Text 7. When Brand is Grand

Brands are among a company’s most valuable assets. They are symbols, names and associations. Sometimes they signal real differences between products. Sometimes they are pure illusion. Either way, brands are akin to a product’s or company’s reputation and they influence consumers’ perceptions. Brands add value by making customers loyal and often willing to pay more for the things branded. Despite the evidence of the value of brands creating the capital of the company, this fact is often neglected by consumer-goods companies. Under pressure to make big short-run gains in sales many brand managers concentrate their attention only on the long–term commercial health of their products. They neglect brand-building activities such as advertising and price promotion. Managers often do not think of the damage that short-term thinking can do to good brands.

To launch a new consumer product is very expensive and most fail especially when old favourites become invulnerable. Brand stretching is also dangerous for the company. In order to extend a popular brand’s recognition to a new type of products, managers often overlook the basic problem – the fit between the old name and the new item. Thus, Levi Strauss’s attempt to stretch itself to cover a line of smart suits has failed. Worse, it has hurt the main brand – jeans production. It took an expensive advertising campaign to get Levi’s jeans business back on track. Another wrong attempt is to milk additional sales from premium brands by taking them down-market. Enormous use of the Gucci name almost brought the company to ruin. There were more than 14000 different Gucci products. The problem is that many brand managers at firms usually stay in their jobs for just a year or two. Companies should hire or appoint people to monitor the status of brands. These brand managers would be charged with taking a long view on guarding products images, name associations. They would have the final say over marketing plans and the decisions of ordinary brand managers.

Answer the questions:

1. What are brands?

2. What is often neglected by consumer goods companies?

3. What problems do brand managers often concentrate their attention on?

4. What brand making activities do brand managers usually neglect?

5. Why is it difficult to launch a new product nowadays?

6. What is brand stretching?

7. What problems did Levi Strauss suffer?

8. Why is it dangerous to milk additional sales from premium brands?

9. How many new products did Gucci bring to the market?

10. What type of managers should be appointed to monitor the status of brands?