THE ROLE OF BRANDING IN STRATEGY

PhD candidate Roxana DUMITRIU University of Craiova Email: [email protected]

Abstract: In this paper I made a discussion concerning the importance of branding in the strategy of the company. Branding theory and practice evolved in the latest years, being considered a valuable marketing investment. Branding is essential in creating for the products of a company. Branding is important because it gives meaning to the consumption process. Companies understood that selling without the presence of a strong is much more difficult. As a methodology I realized an intersection of the branding and marketing strategy theories. The result is that branding can be regarded as a tool that can enforce all resources of a company towards implementing the strategy.

Keywords: marketing strategy, branding, value in marketing

1. Considerations regarding this goals. Strategies require a long- the marketing strategy term vision which is not easy to obtain The business strategy can be (Fisk 2008, p. 123). defined as a set of decisions and A vision means to formulate and to actions regarding the choice of means project a scenario into the future. This and necessary resources to attain the scenario must turn into a reality, so that long run objectives of the company, so the vision finds many adherents. A that the company will get the vision is to create and to impose a according to its leadership of the market. But in many mission (Nistorescu, 2009, p. 12). cases, companies understand to create Most of the business strategies are so called “strategies” only to focus on inadequate to the market conditions. short-term. Instead of creating the They do not relate to the context, they market, of setting proactive objectives, are created inside out and not the other the strategy establishes objectives that way around. Most business strategies are reactive. are not willingly to embrace the The strategy must be fitted to the challenges, to explore new things, to values, resources, competences and praise creativity. Instead they are organizational culture of the focused on the routine tasks. The organization. A good strategy must strategies are not properly fitted with the have originality, goals, logical resources of the company and the coherence, must take into changing premises of the markets they considerations the risks and resources, are envisioning. must have flexibility (Lynch 2006, p.19). As a consequence, in many cases, It should state how the company differs the strategies fail to reach their from its competitors and how theses objectives. Strategies serve only as an differences are relevant for the public. indication of a possible course of action, The place of marketing strategy in but this course is deviated from, the corporate strategy can be defined because those who are supposed to as in the figure 1: implement the strategy do not adhere to 126 Management&Marketing, volume X, issue 1/2012

Corporate strategy

Business strategy

Operational strategy

Marketing strategy

Figure 1. The place of marketing strategy in corporate strategy Source: adaptated from Huff et al, , Logic and Action 2009, p. 15

The marketing is adopting and implementing the strategy an essential way of thinking and action, (Barbu 2010, p. 79). through which the managers are Marketing planning is a sequential constantly looking for new challenges process comprising many steps (figure and opportunities and show flexibility in 2).

Preliminary Adapting the Defining the Implementing analysis and marketing marketing and control of objective mix plan the marketing setting plan

Figure 2. The sequence of planning in establishing the marketing strategy Source: Adapted from Sasu 2005, p. 294

The marketing strategy has a more to create significance for our products? functional and operative character, How to enhance the value of the brand? defining the , the products, the The markets are the source of communications and change, the sources of opportunities strategy, in order to obtain the desired that companies need to capitalize. The success. One important issue is to best results can be obtained if the anticipate and to meet the trends and companies are able to track the opportunities of the markets, or to changes in the environment and to create new opportunities. But in most adapt to them. cases, the formulation of the strategy is The companies must orientate focusing only on improving the existing from the old paradigm based on “core- results, which is focusing more on “how competencies” to the new formula of to” then “what to do”. “market-driven competencies”. There is Questions that need to be asked a balance between the two are: where are the best markets? What perspectives. The idea is that the are the most profitable products? How position you are starting from defines Management&Marketing, volume X, issue 1/2012 127 the framework of the actions to follow to the first question is based on a (Fisk 2008, p. 125). complete analysis of the market The key to formulate and potential, so that the companies are implement a successful strategy is to able to act only on the most profitable understand the markets the company markets. How to compete refers to the operates in. The markets are the operationalization of the marketing complete sources of information strategy: how to best serve the regarding possible challenges. customers, thou enhancing the A market strategy has three main competitive advantage. How to win dimensions: where to compete? How to refers to finding the best solutions for compete? and how to win? The answer overcoming the competition (figure 3).

Marketing strategy

Where to How to compete? How to win? compete?

Figure 3. Marketing strategy Source: Adapted from Fisk 2008, p. 126

Marketing should be the leading 2. Branding in marketing force of the business strategy. strategy Marketing deals with the markets and The marketing activities are customers. Marketing is about the various and each one has its distinctive opportunities of the markets and the role in increasing the company’s , resources that are to be used to win the both long-term and short-term. battle. In a limited manner, we can define Marketing ideas need to be marketing as the sum of all activities orchestrated in a coherent strategy. The that have the role of preparing a strategy is about setting for sale and the role of sustaining a direction, the choice that need to be product’s sales, as well. From this point made, the differentiation on the market. of view, marketing is the sum of the Setting direction means to clarify the , from the traditional vision and the objectives, to ensure the perspective: product policy, clarity of the organizational mission, to policy, placement policy, promotion set the pace of market adaptation. The policy. choices that need to be made within a According to the American strategic framework relate to the clients Marketing Association, marketing is a that will be the first to be served, the set of activities through which long-term brands and the products that the value is created, for both the company company needs to focus on. and the client. From this perspective, Strategy is also about the marketing effort should be differentiation: to identify a viable source considered a long-term investment, that of competitive advantage and to make a will bring together the company and the sustainable profit from this choice (Fisk client, for the benefit of both parts 2008, p. 122). (AMA, 2012). The marketing value is the sum of present and future profits (Figure 4). 128 Management&Marketing, volume X, issue 1/2012

Customer Sale promotion Product and Price and Branding Inovation relationship services distribution management Costs of Marketing sales investment

Current profits Future profits

Figure 4. Value creation in marketing Source: Adapted after Peter Fisk, Geniu în marketing, Meteor Press, Bucureşti, 2008, p. 65.

The investment for brand The value represents the entirety consolidation is a long-term activity, and of satisfactions felt by the client, as a so are innovation and customer consequence of purchase of product. A relationship management. The brand product’s value is the sum of three consolidation stands at the base of the components: the functional attributes of company’s future profits. the product (the intrinsic qualities), the The modern company, regardless additional services and the image if its activity, targets the domestic attributes (Figure 5). market or foreign market, must have as The functional attributes are an objective the orientation towards related to meeting the basic functions of values in the marketing process. This the product, for as long as possible. preoccupation implies: offering value to Therefore, the product must be capable the clients, communicating and of providing the utility for which it was delivering the value, identifying the designed, projected and produced. values desired by society, establishing The additional services represent the values that will be offered and the the additional functions that the marketplaces. producer is offering, in order to make The tendency of satisfying the the product more desirable: the customer reflects in the attempt to warranty, free delivery, information and establish the present and future value consultancy services, installment demanded by him, the required payments. quantity, the manner and moment of the The brand is represented by those value delivery. product features (of fame, pride, Searching the value from the affiliation) that are passed on to the customer’s point of view means client, at the moment of purchase or of establishing a long-term mutual- consumption. profitable relationship, not the The execution of the marketing temptation to maximize the profit on activities is taken place only at the level every transaction. The importance of of additional services and of the brand. relationships, not of transaction, brings The functional attributes are well-known to the center of attention not the by the consumers and they can not help product, but the client, as a factor of the product differentiation, except for obtaining the profit (Jugănaru 2007, new or high-tech products. p.40).

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The functional attributes The net value (the excess value)

Financial costs

The additional services Temporal costs

Psychological costs The brand Physical costs

The value product Costs for obtaining the product Figure 5. Value in marketing Sorce: Adaptated after Ph. Kotler 1997, p. 73

The costs for obtaining the warm, depending on the season. The products are divided into four physical costs can become very categories: financial costs, temporal important, if the client gets hurt while costs, psychological costs and physical handling the product. costs. The difference between the The financial costs are the most product’s total value and the product’s important ones and have the biggest total costs is called the net value or the share; the company wants to maximize consumer surplus. It must be kept in these expenses, meaning to obtain a mind that no client will purchase the price as high as possible. products, unless the total perceived The temporal costs refer to the value is higher than the total perceived time spent by the customer while costs of the product. informing about the qualities of the In order to increase the product, choosing different options, consumer’s satisfaction and the visiting different offers. perceived value, the companies have The psychological costs represent two choices: to either increase the the client’s anxiety towards a purchase product’s total value and/or to reduce of great value and of unlikely-repetition. the client’s costs. Therefore, the client questions the The product value can be following issues: will the product keep increased by offering additional services its qualities for a long time? Is the real and by creating notoriety wide enough quality of the product identical to the for the product. The functional attributes one promised by the producer? If any are constants and rarely vary. problems arise, will the producer Reducing the costs must be made respect the warranty? on temporal, psychological and physical The physical costs are the ones costs. The financial costs must remain made by the client, while purchasing the constant or even increase, if possible. products: lifting, moving, feeling cold or 130 Management&Marketing, volume X, issue 1/2012

Figure 5 shows the brand’s brands get energized and transform determent role in creating value for the themselves, in order to make the customer. The brand increase value connection between the company’s perception by the client and, in the products and the brand’s ideals. This same time, allows the company to ask concept justifies the brands’ existence for more money for its products and and offers a clue about the brand’s services. existence on the market. The branding of a company aims to form a positive 3. Branding within corporations and real image (Popescu 2011, p. 145). Starting with the 60-ies, the We must not confuse the from Wolff Olins and the company’s strategy with the brand’s ones from Lippincott were discussing strategy. The brand’s strategy is part of the brand as a business strategy, giving the company’s strategy. The brand its capacity to create differentiation and strategy has the capacity to reinforce competitive advantage (Bogdan, 2010, from its own ideals and visions. The p. 32). brands helps the company’s resources Branding means more than and capabilities. establishing the name for a company or What brings closer the brand’s for a product line. Branding is a long- products is not the label or the logo on term state of mind, that requires the the package, but rather the vision and management of the company’s strategy, ideals that keep them together. For the coordination of its objectives and instance, the VW brand consists of resources. different types: Polo, Golf, Pasat, The brands are seeking to provide Beatle, Tiguan, Touareg, etc. Judging both tangible and intangible benefits to by external appearances, they are very the customers, so that they adhere to different, but they resemble judging by the brand’s ideals. The tangent conceptual values: the quality and directions between brand and strategy durability of VW. refer to the following: what product Most of the customers judge attributes must be materialized? What brands by their external appearances: advantages are being created? What which of us know what Zara or Nike or are the consumers` benefits? What are Dacia actually mean? Few of us are the brand’s ideational values? capable to relate with the brand’s For many companies, the brand is meanings, as they are set by top perceived only as an external face of management. marketing, a colorful name and a nicely- consists of designed package. But the brands` defining the essential values of a brand advantages are proved by the fact that and then of converting them into visible unbranded products are much cheaper aspects of the brand: name, logo, color, than branded ones. etc. A successful brand must assume The watchword of every strategy is the leadership for the product category creating the competitive advantage. But that it belongs to. Brands must always any advantage has a limited time. The bring innovation, make a difference, be management practice has shown that is meaningful. A brand is not just a simple more wisely to use the concept of participant on a market, it creates and temporary advantages. Brands create a manages the market through a vision of temporary advantage. But brands do what the product category should be not live forever. They need to be (Kapferer, 2008, p 32-33). reinforced, updated from time to time. The bigger brands have a The innovation outside the brand is dominant position in the product far less likely to succeed. The brand is a category. From these positions, the very good mechanism for licence Management&Marketing, volume X, issue 1/2012 131 protection. Nowdays, any innovation is defining values. A brand represents the rapidly reproduced. The product memory, but also the future of its marketed under the brand’s name is described products. (Kapferer 2008, p. more protected from the competition. 37). The consumers tend to be faithful to the The companies must not go away most powerful product. We must from their identity, that helped them remember the dispute between Apple attract customers. The consumers` and Samsung, in the field of fidelity is created by following the smartphones, as Iphone is three times brand’s elements, the one that initially more expensive then the competition’s tempted the consumers. If the product best product. does not rise to the clients` Along the brand’s life cycle, many expectations, it is better to try to keep products can be launched, some of the initial promises, rather than try to which may be more successful than change these expectations. In order to others. But what really last is the brand gain the clients` fidelity, the brands must and the content of its meanings. be sincere with themselves. The brand gives a strong Nowdays, the process of impression, which allows a structure of production does not represent a long-term perceptions. Therefore, the challenge anymore. The production is brand creates a cognitive filter: the less outsourced to the countries with low pleasant and discordant aspects are wages. At the current time, because of being forgotten. Thereby, the failure of flattering consumption and tough some brand extensions does not competition, what really matters is influence the brand perception very creating the desires. From this point of much. The BIC example is relevant: a view, the brand is essential for a company specialized in stationery will company. The customers do not interact have difficulties in launching a perfume. with the products and the services; they The brand is more flexible than a are essentially attracted by the product. After the atypical elements are emotions generated by brands. eliminated, the brand perception creates The brand is the interface between the illusion of permanence and the producer and the customer (Figure coherence. Resulting from this is the 6). importance of establishing the brand’s

Production Brand Consumption

Figure 6. The brand, as an interface between production and consumption Source: Adapted from Kornberger 2010

The brand becomes the magnet 4. Conclusions required by the production with the The brand is the guiding force that intent to attract consumers (Kornberger can bring together the general strategy 2010, p 21). The companies seek to of the company, the human resources, maximize the points of contact with the the operationalization of production, the brand, in order to generate the clients` marketing policies. The strategy seeks attachment. to accomplish the strategic objectives, in which category we can include the 132 Management&Marketing, volume X, issue 1/2012 increase of brand’s notoriety. The company and its products. Branding, human resources are involved in the innovation and continue consumer care brand’s philosophy through the so- are key marketing investments, that can called brand engagement. Branding is contribute to value creation in essential for the reputation of the marketing.

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