Brands and branding

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DOUGLAS B. HOLT

Brands and Branding
Branding has become one of the most important aspects of business strategy. Yet it is also one of the most misunderstood. Branding is sometimes considered to be merely an advertising function. And many managers and business writers hold the view that branding is about the management of product image, a supplementary task that can be isolated from the mainbusiness of product management. This note provides an alternative perspective, arguing that: • • • • • • Branding is a strategic point of view, not a select set of activities. Branding is central to creating customer value, not just images. Branding is a key tool for creating and maintaining competitive advantage. Brands are cultures that circulate in society as conventional stories. Effectivebrand strategies must address the four distinct components of brand value. Brand strategies must be “engineered” into the marketing mix.

This note develops a set of concepts and frameworks to guide the design of brand strategies.

From Value Proposition to the Brand
Marketing strategies begin with the value proposition: the various types and amounts of value that the firm wants customers toreceive from the market offering. The value proposition is value as perceived by the firm, value that the firm seeks to “build” into the product.1 In marketing, the value proposition is sometimes referred to as the positioning statement.2 Common wisdom in business often assumes that product value as measured by the firm and product value as experienced by the customer are identical. If the firm buildsa better product, customers will experience it as such. Marketing makes a crucial break with this assumption. Marketing emphasizes that customer value is perceptual, never objective fact. Value is shaped by the subjective understandings of customers, which often have little to do with what the firm considers to be the “objective” qualities of the product. The brand is the product as it isexperienced and valued in everyday social life. The verb “to brand” refers to all of the activities that shape customer perceptions, particularly the firm’s activities. Branding, then, is a management perspective that focuses on shaping the perceived value of the product as found in society.

1 To simplify the exposition, I use the term “product” generically to refer to all types of marketofferings—products, services,

events, knowledge, etc.—and to include augmented aspects of the product (such as the service outputs delivered by the marketing channel).
2 The traditional positioning statement has three important weaknesses that this note seeks to correct.

First, positioning statements are devoid of strategic focus. Second, positioning statements fail to recognize that the brand has ahistory, a brand culture, as developed below. The branding goal for an existing brand must be to move the brand from Point A to Point B. The strategy should recognize this. Finally, positioning statements do not isolate the four distinct components of brand value (below) and the relationships between these components. As a result, positioning statements can lead to vague brand strategies that fail todirect marketing actions. ________________________________________________________________________________________________________________

503-045

Brands and Branding

Brand Cultures
Think of the brand as the culture of the product. We can borrow from the disciplines of anthropology, history, and sociology to understand products as cultural artifacts. Products acquiremeanings—connotations—as they circulate in society. Over time, these meanings become conventional, widely accepted as “truths” about the product. At this point, the product has acquired a culture. Consider a new product that has just been introduced by a new company. While the product has a name and a trademarked logo, and perhaps other unique design features—all aspects that we intuitively think of as “the...
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