Updated: Oct 24, 2019
Brand is a term we are not only familiar with, but perhaps fond of too. When spoken in the context of a product/service, if a brand is popular, it immediately leads to an impression of ‘something amazing’ or ‘something different’.
The Oxford dictionary defines a brand as “A type of product manufactured by a particular company under a particular name”. In other words, a brand serves as an indicia of ownership, quality, product kind, etc. Let’s say, Amazon! Immediately, what strikes us is, their product delivery on time, range of product offerings, cash on delivery option, great replacement policy and so on.
A number of times, brands and trademarks are considered synonyms. Though this is not true. For example, Coke is a brand of the Coca-Cola Company which is also protected as a trademark. Trademark is the legal protection accorded to a mark while a brand is a wider term that symbolizes commercial application, market capitalization (“market cap”), investor faith, consumer confidence, etc. Generally, trademarks are groomed to become brands. Thus, a trademark is a stepping stone to branding.
This may so happen via careful and planned advertising, maintaining quality of the product/service, being diligent in enforcing one’s rights, maintaining consistency of usage, building consumer awareness, and the like. Amul would be a perfect fit for this case. What started as an Indian dairy cooperative in a small town with very limited resources, is today one of the best Indian brands with considerable and impactful advertising – the Amul girl, we are all fond off.
In today’s times, assets of a company are not only tangible but intangible too. In fact, about two-thirds of a company’s assets may be intangible depending upon a company’s market offerings. Further, the intangible assets are reflected in the total market cap of a company’s balance sheet. In 2013, Apple was rated as the leading brand by Interbrands with a brand value of 98.3$bn while its market cap was 445$bn. This brand value is the total value of the individual brands built by Apple (iPod, iPad, iTunes, etc.).
Other than the fact that the brands add to market cap, brands also help a great deal in launching new products. Flipkart which started with selling books online, is now a very popular e-commerce portal selling a wide range of consumer goods. Apple, which initially dealt with computers, diversified to mobile phones. Dabur, which started with ayurvedic medicines, is now India’s 4th largest FMCG brand dealing with personal care, healthcare, home care and foods. The reason having a good brand image helps is that it takes the initial hitch of a consumer in exploring the new product/service as the consumer’s confidence in the brand is high. In fact, the consumer confidence may act as the most supportive factor in favour of diversification.
However, one should be careful as to the new product/service category one is diversifying into. If say, an electronics company were to diversify into clothing, the brand value relating to electronic goods may not help in clothing. However, if right steps are taken, brand potential and value can only be supplemented. A leading case study in Indian context is Wipro. Wipro which started with IT services used its brand image to enter absolutely tangential market segments like consumer care, lighting, healthcare and infrastructure engineering successfully.
As per economic reports, having a brand value which is 20-50% of the market cap is a big boost to investor confidence as well. If you are planning to seek venture capital or any other form of money inflow, it is absolutely must that you consider brand as an investment and not an expense. To this end, having a proper advertising and marketing strategy in place is crucial. The sooner consumers relate to the brand, the sooner the product/service would be a success provided it is of good quality. Thus, it is advisable that a brand be carefully thought of, typically something which is catchy and not descriptive of the product/service offering like Flipkart, Google, Apple, etc.
Thereafter, trademark protection should be sought as it is not only a great way of asserting your rights but also helps in deterring imitators who may wish to ride over the goodwill you have built in the market over a period of time with great efforts.