Brand

A brand is a distinguishing name and/or symbol intended to identify and differentiate a  seller’s products from competitors’ products. A well established brand is a valuable, intangible asset. For some products, a consumer may judge a product mainly by its brand.

A brand rating represents the overall value of a brand. This rating is the sum of the brand awareness rating and the brand loyalty rating. These two ratings are described in detail in the following sections.

Brand Awareness

Brand awareness measures consumers’ knowledge that a particular brand exists. People will often buy a familiar brand because they feel more comfortable with it. They may assume that a product with a familiar brand is reliable, of reasonable quality, and that it is produced by a company with a reputation for having been in the marketplace a long time.

Brand Awareness Level and Rating

Brand awareness ranges from barely being recognized as a competitor in the marketplace to being recognized as the only one in the product class. The brand awareness rating, which has a range from 0 to 100, represents the two main dimensions of brand awareness: the percentage of the city population that is aware of the brand and the average awareness level of the people.

Increasing Brand Awareness

Brand awareness increases when:
• The brand has been advertised extensively.
• The products using the brand have been sold for a long time.
• The products using the brand are widely distributed.
• The customer base is large.

Brand Loyalty

Brand loyalty measures the attachment that a customer has to a brand. If a customer continues to purchase a brand even in the face of competitors with a superior quality and/or lower price, then there must be a substantial value placed in the brand itself.

Brand Loyalty Level and Rating

In the game, a brand loyalty rating (with a range of 0 to 100) represents the two main dimensions of brand loyalty:
• The percentage of the people who are loyal to the brand
• The average loyalty level of the people

Brand Loyalty Factors

Brand loyalty is based mainly on the following factors:

Brand Awareness
Brand loyalty cannot exist without the prior purchase and use of a product.
The brand must first generate sufficient awareness for the consumers
purchase and use the product. The higher the awareness, the more people
will try the product, and the faster the rate at which the loyalty can increase.

Product Quality
If a customer is satisfied after using the product, brand loyalty increases. Conversely, a bad experience with a product will lead to a decrease in brand loyalty or sometimes even negative brand loyalty (the customer will avoid buying the same brand in the future). In addition, customers will only be loyal to a brand if products of the brand have consistent quality.

Brand Scope
If a brand covers a variety of products, the corporation is not perceived as a dedicated provider of a single category of products. Consumers may doubt the devotion of the corporation to that product and their loyalty to the brand may thus be reduced. See “Brand Strategy” below for details on brand scope.

Brand Strategy

Your corporation can select one of three brand strategies in Capitalism Lab:

• Corporate Brand. A corporation uses a single umbrella brand for all its
products.
• Range Brand. A single brand covers a range of products within the same
product class.
• Unique Brand. Each product has a unique brand.

We strongly recommend that you decide the brand strategy of your corporation at the beginning of the game. Switching brand strategy after brands have been established not only leads to a loss of the hard-earned brand rating, but is also gives your competitors an opportunity to steal customers during the difficult task of reestablishing your brands.

To set the brand strategy of your corporation, first open the Corporate Detail Report and then select the Brand section. A set of buttons appears in the upper left section of the report:
• Corporate Brand
• Range Brand
• Unique Brand

The selected button represents your corporation’s brand strategy.

To switch to a new brand strategy, click the button representing that strategy. You are warned that your products will be designated with the new brand strategy and that the brand ratings of all you products will be set to zero as a result. To proceed, answer Yes and the brand replacement starts immediately.

Corporate Brand

If the corporation uses a single umbrella brand for all its products, the corporation does not start from scratch in building up awareness of the brand identity for a new product. The investment required in the line accordingly reduced.

Although this strategy offers major savings in the time and resources required to build a new brand from scratch and improves the cost effectiveness of resources spent on supporting the brand family, it is not without drawbacks.

Its major drawback is that the corporation is not perceived as a dedicated provider of a single category of product. Consumers may doubt the devotion of the corporation to the product and their loyalty to the brand may thus be reduced.

In addition, when a corporation extends its product lines to others markets, it becomes more difficult for the corporation to maintain the quality and consistency of its products. Failure to maintain quality and consistency results in damage to the brand as a whole. The risk increases if the corporation extends its product lines across markets of different product classes.

Range Brand

Under the strategy, products in the same product class are labeled with a single range brand.

The range brand strategy enjoys the same benefits and drawbacks as the corporate brand strategy, but to a lesser extent. These effects are limited because the number of products a range brand covers is smaller. The range brand strategy is preferable to the corporate brand strategy if the quality of your corporation’s products varies substantially across different product classes. On the other hand, if you are confident that the quality of your products can be maintained, then the corporate brand strategy may be a better choice.

Unique Brand

Under this strategy, each product has a unique brand. The unique brand strategy’s most obvious advantage is that you can simply forget the risk of brand interference across different product lines. Brand loyalty, which has been built up over the years, will not be damaged by inappropriate quality control in other product lines.

The downside of this strategy, however, is that each individual product needs separate advertising to establish and support its brand. Under this strategy advertising can become a major expense for the corporation. The corporation can lose a price advantage to a corporation that successfully pursues a corporate or range brand strategy.