Page 218 - Design for Six Sigma for Service (Six SIGMA Operational Methods)

Chapter
8

Brand Development
and Brand Strategy

8.1 Introduction

Famous brand names make a big difference in the marketplace. Figure 8.1
shows that several T-shirts are made of exactly the same fabric, the same
style, and the same quality, but because they have different brand names, the
retailing prices of these T-shirts are vastly different.

A good brand name brings extra value to the product and the company
that makes the product. McDonald’s, Coca-Cola, Disney, Kodak, and
Sony are among the most globally recognized names in the world
(Kochan et al., 1997). The name recognition of these brands brings
tremendous marketplace successes and high profitability. In modern history,
brand development is one of the key sources of competitive advantage for
companies worldwide. Brands are regarded among the most valuable assets
owned by a company (Batra 1993, Davis 2000). Some brands are valued so
highly that companies have paid huge amounts of money to acquire the
rights to them. For example, in 1988 Philip Morris bought Kraft, the maker
of cheese products, for $12.9 billion, a sum that was four times the value of
the assets of the company (Murphy 1989). Sometimes companies that have
good brand names can defend their market positions for a long period of
time (Arnold 1992), as illustrated by Table 8.1.

What is a brand? Why do brand names have such magical power? What is
the importance of brand names in developing a service product? These are
some of the questions that we try to answer in this chapter.

The Merriam-Webster Dictionary, a brand is defined as “a mark made by
burning with a hot iron to attest manufacture or quality or to designate
ownership,” or “a characteristic or distinctive kind.” Peter Kotler (1984) defines

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