Wednesday, December 4, 2013

From: "Branding: The Past, Present, and Future"

"A Study of the Evolution and Future of Branding"
By Anders Hampf & Kirsti Lindberg-Repo



There are several reasons why it is important to elaborate on the evolution of branding
theories. First, it has not yet been shown in the literature how concepts have an effect on each
other, i.e. their causal connections. Hence, since the causes and effects in the evolution of
branding theories have not yet been scrutinized, it has been hard to map out which concepts
have led to other concepts and which concepts standalone. Due to the lack of understanding
of the cause and effect and the causal connections among the theories, the future of branding
has earlier been impossible to envisage. [...] Due to their importance and vital contribution to the evolution of branding, we name them the 15 milestones of branding.

Segmentation theories became, and still are, an important tool for marketers when breaking the market down into smaller divisions to reach out more effectively to the desired target group. Segmentation should be seen as an internal strategic tool, and the outcome of a segmentation process will help the company to outlay its external position.

In other words, if a company in its segmentation process finds a segment it wants to approach, it has to outlay a positioning strategy. Hence, segmentation and positioning are interconnected and a causal connection exists between them. Furthermore, a company’s positioning influences another contemporary concept, brand identity, which is illustrated in many brand identity models, and the brand identity will consequently change with a new positioning strategy. Hence, it is very important to establish where the employees consider the brand to be positioned. If the employees, who are the representatives for the company’s identity, consider the brand to be positioned in an undesired position, there is a great risk that they will present the company’s identity in an unwanted fashion.

The next milestone, brand loyalty, was presented in the 1950s and still plays a central role in branding. It is, however, a somewhat controversial concept due to its restrictions. That is, brand loyalty should only be a company’s goal with a reservation; it needs to be profitable to have loyal customers. Most companies could attain loyal customers by introducing a good product or service, sell it underpriced, and market it heavily. In this scenario, the company would get loyal customers, but with no profit. Therefore, companies trying to attain loyal customers must also consider a second variable, profitability. This being so, there is a connection between loyalty and brand equity.

To reach and retain profitable and loyal customers, modern companies often become environmentally friendly and focus on social responsibility. Thus, the concepts of brand loyalty and CSR are interconnected. Brand loyalty is also connected to brand communities and subcultures of consumption, which will be discussed later in detail.

Many companies have successfully associated their brands with a certain lifestyle, i.e. Nike, Levi’s, and Abercrombie & Fitch, and the brand lifestyle that the product represents should reflect the desired lifestyle of the consumers. However, not all companies could achieve whatever brand lifestyle they want, as it has to be convincing and trustworthy in the eyes of the customers. As a result, the lifestyle that the company tries to target is dependent on the personality of the company, and hence, the personality of the company and the brand must fit in with the desired lifestyle. If a company has a more mature and conservative personality and is perceived to have an older clientele, it is hard to achieve a young and sporty lifestyle.

Hence, the lifestyle that brands want to attain is interconnected with their personality. The latter has also two more causal connections: those with brand equity and brand identity. As already discussed, brand personality affects brand equity, and especially consumer-based brand equity. Brand equity consists of several influencing variables, which, together, constitute the concept of brand equity, and one of these variables is brand personality. Brand identity is also interconnected with brand personality since it depicts the human characteristics associated with a brand; hence, the perceived personality and its human elements affect the brand identity.

The marketing mix concept had played an important role in the development of marketing and branding for a long period. However, today that concept lost its academic research value and is best suited as a simple theory describing the basic thinking in marketing, for instance, in undergraduate studies. Another concept that also lacks direct causal connections is social marketing. However, this concept is a very important one due to its originality. Social marketing is a framework describing how marketing could be applied outside its normal boundaries. Today, it is an important concept explaining how a company, government, or non-profit organization could work to influence the acceptability of new ideas in the society.

Relationship marketing was introduced during the 1980s and 1990s and offered a new framework for describing how companies and customers could both gain from healthy long-term relationships. However, one important aspect was missing to connect relationship marketing and branding, namely an elaboration on how the brand and the customers affect each other and how this relationship could be used in branding. This was all to change in the late 1990s, when researchers included branding in relationships marketing theories; thus a new concept, relational branding, was coined. This, latter, concept was a product of relationship marketing and the two are, hence, interconnected.

Brand equity plays a central role in branding because it offers a way to measure the long-term effect of branding efforts. Depending on which of the three perspectives one chooses to embrace, brand equity can be influenced by most of the concepts. However, as we have already discussed, brand equity and brand personality are interconnected; furthermore, brand equity has a causal connection to brand loyalty. Aaker and Joachimsthaler (2000) established that brand loyalty is closely related to brand equity, and hence, if a company possesses a large number of loyal customers, the company has high consumer-based brand equity.

As already established, relationship between marketing and relational branding is a close one, whereby the latter has evolved from the former. Furthermore, relational marketing and brand identity are interconnected. Several variables together build up the identity, and by changing some of the variables, e.g. brand name, famous people connected to the firm, or other people reflecting the company’s opinion, the identity could be revised. Hence, since relational branding and brand identity have a causal connection, it is very important to avoid a discrepancy between a company’s relational branding and brand identity; in other words, the two should correspond to each other.

Due to the understanding of how important a good reputation is, CSR has become a key concept in branding. The reputation of a company reflects not only in the planned communication, but also in all activities undertaken by the company. As already discussed, CSR and loyal customers are interconnected; furthermore, CSR also affects brand identity. If a company is perceived as a true citizen brand that pays attention to CSR, this will affect its brand identity. Hence, customers will get the perception that they care for the society, the environment, and take responsibility for the actions undertaken by the company, and this will influence the brand identity. As a result, companies could earn money by changing their identity in the minds of the customers to a brand that encompasses CSR.

In a world that is becoming more and more globalized, and with products crossing the planet with an ever-increasing tempo, COO has become an important research area in branding. Research reveals that COO is not an important issue when it comes to everyday products; however, COO plays a significant role for products that are more dependent on the brand image. It is often more important to emphasize on the COO when selling luxury goods, e.g. Italian fashion designer clothes and Swiss watches. If a company succeeds to associate a brand to a specific country or district, e.g. Champagne, it can thereby attain an identity that is hard to imitate or gain in any other way. Hence, COO and brand identity are interconnected, and companies could consequently use their country of origin in their branding to establish their identity.

Brand communities and subcultures of consumption are two other important concepts in branding. The reason why these groups have become interesting for branding is the strong affiliations that arise among the group members to specific brands chosen by the group.

Group members tend to be very loyal to some chosen brands, which makes them a target group for many marketers; hence a causal connection exists between brand identity and brand communities and subcultures of consumption. Another causal connection is the one to relational branding; branding strategies used to reach these groups obviously try to create a framework to explain how to control the relationship between the brand and its customers. In addition to the connections mentioned above, the concept is also interconnected with brand identity. When branding to smaller subcultures, the brand identity must correspond to the identity the group wishes to attain; otherwise, the brand will not attract the group since they seek the same identity in the brand as the identity they try to achieve.

Brand identity is a concept that is relatively new, coined in the early 1990s, but its components are much older. When the concept of brand identity was shaped, it embraced many old concepts to create a new one. Brand identity has, as Figure 1 reveals, seven causal connections to other concepts: personality, positioning, brand equity, COO, brand communities and subcultures, relational branding, and CSR. Hence, no other concept could compare to brand identity when it comes to the causal connections with other concepts.

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