Branding In Market Economics
Companies capitalize on the natural human fear of the unknown and the unfamiliar by “branding” their products. Realizing that “modern business requires that we conduct major transactions with people whom we've never met before” (Wheelan, 2010, p. 119), corporations strive to make a beneficial service or product available in as many locations and mediums as possible. Thereby, even in entirely alien cities or countries, customers identify with well-known brands as trusted pieces of the familiar, and thereby invest in their products. Thus, brands are economically well-known because they build predictability for consumers, profitability for producers, and credibility for the overall market economy.
First, “branding helps to provide an element of trust that is necessary for a complex economy to function” (Wheelan, 2010, p. 119) by providing a universal, familiar service or product that customers can easily rely upon. McDonald's is a remarkable example of branding in action, managing over 31,000 restaurants in 119 countries as of 2007 (McDonald's Corporation). When travelling nearly anywhere in the world, a consumer sees the golden arches prominently displayed with relative frequency, signifying that one can enter into a “clean, safe, and inexpensive” restaurant with “a working bathroom” and a consistent number of pickles on every burger (Wheelan, 2010, p. 118). Such consistency “is at the heart of the company's success” (Wheelan, 2010, p. 117). Thus, McDonald's “sells hamburgers, fries, and most important, predictability” (Wheelan, 2010, p. 118). The McDonald's principle is very telling of the global significance of branding. Many other corporations also capitalize on the human drive toward the familiar, and such strategies will continue to yield profit to corporations building trust within their customers.
Indeed, brands are also pivotal in a market economy because they “can be a very helpful strategy. In competitive markets, prices are driven relentlessly toward the cost of production” (Wheelan, 2010, p. 119), and extremely competitive corporations drive the price of a good or service down to the point that small producers are barely able to fracture even. This is because “producers of branded goods create a monopoly for themselves—and imprint their products accordingly—by persuading customers that their products are like no other” (Wheelan, 2010, p. 120). By branding, successful corporations utilize the reputation of their brand to either charge more for their product, or to outsource labor to the point that they can afford to provide an even lower price than everyone else on the market. Thus, either the reputation of the brand monopolizes the market for a good, or the low price itself prevents other producers from competing. Either way, brands are extremely profitable. To exemplify the power of price monopoly, one merely has to consider Wal-Mart – a corporation globally known for its tagline, “Save Money. Live Better” (Wal-Mart Corporation, 2010). Saving money is precisely the reason customers frequent the massive stores in 15 countries (Wal-Mart Corporation, 2010), and such a considerable appeal keeps prices at Wal-Mart low enough that the corporation draws its customers away from smaller companies that are not able to provide the same level of low prices. Such, however, is merely the nature of competition.
In a competitive market, the process of brands becoming vested in their spheres is a laborious task. Brands, “like reputations…are built over time” (Wheelan, 2010, p. 119) out of quality products and consistently low prices. Because “a brand's overall economic value rises and falls with the brand's probability, brand awareness, brand loyalty, perceived mark quality, and…determined brand associations” (Pride & Ferrell, 2010, p. 332), a trace must actively occupy its status with continued product quality. For instance, “Firestone has most likely destroyed much of the value of its brand as the result of the link between faulty tires and deadly rollovers on Ford Explorers” (Wheelan, 2010, p. 118), signifying that brands must remain competitive and consistent in their services. Thus, competition is not entirely eliminated for large firms that have near to dominate their spheres. This in mind, brands are undeniably positive and provide perpetual market stability; firms desiring for powerful price status must act in the best interest of their customers and act fairly as a result. “Harried government regulators can only protect…from the most egregious kinds of fraud. They do not protect…from shoddy business practices, many of which are perfectly legal” (Wheelan, 2010, p. 119), but the desires of powerful corporations to retain their influence will regulate their behavior toward honorable business practices with a more lasting power than a regulation from the top down. Thus, a brand powered corporation is truly a corporation urge by benefitted consumers who continue investing in it as in a trusted provider.
Companies capitalize on the natural human fear of the unknown by providing a brand vested over time through continued reliability and trustworthy transaction. Branded firms, then, globally endeavor to provide services as trusted pieces of the familiar so that valued customers continue to consume their products and invest in their firms. Such a perpetual cycle of competition and provision maintains a level of legitimacy that permeates the entire market, thereby stabilizing without the need of governmental regulation. Thus, brands are economically significant because they keep predictability for consumers, profitability for producers, and credibility for the overall market economy.
References
McDonald's Corporation. (2007, March). FAQs. Retrieved from http://www.mcdonalds.ca/en/aboutus/faq.aspx
Pride, W.M., & Ferrell, O.C. (2010). Marketing. Mason, Ohio: South-Western Cengage Learning.
Wal-Mart Corporation. (2010). About us. Retrieved from http://walmartstores.com/AboutUs/
Wheelan, C. (2010). Naked economics: undressing the dismal science. New York, Original York: W.W. Norton & Company.
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Filed under Top Branding Agencies by on Dec 3rd, 2011. 