Internationalization of Branding in the Retail Industry Term Paper

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The main focus of the 1980s regarding brands focused on a trend in takeovers, enabling successful brands to become extremely valuable on the open market. Even very early on, a value associated with a brand large was viewed in part as more important than the product itself. Early research indicates that many thought the only way to have a successful brand was to buy one. Many felt that the development of new megabrands would be impossible in the future and money would be better spent on acquisitions than on research and development. The fact that 90-95% of all new products failed strengthened the argument that takeovers made more sense than trying to develop new successful brands (The Economist, 1988).

As a result of the heightened number of acquisitions and takeovers, many brands suffered irreparable harm. With the changing management associated with takeovers and acquisitions, brands failed to maintain a clear image in the consumer's mind as consumer confusion regarding what a brand represented deepened. The high turnover of brand managers coupled with a preoccupation with short-term earnings led to inconsistencies with brand equity (Baum, 1990). Other causes of lowered brand equity were attributed to years of inconsistent advertising and agency management, generic marketing, look-alike advertisements, undistinctive products, and the proliferation of promotions (Wentz, 1993). The strategy of the 1980s influenced the strategy for the 1990s, as retailers began to realize the shortcomings of the previous decade. In the 1990s, the importance of the product itself received more emphasis than ever before.

Other researchers have suggested that brands are not static and need to change with their environment (Berry, 1993). In the 1990s, retailers turned away from creating new brands and focused on strengthening and expanding those already in existence. The new focus of branding was the creation of mutually beneficial situations. Finding the right brand mix for the consumer while generating adequate sales became a great challenge for retailers and marketers in the 1990s. As consumers became more price sensitive, the brands themselves lost some importance (Allen, 1993). In the 1990s, retailers became concerned primarily with financial considerations, as they desired brands that would increase their business value.

In the early 2000s, the issues became more practical, such as a focus on sales and profits. Research indicates that present-day retailers are concerned with what the customer is willing to pay for their product (Berry, 1993). Currently, branding faces three challenges; branders must understand the price elasticity for their product, adequate price controls must be in place, and retailers must have effective and efficient brand building activities that focus on current and new products (Berry, 1993). According to a recent survey, the number one brand in a line enjoys a 20% return while the number two brand earns a 5% return and all the rest lose money (Berry, 1993). In 2005 and onward, large retailers will continue trying to expand into markets abroad, resulting in an internationalization of brands in the retail industry. One study notes that retailers will continue trying to enhance their brand's relevance to their customers and focus on the brand's personality to build an emotional bond between the brand and its consumer (Baum, 1990). As a result, with branding entering new diverse areas, the future of branding appears bright. As American brands begin to fade as a result of cheaper, more competitive foreign manufactured products, building greater brand identity will be a major factor in the rebuilding of America.

Building a Brand

Most major retailers follow the same patterns in brand creation and positioning. To create or position a brand in the marketplace, a retailer must start with the culture of the whole company. He should first figure out how he wants the brand to interface with the public. A review of the related literature reveals that when a host of products or services fall under one brand, successful positioning demands strong definition. Brands can be multi-level, but it remains the duty of the retailer to define the brand. Once defined, communication to the public becomes paramount. Thus, the branding process affects all forms of communications, from advertising to public relations to product packaging. A retailer must make sure that the public understands their brand immediately; when one confuses brand positioning, one does not have the brand. A strong brand takes time to build, but only an instant to kill.

Consumer choice affects branding because the strategy of pulling products through the marketing channel encourages retailers to carry branded products in reaction to consumer demands. Some manufacturers also go in or brand extension, a scheme that requires adding related products to an existing stream of branded products, or developing a new line with the same brand identity. In doing so the manufacturers capitalize on the brand's reputation and identity, and consumer's choice is based upon brand preferences. Brands that attract the consumer more are termed as brand-driven purchases. Consumers also tend to purchase a particular brand, called brand loyalty. It is also important for retailers to note that a branded retail store should offer a uniform consumer experience and a wider choice under one roof.

Presently, Internet marketing is a strategic tool, as online marketing, if properly developed and implemented, has tremendous potential as a strategy to build brand image, collect information from highly motivated and targeted consumers and provide an avenue for selling products worldwide. Many web site visitors may be reluctant to purchase online due to unresolved concerns about the online shopping experience or may choose to purchase online due to perceived benefits. Thus, actions to reduce barriers by effectively addressing visitor concerns in these areas can lead to increased confidence in the online purchase process; whereas, actions that increase perceived benefits to purchase may lead to a greater motivation to purchase.

The Role of a Retail Brand

The role of a retail brand in the retail industry is a significant one. One of the first steps in maintaining customer loyalty and earning profits is to build and sustain a positive brand image. The image is based on a total product concept that includes colors, symbols, words and slogans, with a clear consistent message and not simply a name (Berry, 1988). Research studies indicate that once a retailer establishes this image through a brand name, it should remain consistent (The Economist, 1988). Creating a brand image involves getting customers to know that the brand exists. Once a brand has been separated from the crowd, it is easier to develop its image, and the branding process itself may be the starting point for product differentiation (Allen, 1992). Many retail brands are similar, and brand leaders are often close to being identical. The image a top brand develops may be the only way for the consumers to tell the difference (Carey, 1991).

The consumer will perceive one brand as more desirable than its competitor's and purchase it based on those perceptions. Research indicates that brand identity is created based on how well the brand has been differentiated from other competitors. Each retailer must decide how branding fits into its general strategy because one strategy does not work for all, and some brand managers agree that the most effective way to use branding is by matching specialized products with specialized markets (Carey, 1991). Thus, choosing the right name, using the right advertising, applying the best strategy, and using the most relevant application techniques are necessary elements to make a branding effort successful. Brand owners, retailers and marketers must deal with the changing nature of society and other factors that affect their ability to be effective.

Branding Problems in the Retail Industry

In the past few decades, issues surrounding branding in the retail industry have emerged as a significant concern for retailers, consumers, and the fashion industry alike. The growth of promotions and private labels has been viewed by many as an indication of a new growth of retailer power, however, this very growth of discounters and warehouse clubs has put immense pressure on traditional retailers and significantly increased retail competition both within and between retail formats. Since a large portion of most retailers' revenue and profit comes from selling manufacturer brands, which many of their competitors also offer, building their own equity is a particularly challenging problem, but one with big potential rewards (Ailawadi, 2004). Such equity insulates them from competing retailers, which has the direct impact of increasing revenue and profitability, and the indirect impact of decreasing costs as their leverage with brand manufacturers also increases (Ailawadi, 2004).

Research indicates that consumers play a major role in either building or eliminating brand equity. Retailers create brand images by attaching unique associations to the quality of their service, their product assortment and merchandising, pricing and credit policy. In most consumer industries, the image and equity of retailer brands also depends on the manufacturer brands they carry and the equity of those brands (Ailawadi, 2004). Retailers use manufacturer brands to generate consumer interest, patronage, and loyalty in a store. In retail, manufacturer brands operate as a basic brand…

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