The Role of Brand Names

Posted: June 1, 2012 in Brand management
Tags: , , , ,

Just imagine you go into the market because you have a headache and need a painkiller. On the shelves there are many boxes of painkillers. On the top shelf, you see the aspirin and below there are some other cheaper brands you have never heard about or used. Which one do you choose? Most probably, many people would prefer to buy aspirin. The same is true of most fast-food restaurants, many national hotel chains and many, if not most, shops on the high street.

Many common medicines like painkillers and fast-food restaurants are only one aspect of broader phenomenon: the role of brand names, names owned by particular companies that differentiate their products from those of other firms in the minds of consumers. In many cases, a company’s brand name is one of the most important assets it has. Clearly, Mc Donald’s is worth far more than the sum of the french fries and hamburgers the company produces.

As a matter of fact, companies often defend their brand names, suing anyone else who uses them without permission. You may talk about googling a subject for your learning, but unless the service in question comes from Google, you should describe it as searching on the internet.

As in the case of advertising, the social usefulness of brand names creates a dispute. Does the preference of consumers for known brands reflects irrationality even though other brands are cheaper with the same functionality? Or do brand names convey real information by serving a real purpose rather than creating unjustified market power? Most probably, the answer is some of both. Consumers often pay more for brand-name goods in the supermarket even though consumer experts claim that the cheaper store brands are equally good.

On the other hand, for many products the brand name does convey information. A tired and hungry traveller arriving in an unfamiliar area can be sure of what awaits in Holiday Inn and in Mc Donald’s. Although sometimes traveller may prefer to try another hotel or fast food restaurant that might be better or worse.

Furthermore, sometimes brand names offer some assurance that the seller has a deep interaction with its customers and a reputation to protect. If a traveller eats a bad meal at a restaurant in a tourist trap and vows never to eat there again, most probably the restaurant owner may not care, because it is a small chance that the traveller will be in the same place again in the near future. But if that traveller eats a bad meal at Mc Donald’s and vows never to eat at a Mc Donald’s again, that matters to the company. So this gives Mc Donald’s an incentive to provide consistent quality while providing travellers for some assurance that the quality control are in place.

  1. Koel says:

    I feel brand names exist because we as consumers would like ‘peace of mind” … an assurance that a service/ product under a particular name offers….. rightly said…pain killer is a pain killer….its only when it is given a name ” asprin”.. that we can trust .. does it emerge successful in the market….

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