Top 5 Marketing Concepts. Number 5: Branding

As a former marketing major and a practicing marketing manager, I think that every fundamental marketing textbook should have a chapter devoted to branding. In today’s competitive markets, companies have two broad options. They can either mass-produce low-end, low-cost, generic products or they can specialize and create a unique brand. This is true with both goods and services. Because the cost of distributing and “mass-producing” certain services are so low, differentiation and branding becomes even more important to non-tangible goods. Since competition is such a primary element in business today, and since consumer-centricity is peaking, it is very important that marketers give potential customers a reason to buy; but they must also give current customers a reason to keep buying (repeat business and customer loyalty are the primary source of revenue for many companies; and the cost of acquiring – or losing – a loyal customer can very high).

Also, branding creates perceived differentiation and allows companies to avoid competing solely on price. If this were the case, large firms would undercut smaller ones, and industries would consolidate. Logically speaking, the end result would be an economy of monopolies. Firms combat this by attempting to differentiate their products from others, creating and developing awareness and perceived quality of their brands, and developing brand equity.

Obviously, none of this would be possible without marketing research (a form of market research), testing and evaluation. Still, in this discussion, let’s keep it broad.

The world’s most well-known companies all have a primary or core brand and high brand equity. Coca Cola is an example used below.

Keep in mind that firms can sometimes overemphasize their brand (such as by over-advertising or by over-extending their brands), which can lead to brand dilution. Coca Cola, over many decades, has developed and added value to its brand. Today, Coke’s is the most widely-recognized brand on Earth. In fact, Coke’s brand worth is estimated at around $70 billion. Now, with the saturation of the soft-drink market and with health awareness becoming a driving force for more consumers, Coke has launched and acquired other health-oriented brands such as Dasani, Nutriwater, Evian, Fresca (…the healthy way to stand out.), KMX (Coke’s answer to Redbull), Minute Maid, Odwalla (…different from any other juices you see in the store…), Simply Orange, Sparkletts, and Swerve chocolate milk.

This is sound marketing practice on Coke’s part, as many people do not recognize that these brands belong to Coca Cola. However, at times Coke has also extended its own brand. In other words, it has marketed new products under the same name, or new forms of Coke. The soft drink conglomerate has added caffeine-free diet coke, caffeine-free coke, vanilla coke, diet vanilla coke, Coke C1, diet coke with lemon, diet coke with lime, and more. Many of these new offerings were rebuffed by consumers and have since been discontinued. By doing this Coke has somewhat diluted the brand it worked so hard to build.