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Establish competitive advantage with trademarks

Trademarks are knowledge-based assets in which value is improved through marketing activities that increase and deepen brand differentiation. This happens through the clear articulation of what the brands stand for, and the artful orchestration of brand meanings and social significances. When these attributes of a brand are in high relief and integrated around a unitary brand identity, trademarks can become iconic brands that consumers seek out, thus providing greater competitive advantages.

However, not all marketing and selling activities accomplish this goal. With the rise of brands at the end of the 20th century, marketing executives began to distinguish between 'pull marketing,' whhich builds brands and increases demand, and 'push marketing' or 'selling on deal,' which erodes brand equity.

'Push marketing' activities discount trademarked products and 'push' them upon the consumer through markdowns and deals. They wear away differentiated product attributes by refocusing consumer perception on price. Selling on price reduces the value of a brand in the consumer's mind, making it less compelling.

Brand perceptions have a financial value, and understanding how properly positioned and built brands increase brand equity can help marketing executives and entrepreneurs understand better how to spend to lock in competitive advantage that ensures take away at the shelf.

With a highly differentiated trademark and a brand strategy that creates a well-articulated brand, even commodities such as bottled municipal water (Aquafina), or yellow bananas (Chiquita), or diamonds (De Beers) can be sold at an advantage against less-differentiated players. The trick is the brand strategy and the 'well-articulated brand.'

What is the nature of a well-articulated brand, and what are brand elements that influence marketplace success? Strategically, well-articulated brands are highly differentiated brands with complex sets of differences. Brand-building focuses on specifically defining what the brand stands for, and establishing its relevance to the consumer. This creates competitive advantage by building value around unique meanings and social significances.

Brand building is guided by a brand-strategy document that lays the brand out on paper, and that focuses on leveraging the following brand attributes:

  • Brand position — Identify a brand position that is unique, ownable and sustainable, one that synthesizes the existing brand equities and core competencies of the company. It isn't enough to just sell a dietary supplement, a company must stand for something that is its rallying point, and from which it can exclude others — eg, Aquafina stands for purified drinking water; Chiquita stands for 'top banana' and fresh, ready-to-eat 'yellow' bananas; De Beers stands for loving, committed relationships — 'a diamond is forever.'
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  • Brand identity — Create and support a clear and distinct identity that cannot be easily duplicated or diluted by competition. Brand symbols, logotypes and product-trade dress are the art of successful brands, and the 'picture' that is worth a thousand words. Every element must work together to create a unique, memorable identity that expresses all that for which the brand stands.
  • Brand values — Dietary and functional products should broadly embody desired and admired values such as health, wellness, safety and efficacy. Well-branded products are framed by their values. Branded De Beers diamonds (each diamond has a jeweler's glass brand engraved into it) undercut blood diamonds and give consumers the certainty that they aren't supporting either slavery or terrorism.
  • Product features — Establish unique product features that fulfil consumer expectations and demonstrate industry leadership, such as timed release, reliable quality, accurate dosages, ease of assimilation and the like. Aquafina trumps natural spring water by using safe and simple technology to purify municipal water of multiple substances to ensure that they only deliver pure water and perfect taste to the consumer.
  • Brand reputation — Protect corporate reputation and drive a responsible social presence. Chiquita, when its employees were threatened with death by terrorists at banana farms in Colombia, paid tribute to paramilitary groups to gain their release, reported it to the US Department of Justice, and, once its people were safe, divested itself of its Colombian properties and withdrew from the country. While prima facia guilty of having financial dealings with terrorists, it paid $25 million in US fines and accepted losses in the Colombian divestitures. In a touchy international situation it enhanced its reputation by putting employees first over financial considerations.

Lindsay Moore, PhD, is the founder and CEO of KLM, a management consultation firm in Boulder, Colorado, and co-author of Intellectual Capital in Enterprise Success: Strategy Revisited, published by Wiley. She also is a professor of law at George Washington University Law School in Washington, DC.

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