Page 312 - Foundations of Marketing

Product, Branding, and Packaging Concepts | Chapter 10 279

instances, U.S. companies actually have had to buy their own brand rights from a firm in a
foreign country because the foreign firm was the first user in that country.
Marketers trying to protect their brands also must contend with brand counterfeiting.
In the United States, for instance, one can purchase counterfeit General Motors parts,
Cartier watches, Louis Vuitton handbags, Walt Disney character dolls, Microsoft software,
Warner Brothers clothing, Mont Blanc pens, and a host of other products illegally mar-
keted by manufacturers that do not own the brands. Annual losses caused by counterfeit
products are estimated at between $ 200 billion and $ 250 billion for U.S. businesses, and
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possibly as much as $ 600 billion for businesses globally. Even retail stores are not safe
from counterfeiting. In China fake Apple stores have emerged to try and sell counterfeit
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or smuggled Apple products. In the interest of strengthening trademark protection, Con-
gress enacted the Trademark Law Revision Act in 1988, the only major federal trademark
legislation since the Lanham Act of 1946. The purpose of this more recent legislation is
to increase the value of the federal registration system for U.S. fi rms relative to foreign
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competitors and to protect the public from counterfeiting, confusion, and deception.
Branding Policies

Before establishing branding policies, a firm must decide whether to brand its products at all.
If a company’s product is homogeneous and is similar to competitors’ products, it may be
difficult to brand in a way that will generate brand loyalty. Raw materials such as coal, sand,
and farm produce are hard to brand because of the homogeneity of such products and their
physical characteristics.
If a firm chooses to brand its products, it may use individual branding, family branding,
or a combination. Individual branding is a policy of naming each product differently. Nestlé
S.A. is the world’s largest food and nutrition company. Nestlé uses individual branding for
many of its 6,000 different brands, such as NESCAFÉ coffee, PowerBar nutritional food,
Maggi soups, and Häagen-Dazs ice cream. A major advantage of individual branding is that
if an organization introduces an inferior product, the negative images associated with it do
not contaminate the company’s other products. An individual branding policy also may facili-
tate market segmentation when a firm wishes to enter many segments of the same market.
Separate, unrelated names can be used, and each brand can be aimed at a specific segment.
When using family branding , all of a fi rm’s products are branded with the same name or at
least part of the name, such as Kellogg’s Frosted Flakes, Kellogg’s Rice Krispies, and Kellogg’s
Corn Flakes. In some cases, a company’s name is combined with other words to brand items.
Arm & Hammer uses its name on all its products, along with a general description of the
item, such as Arm & Hammer Heavy Duty Detergent, Arm & Hammer Pure Baking Soda, and
Arm & Hammer Carpet Deodorizer. Unlike individual branding, family branding means that
the promotion of one item with the family brand promotes the fi rm’s other products. Examples
of other companies that use family branding include Mitsubishi, Fisher-Price, and Sony.
An organization is not limited to a single branding policy. A company that uses primar-
ily individual branding for many of its products also may use family branding for a specifi c
product line. Branding policy is infl uenced by the number of products and product lines the
company produces, the characteristics of its target markets, the number and types of compet-
ing products available, and the size of the fi rm’s resources.

Brand Extensions individual branding A policy of
naming each product differently
A brand extension occurs when an organization uses one of its existing brands to brand a
family branding Branding all of
new product in a different product category. For example, Starbucks created a brand exten- a firm’s products with the same
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sion with its single-serve brewing machine. A brand extension should not be confused with name
a line extension. A line extension refers to using an existing brand on a new product in the
brand extension Using an
same product category, such as new flavors or sizes. For example, when the maker of Tylenol, existing brand to brand a new
McNeil Consumer Products, introduced Extra Strength Tylenol P.M., the new product was a product in a different product
line extension because it was in the same category. category

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