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A TCI Book Review

Laws of Branding

Susannah Hart and John Murphy (editors)
New York University Press, New York, 1998

"This book is about brands and the branding process. It might equally be said to be about the 'branding revolution', a relatively quiet affair by the standards of the rumbustious world of advertising and marketing, but a revolution none the less.

This is almost certainly true because the last ten years has seen a train of events which, to use the language of marketing, have re-positioned brands. Brands are no longer of interest because they provide their owners with a colourful way to compete; they are now widely recognised as business assets of genuine economic value and as such have attracted the attention of a much wider audience. Brands are now centre stage: they drive major mergers and acquisitions; they appear frequently in the balance sheets of their owners; they have vexed legislators involved in updating archaic trade mark law; their application now extends to organisations who a few years ago would never have considered themselves as 'brands' (charities, utilities, sports associations, cities, etc.); and they have changed irrevocably the way in which many major companies organize and run their businesses." (from the Foreword)

The editors of this book (and indeed, many of its contributors) are with Interbrand, a UK-based firm specializing in brand management. As a result, while much of the book is interesting and useful, it has a decidedly European flavour to it.

Brands The New Wealth Creators consists of twenty essays by various authors (many with Interbrand), each offering a different perspective on the branding process. The essays are:

  1. What is Branding?
  2. The History of Branding
  3. New Brand Development
  4. Developing New Brand Names
  5. Brand Packaging
  6. Researching Brands
  7. Branding the Corporation
  8. Brands as Intellectual Property
  9. Commercial Counterfeiting
  10. Brands as Financial Assets
  11. Brand Licensing
  12. Brand Franchising
  13. International Branding
  14. Branding in the European Union
  15. Managing Retail Brands
  16. Commodity Branding
  17. Branding in the Pharmaceutical Industry
  18. Brand Revitalization and Extension
  19. Managing the Brand
  20. The Future for Brands
As mentioned, a central theme of the essays in the book is that brands are now regarded as tangible assets of an organization and, as such, can be valued and reflected on the balance sheet. Hence the book's subtitle: the New Wealth Creators.

"Essentially, a brand is nothing but a network of associations in the consumer's mind. If an association whether rational or emotional represents something that is personally and/or socially desirable to the consumer, we call it a value. Such values are the key drivers of consumer choice." (p. 190) Insofar as a brand causes consumers to preferentially select a certain brand over that of competitors, it can drive sales and profits that otherwise wouldn't occur. These can be measured, projected into the future, discounted, and assigned a tangible value. This income-based method of valuation has been pioneered by Interbrand, and is discussed in Chapter 10 (along with the cost-based, and market-based methods of brand valuation).

In addition to 'traditional' product branding, the essays discuss the use of corporate branding, the rise of retail brands, and commodity branding.

Particular 'gems' of information contained within the book are:

  • 95% of new products launched are brand extensions (Chapter 1)
  • 17 out of 20 new brands fail (Chapter 1)
  • A useful concept, the naming spectrum, is presented in Chapter 4 it presents a spectrum from 'freestanding' brand names such as Kodak and Exxon, through to associative names such as Visa and Silkience, to descriptive names such as Yoghurt Juice, with the idea that descriptive names may be problematic in that they may not be protectable in the longer term
  • The last thirty years have seen an explosion in product (brand) counterfeiting; it has become a very well-organized and well funded big business (Chapter 9)
  • It is estimated that 9% of all products sold are counterfeit (Chapter 9)
  • Companies are often their own worst enemies as they fail to take the proper precautions, domestically and internationally, to protect their products (Chapter 9)
  • Evidence for brand value can be seen in the huge gap between tangible assets and market capitalization of many branded companies (Chapter 10)
  • Chapter 11 presents various considerations involved in licensing brand names (considering their high value, as previously outlined) and discusses the situations in which it may be useful for internal licensing of a brand name within divisions of a company to occur
  • Chapter 15 presents a useful framework in which to conceptualize strong versus weak brands:
  • Chapter 18 discusses an approach to brand revitalization and extension, and presents a 'brand platform structure' approach taken by Interbrand, that examines the following dimensions of brand performance and value in a hierarchical and integrated fashion:
    • The vision of the brand: the brand's unique view of itself or the world
    • The mission of the brand the action obligation implied by the vision
    • - central values of the brand what the brand and the consumer share at a fundamental level
    • Expressive values of the brand what it says about the consumer
    • Functional values (benefits) of the brand what it does for the consumer
    • Area of competence the intended scope of the brand
    • Attributes functional product and/or service features of the brand
    • Products types of products/services offered
    • Brand signals name, colour, shape, etc.
  • Chapter 20 presents Interbrand's assessment of the 10 most powerful brands in the world: McDonald's, Coca-Cola, Disney, Kodak, Sony, Gillette, Mercedes-Benz, Levi's, Microsoft, Marlboro

The book concludes by affirming the strong and growing role of brands in society, and their increasing use in non-traditional areas (e.g. charities, cities, people). It concludes with a plea to managers to recognize the need for their brands to be seen to have social responsibility:

"Brands are not just about fulfilling basic consumer needs. Brands possess great power and the truly great brands will be those that learn to balance this power with responsibility." (p. 214)





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