A brand offers the consumer a unique combination of benefits:
- Value from higher quality delivered at competitive prices
- Choice from brand diversity
- Convenience from wide availability and ease of recognition
- Relevance to the consumer's needs from research and innovation
- Reassurance as a result of trust in the maker and reliability of the brand: when the brand delivers on all these benefits, the consumer receives satisfaction from the purchase of, and even identification with, the brand.
Brands also offer wider benefits to society and to the economy. Research by PIMS Europe, based on evidence from over 200 businesses in their database, shows that "branding does boost competitive innovation. Branding is associated with a more dynamic response by producers to consumer needs and to competitive activity. Branded businesses do invest more in innovation, which is strongly associated with business and employment growth.”
In mature markets major growth will not come from selling the same products to more people. Growth comes from people trading up to improved products and through the development of completely new products.
In the Commission's impact assessment related to its proposals for a revision of the review of the EU's trade mark law (27 March 2013), the Commission sums up the economic importance of brands as follows: "Europe's economy relies on powerful brands, requiring strong and effective trade mark protection. In the EU, the value of the top ten brands per country amounts to almost 10% in relation to their GDP (PPP). The percentage is even higher in smaller countries with valuable brands where the figure can amount to over 30%. As such, the economic value of trade marks serves as an indicator for the economic wealth of a country. The average value of the top ten brand values per Member State equals € 35 billion but amounts to € 145 billion in Germany and € 138 billion in the United Kingdom. Annual communication and advertising expenditure in Europe on brands of € 174 billion benefits media as well as sport, arts and entertainment. In microeconomic terms, trade marks are important and valuable business assets for companies across all sectors, and able to significantly increase in value as businesses expand and grow. With regard to international trade dimension, 48% of EU exports are upmarket branded goods."
There are numerous studies on the effects of brands on consumers and society more generally. Below you will find links to a selection of studies.
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Brands and consumer trust study: The nature of trust, how it is built and its implications for companies and the economy.
A three-in-one report summarising three significant studies into trust and brands. Commissioned by national brand associations in Europe and AIM, the European Brands Association (20 October 2015).
Intellectual property rights and firm performance in Europe: an economic analysis
The Office for Harmonization in the Internal Market (June 2015)
The European Observatory on Infringements of Intellectual Property Rights and the European Patent Office had carried out an EU-wide study on the contribution of intellectual property rights (IPRs) to the EU economy (cf below).
This follow-up study carried out by the EU Observatory delves into the contribution of IPRs to individual firms in Europe. Main findings:
- Companies that own IPRs tend to have almost 6 times more employees than companies that do not.
- Their revenue per employee is 29% higher on average.
- They pay wages that are on average 20% higher than firms that do not.
- About 40% of large companies own IPRs.
- Although only 9% of small businesses own IPRs, the firms that do have almost 32% more revenue per employee than firms that do not.
The Future of Brands: searching for a new meaning
Forum for the Future (2014)
With this edition, Forum for the future interviewed experts and invited critical analysis of the shifting scene on branding. Three significant ways in which brands are responding to change emerged: they are taking a stand in society, they are engaging with artists and creators and they are becoming more intimately involved in our personal lives. What difference will they make to our future? What good might come of it? What are the risks?
This special edition was sponsored by L’Oréal.
Intellectual property rights intensive industries: contribution to economic performance and employment in the European Union
The European Patent Office and the Office for Harmonization in the Internal Market (September 2013)
This is the first EU-wide study on the overall contribution made by intellectual property intensive industries to the EU economy. Some of the findings:
- IPR-intensive industries account directly for 26% of all jobs in the EU – around 56 million direct jobs. With the addition of 20 million indirect jobs, one in three of all EU jobs rely on IPR intensive industries.
- These industries generated almost 39% of total economic activity (GDP) in the EU, worth €4.7 trillion.
- IPR-intensive industries pay higher remuneration than non-IPR intensive industries, with a premium of more than 40%. The average weekly remuneration in IPR-intensive industries is €715, compared with €507 in non-IPR intensive industries.
- IPR-intensive industries account for 90% of the EU's trade with the rest of the world.
- Link: Intellectual property rights intensive industries: contribution to economic performance and employment in the European Union (2013)
Brands – Reputation and Image in the Global Marketplace
WIPO’s World Intellectual Property Report (2013)
WIPO’s World Intellectual Property Report is published every two years and offers insights into the role that the IP system plays in market economies. Companies around the world spend nearly $466 billion annually on branding, more than on R&D and design. In some countries this accounts for more than 25% of company investments in intangible assets. The total value of the top 100 global brands grew by 19%-24% between 2008 – 2013, despite the global economic downturn. Francis GURRY, WIPO Director General, emphasized in his foreword that brands “ are an indispensable guide for consumers and a means for companies to build a reputation and an image in the marketplace.(…) In short, a recognized brand is among the most valuable intangible assets a company can own.”
A virtuous cycle: Innovation, consumer, value, and communication
IMD and PIMS Associates (2000)
The report summarises the findings of a major research project examining the role of innovation and its contribution to the performance of brands. The data set is based on 100 in-depth interviews with largely fast moving consumer goods companies across Europe. The study finds that when innovating brands create novel consumer value, they benefit from a number of advantages that come with greater consumer franchise, growth, and economies of scale in communication. This is what the authors call the “virtuous cycle of innovation, consumer value and innovation”.
Brands, Innovation and Growth
PIMS Associates (2004)
The report provides evidence on the contribution from branded consumer businesses to economic growth and discusses what are the incentives to increase innovation.
Sources of brand benefits in manufacturer-reseller B2B relationships
GLYNN, Mark S., MOTION, Judy, BRODIE, Roderick (2007)
In this article, the authors develop a conceptual framework to explain the benefits of manufacturer brands for resellers. These benefits not only reflect the manufacturers’ brand name strength, but also additional positive effects related to a brand, such as advertising, promotional support and category development.
- Link: GLYNN, Mark S., MOTION, Judy, BRODIE, Roderick (2007). Sources of brand benefits in manufacturer-reseller B2B relationships. In: Journal of Business and Industrial Marketing, 22/6, 2007.
It’s all about brands - The importance of brands and the brand-oriented industry in Germany
McKinsey & Company, Markenverband (2011)
The study analyses the development and economic performance of the German brand-based industry during a time of economic crisis. It demonstrates that from 2001 to 2010 the brand business grew at a continual rate of 3.4% each year to EUR 457 billion. A key to the success of the brands is the increased consumer focus also on aspects such as product safety and rust in brands.
- Link: The importance of brands and the brand-oriented industry in Germany, McKinsey & Company, Markenverband (2011).
Brands and Responsible Business. The contribution of brands through responsible business and a study of the developing approach to policy partnership
British Brands Group (2010)
This publicationshows how CSR in branded goods companies has become an integrated part of the business activity. In the majority of cases, CSR programmes are no longer add-ons to help build positive reputation. Instead they are playing a key role in boosting profitability and building better relationships with both suppliers and customers.
- Link: British Brands Group (February 2010). Brands and Responsible Business. The contribution of brands through responsible business and a study of the developing approach to policy partnership.
The Brand report card
KELLER, Kevin L. in: Harvard Business Review (2000)
The article identifies ten attributes that are shared by the world’s strongest brands, and describes how managing and developing the brands ultimately secures their long-term success and leads to sustained brand equity.
Trade mark incentives
GREENHALGH, Christine et al. (July 2011)
A positive correlation between the use of trade marks and productivity is demonstrated in this study commissioned by the UK Intellectual Property Office. Trade mark protection stimulates competition based not only on cost and price but also on quality and variety.
Valuing brands in the UK Economy
URWIN, Peter et al. (2008)
The report, produced by the research team of Westminster Business School, analyses the significance of brands for the UK economy. According to findings, an estimated 1 million people (4 % of all employees in the UK) are directly employed in the creation and management of brands in the UK. That includes both ‘in-house’ and ‘bought-in’ (outsourced) functions and operations such as marketing and sales, advertising and PR, design, graphic, product and development related engineers etc.
The value of the cultural and creative industries to the European economy
Frontier Economics (2012)
The objective of this study was to examine the contribution of high-end consumer products and services to the European economy. The study concludes that European firms lead the global luxury markets and predicts that this sector can provide further substantial contribution to the EU economy.
- Link: Frontier Economics (June 2012). The value of the cultural and creative industries to the European economy.
Independent review of IP and growth. A response from the brand perspective
The Anti-Counterfeiting Group and the British Brands Group (2011)
In the context of the Independent review of IP and growth in the UK by Professor Ian Hargreaves, the Anti-Counterfeiting Group and the British Brands Group provided evidence on intellectual property (IP) and brands growth demonstrating that the benefits of branding depend on the wide variety of IP rights which, in turn, provide a necessary incentive to undertake innovation.
Embedding knowledge and value of a brand into sustainability for differentiation
GUPTA, Suraksha, CZINKOTA, Michael, MELEWAR, T.C. in: Journal of World Business (2012).
Do sustainability concerns of brands lead to differentiation? Or in other words: do consumers care about sustainability? The authors of this article conclude yes: branding that integrates consumers’ sustainability concerns can create brand differentiation and brand value.
- Link: GUPTA, Suraksha, CZINKOTA, Michael, MELEWAR, T.C. (2012). Embedding knowledge and value of a brand into sustainability for differentiation.: Journal of World Business (2012).