A brand identifies the maker of a product and allows consumers to assign responsibility for its performance to that maker or distributor.
Consumers may evaluate the identical product differently depending on how it is branded. They learn about brands through past experiences with the product and its marketing, finding out which brands satisfy their needs and which do not. As consumers’ lives become more rushed and complicated, a brand’s ability to simplify decision making and reduce risk becomes invaluable.
Brands can also take on personal meaning to consumers and become an important part of their identity. For some consumers, brands can even take on human-like characteristics.
Brands also perform valuable functions for firms. First, they simplify product handling by helping organize inventory and accounting records. In addition, a brand allows the firm legal protection for unique product features.
The brand name can be protected through registered trademarks, manufacturing processes can be protected through patents, and packaging can be protected through copyrights and proprietary designs. These intellectual property rights ensure that the firm can safely invest in the brand and reap the benefits.
In fact, brands represent enormously valuable pieces of legal property that can influence consumer behavior, be bought and sold, and yield sustained future revenues.
Brand loyalty provides predictability and security of demand for the firm, and it creates barriers to entry that make it difficult for other firms to enter the market.
Loyalty also can translate into customer willingness to pay a higher price—often even 20 percent to 25 percent more than competing brands.
Although competitors may duplicate manufacturing processes and product designs, they cannot easily match lasting impressions left in the minds of customers by years of favorable product experiences and marketing activity. Thus, branding can be a powerful means to secure a competitive advantage