenue remains high and that their products continue to appeal to existing customers. It also makes it easier for the firm to attract new customers when launching new products under the same family brand name. Ultimately, marketing strategies designed to cultivate loyal customers will tend to give a business, such as Toyota, a major competitive advantage in the industry.

Award [1 - 2] marks for an answer that shows some understanding of the demands of the question. Application and/or reasoning may be limited.

Award [3 - 4] marks for an answer that shows a good level of understanding of the demands of the question. There is appropriate application and reasoning provided, with effective use of business management terminology.


(b)  Explain three advantages of successful branding for a business organization.  [6 marks]

Possible advantages include an explanation of:

  • Price advantages - Businesses that sell homogeneous products, such as bananas from a fruit market, can only charge low prices as there are plenty of substitutes. By contrast, branding can add value to a product, so allows a business to charge higher prices, such as Apple, Nike, and Mercedes Benz.

  • Recognition and loyalty - Brand recognition can be a source of competitive advantage as there is a greater chance of the products being sold, such as Toyota motor vehicles. This could be due to brand loyalty or simply because customers feel more comfortable buying a brand that they are familiar with.

  • Distribution advantages - Retail space is limited so vendors only stock the best-selling brands. Hence, successful branding improves placement (distribution) of a firm’s products, such as Coca-Cola beverages sold in supermarkets and convenience stores.

  • Accept any other relevant advantage of successful branding that is accurately explained.

Mark as a 2 + 2 + 2

Award [1 mark] for each relevant advantage of successful branding, and a further [1 mark] for an accurate explanation.

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