In the last post, we looked at understanding the origin of two terms: "brand" and "branding". In this post, we'll look quickly at how these terms relate to ownership and differentiation.
In terms of ownership, brands establish a direct link between the product (or service) and the person or group responsible for creating it. We can immediately see the implications of this in the long run. Organizations that produce products that create positive reputations among buyers over time (in the case of cattle, this could mean health, size, strength, value, etc.) will automatically have brands or brand marks that becomes associated with those qualities.
On the opposite side, organizations seen as producing products with qualities perceived as negative will be seen as having brand marks associated with those negative qualities. Of course there will be a whole range of brands in between the two extremes that will come to represent different associations in the minds of buyers and potential buyers, but the main thing here is that the producers can be clearly associated with what they produce through brands.
So at this point, what we see is that brands allow owners to create links between themselves and their products and services. Over time, the cumulative experience of everyone coming into contact with those products or services creates a reputation for the brand mark such that the brand mark itself eventually comes to have a symbolic reputation on its own. If we project out over time, we can see that there will be two types of organizations: those with perceived “strong brands” and those with perceived “weak brands”.
Strong brand: A brand that over time has become associated with attributes that buyers and potential buyers see as having high value.
Weak brand: A brand that over time has become associated with attributes that buyers and potential buyers see as having low value.
The above definitions begin to hone in on the second point we talked about: differentiation. In very simple terms, organizations perceived to have “strong brands” will have more demand for their product than "weak brand" products and thus generate more sales leading to greater profit which can then be reinvested to strengthen the brands position even further. We could call this a positive spiral.
Those that have a “weak brand”, however, will have less demand compared against a “strong brand”. Less demand means less sales and, all things being equal, less profit with which to grow the business. In order to improve profit margins, these companies usually have to begin cutting costs which can have the affect of weakening the brand even further leading to even less sales. We could call this a negative spiral.
But there needs to be another category as well: the “unknown brand”. As we saw previously, brands are reputations over time. Since completely new organizations have no time in the market, it is not possible for them to have reputations.
Unknown brand: A brand that has no history in the market and therefore is not yet associated with any specific attributes in the mind of the buyer or potential buyer.
The last category is probably the most interesting as it provides the entry point into branding as we know it today. We’ll get into basics of modern brand building in the next post.