State any four merits of good brand name and explain any four factors, which should be considered while formulating product price.
Answer – Branding and a good brand name
A brand identifies and differentiates a seller's offering through a name, term, symbol, design or combination. A brand name is the speakable part, such as Dunlop; a brand mark is the recognisable symbol or design; a trademark is a brand or part of it protected by law. Branding is the process of giving a product this identity.
Benefits to marketers: easier product differentiation; support for advertising and display; scope for favourable pricing when customers value the brand; easier introduction of new products under an established identity.
Benefits to consumers: easier identification and repeat purchase; assurance of a consistent expected quality; status or psychological satisfaction where relevant.
Good brand name: short and easy to pronounce, spell and remember; suggests benefits or qualities; distinctive; adaptable to packaging and advertising; suitable for different media and languages; capable of registration and legal protection; sufficiently enduring for future use.
A brand is valuable only when the actual product and service support its promise.
Factors affecting price determination
Price is the amount paid for a product or service. It directly affects demand, revenue and competitive position.
- Product cost: consider fixed, variable and total costs. Price must support sustainable cost recovery, though short-term decisions may differ.
- Utility and demand: customers' perceived value and price sensitivity influence the upper limit and feasible price range.
- Competition: competitors' prices, quality and offerings affect the firm's freedom to set price.
- Government and legal regulation: observe applicable price controls and rules against unfair practices.
- Pricing objectives: objectives may include profit, market share, survival or product-quality leadership.
- Marketing methods: distribution, advertising, service and credit arrangements influence the price and its justification.
A high price without customer value may reduce demand; a very low price that cannot cover sustainable costs is also unsuitable.