In this module, you reviewed many of the different factors that influence the pr

Question

In this module, you reviewed many of the different factors that influence the price a company must establish. One aspect of the price that can be established is the brand image and the brand equity related to the product (discussed in previous modules). Explain how these two items may influence the price you can establish for a product. Support your answer with additional outside materials. Include in your discussion post personal observations as well as concrete examples to support your views. Initial posts should be at least two paragraphs and include direct references to the readings and/or additional articles. Word choice and sentence structure should be suitable for professional level work, and all sources should have appropriate references and citations.

Explanation / Answer

Trusts and Relationships are the bulwark of any enterprise, be it big or small, with a global or local ambit, having a traditional or modern management style, high tech or low tech, leader or follower, and irrespective of it being a part of the old world of ‘brick and mortar’ or a rising star-reliant on e-commerce.

What is a brand?

A Brand is a consistent, holistic pledge made by a company, the face a company presents.A Brand serves as an unmistakable symbol for products and services.“Business card” a company proffers on the competitive scene to set itself apart from the rest.Moreover, just as trust is the synonym for the business similarly trademark is essential to a brand.Brand Equity is built on the foundation of a protected Trademark. Brand/Trademark can be disposed of separately from other company assets (Free-standing Institutions). Trademark is a Legal concept while brand is a marketing concept.Registration of a brand adds value as it protects its other inherent assets.Brand profile and positioning may vary over time, but trademark protection remains the same. Thus (1)brand defines the differential features of a product or service as to whether it is

• Real or Imaginary

• Rational or Irrational

• Tangible or Intangible

(2) Constitutes an image that creates a personal experience as to whether it is:

• Own

• Third party

• Imaginary

and also

3) With conscious and unconscious contents that the consumer projects and deposits on it;

(4) Constitutes part of and builds up his/her identity;

(5) Generates certain perceptions, attitudes and behaviors and enables fulfillment in their lives

Role of Brands for the Company

It is a real and marketable asset which provides higher profit margin (Price Premium) . It is incremental cash flow and reduces cash flow sustainability risk.

Moreover it accelerates speed of cash flow and also increases bonding and customer loyalt. All these results in increased market share. It also limits growth of competitors.

Requires lower investment levels. Provides Better negotiating position with trade and other suppliers. Facilitates higher product availability (better distribution coverage).

Extends products’ life cycle.Allows lower cost brand extensions.Can be the basis for international expansion.Provides legal protection; licensing; franchising. Provides buffer to survive market or product problems.

Value of Brands is a key determinant of enterprise value and stock market capitalization. Financial markets reward consistently focussed brand strategies. Brand management a vital ingredient for success in corporate strategy.

But

•Brand Building Requires Time and Money;

•Brand Nourishing Should be a Continuous Process;

•Higher the Profile/Exposure, Greater its Vulnerability;

“It took seven years of marketing before car buyers began to recognize that the BMW brand was distinctive”: Jorg Zintzmeyer, board member of Interbrand, p 33 of FORBES Global, July 22, 2002 in “The best-driven brand” by Nigel Hollway.

So the cost of building a brand can be very substantial over a period of time. That is why buying a brand sometimes makes sense to many companies. Some of the brand are Nike , Adidas, Reebok, Levi-Straus which owns no factories.

A Strong Brand can also command a price premium for its producer, and can reduce the price elasticity, that is, soften consumer reaction to price increase/change.

A Strong Brand can reduce the risk that new product launches will flop and can be used as a platform for successful brand stretching (including launching a completely new product segments or sector). Value on premium brand is high. Premium autos have a higher resale value, stronger brand loyalty and bigger profit margins than mass-produced cars. This in turn enables the premium car makers to spend more on Research and Development (R & D) to make better, more advanced cars with a powerful brand image.

Value of a Brand = Brand Equity :Is a Company’s Most Important Asset which is like the reputation of a person.

What is brand equity?

•Name Awareness is a precondition

•Brand Loyalty is at the core

•Perceived Quality is the purpose or alternatives

•Brand Associations (security, confidence, exclusivity)

•Other Brand Assets (Legal and institutional benefits; Trademark, markets, distribution channels)

The quality of the product, the brand heritage, the target market, the product category all need to be considered before the price is set. Brands can be positioned into a high price, high-quality segment or a low price/ low-quality segment or somewhere in the middle.The promotion of expensive and quality goods are based on status and building the image of the brand. While at the low end, a down to earth approach is used emphasizing the low price and sales.

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