BRANDING has a long history, both in India and around the world. The word ‘brand’ is derived from the word brandr, a word used by early Norse tribesman meaning ‘to burn’, as in branding livestock to declare ownership. No doubt, anyone who has read cowboy stories is familiar with the concept of branding cattle.

Over time branding of cattle became not just a mark of ownership but also of quality. In the Chicago meat market, buyers recognised quality beef through the brand mark on cattle. This was because the ranches which produced better quality of meat did so because of many reasons – better grass or more adequate supply of water, better living conditions for the cattle or a shorter journey to the meat market. No longer was ‘meat on the hoof’ a commodity, it was ‘branded’ (if a small pun is allowed) and the better quality was recognizable.

In its earliest form, a brand mark defined quality, a mark which differentiated a quality product from other similar products.

Many years ago, in the Soviet Union, when products were sold under a generic name, the factory manufacturing the product had to mark its identity on the packaging. Customers soon realised that a detergent powder produced in one factory was superior in quality to others in this category of goods. Hence, housewives would turn the packaging around, upside down, and, if necessary inside out, to identify the origin of the product and make their choice on the basis of its manufacturing location. The serial number of the factory had become a brand as it differentiated from other similar detergents which, according to the state, were supposed to be identical in formulation and in every possible way. (Of course, this is similar to the Nirma story where the brand name was the only differentiator between totally similar products in the Ahmedabad market in the early 1970s).

A brand name or mark is also an identifier of the maker and carries with it the reputation of the manufacturer or the marketer. In its simplest form, this is true for a variety of commodities which are normally considered to be unbranded but carry an identification mark, and have done so for many years. Products and commodities such as jewellery, crockery, gold bricks and pipes carry a mark which identifies the producer. Often, even in such categories, the buyers choose their purchase on the basis of such identification marks. What does this mean?

Branding is neither new, nor confined solely to manufactured goods. Indeed, even in so-called commodity categories, there are reasons for consumer choice based on a process which is similar to the consumer choice process in a sophisticated category consisting of high quality brands.

 

 

Over the last hundred years there has been a proliferation of products due to mass production and distribution. As technologies developed it became increasingly difficult to differentiate in a given product category. Without having strong brands, consumers find it difficult to make a choice between a large number of products and services. In such situations, strong brands can differentiate between similar products and consumers use brands as a mechanism to make purchase decisions.

This has become increasingly important as functional differences between products have become almost inconsequential (but not necessarily unimportant). It has become usual for brands to differentiate themselves on the basis of non-functional differences between competing products. Finally, brand names are no longer applicable to just products as they are also being used for services, and even corporations. Indeed, there is hardly any category which is bought and sold that does not have a brand name in the world of today.

 

 

What, indeed, is a brand? Here are some definitions from management textbooks:

* A name, symbol, design, product or a combination of these, that identifies a seller’s goods and services and distinguishes it from competitor’s products.

* A name, trademark, product or logo to which a unique set of associations have become attached.

* A brand is a complex set of consistent beliefs and meanings held by its purchasers and users which are associated with the product or service but which exist over and above its obvious physical function – brands are found in people’s heads!

In case you find the textbook definitions bland and boring, I would not be surprised. This is because they have all been written by professors from business schools. Let me give you some more definitions, which have been written by advertising executives and specialists in communication: A bundle of functional and emotional benefits (or a bundle of feelings, meanings and emotions); a name with a reputation/a product with a reputation; a mark of pride; a simplifier of choice; product(s) with an attitude; products are ‘what companies make’ – brands are ‘what customer buy’.

I like these definitions much better, particularly that of a brand name being ‘a mark of pride’ or ‘a product with an attitude’. My favourite is the last which differentiates between a product and the brand.

In today’s world, brands must be relevant to the needs of the consumer; if not unique, at least different in their offering which should carry both functional and emotional benefits. Having said that, let us return to the original question: What is a brand? I would define a brand as, A name for a marketable unit to which a set of associations and benefits – functional and emotional – have become attached.

 

 

Ultimately brands should motivate consumers to buy the brand offering in preference to other alternatives. One should remember, however, that brands may have functional and emotional associations which are not benefits. For example, Lux toilet soap is associated with film stars, a strong emotional association but not a reason to buy the brand. Similarly, Nike, the famous sports shoes and clothing brand is associated with the ‘swoosh’ motif, a strong functional association but not a benefit in itself.

It is possible to classify brands into many categories. For example a simple brand is a brand name with no benefits or associations attached. A negative brand, on the other hand, would be a brand name with negative associations. Such a brand is more a liability rather than an asset. Indeed, many brands are silent brands. These are weak or commodity brands, names with associations but with no real reason for purchase.

But what is a strong brand? I have just modified my earlier definition so that a strong brand may be defined as: A brand name to which a set of unique, relevant and motivating emotional and functional benefits have become attached.

Fortune magazine publishes a list of The World’s Strongest Brands every year. Here is the list for the year 2000: Coca Cola, McDonalds, Sony, Nike, Microsoft, Walmart, Ford, Levi, Gap, and Amazon. Quite a list, and, not a single Indian brand name on it. Indeed, Fortune being an American magazine has a US-centric view of the world, so that 9 out of the 10 brands are American.

 

 

Brands are important from three points of view. First, they have a role to play in the market place. Second, the consumers are impacted by brands in their purchase decision. And finally, there is a company or a corporate perspective as to the role of a brand. I have tried to present the reasons as to why a brand is important from all three perspectives in the chart given below.

 

 

The Market	The Consumer	The Company
Create preference between similar products	Remove uncertainty	Increase profit
Provide protection against new entrants	Enable ‘badging’ of self-image	Protect revenue
Sustain premiums and margins	Concentrate information (i.e., values, beliefs, etc.)	Create new segments/growth
Simplify choice in a complex world
		Guide brand activity
		Motivate staff
		Manage emergencies

We have not as yet appreciated that in India brands are the key value drivers in a business. Traditionally Indian business has accumulated capital and assets as a route to pursue growth. Little thought has been given to the productivity of the asset; indeed in many cases the high cost of capital and asset formation has led to value destruction. Indeed, the winds of liberalisation have demonstrated how many large and powerful businesses, such as the House of Mafatlal and Sarabhai’s, have destroyed value to such an extent that the original businesses just do not exist anymore or have become BIFR cases. Most significantly, neither of them had actually developed a brand name of note and relied entirely on the family name.

 

 

As we have seen brands can and do provide and create real value. The value of a brand is measurable and there is a strong case for showing the value of the company’s brands on the balance sheet. Strong brands do need to be supported but usually require lower capital expenditure, provide superior performance, and can ensure future growth and higher value.

It is a misconception that only a high level of advertising expenditure can create a strong brand. There are several steps that need to be taken to create a strong brand. Brand owners must invest in maintaining strong brands by:

* Innovating: Strong brands constantly innovate to delight their potential and existing customers, not just through product innovation but also innovations in the other elements of the marketing mix such as packaging, pricing, distribution, promotion and sponsorship. Pepsi, in India, is an excellent example of such an innovative brand.

* Gain mind share and market share through relevant and powerful advertising: Strong brands are created and maintained through effective advertising which is relevant, clear and concise in communication and has a ‘big idea’. A big idea is a distinctive expression or a creative device which is uniquely associated with the brand and the brand promise. An example of such a big idea in India is the motif of the ‘girl in the waterfall’ in Liril’s advertising.

* Distribution: In India this is probably the most important factor in creating a strong brand. To paraphrase the saying of an earlier chairman of Coca Cola company, the brand must always be within an arms length of desire.

* Expanding consumer base: It is important to understand that in India a brand must have wide appeal. The market for niche brands is normally unprofitable and hence a mass brand is critical for financial success.

* Finally, by keeping margins intact and maintaining capital efficiency. This is not only important for rewarding the shareholder but to ensure that sufficient money is available for investing and maintaining strong brands.

 

 

There is evidence available worldwide that the performance of companies is directly linked with the strength of the brand name. A study conducted by McKinsey in 1999 across 130 countries worldwide demonstrated that on average the total return to the shareholder was five percentage points higher than companies which had weak brands.

The time has come for Indian business to create strong brands because they create value. This means that brands must have greater focus which provide relevant and motivating benefits to the consumer because only such brands can create value for the business and the shareholder.