STRATEGIC ROLE of Brands

FOR BUYERS, brands can:

•Reduce CUSTOMER SEARCH COSTS by

identifying products quickly and accurately

• Reduce the BUYER’S PERCEIVED RISK by

providing an assurance of quality and
consistency

• Reduce the SOCIAL AND PSYCHOLOGICAL

RISKS associated with owning and using
the “wrong” product by providing
psychological rewards for purchasing
brands that symbolize status and
prestige.
 STRATEGIC ROLE of Brands
FOR SELLERS,
brands can facilitate: •REPEAT PURCHASES that enhance the company’s financial
performance because the brand enables the customer to identify and
re-identify the product compared to alternatives,

• the INTRODUCTION OF NEW PRODUCTS, because the customer is

familiar with the brand from previous buying experience,

• PREMIUM PRICING by creating a basic level of differentiation

compared to competitors,

• MARKET SEGMENTATION by communicating a coherent message to

the target audience, telling them for whom the brand is intended and
for whom it is not,

• BRAND LOYALTY, of particular importance in product categories

where loyal buying is an important feature of buying behavior.
Strategies for Improving Product Performance

Product Alter
improvement marketing
Cost strategy
reduction

Add Eliminate
new Product line specific
product(s) Strategy product(s)
Illustrative Pricing Strategies
High Active Strategy: Role of Price

 Emphasize a high price in promotional Active Passive

activities to convey buyer for superior
& expensive brand value
High Active Strategy High Passive Strategy
 Used on a very limited basis to

High
symbolically position products .
 Less subject to retaliation by
competitors if differentiated properly .

Low
Low Active Strategy Low Passive Strategy
High Passive Strategy:
 Essential to gain the margins
necessary to serve small target
markets & Produce high quality
products
 Marketed by featuring non-price
factors rather than using high active
strategies.