Brands are of paramount importance in food and beverage markets. What is a brand? A brand is a name, a sign, or a set of symbols distinguishing the products of a company from the products of other competitors' companies. In marketing terms, branding has not only to do with choosing a nice name or a nice set of symbols, brands are important because they create value for customers. In which way? Let's remember that food and beverage products are experience products. Products for which consumers find it difficult to anticipate their quality before consuming them. They go and seek quality clues, and the brand can be a very important, very effective quality clue. Let me give an example. These are two typical bottles of champagne. For those of you who like champagne, you should recognize the typical shape of the bottles, the typical color of the bottles, and the golden caps, which most champagnes have as a distinguishing sign. Let's also assume that the content of the two bottles is exactly the same, so there is no difference in terms of quality for the products of the two different bottles. How would you choose? How could you make a choice between one of the two? Actually, for you, it is completely indifferent to choose one or the other. But let's assume that you know and you can see the label, and you know the two brands. On one side we have Veuve Clicquot, and on the other side we have Moët & Chandon. By adding this piece of information, your choice may be easier and may be more effective. Basically this is the point, a brand is a piece of information which creates value for consumers. Obviously, for those of you who don't know either Veuve Clicquot or Moët & Chandon, actually the additional information is not even effective. Maybe you would choose because you like this label or this label more, but the actual name, the brand in itself has no value at all. The point is exactly this, a value created by a brand depends on the fact that consumers know the brand. The concept through which in marketing we distinguish this value is called brand equity. What we should be interested in is the brand equity, the equity of the brand, the value of the brand, which is basically the extra value that the brand adds to the product when the customer knows the brand. Brand equity is mainly made of two different components. The first component is brand awareness, that is to say knowledge. If you know a brand, it facilitates your decision-making process because you can distinguish one product from the other products. Awareness has to do with information, it has to with knowledge, it has to do with depth and breadth of knowledge, that is to say some consumers may know a lot of a brand. Some other consumers may know it less, but this grade of information is what creates value for consumers. The second component is brand image, that is to say, the judgment that consumers have of one brand or another brand. So a judgment is something more than pure knowledge. It makes an assessment, and consumers, having made an assessment, can say more about that brand and, given the assessment, can choose in a more effective way. Brand equity is basically based on consumer knowledge, and this knowledge has to do with two components, awareness and image. Managing a brand for a company basically means to manage the awareness of the brand and the image of the brand. These are two typical decisions of brand management which are of paramount importance in the food and beverage markets. Linked to the brand image, that is to say, the judgment that consumers have or can have of a brand is the decision of brand positioning. So by brand positioning, we mean the building of different shapes in perceptions in the minds of consumers for that brand by the company. The company should try to build a difference in the minds of consumers relative to its brands compared to the brands of its competitors. Differentiation is fundamental to help consumers choose or to make consumer choose. Because remember that without a difference, there is not preference. Only by giving additional information and additional value to consumers, companies can move consumers towards their brands, to choose their brands and not competitors' brands. This is the topic of brand positioning. How can a company build a positioning for its brands? Positioning is basically built by linking associations to that brand. That is to say to try to build in the minds of consumers specific associations that consumers link specifically to one brand and not to the other. Positioning is strong if the associations are favorable, are unique, and are relevant for consumers. When building an image or positioning for a brand, the difference between positioning and image is of a sequence, because the positioning is the ideal, the objective that the company wants to achieve, and the image is the actual positioning that the brand is able to achieve in the market, so in consumers' minds. A company should try to build a positioning which translates into an image in the minds of consumers. The associations that the company can use to build the positioning for its brand can be classified into two big groups: The first one is made by the so-called primary associations. The second one is made by the so-called secondary associations. What is the difference? Primary associations are the associations directly connected to the brand. Secondary associations are those associations linked to third parties that have a link with the brand, so are indirectly linked to the brand. Typical examples of primary associations are the attributes of the products branded by the brand, and the benefits provided by those products, the values behind the products and the brand. All these components are directly linked to the product itself, to the products, to the benefits of those products, to the value of those products. Typical examples of secondary associations are in food and beverage businesses, for example, awards. In many food and beverage businesses, there are awards given to products and brands which show an extraordinary quality. If I'm awarded a gold medal, a silver medal, or a bronze medal in a fair or contest, I can use this element, which is information provided to consumers, as an element of my positioning. Other secondary associations are, for example, are associations related to the channels of distribution. If I sell my products through a specific specialized channel, the image of that channel can be translated into the image of my brand. So for example, if my wine or my water or my beer is in the wine, beer, or water list of starred restaurants, that image of those restaurants is translated into the image of my brand. It is a secondary association. Other typical associations are, for example, associations linked to events. If I organize a big event, a music event, a contest, a fashion event, whatever associated to my brand, the image of that event can be translated into the image of my brand. Another example is the endorsement of celebrities. This is very typical in the food and beverage business. I use a celebrity which endorses my product and my brand. I am basically trying to translate the positive values, the positive image of that celebrity into the positive value, the positive image of my brand. Other brands use characters, so specific spokespersons, which are used to take the message of the brand to the general audience. If I am able to build a positive value for that character, that positive value is translated into the image of my brand. As you can see, secondary decisions are values, and values of them can be used to build the positioning of the brand. A very important decision a company has to make is the one regarding the so-called brand elements, that is to say, those visual elements distinguishing the brand from the competitor's brand. Elements are basically the name, the logo, the jingle maybe if one is used in some ads, and other symbols which are specifically connected to the brand. These elements can be used by consumers to identify the products of that brand and distinguishing these products from the products of the competition. Let's go back to the champagne example. Here we have four bottles of champagne, four different brands. And as you can see, the different brands use different symbols, different elements. The elements in this case are represented easily by the label. So one is golden. The other is orange. The third is pink. The fourth is golden as well. Golden in many food and beverage companies means elegance, prestige, and so usually consumers tend to recognize the gold as a sign of prestige and elegance. So while we can see if the two brands use the same golden label, actually if the consumers do not know the brands, it is difficult for them to separate them, to identify them in a separate way, where as the orange and the pink ones are really different. Let's assume again that you don’t know any of these brands. You can maybe be attracted by the golden label because you are seeking elegance out of champagne, so the quality of the product. Or you may be attracted by the orange that can provide you with an idea of something younger or fresher. Or maybe you're attracted by the pink label because it can sound like a champagne for a more feminine target. Actually, every consumer then associates, to the specific piece of information given by the brand elements, a specific meaning. The point here, though, is that elements provide value to consumers in two different ways. The first one is they help consumers in identifying and recognizing the different brands, and so helping them selecting the brands when they have to make a choice. The second one is that the elements in themselves can provide consumers with meaning: the colors, the fonts, the size, the shape of the label, and the shape of the design of the bottle. You can say so for any other product in the food and beverage markets, All these elements can help consumers in making a more effective choice. Basically and finally, a brand in marketing terms is important because it can create value for consumers. In our topic this week, innovation versus tradition, a brand is very important because the brand can build authenticity or can be perceived as authentic, and so below the brand, the company can launch products that are more focused on the tradition or are more innovative without keeping or taking away from the brand its value of authenticity.