Running a business requires appropriate knowledge, preparation and commitment. First of all, every entrepreneur should get acquainted with all legal provisions regulating the basic principles of functioning on the market. One of them is the correct use of names and terms. The most confused terms are brand and company. Procter & Gamble is not a brand, but a company. By contrast, Braun is already a brand. How can you tell this apart?
Brand and company - definitions
In the Encyclopedia of Management, we can read that a company is any registered economic activity conducted by a natural or legal person. It is an intangible good with a specific property value. The dictionary of the Polish language gives 4 different definitions of the term "company":
- commercial, service or industrial enterprise
- registered official name of the company
- about a person with a good opinion
- about a reputable company
In business, the first and the second meaning are most often used.
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A brand, on the other hand, is a certain name, term, sign, symbol, logo or a combination of all the above-mentioned elements. The idea behind the brand is to identify goods, services or units and thus distinguish them on the market - distinguishing them from competing goods. In the dictionary of the Polish language, as in the case of the term "company", we can find several definitions of "brand", including:
- trademark placed on the products
- the quality or grade of the company's products
- good opinion
- daw. postage stamp
- daw. a number or a token
What does this mean in practice?
The brand and the company in practice
In a nutshell, we call the company the entire enterprise and its name, while the brand name is a trademark (usually a logo), name and others elements of visual identification typical of a specific product or product line. So why do many people equate these two concepts?
The problem may be because there are many brands on the market that have the same names as the companies that control them. Usually, the situation applies to small, local companies that offer only one brand of products. The same name raises problems related to the incorrect application of the concepts.
Many companies, mainly large, global enterprises, sell their products not under their own name, but under the appropriate trademarks. An example is the aforementioned Procter & Gamble company, which offers products under brands such as Always, Braun, Duracell, Gillette, Lenor, Naturella, Old Spice, Pampers, Pantene, or Tampax. These brands are directed to other target groups. Each of them has a specific image, vision, mission and values that guide them in their activities. Many consumers do not even know that there is one company behind these brands. Customers do not identify these brands, they consider them to be completely separate entities. This allows the company to operate in many industries and be successful on many levels.
Why are brands introduced?
The Management Encyclopedia lists 3 brand functions:
- identification - distinguishing a given product from competing products,
- warranty - a guarantee of a certain quality,
- promotional - a way to attract the attention of recipients and encourage them to buy.
So there is a difference between what a brand and a company mean. The first is something that distinguishes a given product on the market. Thanks to the brand, the customer knows what product he is reaching for - he expects a specific quality, specific value and individual character.
Some companies introduce competing brands that offer the same product groups where one of the brands is more luxurious. An example is the Inditex company, which sells casual, low-end clothes under the Bershki brand, and the Zara trademark signs more luxurious clothes. Competitive brands created under one company mutually drive each other in the market. Such a move is a great way to generate maximum profits and be popular among various target groups (the example of Inditex - in Bershka it is usually teenagers, and in Zara people who earn their own money or come from higher social groups).
A company may also market various unrelated brands in entirely separate markets. Acting on many levels increases the chances of success in business.
The consequence of having multiple brands
A company that runs multiple brands must take into account the risk that the failure of one of them may have a negative effect on the others. Any are particularly dangerous brand image crises. As a consequence, recipients may lose trust in all brands managed by the company. This exposes the company to large losses, not only financial.
Image crises cannot be prevented. Sometimes one unfortunate decision or one unfavorable comment is enough to start a real fire that is hard to put out. What to do to prevent the fire from spreading to other brands operated by the company? First of all, quickly enter the appropriate crisis managementbased on a carefully prepared strategy tailored to the situation. A quick, professional response is the best that can be done in a crisis. Avoiding confrontation, not responding to accusations or denying a crisis is the easiest way to collapse.