The battle of the brands in a digital world

A brand is a maker’s name or trademark. According to Philip Kotler in Marketing Management, a brand is a ‘name, term, symbol or design which is intended to signify the goods and services of one seller or group of sellers and to differentiate them from competitors’. This very simple definition does not cover the full range of roles that a brand possesses. A brand is short-hand for a product’s quality and unique identity and for all the information that a customer has about it. Most importantly brand development can create a loyalty that ensures consumers will repeat purchase.

A brand is an intangible asset, in that it is not a physical item that can be seen or touched. However, it can add significant value to a product and can be critical to its long-term success or failure. It allows a firm to advertise less and price higher and discourages brand switching; all of which adds to a firm’s net profit.

It is difficult to place an actual value on brand loyalty, but a number of organisations do so each year. Two of the biggest are Brandirectory and Interbrand, which produce annual tables of global brand values. Both of these organisations placed Apple as the number one brand by value in 2013, with Interbrand valuing the global brand at 98,316 $m and Brandirectory at $87,304m. Brandirectory places the Samsung brand second, with Interbrand placing Google runner up to Apple.

Valuing brands is becoming even more difficult as the digital revolution completely alters the nature of marketing communication. According to the Mobile Marketing Association of Asia, of the 7 billion people on the planet, 4.8 billion have a mobile phone while only 4.2 billion own a toothbrush. This explosion of digital and social media has fundamentally changed the way consumers behave and interact with brands. No longer can firms control the relationship between their brands and their consumers, because consumers connect with brands through multiple channels, which creates a two-way rather than a one-way process. Consumers are becoming more selective in their interaction with brands and the channel that suits them best. Brands themselves are being reviewed, shaped and even created by consumers, who share experiences with other consumers through social media channels.

As a result, the social media, and sharing, has become a major focus for all brands. Internet usage is increasing across all age groups. Although, the largest proportion of users comes from the 16-24 year-old category, the 55-64 year-old age group represents the fastest growing user group. It is not surprising, therefore, that this is generating significant growth in advertising on, and sales over, the internet and changing the nature of marketing communications.

The Social Nature of the Brand

Creating social communities and investing in social campaigns and integrating social features into company websites drives business value, but the biggest impact for brands is when consumers share, or like, a brand’s content with their network of friends.  The rise of online social media: Facebook, Twitter, YouTube, fan sites and social marketing websites represents a fundamental change in marketing practice.  A one-way message or image can no longer compete. The value of a brand is linked to the social connections among people who buy the product or service. Managing these connections has huge impact on the intangible values of brands and is rapidly becoming the crucial focus of marketing departments.

Brand loyalty is created by customer satisfaction, but referral within communities reinforces that loyalty and spreads the word far more rapidly than traditional advertising campaigns could ever do. Research as far back as the 1930s identified the importance of social relationships in influencing attitudes and behaviour. Now, a growing number of marketing researchers are examining the influence of the social media on purchasing decisions. They are finding that online communities influence how people interpret their relationship with brands and shape a long-term relationship with a brand, rather than just making a single purchase decision.

IB Style questions

1. Define the following terms:

  • Intangible asset
  • Marketing channel

2. Explain the role and importance of branding.

3. Analyse how changing internet usage patterns influence the nature of marketing strategy.

4. To what extent can multinational corporations influence perceptions of their brands among consumer groups?

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