Trademarks and Brands for Global Economic Activity Research Paper

Introduction

Business organizations have the mandate of making their wares known to customers for them to sell. With the dawn of globalization and free trade, competition has increased greatly. Different manufacturers engage their factors of production to come up with products with similar qualities to their competitors. Such cases can be more than 10 in one area or market. This means that the final consumer will be presented with more than 10 products of same qualities only to choose one because they are the same.

Despite the myriads of products of same line in the market, companies have managed to maintain loyal customers amidst competing firms. This has been achieved through effectively distinguishing their products from the rest. The distinction has been made possible through branding. The process of branding involves giving specific names to the products manufactured to distinguish them from the rest. Branding goes hand in hand with trademark.

A trademark is a symbol or logo of a company placed on the products to associate them with the parent company. It is unique and the company that invented it preserves the exclusive rights to use it. Trademarks are seen as the key selling point of products. Companies with excellent global appeal have been identified through their trademarks. At the same time, companies with unpopular global appeal have resorted to selling their products through retailers’ brand name or simply through private labels.

Given the nature of competition posed by leading companies identified through their trademarks on their products, companies with little global appeal have managed to compete with them through private labels. The competition has been beneficial to the global economy if analysed in several ways. In this paper, an explanation and a critical evaluation of the contribution of trademarks and the brands they signify have made to the organisation of global economic activity will be made. The evaluation has been done considering the competition between “brands” and “private label” (or “own label”) products in retail outlets such as supermarkets.

Branding, Trademarks, and Private Labels

Globalization, which is the aspect of positioning business to achieve an international image has compelled business organizations to position their wares to potential customers in a manner that suggest each of them as the only one primed to provide solution to the customers’ problems. A customer problem in this case is search for satisfaction and the primary purpose of goods is to offer solution to the same. The process of positioning the wares as a solution to the customers’ needs is achieved through branding. Branding involves giving identity or brand to the product to make it stand out from similar line of product.

A brand in this case is defined as “a name, sign, design, symbol, or a combination of the same that is aimed at identifying the goods and services of one seller or a group of sellers from goods and services of other servicers”¹. Through effective branding, buyers are motivated to buy the products and concretise their loyalty to their brand. When a brand is legalised and used by the company as part of its identity and not necessarily for its products, it becomes the trademark of the company².

A trademark on the other hand, is a distinguishing sign exploited by a person, a company or an incorporated legal entity to outline to the end users of the products or services produced that the products or services which the entity appears on exclusively comes from a specific source. Trademarks can be non-convectional. This means that there are some trademarks that are not based on sign, logo, phrase or symbol. Trademarks of this nature include those based on colour, sound, and smell. In business, trademarks are utilized in categorizing goods and services from various traders implying that they are used to offer protection to the product.

They are normally in form of script, scent, figure, emblem, portrait, slogan, casing or even mixture of these. A trademark shows the real owner of the product or service that is, establishes the link between the manufactured and the manufacturer. It also shows standardizes quality hence anticipation of products’ excellence is possible. The owner of particular products is given full rights only if the trademark is registered³.

Private label, on the other hand, refers to products or services on offer under a brand name of a different company. In most cases, private labels are positioned at a lower price in order to compete with other brands. The recent marketing trends have seen private labels being displayed as premium brands to compete with other internationally existing name brands⁴.

The Competition between Brands and Private Label Products in Supermarkets

The increased competition brought about by globalization has necessitated business organization to undertake corporate strategies to position themselves on the global market. One way to ensure a business organization remains in the market is through brand loyalty. For business organization operating in retail stores including the supermarkets, there is need for maintaining brand loyalty as a result of the nature of the goods sold.

Supermarkets deal with groceries, which are fast moving goods with relatively short shelf life. At the same time, they sell their products at a relatively cheap price. This means that they make little profit. Therefore, for the supermarkets to achieve substantial business, they have to ensure that their rate of stock turnover is high. Given that supermarkets are visited on regular basis, they have to ensure they hold on to regular customers in an effort to increase their rate of stock turnover.

It should be noted that it is possible for supermarkets to maintain the loyalty of regular customers because the stores are located near residential places. For instance, Wal-Mart store, which is among the largest retail stores (supermarket) in the world has its stores located within 15-miles distance from residential areas. This means that they are able to go to the Wal-Mart stores on daily basis for their daily shopping spree⁵.

Because of the nature of the business in the supermarkets, retail stores have resorted to brand loyalty as a means of attracting customers. This means that the customers are tied to a given brand of product, which becomes part of their daily shopping. Because branding is done by suppliers, retail stores are not always guaranteed brand loyalty. As a result, retail stores have resorted to branding products from their suppliers so as to create brands that are meeting the needs of the customers.

Private labels created by retailers have increased loyalty from customers and therefore increasing the turnover of their sales. Wal-Mart stores were among the first to implement privately labelled products. Its private label ‘everyday low prices’ was received gladly by customers and hence making it possible for the retail stores to compete with other supermarkets. This means that private label provides an intense competition to the other brands. The competition between the private label and trade mark brands has compelled trademark owners to restructure their advertisement strategies to ensure that they remain close to the customer.

In fact, the competition has resulted into positive contribution to the organization of the global economy. The contribution can be analysed by considering the significance of the legal nature of trademarks as a form of property, the economic significance of brands as marketing resources, and the impact of marketing on the organisation of economic activity. For proper analysis of the above, private label products and the nature of competition it has posed to the branded products has been analysed in the first place.

The Genesis of Private Label products

Since 1960s, the retail market of the grocery industry in the Europe and the U.S. A. started experiencing the surge in distribution and concentration of private label products. Private label commenced in some grocery shops in the Europe and the U.S. A. Some retailers decided to sell their wares under their own brand names. The process gradually developed into complicated process. Retailer such as Wal-Mart begun to expand their range of brand names to develop into range of products with sub-niches.

These involved developing their own products and test them on the market in the same way manufacturers do and later selling them under their own brand names or brand controlled by them. Products for the branding are obtained from manufacturers who supply them under a different brand name. This implies that the brand of the producer is discarded and the brand of retailer appreciated or emphasized. Whoever even if the brand of the producer is discarded in preference for the retailers’ brand, the product is still sold though under different ownership⁶. To bring out the contribution of branding to the economy, an analysis of branding in relation to the choice of the consumer is made bellow.

Branding and Consumer Choice

When viewed in economic terms, branding is a system firms use to build a relationship with customers; both existing and potential customers. The relationship created is based on various aspects of the products and services produced. Branding focuses on the creation of long-term association between the customer and the supplier of the product or service. It involves various aspects of the products or services including customer experience, advertisement, and packaging.

If a particular product which is a brand in this case will provide the customer with an implicit guarantee of characteristics or qualities, that particular product will be of great benefit to the customer and the customer will always be in the hunt for the product. The aspect mostly considered by the customers in supermarkets includes good quality, even size, right quantity, low prices, and product innovation among many. If the customer identifies a particular brand with the desired qualities, the product will stick into his or her mind and will therefore be thinking of that particular brand when going for shopping.

However, this loyalty only stands if the qualities of the product or service remains. As a result, the suppliers are challenged to maintain the same qualities in their products or services in order to hold the loyalty of the customers. Following the need for suppliers to maintain the qualities and characteristics of the brand, private branding and trademark branding has heightened, providing competition between the two. This has left the customer as the beneficiaries and the competition has led to an improvement in the global economy⁷. Self branding has been increasing, which in turn has impacted the suppliers, the consumers, and the retailers.

Impact of Self Brand to the Consumers

Self brands have been on the increase in supermarkets across Europe and the U.S.A. The increase has brought several benefits to the consumers. In the first place, the increased competition for self branding has benefited the customer. Suppliers and retailers have been compelled to provide improved deals to customers inform of better prices, improved quality, and right quantity. At the same time, self brands are generally cheaper than other branded products. According to the Oxera report on economic benefits of own brands as published in Times Newspaper, self branded products were discovered to be 22% cheaper than branded products⁸.

This is an economic benefit to the consumers as they are presented with goods at lower prices. In the United States of America, Wal-Mart stores developed self branded marketing strategies that saw the supermarket provide goods at a cheaper price. Self branded products provides competition to consumers of branded products. As a result, consumers who are used to branded product are challenged to use self branded products. This in turn provides a challenge to the suppliers of branded products as they are compelled to challenge the competition by reducing the prices, introducing another brand entrant, or innovate in order to differentiate the product from the self branded products.

The economy dominated by self labels brands is important to the consumer because the market is driven by the demands of the consumer. As seen in the concept involving branding and customer loyalty, customers will be attracted to the brand with qualities they desire. As a result, supermarkets have cultivated the concept and are therefore modifying the products to meet the demands of the customers.

In this case, the competition is about maintaining brand loyalty through products differentiation, which is achieved by field research from consumers. The consumer dictates what is best, which in turn is reflected by the private labels or brands in the supermarkets. Self branded products are information to the consumers. Thorough self branding, retailers display products in a range based on particular qualities. This means that the consumer will have been saved the hustles of analysing each quality in the product before buying but will instead buy the product under a certain brand which has the proposed qualities.

Impact of Own Self Labelled Products on Retailers

In most cases, suppliers are supposed to advertise their brands and attract consumers to buy them through the supermarkets. Under normal situations, retailers stand to lose if they do not consolidate marketing efforts to attract customers. As a result, they are allowed to differentiate suppliers’ brands to come up with their own brands that will compete for customers on the market. As a result the retailers achieve a bargaining power from the suppliers. This is because the retailers have the ability to get supplies from any supplier for which they feel will meet the demand of cheap prices and quality.

Own-brands and retail innovations goes hand in hand. Innovation is the vital key for the growth of the economy. Retailers utilize the vital market research and differentiate products to fit consumers taste, economic size, and price. As a result, the retailers especially in the supermarkets have become more innovative through self labels. It should also be noted that self branding in retailing is an innovation in itself, which is being utilized by manufacturers.

Retailers interact with consumers on daily basis and therefore are better placed to meet their needs through innovations. As a result, some manufactures have incorporated retailers into their supply chain system whereby the retailers are treated as agents. Because retailers are better placed at innovations, they differentiate the product at the factory or in their premises.⁹

Trademarks and Marketing

In the early 1960s, laws governing trademarks were drafted and became widely in use. According to these laws, a trademark was considered as a word, a symbol or a device used to make out or distinguish the goods of the owner. The owner of the trademark was entitled by the law to be accorded protection such that no one else makes use of the trademark to market his or her product or services. The law therefore sort to erase confusion arising from the origin of the product. At the same time, the probability of confusion arising from trademarks hustles was assessed through an in-depth analysis of market related factors.

These market-related factors were determined through conceptual and commercial tests. However, with the acceleration in the science behind marketing using trademarks, many consequences have been affected from trademark marketing. In the contemporary market, goods are differentiated considering the marks under which they are sold in. At the same time, the source of goods and services are not very vital as the same is considered as an association. Also, brand equity has come into play. Brand equity in this case is the sum of profit that a brand is expected to generate over a given period of time¹⁰.

Prior to the World War II, several marks from prominent manufacturers including Coca-Cola and Kodak emerged in the American trading system. As a result, stakeholders in the business ambience sort to clear the air on the relationship between branding and marketing. After long deliberations, the Business Harvard School came up with the concept of brand marketing. They found out that “by successfully differentiating a standardized product, irrespective of the source, and achieving a brand loyalty through advertisements, a producer could insulate his market from price competition¹¹.”

As a result, there have been efforts by brand managers and marketers to make informed decisions on marketing using trademarks to their target audience¹². The audience has received trademarks and branding strategies in several perspectives which have contributed to the positive global view of the product as discussed bellow.

The Customer View of Trademarks

Customer view trademarks in several ways. Based on the laws governing trademarks, which have been in existence for long, a brand originates for a source that birthed it and other brands. This means that a brand is seen as a species originating from a genus identified by a trademark. This means that one company can have one trademark symbol on its different brands of products. As a result, customers have several views on trademarks.

In the first, customer view trademarks as an attrition of source marks¹³. The current sea of changes in marketing strategies have seen myriad of brands beings presented to the consumers. As a result, experience goods have lacked source relevance. For instance, Procter & Gamble, which is the leading manufacturer of detergents, markets its wares under the brand names such as ERA, BOLD, TIDE, and IVORY among many.

From these brands, TIDE is the most powerful as it penetrates every fibre whereas IVORY is considered as 90% effective. A customer when looking for the good detergent will not be interested in the trademark of Procter & Gamble but will rather focus on the brands suitable for his or her needs. This means that a product is differentiated or distinguished based on its brand rather than its origin. Based on this view, a trademark is seen by the customer as an erosion of an identity of the source of the product.

In the view of the customer, a trade mark is also seen as a merger of the product and source into a brand¹⁴. In the contemporary market, there is little competition between the genus and species on one hand and the experience of the consumer on the goods. As a result, experience goods together with its sources have been merged together. For instance, Wal-Mart, which is among the largest retail store in the world, commenced trading as a business name.

However, the company developed some marketing strategy under the slogan ‘every day, low prices’ that hit the market in a storm. Product with the slogan ‘every day, low prices’ were associated with low prices, which were an experience for customers with low income and therefore became the overall brand for the customer looking for low price experience. This means that the source of the product is still vital for the customer.

This view of the customer is important in the analysis of the competition between private label and trade mark brand¹⁵. For instance, the ‘every day, low prices’ slogan of Wal-Mart products can be considered as a private label for the products manufactured by different companies. Since the master brand ‘every day, low prices’ sales on quickly, it will provide a competition for similar brands in other chain stores.

Consumers also view trade mark brands inform of the information transmitters. In the view of the customer, modern brands are highly efficient information transmitters. This is seen in the information they convey through their definitions or hidden connotations. A trademark in this case is an informer. It gives the customer an insight on the type of product on display and helps the customer to differentiate the product from the rest. In fact, this is the essence of competition. Competition is achieved through information to the customer such that the customer will have enough reasons to differentiate the products from the rest.

Through trademark, the customer is able to select the source of goods based on its origin or source. The customer is given access to the information on the origin of the product at a low cost. Based on the information conveyed by the trademark, producers owning the brand are challenged to produce products conforming to the stated quality. For instance, the ‘every day, low prices’ Wal-Mart brand is a challenge to Wal-Mart to sell and continue selling goods at a low price to be consistent with the trademark.

Consumers also view modern brands as a source of resource or as a beneficial item. They consider modern brands as being of benefit to them. Through branding, consumers are able to understand the unobservable qualities of the products and shun risks associated with the same. At the same time, consumers find an avenue for fulfilling their emotional needs and social needs. As a result, consumer creates competition for the brands basing on their desires, which necessitates target market advertising.

Customer’s view on the brand impacts the prices and competition of the product. Retailers in chain stores differentiate from one another by offering brand names with competitive qualities from their rivals in order to meet their needs. The brand names when positioned in their attractive names offer attractive messages to the customers, which in turn brings competition.¹⁶

Owners’ View of Trademarks

Trading is facilitated by the Lanham Act, which was effected in 1946. According to this Act, consumers should be protected from exploitation such that they obtain the value of the product, which they bought. At the same time, the Act protects owners of the products from being conned by unscrupulous businessmen who may pirate the products. As a result, the law seeks to associate the source of the product with the owner. This means that a trademark or brand is a badge of identity. At the same time, there are several views on the same as outlined below.

Owners view their trademarks as symbols of trust marks. In the contemporary market, a trademark is considered as an assurance of the association of the product with a particular owner. This means it reflects an assurance of the product based on the trade mark symbol. A trade mark is therefore the most vital component and as a result functions like a trust mark. This aspect makes the owner to achieve several benefits to the consumers. In the first place, the trust filters into the minds of the customers. At the same time, the cost of advertisement is reduced because the trust in the brand impacts customer to the point that there is no need of aggressive advertisement¹⁷.

Legal Nature of Trademarks as a Form of Property

There are some laws governing trademarks which give it legal nature. A trademark is treated as an intellectual property. In fact, the law in the USA and other nations including Australia and Kenya recognizes trademark as a form of property that ought to be guarded. “The rights of ownership of the property can be established through registration of the symbol or mark in the patent office or through actual use in the market place”¹⁸.

However, most jurisdictions do not recognize the legal ownership of a trademark if the ownership arises through use in the market rather than registration. In the event of infringement of rights associated with the same, the case will be treated on the basis of ‘first one to file¹⁹.’

The process of registering a trade mark is similar to the process of property registration. This further reveals its legal and property nature. In the first place, the owner is supposed to file an application in the legal office available including a trademark office. The applications are thereafter filed and the applicant put in the line for examination by the attorney or trademark officer in charge of the same. The applications are reviewed for a period of about six months and thereafter the trademark is published for opposition. If no one opposes the same for a designed period, the trademark is registered.

When the trademark has been registered, the owner is given exclusive rights for the same. This means that no one else reserves the rights to use the trademark for trade and the owner reserves the rights of suing the trespassers who could use the trademark for their own benefits. The owner becomes the valid owner meaning that he has to act in accordance to the trademark; he or she should own its demands and meets its public expectation. Any product in the market with the tag of the brand cannot be from any other source apart from the real owner²⁰.

Significance of the Legal Nature of Trademarks as a Form of Property

Trademarks once registered become the exclusive property of the owner. This means that the owner takes exclusive laws of the property, which must then be governed under the legal nature of property. The property laws thereafter apply to the trademark, which in turn has an impact on the global economy. The legal nature of a trademark as a property manifests during the time of selling the property.

Once the trademark has been registered, the owner cannot sell it easily unless under full transfer of the ownership as in the case of property. If the trademark is sold to a retailer or supplier, there are high chances of consumers being manipulated unless there was transfer of the ownership of the trademark and the underlying production process²¹. For instance, if Coca-Cola decides to sell its trademark, the buyer of the same will not have the formulas to produce a brand such as Fanta.

An attempt to produce a Fanta will be disastrous as the consumers will be robbed of quality and taste. As a result, the legal nature of trademarks restrict the selling of the same unless the there is a complete transfer of ownership rights. For the case of Coca-Cola, if the sale of its trademark involves the transfer of ownership rights for the formulas used in the production, the Fanta produced will be the same as the original owner.

From the above information, it means that the legal nature of the trademarks guards against misinformation and ensures originality of the product²². With the originality of the product guarded, the suppliers remain responsible for ensuring the qualities of the products are maintained. At the same time, the trademark remains a link to the source of the product. This means that source or owners of the trademark will maintain the properties of the product and ensure it maintain the standards required for competition. In the event of competition, the owner of the trademark has the duty of differentiating the product to ensure the brand meets the taste of the customer.

The legal nature of the trademark implies that the mark is attached to a physical product or service. This means that trademark exists in present tense and has indefinite lifespan. As long as the products are on the market, the trademark is present. This implies that if the owner ceases selling products, the brand ceases to exist.

The legal nature of trademarks signifies the zeal with which the owner undertakes to market the products. A trademark carries uniqueness and singularity in the market. The singularity and uniqueness property of a trademark is associated with the product it signifies. The owner gives the product under their trademark some qualities and properties unique to that of the competitors. The legal nature of trademark implies that the product is associated with the source or owner.

The owner or the source must therefore ensure the product maintain qualities needed on the market. In case of potential entrants on the market that may weaken the brand, the owners ensure the product is adjusted to meet the regulations of the market. This means that the legal nature of trademarks yields economic zeal to the producer. The economic zeal is essential driver of the economy.

Economic zeal of the producer results into comprehensive efforts on producers to ensure the products produced meet the required standards in terms of properties and price of the commodity. Since early 1960s, self branded products emerged on the market. As a result, the branded products started getting stiff competition from self labelled products. This competition is behind the fuelling in economic zeal on the part of trademark owners²³.

The Economic Significance of Brands as Marketing Resources

The contribution of trademark and the brand they signify to the economic growth can also be analysed in terms of a brand as a marketing resource. When used as a marketing tool, a brand bears some significance and is viewed in different angles by the marketers, who are also the owners. “A brand is a trademark, symbol, design, a term, a name or a combination of all whose main intention is to identify the goods or service of a particular seller or a group of sellers and distinguish them from other goods”²⁴. It attracts value termed as brand equity²⁵. Brand equity refers to indirect and the direct worth accumulated to the profit connected with the brand.

The value of the brand is appreciated when the consumer gains the knowledge of the same through marketing efforts. Brand knowledge refers to feelings, descriptions, familiarity, discernments, and beliefs that are linked to the brand in consumers’ brain. To achieve comprehensive brand knowledge, various components of the brand knowledge should be considered. Brand awareness and brand image forms the components of brand knowledge. The ability of the customer to identify the brand is referred to as brand awareness. Brand image is the consumers liking and perception of a brand. It is important to note that brands exist in the eyes of the beholder and the consumer²⁶.

Brands signify an improvement and growth in an economic activity when viewed in terms of its equity and the subsequent components of equity realised during marketing. As seen above, brand equity is the sum of profit that a brand is expected to generate over a given period of time. This implies that a brand is seen as a source of equity. When marketing a brand, the owner will ensure comprehensive efforts are made to preserve the image of the brand. The comprehensive efforts by marketers are accomplished through the four components of brand equity: brand awareness, brand loyalty, brand image, and premium price.

Brand awareness is a vital component in advertisement as it has an economic significance on global scene as a marketing tool. Marketers concentrate on making their presence felt by the consumers. Consumers should be aware of the product in order to associate themselves with it. Marketers therefore ensure that consumers are able to recognize the brand of the product in order to make appropriate purchases²⁷.

Brand awareness can be defined as the ability of a consumer to identify a brand from a list of various products. Strong brand awareness is when a consumer is in a position to identify a brand without any assistance. Marketers emphasize on brand awareness to increase sale of the brand. Consumers will only recall the brand that is dominating the market. In order to make the brand dominant, suppliers will do more than television advertisements. They will ensure the awareness is physically done implying that they will expand production capacity and distribution network to give the product a global awareness; this is an expansion and growth of economy.

Brand loyalty is another component emphasised in marketing. It refers to the ability of the consumer to choose the same brand when buying the product. If consumers buy products basing on their price, feature and convenience then the existence of brand equity is very little. The degree of brand loyalty varies because even loyal customers may switch to other brands if they do not derive satisfaction from preferred brands. Brand loyalty is influenced by one’s money, time, and risk associated with switching brands. The changes in retention rates of customers and average customer lifetimes are good indicators of brand loyalty which is a very important indicator of brand equity.

Market leader brands have high brand loyalty built on positive experiences. This means the producers have to ensure their brands have a good image on global scene. To achieve such loyalty, competitive offers in terms of low prices, high quality, and right quantities have to be provided. As a result, producers or suppliers have greatly enhanced economic growth through conscious efforts of ensuring they maintain brand loyalty. At the same time, the consumers have been guarded against substandard products from malicious producers.²⁸

Brands as marketing resources commands an economic significance through the equity component of premium price. Marketers aim at making their brand fetch the best price for them and at the same time be able to command a wide and consistence brand loyalty from customers. Brands that have positive equity should be able to have a premium price though they should compete more on dimensions than price. There is need to differentiate between the capability to command a premium price and a price premium. To command a premium price, brands should have a value viewed in terms of the product they signify.

This implies that marketers ought to look for suitable resources to increase the brand value. The resource in this case is extensive market research and conscious production process that focuses on quality and taste of customers. They do so knowing that failure to achieve the value that matches the premium price will be viewed as a weakness to the marketing strategies. Marketing therefore aim at making the brand to own the business and add some value in the business. It does so by providing intelligence or human resource capability that helps in the allocation of various market investments in several places with potential for the same.

The main aim of strategic brand management is to maximize sales. High profits generated imply that the brand is of great value. An instance in this case is LG products. The company has managed to achieve a premium price for its products as result marketing efforts that was coined around the phrase ‘everyday goodness.’ To ensure there is goodness in its products, LG has eliminated possible areas of weakness that could make their product fail. They have also made sure the product is well decorated to match prestige status. Price premium strategies are a gigantic step towards an economy where customer needs are well taken care of.

Brands as marketing resources is utilized in several ways to ensure the product command a large market. One way is through brand extension. Brand extension, also referred to as brand stretching, is a marketing strategy where a marketer of a product uses a similar brand name in various product category. The concepts of brand extension were employed in 1990s whereby 80% of the product was introduced to the market through the concept.

Brand extension is a development policy which when used leads to reduction in the risks associated with finance. It is mainly achieved through products extension. Product extension refers to similar products used as a segment of the target marketplace. To illustrate the same “Coke” and “Diet Coke” can be used. Diet coke was introduced through extension of Coke making consumer to trust Diet Coke based on their trust in Coke. Brand extension is mainly focused on evaluation of the extension by the consumer. Three dimensions are used to assess brand extension. First is the complement which refers to complementary products.

Subsequent to compliment is the substitute products which can serve the same purpose meaning that they can be swapped. Third is transfer, which illustrates the relationship between the manufacturer and brand extension licensed. Brand extension is a major marketing strategy that has had a great economic value to the customers. Through brand extension, customers have been exposed to varieties of products utilizing the same level of products art. This has been the case because the extension process is cautiously done to ensure the extension does not taint the image of the brand in relation to the existing products. As a result, an extension is always at an elevated market position than the existing product²⁹.

Brands also have further economic significance. Through branding, the working of the market is facilitated. In economic perspective, making the best choice from the array of product is an expensive undertaking on the consumer.

To find a product that will satisfy his or her needs, a consumer has to undertake an intensive market survey including the analysis of the available product to determine the best alternative from the available goods. Such an undertaking is time and money consuming for the customer. However, branding ensures that the customer has all the information concerning the product. This means branding offsets the cost of the consumer. A customer is supposed to walk into the supermarket and pick the product based on the marketing information available for the same.

Impact of Marketing on the Organisation of Economic Activity

Organization of economic activity involves careful and systematic planning of the factor of production. It involves the division of labour and specialization and also the coordination of the specialization. In an economy, there exist various classes of people. They include the rich, the poor, and the middle class. Marketing aims at satisfying these classes of people. Branding involves pricing and giving a description of features of the products.

As a result, consumers are able to identify the brand that suits their class. There are brands associated with the rich class. In marketing such brands, suppliers display its features including price other features associated with the rich. At the same time, there are brands associated with the middle class or the poor. In marketing brands of such qualities, suppliers ensure the features associated with poor class are emphasised. For instance, the poor are normally conscious of price and quantity. This means that marketing efforts will be directed at ensuring low prices and large quantity. This means marketing has enabled the satisfaction of needs at different social levels in the society.

Marketing can lead to monopoly of the market, which in turn can destabilize the organization of economic activity. Marketing involves vigorous campaign aimed at making the product known to consumers. Companies with a wide expert foundation have the ability to differentiate their product using their expansive resources. This means that companies with little resource base have little chance in terms of access to customers. In some cases, marketing campaign may lead to the attainment of premium prices.

In such cases, prices are high yet the premium brand is the ideal one in the market. As a consequence, all consumers are forced to buy the product at the high price on offer. This is against the organization of economic activity. In an organized economy, the needs of all categories of people ought to be met. The poor should get a fair share of a product base on their status whereas the rich should also get a fair share of the same. But with premium prices resulting from aggressive marketing mechanisms, the poor are pushed aside³⁰.

Marketing done through private branding may give supplier an equal ground of competition in the event bargaining power of retailers is not overstressed. In private branding, big retail outlets purchase their stocks from suppliers of various scales and sell the same as a single brand after differentiating the same. This means that the product is sold at the same price and has equal competing power notwithstanding the origin.

The producer with a good bargaining ground has to content with the level of the producer with little bargaining ground. In this case, the retailer has the final say on the product through his private brand achieved through aggressive marketing campaign. This is a form of protection to weak manufacturers especially those from domestic companies. This phenomenon has been vital for the organization of global economy. Weak manufactures have been given the platform to advance. In fact, if the case was not the same, there would be no development of brands of the same manner.

In an oligopoly market where different competing companies produce similar products, it is important to create awareness of the product to individuals to increase the market of the product. As a result, marketing has been done using various tactics to enhance fair share of the market. For instance, consumer preferences vary. Some consumers are after low prices, others are after fanciful colours, and others are after sizeable quantities among many.

As a result, oligopoly competition utilizes different marketing strategies with each company concentrating on the important aspects of the consumer needs. This means that a fair share of competition has been provided in this case. And the control is strengthened by the fact that each territory is guarded by a brand. For instance, in the competition for market in the cooking fat, several competing companies have come up with unique strategies to meet the demands of the customers.

They include, colour, state, packaging size, flavour, and price among many. Consumers are offered assortments of commodities to select from. This means that the economic activity has been organized properly considering the needs of manufacturers. The economy consists of manufacturers with various capabilities. These manufacturers must be protected from unfair competition in some ways. However, the protection is achieved through marketing campaigns.

When marketing, suppliers add intangible attributes to the products such that customers associate themselves with the product. These phenomena can be illustrated well with the help of distinctive theory of marketing. This theory states that an individual’s distinctive trait related to other people in the same environment will be more outstanding to the person than common features³¹. For example, an individual will be more comfortable to identify himself with the people of his ethnic group.

This theory has been used to show the impact of ethnic identity on marketing responses for instance, in the U.S. programs on the market, different cultural characteristics are more salient. Research supports this theory by showing that there is an interrelationship between market responses and cultural identity; if marketers are very sensitive of their targeting efforts, they will have more trust and they will have a good response to cultural sensitivity and brands. Application of distinctive theory in marketing shows that marketers can advance their marketing communications by familiarizing with consumers or affiliating themselves to consumers’ cultures.

This practice has made consumers associate themselves with some brands based on the unseen value derived from the brand. However, the problem arises in the event the consumers want to migrate from their brand.

They will incur the cost of migration because they will spend money testing and settling on the brand with similar effects as their usual brand. At the same time, they are likely to be manipulated by scrupulous producer in terms of prices in the event of realizing that they are tied to the products³². For instance, in the United States, staunch Muslim believers only purchase the product with a label “Halal.” Even though there is no additional flavour in the brand with “Halal” sticker, Muslim will stoop at nothing to get the Halal branded products. This means that they are likely to be exploited by traders dealing with Halal brand.

Conclusion

Retail stores lead by the supermarkets is essential factors of the economy. The stores are conveniently located in residential areas and have stocked their products in a way that gives customers the freedom to choose the brand of their liking. Since choice is a crucial factor in customer satisfaction, suppliers have organized comprehensive plans in their product awareness to ensure consumers select their brands from the rest in the store.

As seen in this paper, the most determining factor is branding. Branding as discussed above takes various forms and goes beyond the press. Suppliers integrate consolidative efforts such as product differentiation, pricing, quality assurance and proper quantity to attract customers. Once customers have been attracted to the same, suppliers ensure the brand is secured. This is achieved through registering the brand to become a trademark.

There are laws governing trademarks, which guard the consumer and the owner. Through trademark laws, consumers maintain the use of their loyal brand without fear of fraud. Private brands in the retail stores have emerged as a challenge to existing brands. The end result of the same has been a benefit to the consumer because the competition is meant to attract them into buying the product. The competition existing in this case is about branding and marketing efforts.

As seen in this paper, branding has a considerable economic significance when viewed in a marketing perspective. At the same time, marketing has an impact on the organization of the economic activity in terms of product balance on the platform of social status. This paper has critically evaluated the contribution of trademarks and the brands they signify on the organisation of global economic activity. The evaluation has been done considering the competition between “brands” and “private label” (or “own label”) products in retail outlets such as supermarkets.

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Footnotes

1. Cornish, W & P Jennifer, ‘The Economic Function of Trade Marks: An Analysis with Special Reference to Developing Countries’, International Review of Industrial Property, vol. 13, no. 1, 1982, pp. 41
2. R Brown, ‘Advertising and the Public Interest: Legal Protection of Trade Symbols’, Yale Law Journal, vol. 57, 1948, p. 1165.
3. G Ramello & F Silva, ‘Appropriating Signs and Meaning: The Elusive Economics of Trademark’, Industrial and Corporate change, vol. 15, 2006, p. 947.
4. S Betsy, ‘Private Label’, Brandweek, vol. 34, no. 30, 1993, p. 30.
5. M Senftleben, ‘The Trademark Tower of Babel: Dilution Concepts in International, US and EC Trademark Law’, International Review of Intellectual Property and Competition Law, vol. 40, 2009, p. 57.
6. F Bergès-Sennou & M Waterson, ‘Private Label Products as Experience Goods’ Journal of Agricultural and Food Industrial Organization, vol. 3, no. 9, 2005, p. 9.
7. J Swann, ‘An Interdisciplinary Approach to Brand Strength’, Trademark Reporter, vol. 96, 2006, p. 943.
8. M Senftleben, ‘The Trademark Tower of Babel: Dilution Concepts in International, US and EC Trademark Law’, International Review of Intellectual Property and Competition Law, vol. 40, 2009, p. 68.
9. F Harris & L De Chernatony, Corporate branding and corporate brand performance. European Journal of Marketing, vol. 35, no.3/4, 2001, p. 446.
10. G Ramello, ‘What’s In a Sign? Trademark Law and Economic Theory’, Journal of Economic Surveys, vol. 20, 2006, p. 551.
11. B Beebe, ‘The Semiotic Analysis of Trademark Law’, UCLA Law Review, vol. 51 2004, p. 645.
12. T Drescher, ‘The Transformation and Evolution of Trademarks: From Signals to Symbols to Myth’, Trademark Reporter, vol. 82, 1992, p. 319.
13. A Griffiths, An Economic Perspective on Trademark Law, Edward Elgar, London, 2011, p. 117.
14. C Pickering, Trade Marks in Theory & Practice, Hart Publishing, Oxford, 1998, p. 259.
15. B Beebe, ‘The Semiotic Analysis of Trademark Law’, UCLA Law Review, vol. 51 2004, p. 631.
16. W Cornish & P Jennifer, ‘The Economic Function of Trade Marks: An Analysis with Special Reference to Developing Countries’, International Review of Industrial Property, vol. 13, no. 1, 1982, p. 46.
17. N Economides, ‘The Economics of Trademarks’, Trademark Reporter, vol. 78, 1988, p. 535.
18. Ramello, G, ‘What’s In a Sign? Trademark Law and Economic Theory’, Journal of Economic Surveys, vol. 20, 2006, pp. 547-565
19. W Landes & R Posner, The Economic Structure of Intellectual Property Law, The Belknap Press, Cambridge, p. 103.
20. W Landes & R Posner, ‘Trademark Law: An Economic Perspective’, Journal of Law & Economics, vol. 30, 1987, p. 285.
21. A Griffiths, ‘A Law-and-Economics Perspective on Trade Marks’ in Bently, L, J Davis & J Ginsberg (eds), Trade Marks and Brands: An Interdisciplinary Critique, 2008, p. 58.
22. J Swann, D Aaker & M Reback, ‘Trademarks and Marketing’, Trademark Reporter, vol. 91, 2001, p. 812.
23. J Aldred, ‘The Economic Rationale of Trade Marks: An Economist’s Critique’, in Bently, L, J Davis & JC Ginsberg, (eds), Trade Marks and Brands: An Interdisciplinary Critique, 2008, p. 274.
24. Swann, J, ‘An Interdisciplinary Approach to Brand Strength’, Trademark Reporter, vol. 96, 2006, pp. 943
25. A Griffiths, An Economic Perspective on Trademark Law, Edward Elgar, London, 2011, p. 106.
26. R Brown, ‘Advertising and the Public Interest: Legal Protection of Trade Symbols’, Yale Law Journal, vol. 57, 1948, p. 1165.
27. Ailawadi, K, N Scott, & L Donald, ‘Revenue Premium as an Outcome Measure of Brand Equity’, Journal of Marketing, vol.2, no.1,2003. pp. 79.
28. B Beebe, ‘The Semiotic Analysis of Trademark Law’, UCLA Law Review, vol. 51 2004, pp. 621-704.
29. S Mark, “Advertising in Competitive Markets,” American Economic Review, vol. 81, no. 2, 1991, p. 223.
30. C Shapiro, ‘Consumer Information, Product Quality and Seller Reputation’, Bell Journal of Economics, vol. 13, 1982, p. 28.
31. S Grier & R Deshpande, ‘Social Dimension of Consumer Distinctiveness: The Influence of Social Status on Group Identity and Advertising’, Persuasion Journal of Marketing Research, vol. 38, no. 2, 2001, p. 120.
32. C Shapiro, ‘Premiums for High Quality Products as Returns to Reputations’, Quarterly Journal of Economics, vol. 98, 1983, p. 661.