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BRANDING LEVELS AND ALTERNATIVES There
are four levels of branding decisions:
- No brand versus brand
- Private brand versus manufacturer's brand
- Single brand versus multiple brands
- Local brands versus worldwide brand
Branding versus No Brand
To brand or not to brand, that is the question. Most U.S. exported products are branded, but that does not mean that all products should be. Branding is not a cost-free proposition because of the added costs associated with marking, labeling, packaging, and legal procedures. These costs are especially relevant in the case of commodities (e.g. salt, cement, diamonds, produce, beef, and other agricultural and chemical products).
Commodities are "unbranded or undifferentiated products which are sold by grade, not by brands." As such, there is no uniqueness, other than grade differential, that can be used to distinguish the offerings of one supplier from those of another. Branding is then probably undesirable because brand promotion is ineffective in a practical sense and adds unnecessary expenses to operations costs. The value of a diamond, for example, is determined by the so - called four Cs cut, color, clarity, and carat weight and not by brand. This is why DeBeers promotes the primary demand for diamonds in general rather than the selective demand for specific brands of diamonds.
On the positive scale, a brand less product allows flexibility in quality and quantity control, resulting in lower production costs along with lower marketing and legal costs.
The basic problem with a commodity or unbranded product is that its demand is strictly a function of price. The brand less product is thus vulnerable to any price swing or price cutting. Farmers can well attest to this vulnerability because prices of farm products have been greatly affected by competition from overseas producers. Yet, there are-ways to--remove-a company from this kind-of cutthroat competition Branding, when feasible, transforms a commodity into a product (e.g., /Chiquita bananas, Dole pineapples, Sunkist oranges, Morton salt, Holly Farms fryers, and Perdue fryers).
A product is a "value-added commodity," and this bundle of added values includes the brand itself as well as other product attributes, regardless of whether such attributes are physical or psychological and whether they are real or imaginary. The 3M company developed brand identity and packaging for its Scotch videotapes for the specific purpose of preventing them from becoming just another commodity item in the worldwide, price-sensitive market.
Branding makes premium pricing possible because of better identification, awareness, promotion, differentiation, consumer confidence, brand loyalty, and repeats sales.
Although branding provides the manufacturer with some insulation from price competition, a firm must still find out whether it is worthwhile to brand the product. In general, these prerequisites should be met:
- Quality and quantity consistency, not necessarily the best quality or the greatest quantity.
- The possibility of product differentiation.
- The degree of importance consumers place on the product attribute to be differentiated.
