A firm’s brand is often its most valuable and enduring asset and, consequently, needs to be protected and developed, modernised and nurtured. BrandZ reported in 2010 that consideration of brand in the purchase decision had risen by 20% since 2005.
Branding is the way in which a firm differentiates itself and its products from those of their rivals. The term originated from the use of a hot iron to leave a mark on livestock to prove ownership. According to Aswath Damodaran, professor of finance at New York University’s Stern School of Business, a brand’s value measures the extent to which it can sell its goods and services at a premium price.
The BrandZ Top 100 Global Brands 2011 ranking by Millward Brown, values household brands such as Apple, McDonald’s and Coca-Cola at billions of dollars. The world’s top three brands: Apple, Google and IBM, the jewels in the crown of the list, are each valued at more than $100bn. Brands in the top 100 have grown in financial value by nearly 36% since the portfolio was put together in 2006.
Coca Cola was ranked the best global brand in 2010 by brand consultancy Interbrand for the 11th consecutive year, with a value estimated at $70.7bn. IBM remained in second place up 7% from 2009 to $64.7bn, while Microsoft retained third place on $60.9bn. Google climbed from seventh to fourth place and increased its brand value by 36% to stand at $43.5bn.
A brand is a name, sign, colour or symbol used to identify items or services of the seller(s) and to differentiate them from goods of competitors. Brand names may be supported by catchphrases, slogans and logos that provide visual or auditory recognition for the product:
- a symbol – Nike swoosh
- a logo – Microsoft graphic
- a character – Frosties Tiger
- a sound – Intel inside
Brand names come in many different forms:
- Acronym – a name made up of initials, such as BMW, BP, KFC or IBM
- Descriptive or functional – representing a product benefit like Sparkle window cleaner or Mop and Glo floor cleaner
- Evocative – names that evoke a relevant vivid images like Fairy, Crest or Paramount
- Neologisms – completely made-up words or phrases like Accenture (derived from ‘accent on the future’), Aviva, IKEA or Motorola
- Personal names – products may be named after the original founder such as Chevrolet and Ford or combinations of names such as Adidas (after Adi Dassler)
- Abbreviations – Xerox is abbreviation of the word xerography
- Foreign language terms – Volkswagen literally means “the people’s car” in German
- Mistakes – Google is a misspelling of Googal, a very large number
- Geographical regions or landmarks – like Fuji Film or Olympus (the highest mountain in Greece)
- Myth – many brands use mythical characters like Nike the Greek goddess of victory
- Association – in 1976, Steve Jobs was working in a community farm in Oregon which made him think of Apple
Business is changing, but the principles of strong brands still hold true. Interbrand’s Brand Strength Score comprises 10 components, all of which have an important and equal role in the brand’s ability to generate value. The 10 principles bring together all aspects of a brand – its people, products, positioning and partners – to create a more holistic and accurate way of understanding and evaluating the power of brands.
Interbrand’s 2011 Best Retail Brands report identified three emerging trends for retail brands in 2011:
- Customer’s demand for a more seamless retail experience. Digital’s continued rapid growth is forcing smart retailers to adapt their brand to new mediums, and exploring new opportunities for growth. Areas with impressive innovation include: e-commerce, m-commerce and social media.
- The need for human touch in all interactions. Consumers continue to put emphasis on the brand experience, expecting that a favourite retail brand will act as a filter for their choices. In today’s retail landscape, brands with genuine character, definitive core values, and concern for community are likely to profit the most.
- An increasingly interrelated global retail market. Retail brands must view their competition as both local and global. The internet and smartphones have created a high-speed global trade route where millions of people are mixing cultures and making transactions. That means, of course, that retail brands must view their competition as both local and global. Brands will combine global market savvy and sourcing with local market delivery and know-how.
Much research has taken place on the psychological meaning of a brand. Brand experience refers to customer’s thoughts, feelings, perceptions, beliefs and attitudes when they make their purchase. Over a period of time if these emotions are shared they combine to build into a brand image, with which loyal customers identify. Ideally, if a firm has marketed its product successfully, customers will use positive descriptors like ‘trust, value, modern and fashionable’ when asked for their opinions of its brand. Although the channels that firms use to reach their customers may be changing, the same time-tested rules of branding still apply: Firms need to listen to what customers want and deliver this clearly and simply through their brand.
Outline student IB Class Activity
Wolff Olins is the creative agency behind some of the world’s biggest rebranding strategies. It was the agency that designed the 2012 Olympic logo, the new AoL logos and many more. Visit the Wolff Olins site and watch its introductory video, which details some of its major design projects.
Produce a 1000 word report/case study on one of these design makeovers using the Wolff Olins site and further research on the Internet.
- Identify the brand
- Include a ‘before’ and ‘after’ section
- Examine the reasons for the corporate redesign and rebranding strategy and if possible, identify the financial costs of the process
- Identify responses to the change
- Search the web for a range of reactions – positive and negative – to the rebranding. Summarise these.
You may wish to carry out some primary research to support your analysis and evaluation.
There are several YouTube quizzes on Logos, such as
Answers are provided for these logo quizzes through another link.
Teacher note: You may wish to search for quizzes more focused on your particular country, or make these yourselves. Students normally really enjoy these.
You could use quizzes as a way of classifying brands and examining the success of individual brands and the reasons for this. There are opportunities for discussing brand perceptions and the underlying causes of these.
IB style written questions
1. Define the terms:
- Mission statement
2. Explain the functions of a business logo.
3. Analyse the reasons why AOL felt that its brand needed a marketing makeover.
4. With reference to AOL and other recent rebranding exercises, discuss the importance and role of branding in a global market.