Magazine article Phi Kappa Phi Forum

The Value of a Brand

Magazine article Phi Kappa Phi Forum

The Value of a Brand

Article excerpt

The obstruction of justice trial of Martha Stewart last winter generated a huge amount of media hype. Newspaper and television commentators focused not only on legal arguments and on what was permissible evidence but also discussed tangential issues such as the personal tragedy of Stewart's former secretary giving damning testimony despite having received a beautiful cake from her boss for Christmas. Even the business press analyzed the consequences of Stewart donning fur while exiting the courthouse on a warm New York day. Certainly much of the spectacle can be explained by her celebrity status. But unlike the celebrity trials of Michael Jackson or Robert Blake, the business press was very interested in the outcome of Stewart's trial. Of course, many business observers had an interest in the fall of the head of the $250 million company, Martha Stewart Omnimedia. But it was more than Stewart, the person, on the verge of falling. It was Martha Stewart, the brand, that had the attention of so many Wall Street investors.

What exactly is a brand? What social value, if any, exists from the process called branding? And, how can Stewart's obstruction of justice trial be of any relevance to a brand?

Think of a brand as an image associated with some product, service, or organization. While the image might be associated with a product, the image itself lives in the minds of the consuming public. Across the world, for example, many associate Coca-Cola with the American way of life, its customs and traditions.

Despite existing mainly in the consumer's imagination, the presence of a brand is very real. Consider the following classroom experiment that I conduct with my undergraduate business students. I bring two two-liter bottles of cola, one of Coke and one of Pepsi, to class and ask students if they can identify the taste of either. Most are confident that they can because students believe themselves either loyal Coke or loyal Pepsi drinkers and that their loyalty is based on "real" factors, such as taste. Then each tastes a random cola and tries to identify the brand. In the end, the students are surprised to learn that statistically they do no better than random guessing. This informal experiment usually convinces students that their loyalty to either cola is based not on taste alone, but on some additional notion associated with the product.

Makers of consumer products develop and maintain a brand image through advertising, packaging, and the design of logos. As is evident from our highly commercial society, businesses benefit from the ability to brand their product. But how, if at all, do consumers benefit? Economists' positions on this question vary greatly because existing economic research is unable to fully disentangle all the dimensions of branding.

A benefit from brands is that they help consumers identify products. In a single product category, such as cars, so many alternatives are available that consumers have a difficult time finding the one best suited for them. The Lexus brand, for example, means wealth, luxury, and exclusivity. Knowing this, a car buyer in the market for a practical, fuel-efficient vehicle could avoid a trip to the Lexus dealer.

Similarly in the market for commercial art, consumers can feel overwhelmed by hundreds of unknown artists and themes. However, by successfully branding himself as "the painter of light," Thomas Kinkade helps people identify his luminous paintings and licensed products that depict home and serenity. …

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