The American Marketing Association Marketing Essay

The American Marketing Association defines a a brand is “a name, term, sign, symbol, or design, or a combination of them, intended to identify the goods or services of one seller or a group of sellers and to differentiate them from those of competitors.”(1). Brands have greater meaning to customers. They not only identify the seller but give the seller many physical /emotional /quality attributes in their minds. It creates expectations and is a source of reassurance.

Brands create added value in peoples minds through reassurance, beliefs, expectations, associations for generic products/services and commodities. Brands stand for something(positioning) and create a attitude towards the product/service or store.

Brand Equity: According to John Torella “It is a key indication of your brand’s present strength, of your relationships with core customers, of your customer’s propensity to buy from you in the future and of their willingness to pay a premium price of your brand.”(2)

The American Marketing Association defines Brand equity as “The value of a brand. From a consumer perspective, brand equity is based on consumer attitudes about positive brand attributes and favorable consequences of brand use.”

“Brand Equity is the added value endowed to products and services. This value may be reflected in how consumers think, feel, and act with respect to the brand, as well as the prices, market share, and profitability that the brand commands for the firm.”(3) Kotler.

In Managing the most important asset: Brand equity, David Aaker mentions “A strong brand has four dimensions: awareness, associations, perceived quality and brand loyalty. To understand what drives a brand’s value, one must understand each of these four dimensions”(4)

Branding the Store and Store Brands

Store brands are also called ‘private labels’ and are brands for products that belong to the retailer, like ‘John Miller’ shirts at Pantaloon or ‘stop’ apparels at shoppers stop. Private labels are brands the retailer owns that compete with national brands for example ‘John Miller’ of Pantaloon competes with ‘Peter England’ that belongs to Madura Garments which is a integrated apparel manufacturer and fashion brand.

Branding the store refers to creating brand equity for the retail store or chain. For example Pantaloon, Shoppers stop or Westside are all brands of stores that have created a unique identity and mean different things to their customers. It is important to create brand equity for the store before one can start introducing store brands / private label products.

Do retailers have to invest in this intangible asset?

In earlier times, the three important factors for retailing success were Location, Location and Location. Today it looks more like Price, Price, and Price. The success and the value proposition of Big-bazaar are based on this. While investing in IT and building partnerships with suppliers is more crucial than ever before, building a brand for the store has not received much attention. It is easier for Single brand retailers (like Bata, Liberty Shoes or Tanishq) to create a brand personality than it is for Multi-brand retailers (like food-world, Westside). The need to create a store brand however exists for both types of retailers.

“According to our analysis of retailers in a number of formats, consumers actually make more frequent visits, check out larger than average shopping baskets, or pay price premiums at the stores of brands they perceive as strong” (5)

The grand master of marketing communications David A.Aaker in his “Managing the Most Important Asset: Brand Equity” mentions two reasons why investment in building brands is worthwhile. First, it can result in a real sustainable competitive advantage. Awareness, perceived quality, and customer loyalty are all dimensions of brand equity. The second reason is that strong brands make sense in price competition. Tom Peters has said, “In an increasingly crowded marketplace, fools will compete on price. Winners will find a way to create lasting value in the customer’s mind.” In today’s retailing environment while providing low price appears like a panacea, providing “value” should be the mantra. In addition, when you discuss value, you need to mention “Brand Equity”.

When one considers the various steps in forming an evoked set of outlets for a particular purchase, fig: 1 from “An integrative theory of patronage preference and behavior” (6) by Jagdish N.Sheth gives a good understanding of the steps the consumer goes through. This only stresses the fact that a store needs to pass many steps in the minds of its prospect before it becomes a preferred outlet for a consumer to shop in. Having understood the customer, his needs, wants and motivations to define location, merchandise selection, price and such other factors building a favourable brand equity is essential for retail success.

Benefits of Branding for the Retailer

A retail brand has many long- term benefits, many of which can have economic value. For the retailer the advantages include

Premium Pricing

Customers are willing to pay a higher price for the reassurance and other intangible values a brand brings. Compare the price for a commodity and a branded commodity to see this in action.

Lower Marketing Costs

Once a brand has been established the cost of marketing reduces considerably. The number of repeat customers for a brand like ‘westside’ or ‘shoppers stop’ is a indication that they do not need to spend too much money on acquiring new customers each time.

3. Increased Foot Falls

People prefer to shop at well known names. One is that they reduce their shopping risk and second when one shops at a top brand shop it adds status/presitige.

4. Better People – Lesser Attrition

People prefer to work for brand names as the firm we work for many times gives us our identity in society. Attrition is a issue in the retal industry, however attrition will be lesser if the store has a reputation/brand.

5. More Consistent Sales Patterns

When a store is competing merely on price customers are likely to come in when the prices are low, say during a ‘sale’. Also they might shop for those items which are cheaper at this store. This is not the case when a brand name has been built because the name stands for something and that is the reason for customer’s walking in. There will not be huge fluctuations in sales if there is customer preference based on what the brand stands for.

6. Opportunities Franchise And Licensing

Once established, brands can be franchised or licensed. Take Mc Donalds, or many of the Titan watch stores, these are franchisee outlets with the owner of the brand adding meaning to what the name stands for and the franchisee managing the operations.

7. A Way To Get Off The Discounting Spiral

When people buy for the comfort brands give them, the retailer does not need to compete on price which is a downward spiral that leads nowhere

8. Trademark – Legal Protection

Generally brands are protected as trade marks and this helps in protecting the owner of the brand from imposters and copy cats to a great extent.

8. Brand Loyalty – Store loyalty

When a brand of stores stands for quality merchandise, great service or even good returns policy, it creates customers who value these aspects and would return to the shop with the same brand. Many customers of ‘Westside’ who move to Bangalore from Mumbai or Delhi continue to shop at ‘Westside in Bangalore as they are loyal customers of that brand.

9.Reduces Need For In-Store Contact

Well known respected brand name stores will translate to reduced requirement of In store contact. For example there is no need for a customer to ask many questions about the quality of a product if she is confident that the store stocks ‘good stuff’.

10.Helps Segmentation, Promotion, And Pricing

Customers are prepared to pay more for what they prefer. Brand names bring in more price for the same product/commodity. Brand names strongly indicate the kind of person who is a customer of the store. This helps to select customers. For example ‘nike’ is strongly positioned as a young/sporty brand and therefore attracts those who think of themselves as such and not the others.

“Successful retail outlet brand building enables organizations to:

build stable, long-term demand based upon increasing store brand strength;

build and hold better margins than stores that have weak or unsuccessful brand names;

differentiate themselves through creating associations that can endure over long periods of time and which may allow brand stretch (e.g. Starbucks from coffee to ice-cream and CD’s);

add values that entice customers to visit and buy, especially in relation to own brands;

act as a signal to the customer implying trust in the fulfillment of service expectations ;

promote customer loyalty and launch relationship marketing schemes for their retail offers/services;

protect themselves against the growing competition of alternative intermediaries and to gain leverage in the distribution channel;

protect themselves against aggressive competitors by strengthening barriers to entry;

transform themselves into companies that are attractive to work for and deal with ;

Negotiate with suppliers from a position of improved strength”(9)

Benefits of Branding for Customers

From a customers point of view a store brand has the following benefits

Enhances Self Image

Reduces Uncertainty and Psychological Risk

Simplifies Choice, Saves Time, Effort, -Increased Shopping Efficiency

Building Brands

The steps involved in creating and managing a brand of store/s and more importantly communicating the brand requires an integrated approach and involvement of everyone from the shop assistant to the C.E.O.

According to David A.Aaker, there are five considerations for building strong brands, 1.Clear Identity, 2.A Corporate Brand, 3.Integrated, Consistent Communications, 4.Customer Relationships, and 5. Symbols and Slogans.

“Excellent brand marketing can strengthen even a strong brand by reinforcing the customers’ experience, but it cannot rescue a poorly merchandised or staffed store that undercuts the marketing message. An engaging television commercial can create brand awareness and prompt customers to visit the store, but if their experience differs from the advertising message, customers will believe the experience and not the ad. Customers’ negative in-store experiences close the doors that traditional brand marketing helps open. Retailers build strong brand equity with performance, not promises.”[7]

“Although many important branding principles apply retailer brands are sufficiently different from product brands that the actual application of those branding principles can vary. Retailer brands are typically more multi-sensory in nature than product brands and can rely on rich consumer experiences to impact their equity. Retailers also create their brand images in different ways, e.g. by attaching unique associations to the quality of their service, their product assortment and merchandising, pricing and credit policy etc.

“Manufacturer brands operate almost as “ingredient brands” that wield significant consumer pull, often more than the retailer brand does. To the extent “you are what you sell,” manufacturer brands help to create an image and establish a positioning for the store.

Following the American Marketing Association’s definition of a brand, “a retail brand identifies the good and services of a retailer and differentiates them from those of competitors.”[8] (Keller 2003)

Building a brand is essential for retailers especially with many retailers offering the same or similar merchandise to customers. Differentiation is a key requirement for building a brand. The difference etched in the minds of the consumer is the result of positioning.

Retailers need to be genuinely interested in creating communities and building relationships, willing to train people, and look at long term, planning and executing experiences for customers/potential customers at all touch points (points of contact).

“It is impossible to imagine a retailer surviving and flourishing in the years to come without creating a genuinely robust brand. Establishing and communicating it is more difficult for multibrandretailers than for their single-brand counterparts, but brand building is essential for both. Senior managers must make building the brand an integral part of how they think about the business,

whether they are deciding what their target segments will be or how

to speak to customers. Multibrand retailers must take back from their vendors full responsibility for managing their banner brand. Only then(11)

“Brands are now thought of as living entities that take on a life of their own inside the consumers’ minds, creating something known as a ‘mental model’. Mental models, ….provide insight into how consumers create, store, recall, and relate to brands to everyday life. In effect, a brand becomes a representation of an individuals collection of experiences at each of the ‘touch points’ at which the brand wittingly or unwittingly engages the consumer. These experiences provide a mix of rational, emotional, social, and cultural benefits to the individual consumer. If the supplying organization is defining and creating value effectively, then this bundle of complementary benefits will be delivered through the value-adding factors associated with the brand. The brand is, therefore, the consumer’s experience of the value proposition.”