Brands and Branding. What makes a brand valuable, using Apple's innovation strategy as example

Table of content

List of figures

1 Introduction

2 Brands and branding – What makes a brand valuable?
2.1 Brands and branding
2.1.1 What is a brand?
2.1.2 What does branding mean?
2.2 Key elements constituting brand value
2.3 The role of innovation for brand value using Apple as an example
2.3.1 Historical background
2.3.2 Apple’s strategy
2.3.3 Success and breakdowns
2.3.4 Customer loyalty

3 Conclusion

Bibliography

List of figures

Figure 1: Brand Equity

Figure 2: The world's most valuable brands 2020

1 Introduction

The topic of brands is a hot topic in marketing worldwide. Each of us own brands at home and uses brands, for example when using your smartphone. The importance of brands and branding has increased in the recent years. The behavior of consumers can be controlled by a brand. Because consumers build relationships with brands and have very lively brand images. A brand is also a distinguishing mark for the potential buyer. For this reason, it is crucial which image and appearance the brand incarnates in public, so that the brand can become successful and achieve a high market value.

Nowadays, electronics and innovative technologies are very important. The brand Apple can attach a high level of awareness to this. From young to old people, there is interest in the brand and its products. In the latest news, it was announced that the Apple brand is the first US Company with a market value of $ 1.5 trillion.

The timeliness of the topic and Apple's marketing strategy convinced me to consider this topic and questioning of what distinguishes Apple's marketing strategy in the consumer market from other marketing strategies. Clarifying this question will reveal what strategy Apple is using when launching new products.

First of all, in this study paper the term brands and branding are generally defined and the different values of the success of a brand are explained in more detail. Then the history of the founding of the Apple Group is briefly presented. In the following, the values mentioned in the first part are taken up again and explicitly demonstrated in practical applications relating to Apple's innovation strategy.

2 Brands and branding – What makes a brand valuable?

2.1 Brands and branding

2.1.1 What is a brand?

A brand can be defined as a “name, term, symbol, or design, or combination of them, which is intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors”. (Kotler 1991, p. 442) The name of a brand is one of the most important factor as its used in language supplies a universal point of origin. A brands name should never change, while the other elements like the logo can change over time. It doesn’t mean that brands achieve their characteristic through their names alone. But brands like Nike or McDonalds would be paler properties without their famous logos.

Brands can be an indicator of risk or trust for consumer, but they are also markers of offerings for companies and a sign of quality (Keller and Lehmann 2005, pp. 740-759).

It’s important to understand the content and structure of brand knowledge, because they have the ability to influence the thinking of consumers about a brand, especially in reaction to marketing activity for the brand. Brand knowledge is known as descriptive and evaluative brand-related information. That means a consumer saved an individualistic conclusion in memory. It includes brand-related terms, brand awareness, and brand image that correlate different information like awareness, attributes, benefits, images, thoughts, feelings, attitudes and experiences to a brand justifies brand knowledge and directly affect the response of consumers (Keller 2003, pp. 595-600).

Brand image appears when brand associations held in within the mind of consumers are transferred onto a consumer’s perception about a brand. These associations are often developed, if a consumer has direct experience with the brand, get information that is communicated by the business, or if there are previous associations held about the business and origin, etc. (Martinez et al. 2003, p. 432).

2.1.2 What does branding mean?

Branding includes all decisions and measures related to the marking of products and services. The aim of branding is, to influence consumer’s behavior regarding a brand. This include e.g. the perception, the preference formation, brand loyalty and much more. That means that you actively influence it by brand management and examine the aftermath by market research (Baumgarth 2001, p. 25).

Many companies trying to increase sales and turnover by establishing a brand. On the consumer side, this arise due to preference formation, i.e. the brand promises not only high quality but also additional psychological benefits for the customer. For example with Apple’s iPods, people get a high quality device with which they can scroll 1000 of songs ‘in their pocket’. In addition, with branding the company tries to tie the consumer to the product for as long as possible. In conjunction with the additional benefits, which are offered, this created brand loyalty ensures higher sales potential and offers a scope in price policy. If a brand has a positive image, it’s in favor of the products, because it’s likely a free advertisement (Brockhoff 1999, p. 173). But there are also some risks to be aware of. Probably the best example at the moment is the VW Group. After the Diesel gate scandal, the company has already left a bad image with some people. Their current advertise and the resulting criticism about it shows that advertising can definitely go wrong if you use it wrong: The clip shows a black person who is checking out the new golf. A white hand than grabs him and moves him to the door of a restaurant, where he is flipped inside. The restaurant called “Petit colon” which means little colonist, if you translate it. While the hand flips the man inside, the hand shows the “white power” sign, which is a key word in the neo-Nazi scene. If this is not worse enough, the words who are spelled successively make the word “Neger” if you stop the clip for a second. According to the comments below the clip, the people are shocked and angry. This advertise definitely went wrong and created a bad image for the VW Group (Süddeutsche Zeitung 2020).

Why is branding important?

Branding is important, because the competition is increasing continuous and the products become easier to exchange. This means that with successful branding the products should stand out from the crowd and at the same time they characterizing the brand. Properties associated to the brand succeed directly to the product. In summary, you can say that the branding should give a positive purchase-relevant image.

If a brand generates additional profits from his cash value, this refers as brand value and can resumed as cash value. So the company’s value is also positively impacted by branding.

Brand Positioning

The goal of brand positioning is to influence consumer behavior. It’s a standout from competitive brands. Properties such as relevance, ability to differentiate and future orientation have to be fulfilled, to successfully position the brand (Baumgarth 2004, P. 116). In order for consumers to perceive the brand, the brand has to comply with the wishes and conceptions of the relevant consumers. The long-term target position achieves through active strategic control. This means that necessary measures in brand management can be planned and implemented in a targeted manner and thus the success can be monitored.

In order to distinguish a product, it’s necessary to recognize the brand again. To recognize it again, it’s assumed that it was already noticed. To ensure that a trademark is recognized, it should differ from others. This can be achieved through distinctive shapes, colors and highlights. As already mentioned, the conciseness is also important. In order to achieve a better conciseness, it’s necessary to use e.g. simple shapes, uniform colors and contrasts.

Recognizing a brand is not enough for the success of a brand. The associations of the brand should also convey to the consumer as part of brand positioning. This includes the name, the logo, the packaging and the services (Behrens 2017, pp. 201-202).

There are a few simple steps a brand can create successful positioning:

The first one is to be unique and get the own niche that represents the brand, so that the customer want to buy exactly this brand instead of competitive brands. For example, with the brand “Coca-Cola” people associate happiness, relaxation, friends, love, family, etc. because Coca-Cola have made ad campaigns that transmit these feelings.

After that, the brand should make sure those attributes they want to build their brand on, are important to the customer. It’s important to understand what the consumers want. For example, Fedex has built their brand on: next day delivery, guarantees, speed, etc. - and that’s exactly what the consumers like to have (Kotler 2003).

If a brand has done that, they should choose a positioning statement that resonate with the consumer; can be delivered by the company and is different from competitors. In this case, it’s important that a brand not uses a statement like “unique and successful”, because every brand wants to be unique and successful. The brand positioning of “Australian Yellow Tail Wines” is a good example for powerful brand positioning. Their positioning is perceived as “approachable, easy-to-choose, and fun”. Their products are as approachable as “Cocktail-to-go”; the name represents the tail of a Kangaroo and the packaging is colorful, especially yellow – as the name says (Fuchs 2010, pp. 1763-1786).

Brand Name

As the offerings at the markets increase constantly, the brand name is also an important factor for branding. Because it’s kind of an orientation for the consumer and at the same time the brand name can reflect the feelings of customers associated with the brand (e.g. the brand “Under Amour”). Different elements of the marketing mix such as advertisements, the packaging, etc. can vary, while changing the brand name can lead to loss of identity. Because a new name also means a new identity. A good brand name should suit the company itself as well as the products the company sells and the customers (Aaker 1991, p. 39).

2.2 Key elements constituting brand value

Marketers are trying to build a market value to satisfy customer’s associations. The brand value consists of influencing factors. These can increase or decrease the value of a product or service for both the customer and the company (Aaker 2005). This is how the assets and liabilities are grouped into the following four categories of brand equity: brand loyalty, brand awareness, perceived quality and brand associations. (Andersson, et al. 2006). Abbildung in dieser Leseprobe nicht enthaltenFigure 1: Brand Equity, Authority: According to Chand, n.d.

Brand Loyalty

Brand loyalty is a customer’s loyalty to a brand and a fundamental element of brand value. It can be defined as a measure of the connection that a customer has with a brand. The more unimpressed the customer is to the brand, the lower the equity. Thus, this element is a good indicator of equity that constitute future profits.To make sure that brand loyalty takes place, the customer must have a positive attitude towards the brand. That means if the customer is satisfied with the brand, it will give him guaranty and the customer will be involved in repeated buying (Aacker 1991, p. 62).

Brand Awareness

Brand awareness means the ability that a potential customer creates through the product a direct connection to the brand, therefore the customer can identify the brand. It ranges from an uncertain feeling of brand awareness to the belief that the brand is unique. Brand Awareness is important for customer’s decision. A brand has to come to customer’s mind when they are thinking about a specific product category (Aaker 1992, pp. 27-32).

Perceived Quality

Perceived quality is what a customer expect about a product and his perception of the quality of a product or service. Even if there are no other brand associations, brand awareness can influence the decisions about brands from approach. For example, consumers are shown to adopt a decision rule to buy only well-known and well-established brands. In a consumer choice study by Hoyer and Brown (1990), students tried different tastes of peanut butter (blind taste tests) and afterwards decided on a brand. The consumers preferred the peanut butter of the unknown brands to the well-known brands. This result is surprising when you consider that the participants had the opportunity to test all brands. It makes sense that well-known brands have a drastic influence on the valuation of the brand. If a brand does a lot of advertising and the consumer heard about the brand, they assume that the brand is profitable. That means the customer has to buy the product and be impressed by the performance, therefore the product has to be of justified quality. So if the customer believe that the brand is the best, then it is. According to Aaker (1990) there are seven elements how perceived quality can be generated by each consumer’s perception. If it’s a product, the customer make their decisions based on: Performance, reliability, serviceability, durability, conformity with specifications and fit and finish. If it’s a service, the customers evaluate on: Competence, reliability, tangibles, responsiveness and empathy.

Brand Association

Brand associations can be linked to the brand node in memory and contain the meaning of the brand for consumers. They can be classified into three mainly categories: attributes, benefits and attitudes. Products and services are characterized by descriptive features called attributes. That’s what a consumer think about a product is or has. Physical product characteristics and non-material product characteristics are built upon product attributes, which associations have the clearest significance. Benefits are the personal values a consumer has and that is what a consumer think a product has or can do for them (Alba and Hutchinson 1987, pp. 411-413).

Innovations

Innovations are services, which are offered by companies on the market. This may involve launching new techniques or ideas or changing a product or service to satisfy customer needs (Brockhoff 1996, p. 13-14).

Speaking of an innovation can be a material novelty of the individual company, employees, etc. It depends on the perception of the individual. Therefore, it’s also an innovation if the innovation is useful for the individual user. The goal of an innovation is to create with a given medium a new purpose. Thus, e.g. technical functionalities with higher complexity are easier to use. The most important factor here is the combination between human and technology.

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