How Branding Works
A brand is a distinguishing name or symbol that identifies a seller’s products and separates them from competitors’. A well established brand is a valuable intangible asset — and for some products, a consumer judges the product mainly by it.
The brand rating is the overall value of a brand, and it is the sum of two things:
- Brand awareness rating
- Brand loyalty rating
Brand awareness
Brand awareness measures how far consumers know a brand exists. People often buy a familiar brand because they are more comfortable with it — assuming a familiar product is reliable, of reasonable quality, and made by a company that has been in the market a long time.
Awareness level and rating
Awareness runs from barely being recognized as a competitor to being recognized as the only name in the product class. The rating, from 0 to 100, represents two dimensions:
- the percentage of the city population aware of the brand
- the average awareness level of those people
Advertising is how a business raises it.
Brand loyalty
Brand loyalty measures a customer’s attachment to a brand. If a customer keeps buying it even against competitors with better quality or a lower price, there is substantial value in the brand itself.
Loyalty level and rating
Also 0 to 100, and also two dimensions:
- the percentage of people loyal to the brand
- their average loyalty level
What drives loyalty
| Factor | How it works |
|---|---|
| Brand awareness | Loyalty cannot exist before purchase and use. The brand must generate enough awareness for consumers to try the product at all. The higher the awareness, the more people try it, and the faster loyalty can build. |
| Product quality | A satisfied customer raises loyalty; a bad experience lowers it, and can push it negative — the customer then avoids the brand in future. Loyalty also requires consistent quality, not merely high quality once. |
| Brand scope | A brand covering many kinds of product makes the corporation look less like a dedicated provider of any one of them. Consumers doubt the commitment, and loyalty falls. |
Brand strategy
Your corporation picks one of three:
- Corporate Brand — a single umbrella brand across all products.
- Range Brand — one brand across a range of products within the same product class.
- Unique Brand — every product has its own brand.
Decide at the start of the game. Switching after brands are established loses the hard-earned brand rating outright, and hands competitors an opening to take your customers while you rebuild.
Setting it
Open the Corporate Detail Report and select the Brand section. Three buttons appear at the upper left — Corporate Brand, Range Brand, Unique Brand — and the selected one is your current strategy.
Click another to switch. You are warned first, because the brand ratings of all your products are set to zero and the replacement begins immediately.
Corporate Brand
With one umbrella brand, a new product does not start from scratch in building brand identity, so the investment it needs is accordingly reduced. That is a major saving in time and resources, and it makes everything spent supporting the brand family more cost-effective.
Two drawbacks. The corporation is not perceived as a dedicated provider of any single category, so loyalty suffers. And as product lines extend into other markets, quality and consistency get harder to maintain — a failure anywhere damages the brand as a whole. The risk grows the further the lines spread across different product classes.
Range Brand
Products in the same product class share a single range brand.
It carries the same benefits and drawbacks as the corporate brand, to a lesser degree, because a range brand covers fewer products. Prefer it when your product quality varies substantially across classes; if you are confident quality holds up, the corporate brand may be the better choice.
Unique Brand
Every product has its own brand. The obvious advantage is that brand interference between product lines disappears entirely — loyalty built over years cannot be damaged by poor quality control somewhere else in the company.
The cost is that every product needs its own advertising to establish and sustain its brand, which can make advertising a major corporate expense — and can lose you a price advantage to a competitor running a corporate or range brand successfully.
Also see
- Mega Product Class — which product classes a corporate brand can stretch across before loyalty falls.