Comprehension
1 Why do companies' product mixes regularly change?
2 Why do companies brand their products?
3 What is the difference between corporate branding and individual branding?
4 Why do the big soap powder producers have a multi-brand strategy?
5 Why can the market value of companies be much higher than the value of their tangible assets?
A product is anything that can be offered to a market that might satisfy a want or need. This means that services, leisure activities, people (politicians, athletes, actors), places (holiday resorts) and organizations (hospitals, colleges, political parties) can also be considered as products.
Most manufacturers divide their products into product lines - groups of closely related products, sold to the same customer groups, and marketed through the same outlets. Because customers' needs and markets are constantly evolving, and because different products are generally at different stages of their life cycles, with growing, stable or declining sales and profitability, companies are always looking to the future, and re-evaluating their product mix.
Most products offered for sale by retailers are branded. A brand is a name, or a symbol, or a logo that distinguishes products and services from competing offerings, and makes consumers remember the company, product or service. Abrand name can be reinforced by distinctive design and packaging.
The key objective of branding is to create a relationship of trust. Customers have an image of the brand in their minds, combining knowledge about the product and their expectations of it. Some brands are seen as more than just products or services: they successfully represent customers' attitudes or feelings, e.g. Nike, Starbucks, Apple Computer, The Body Shop, etc.
By way of extensive advertising, companies can achieve brand recognition among the general public, including millions of people who are not even interested in the products. Branding is used for B2B (Business-to-Business) marketing of materials and components, as well as for consumer goods in B2C (Business-to-Consumer) marketing.
its individual brand names Pampers, Pringles, Duracell and Gillette).
Some companies, such as the major producers of soap powders, have a multi-brand strategy which allows them to fill up space on supermarket shelves, leaving less room for competitors. Even if one brand 'cannibalizes' (or eats into) or takes business away from another one produced by the same company, the sales do not go to a competitor. Having three out of 12 brands in a market generally gives a greater market share than having one out of ten, and gives a company a better chance of getting some of the custom of brand-switchers.
The brand consultancy Interbrand publishes an annual list of the Best Global Brands, which shows that the worth of a brand can be much greater than a company's physical assets. For example, in the early 2000s, the value of the top ranked brand, Coca-Cola, was calculated at over $70 billion. Consequently, a company's market value (the combined price of all its shares) can be much greater than its book value - the recorded value of its tangible assets such as buildings and machinery. Brand value largely comes from customer loyalty: the existence of customers who will continue to buy the products.