Introduction
A product marks the starting point for the marketing program of a target market. The marketer uses the product to draw attention of consumers and acquisitions. A marketer makes decisions to present the best offer to his or her customers through branding strategy.
Most markets have become increasingly competitive and brand image, name, loyalty, and corporate reputation becomes a major consideration towards survival in the target market. Many customers tend to care more about the brand than the manufacturer (Doole 2008, p.187). The purpose of branding strategies is to ensure product differentiation and customer access to the product. Advertising and other sales effort cultivate favorable brand image among final consumers and distributors.
The resulting brand loyalty create a dominant position by raising entry costs for rivals who will have to either overcome or duplicate the brand loyalty in order to compete competitively. Entrants may have to spend more to overcome the incumbents brand image advantage than the incumbent had to spend in the first place to establish the brand image (Ferrel 2008, p.311). This has led to the introduction of different branding strategies to overcome the challenges. It is therefore important for marketers to understand the use of extension strategies and umbrella branding when marketing their products or services (Stull 2008, p.45)
Concept of Extension Strategy
A marketer whose product is already in the market may decide to introduce a compliment, substitute or transfer of its brand name, corporate reputation, and image to its new product to enlarge its company’s market share and brand loyalty.
The marketer uses this strategy to target consumers who purchase their products or services consistently and are aware of the characteristics of their product. This makes it easy to influence the customers to pay attention to the variety of products they offer to boost their satisfaction (Schmitt 2008, p.219). This strategy also targets the complex buying behavior of customers and their decision process as it involves a lot of comparison amongst different brands.
The marketer provides a variety of products under the same brand name or image to attract customers due to the satisfaction they derive from the products and prevent their customers from seeking satisfaction from their competitors (Gelder 2005, p.226). By offering a variety of brands, a dominant firm can preempt opportunities for a new firm to come in on a small scale and serve a narrowly focused segment of the market. A strong brand image can encourage customers to remain loyal only to a single supplier.
A multi product firm discourages rivals from competing against it in a single market. To offer a variety of products within the dominant brand corresponds to an increase in the penetration in the target market (Gelder 2005, p.230). However, when a customer buys the new product and does not fully get satisfied, he or she seeks for other alternatives. It happens that the customer associates the perception with all the products under that brand name. This leads to the original product loosing many customers.
The product can also stimulate the customer’s attention on the competitor products. For example, Coca-Cola can provide fringes for their customers. The customers in turn use the fringe to store other soft drinks reducing market share for the original product (Gelder 2005, p.232).
Introducing a substitute product that is more preferred than the original brand endangers its target market as customers shift to the new product. It is therefore important for the marketer to understand consumer behavior when designing products to use the same brand name or image (Schmitt 2008, p.220).
Concept of Umbrella Branding
A company that has a variety of products under the same brand name uses umbrella branding but the brand loyalty may differ according to customer tastes and preferences. Most products provide different tastes and preferences but are of the same value to the customer. This strategy develops to help the company remain competitive in the market by providing a variety of products or services the customer may need (Kapferer 2008, p.364). Most of these companies seek to build a worldwide brand by establishing and protecting one strong brand used across the market.
The brand names depict the product image. It is upon the company to ensure that their brand name demand is high in the target market. Vivid advertisement is used to increase awareness of the great products the company has offered to its customers to increase their interest and attention (Doyle 2008, p.253).
Pro and Cons of Different Branding Approaches
Corporate Brand
The producer are different but using the same brand names. Differences are through the brand image created by the producer or management. The employees’ qualities determine the satisfaction of the customers’ given that they handle the activities of the business.
The management further facilitates it by enforcing policies and programs that satisfy both the employees and the customers. This approach mostly base on private or national brands where the marketer has an opportunity to generate brand names that respond to customer demands (Capon 2008, p.306).
Advantage and Disadvantages of Using this Branding Approach
The producer has control over its brand image and loyalty. Performance of the company reflects in the brand loyalty. It is upon the management to utilize all the available opportunities in the market to maximize profits.
The disadvantages come in when the producer or manager is unable to provide quality product or service for one of them; the brand image for all the products is then destroyed. The customers’ dissatisfaction extends to the brand name rather than the product or service. This forms the downfall of the whole company (Capon 2008, p.306).
Individual Brand
According to Capon (2008, p. 306), this approach refers to the use of different brand names for different products or services. The producer has control over all the products or services to balance good brand image for each of them. Individual performance of its product or service in the target market is independent.
Advantages and Disadvantages
Individual branding reduces the risk of collapse of the company producing a variety of products or services because they use different brand names to differentiate the product. Most consumers pay more attention to the brand name rather than the manufacturer. The disadvantages are that they create different brand names, which are very costly for the organization.
The products or services are different entities, and require different budgets and marketing plan and strategies. The company ends up spending more than a company with the same brand name. Creating different brand names does not affect the brand image or brand loyalty but the satisfaction derived from the product or service (Capon 2008, p.306).
Private or Store Brand
This is an approach of introducing a product because of another product or service. The products depend on each other to survive in the market. The customers derive satisfaction from the different products or services used at the same time.
The products may not necessary be produced by one company but both try to satisfy customers in their own way. In some cases, the marketer can use a brand name based on the country of origin. This occurs when the target market has favorable perception about the country of origin. For instance, developing countries regard to brands from their former colonial master country (Capon 2008, p.306).
Advantages and Disadvantages
The products or services take advantage of each other to survive in the market in a profitable way. When one product improves its quality and performance, it improves the other product or service too. It is upon a company to choose the right match for its product or service.
However, the products are interdependent. When one of the products image destroys, the other destroys too. It becomes challenging to maintain market leadership unless there are substitutes. One of the companies may rely on the improvement of the other disadvantaging each other in terms of marketing expenses (Capon 2008, p.306).
Family Brand
This approach helps the company to provide a variety of products that provide different levels of satisfaction to customers for the same needs and wants. In some cases, the company uses the same brand name for all its products. Customers are to make their own choice on what satisfies their needs and wants. Capon (2008, p. 306) points out that the marketing strategies are similar giving equal opportunity for all the products or services they provide.
Advantages and Disadvantages
The products exploit all the opportunities in the market for customers’ attention. In return, the company gets a substantial number of customers to survive in the market. It is very important for the company to maintain consistent quality to compete effectively and efficiently with its competitors. The company uses one form of advertisement and sales promotion reducing the costs of promotion (Capon 2008, p.306; Saxena 2009, p. 68).
The disadvantages are that the brand image for one product destroys for the other in case they share the same brand name. The products create different brand image and loyalty. The product that receives more attention from the consumers is likely to develop more than the other brands since they are close complements (Capon 2008, p. 306).
Family Brand
The brand image is limited to the company or producer. Different companies use the same or different brand names (Capon 2008, p.306).
Case Study
Case 1: Petroleum Industry
Top 10 largest world oil companies by reserves and production
(Source: Petrol Strategies 2000, p.1).
The table above shows different companies producing the same products. Petroleum uses family brand where the companies brand image and brand depend on the view of customers and the efforts of the company to differentiate their products. The products are close substitutes and the customer differentiates them by brand names.
The companies use one brand name reducing the cost of establishing a new brand name (Various 2007, p. 1).This eliminates customers need for research of the product but rather consider the price, place, and promotion. Consumers can differentiate the products by price and not quality. The brand image, loyalty and name depend on the rivals’ action.
The companies are interdependent on one another in a way that decisions made by one-company takes into account the possible reactions of the other (Saxena 2009, p.60). The few sellers of these products face so many challenges such as price competition and adjustments, low levels of profits, take long to negotiate and secure agreements due to the differences in the costs, size, and markets of individual companies (Various 2007,p.1; Ireland 2006,p.124).
It is very difficult for a company to differentiate its products in a way that it attracts its customers. This is because the changes made by the company include lowering of prices, which affect the overall profit of the company. The competitors in turn, lower their prices to compete effectively in the target market. However, companies can enter into joint ventures to boost their output and establish their own potential customers (Various 2007, p.1; Haasen 2003, p.26).
Case 2: Post Office
Post office provides various products and services under the same brand image, name and loyalty. There are few producers and entry is limited from competitors. The government or private investors own them. They enjoy total control of the market. It uses family brand where it offers new products and services under the same brand name but has different brand image.
The marketer concentrates on improving the quality of its services and products to attract many customers and ensure their brand loyalty (Davis 2006, p.90). A post office provides transmission and receiving of messages from one place to another. It also provides insurance and transfer of money services to their customers. Its branding helps them to maintain their customers from seeking alternative complements.
Their services differ from one post office to another. Some are fast and others slow in providing quality services. For instance, United States Postal Service (USPS) provides the same service brand names as the Post Office of India but the service image and loyalty is different (Business and Enterprise Committee 2009, p.174).
Case 3: Fast Food Outlets
Food is in terms of diet, nutritional value, tastes, preferences, and quality. It is very important for marketers to satisfy needs and wants of consumers by providing a variety of products or services. Food recipes are prepared to make it easy for customers to make choices according to their preferences. Cooking or manufacturing methods and preparation criteria bring forth different brands names and image (Baret 2000, p.5).
This business uses family brand to differentiate their products and services since they share the same brand name but different brand image and loyalty. There are many entrances into the market making it difficult for the business to survive in the end due to high competition.
Due to the differences in the brand image, the producers in this market have control over their elements of the marketing mix. The consumers easily differentiate the products by quality and performance of the outlet. For example, McDonalds and burger king are international food outlets but a customer may prefer food from one outlet than the other due to the difference created by brand image and loyalty (Pride 2010, p.38).
Efforts of the marketer to create a strong brand image stimulate the business market share. The products are close substitutes making it necessary for the marketer to be consistent in satisfying and reaching their customers to avoid loosing customers to the competitors (Pride 2010, p.43; Hoffman 2007, p.2).
Most of these businesses attract qualified and competitive employees to create higher standards of product and service delivery than those of the competitors. The employees become very crucial in creating a good image during their service delivery (Baret 2000, p.7).
Conclusion
Strategic branding has helped many businesses to improve their profits and marketing programs. This has created interest and motivation in the market for increased competition. Implementation program of a company that has both local and foreign market specifies its objectives, standards of compliance, assignment of responsibilities, measurement of performance, necessary corrective action, and a work structure for coordinating marketing activities in its target markets.
A firm with an established market position can employ various tactics to make it harder for new firms to obtain a trial for their products. It applies trying and exclusive dealing contracts or offers products only for lease rather than for sale to enhance customer retention. Customer quality in service delivery plays a key role in the organizations mission and goal statement to help the company modify its relationship with the specific needs of diverse groups of customers.
The employees involve in creation of effective marketing programs to enable them understand their roles within the marketing process. It is important that the company embrace control and consistency in their markets to ensure successful programs. The company maintains and improves its technology and innovation to ensure it keeps pace with the changes and demands of its customers.
Recommendations
The company should focus on producing and availing its products to the target market to attract and maintain more customers from their competitors. The company should carry out frequent and effective evaluation and analysis of their target market to advise the company on the extent of getting involved in the marketing of their products and the actions to take to improve their production and profits (Kotler 2011, p.26).
The company should also understand the right mode of entry to use to the foreign and local market in order to determine the amount of control they have on those markets (Ireland 2006, p.126). This enables the company to focus on its SWOT analysis to create a superior advantage over its market and competitors. The company should be careful in allocating its budgets to ensure all its activities complete effectively to avoid loosing its customers to the competitors (Hartline 2008, p.3).
The company should approach their target markets in a gradual manner to reduce the risks of losses and increase their knowledge and performance of their target markets. The company should analyze its marketing mix to facilitate effective participation in their target markets to ensure survival and sustainability in the local and foreign market. Marketers should set standards for both the consumer and the company to ensure the business maximizes profits and utilization of resources and opportunities in the target market (Champoux 2010, p.410).
The marketers should be in position to face the challenges of ensuring high levels of competitiveness in the foreign markets. This pressure for globalization presents an image of a highly globalized producer. While confronting these challenges, the marketer increases the knowledge and understanding of their target market enabling them to create marketing programs and plans of the local cultural conditions that shape the needs and wants of their customers (Gitman 2008,p.167).
References
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