Branding – How to Succeed

Brand Management

Negative Brand Equity

In the previous discussion on brand equity, one aspect needs consideration. It is this – is it possible for brands to have negative brand equity? Consider now both sides of the conundrum:

From one perspective, brand equity cannot be negative. The application of effective marketing by way of a combination of advertising, public relations, and sales promotion unequivocally gives rise to positive brand equity.

From another perspective, however, there is a case to support the belief that negative brand equity can exist. The validity lies in the characterization of a political brand. A pertinent example is that, at a particular moment in time, the Democratic brand may be judged to be negative in respect of the Republican brand in the sense that the former is performing poorly compared with the latter. On the other hand, of course, the contra may be the prevailing truism.

Retail Brands

Retailing – This is defined as the sale of goods or merchandise from a specified location, such as a department store, or by mail, in small or individual quantities for delivery directly to the purchaser.

Private Brand – This usually involves a retailer, who buys in bulk from a manufacturer, and arranges for the product to bear its own name. This strategy is only feasible when the retailer deals in very high volumes.

The advantages to the retailer are:

Greater freedom and flexibility in pricing

Greater control over product detail and quality

Higher margins or lower selling price, whichever is appropriate

Manufacturer’s promotional costs are minimized

The advantages to the manufacturer are:

Minimal promotional costs

Dependable sales volume

Store Brand – Also known as Own Brand in the UK, it refers specifically to retail stores or store chains. The retailer has a number of choices, viz. to manufacture goods under its own label, or re-brand private label goods, and even outsource manufacture of store-brand items to various third parties (who are often the same manufacturers that produce brand-labeled goods).

Store branded goods are, in most cases, cheaper than national-brand items since the retailer can maximise the production to suit consumer demand whilst, at the same time, reducing advertising costs. In certain retail sectors, it is possible for store brands to account for 40-50 percent of total sales.

Since store branding is a mature industry; then some store brands have been able to position themselves as premium brands. It is not unusual for store-branded goods to style themselves on the shape, packaging, and labeling of national brands so as to acquire premium display treatment from retailers.

Some retailers take the view that, whilst advertising by premium national brands attracts shoppers to the store, none the less, the retailer invariably makes more profit by selling a store brand in preference to a premium brand. In the majority of cases, while store brands are usually cheaper than national brands, they remain more expensive than generic brands (products with no brand name, e.g. Cola) sold at the store.

The “no-frills” grocery chains, such as Aldi, principally sell store brands in order to promote lower prices. In comparison, supermarket chains sell several brands over and above other products.