Marketing Communications

60 CHAPTER 2 BRANDING

Good product performance and higher perceived quality give the consumer a good reason to

buy the product, but also the right user image or brand personality induces people to buy the

product. Higher perceived quality as well as a positive brand personality and higher customer

loyalty give the company the opportunity of charging a premium price. Furthermore, it pro-

tects the company against future price competition. Positive brand imagery, strong brand-

evoked feelings, good performance and high-quality perceptions enable the manufacturer to

create a diff erential advantage, to build up a defence against the competition and to target and

position products in a more sophisticated way. Th e same brand equity components also give

the manufacturer an effi cient base for line or brand extensions. Th e image and personality of

the brand are easily carried over to the new product, giving it a head start. An extensive set

of brand associations helps the consumer retrieve information from memory, thus facilitating

the purchasing process and biasing it towards the brand.

A strong brand is capable of fostering brand loyalty. It is a vehicle in forging stable relation-

ships between the consumer and the manufacturer. It reduces the marketing cost, because it

is cheaper to retain an existing loyal customer than to win over a new one. Brand loyalty leads

to more support from the distribution channel and makes the company less vulnerable to

competitive action. Overall, the most important consequence of possessing strong brands is

that it can generate higher and more stable sales and profi ts.

Marketing communications and brand equity

Marketing communications are the voice of a brand. In general, the role of marketing com-

munications is to inform, persuade and remind consumers of the brand essence, to engage

consumers in a dialogue and to build relationships, or even a brand community.

A number of communications tools can be used to build and reinforce brand equity.

Others, however, should be avoided or used carefully. Taking a long-term perspective of

brand management, managerial eff orts can be classifi ed in two types of activities: brand-

building and brand-harming activities.^75 High advertising spending and investing in cor-

porate social responsibility initiatives are examples of brand-building activities. Frequent use

of price promotions, on the other hand, dilutes the brand in the long run and can therefore

be classifi ed as a brand-harming activity. Indeed, price cuts and other types of immediate

material incentives may reduce the quality perception of brands and the potential of the

brand to command a premium price. On the other hand, loyalty promotions may serve

both as a reward for loyal customers and as a means of enhancing the loyalty-creating eff ect

of brand strength with new customers.

Direct mailings used in a ‘junk mail’ way could also harm the brand. A beautiful and

convincing image campaign may be completely overturned and destroyed by frequent,

straightforward, hard sell direct mailing campaigns. On the other hand, public relations, if

well handled, and corporate image-building can be valuable brand-building activities for cor-

porate brands. McDonald’s did not open a restaurant in Moscow because of its immediate

profi t potential. Th e worldwide coverage of the event in the media gave it massive free publicity

and positioned the company as very international and forward-looking. On the other hand,

Perrier reacted so clumsily to the problem of benzene in its mineral water that the image of

the brand was seriously damaged. Consistent corporate identity and corporate image-building

through packaging and design add to building and maintaining the long-term network of

associations, one of the factors of brand equity.^76

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