We all know the famous brands such as Adidas, Nike, iPhone, Apple and others. But what exactly is a brand and why do companies need to brand their products? Branding is a marketing strategy that involves creating a differentiated name and image, often by creating a logo and/or a tag line, in order to establish a presence in the consumer’s mind and attract and keep customers.
It needs to be clearly understood that branding is not just a logo or a tag line. It is much more than that. It is the company’s voice in the market place and its proposition to the customers. It is an opportunity for a company to create something with lasting effects. It communicates the value and character a product or a firm brings to the market, the economy and to the world. An effective brand strategy gives a company a competitive edge in an increasingly competitive market place.
Consistent, strategic branding brings to a company’s products and services strong brand equity and this strong brand identity allows to charge prices higher than competing non-branded products.
One common brand strategy which big supermarkets use is the so – called own – label brands or private labels. This is a branding strategy where the retailer has a particularly strong identity and this “own label brand” becomes able to complete against even the strongest brand leaders and may outperform products that are not strongly branded. Traditionally it was the manufacturer that used to produce and market their products. A good example of manufacturer brands are Proctor & Gamble and Unilever and their main strength lies in technologies and processes underlying the product.
Own-label or private brands are created and owned by powerful retailers. They are not involved in the production of the product but they have important information about the likings of customers which the manufacturers may not possess. Usually the promotion of those own-brands does not require huge marketing budget and resorts to in-store promotions and advertising in the local media. By avoiding the distribution and promotion costs, the retailer brands can be sold cheaper than comparable manufacturer brands.
Own-label branding is especially common with the big food chains such as Carrefour, Aldi, Tesco. Tesco recently launched brands such as Rosedene Farms and Boswell Farms to cover its own label produce. It turns out that despite their British sounding names the “farms” do not really exist and the produce is often sources from abroad.
The new brands make a “real statement of high quality food at low prices” according to HSBC retail analyst David McCarthy.
He explains: “Tesco are giving the market yet another reason not to shop at Aldi and it’s a major brand repositioning that says why go there for cheaper veg? Ours is the same price and is better quality.”
But the recent branding strategy of Tesco also prompted a lot of questions. The National Farmers’ Union (NFU)have expressed the opinion that “the labels may give customer a false idea of where the produce is sourced” and thus be misleading to customers. Tesco has also been heavily criticized on social media with the argument that “shoppers deserve to know where their food comes from”.
It seems that by using farms’ names to brand its own-label products Tesco wants to capitalize on “the positive affinity of customers with farmers”, said Phil Bicknell, the NFU’s Head of Food and Farming.
This example of branding strategy shows how important branding is for companies like Tesco, operating on a very competitive market. It also demonstrates the way in which companies use their information on customers to create successful brands. It is to be seen whether Tesco’s branding strategy will help the food retailer manages to win over customers from Aldi and other food chains.