Types of brand

There are two main types of brand – manufacturer brands and own-label brands.

Manufacturer brands

Manufacturer brands are created by producers and bear their chosen brand name. The producer is responsible for marketing the brand. The brand is owned by the producer.

By building their brand names, manufacturers can gain widespread distribution (for example by retailers who want to sell the brand) and build customer loyalty (think about the manufacturer brands that you feel “loyal” to).

Own label brands

Own-label brands are created and owned by businesses that operate in the distribution channel – often referred to as “distributors”.

Often these distributors are retailers, but not exclusively. Sometimes the retailer’s entire product range will be own-label. However, more often, the distributor will mix own-label and manufacturers brands. The major supermarkets (e.g. Tesco, Asda, Sainsbury’s) are excellent examples of this.

Own-label branding – if well carried out – can often offer the consumer excellent value for money and provide the distributor with additional bargaining power when it comes to negotiating prices and terms with manufacturer brands.

Why should businesses try to build their brands?

There are many advantages to businesses that build successful brands. These include:

• Higher prices
• Higher profit margins
• Better distribution
• Customer loyalty

Businesses that operate successful brands are also much more likely to enjoy higher profits.

A brand is created by augmenting a core product with distinctive values that distinguish it from the competition. This is the process of creating brand value.

All products have a series of “core benefits” – benefits that are delivered to all consumers. For example:

• Watches tell the time
• CD-players play CD’s
• Toothpaste helps prevent tooth decay
• Garages dispense petrol.

Consumers are rarely prepared to pay a premium for products or services that simply deliver core benefits – they are the expected elements of that justify a core price.

Successful brands are those that deliver added value in addition to the core benefits.

These added values enable the brand to differentiate itself from the competition. When done well, the customer recognises the added value in an augmented product and chooses that brand in preference.

For example, a consumer may be looking for reassurance or a guarantee of quality in a situation where he or she is unsure about what to buy. A brand like Mercedes, Sony or Microsoft can offer this reassurance or guarantee.

Alternatively, the consumer may be looking for the brand to add meaning to his or her life in terms of lifestyle or personal image. Brands such as Nike, Porsche or Timberland do this.

A brand can usefully be represented in the classic “fried-egg” format shown below, where the brand is shown to have core features that are surrounded (or “augmented”) by less tangible features.

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