Page 152 - DMGT408DMGT203_Marketing Management

Unit 6: Products, Services and Brands

Wholesalers or retailers have the freedom and advantage of buying specified quality at an Notes
agreed upon cost from the manufacturer without disclosing manufacturer identity. In most
markets around the world, manufacturer brands dominate. In developed countries such as U.S.,
supermarkets average more than 19 per cent private brand sales. The trend of private brands is
slowly catching on in India. This is likely to speed up, with increasing numbers of large retail
stores appearing in major cities of the country.

Did u know? Mukesh Ambani’s Reliance Retail is planning to invest ` 25,000 crores into its
forthcoming retail operations.
Paul S. Richardson, Alan S. Dick, and Arun K. Jain found that formerly, consumers viewed
brands in a category in a ladder-like manner. The top rung was occupied by the most preferred
brand and the remaining brands were arranged in descending order of preference. There are
now indications that consumer perceptions of brand parity are replacing the brand ladder.
Licensed brand is a relatively new trend and involves licensing of trademarks. Entering into a
licensing agreement, a company allows approved manufacturers to use its trademark for a
mutually agreed fee. The royalties may range anywhere between 2 per cent to 10 per cent or
more of wholesale revenues. The company obtaining the license would be responsible for all
production and promotional activities, and would bear the costs in case the licensed product
fails. The benefits of this arrangement can bring extra revenues, free publicity, new images, and
protection of trademark.

Example: P&G licensed its Camay brand of soap in India to Godrej for a few years.
The disadvantage is that the licensing company loses its control on manufacturing and at times
this may hurt the company’s name and lead to overstretching the brand.
Some manufacturers prefer to have branded products as well as their generic brands. Generic
brands indicate only the product category, such as aluminium foil. Another form of generic
brands is that the generic name of the product is mentioned and the manufacturing company’s
name is written just to conform to legal requirements, such as paracetamol, or tetracycline. They
do not include any other identifying marks. Generic brands are usually sold at lower prices than
their branded versions. Generic brands are fairly common in the drug industry.

6.3.5 Branding Strategies

With the passage of time, successful companies grow and the number of products handled by
most companies also grows. These companies face the question as to what kind of branding
relationships these products will have. The branding strategies that companies adopt reflect this
relationship. There is no best branding strategy and the choice is not easy. Different companies
adopt different strategies, and since there is no best strategy for all types of products, a company
may adopt different branding strategies across its product mix.
Companies differ in their approaches to branding. A casual look at Western World and Eastern
World shows that companies of the Western World generally adopt product-branding strategies
(one product one brand or many products many brands).

Example: At the top of this approach are three giant and familiar companies, P&G, HUL,
and Xerox.

Eastern companies, such as those from South Korea and Japan adopt a mega branding approach.
The company tagline covers all products “Chips to Ships.”

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