Brands and branding

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 main business 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. Effective brand 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 to receive 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 builds a 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 is