The term “brand” is often misused, leading to confusion about its true meaning and functionality.

Advertising, marketing, naming, and design are often wrongly associated with branding, further complicating matters. Different types of businesses and organizations, such as consultancies, marketing companies, advertising agencies, public relations firms, and graphic/web design studios, each define brand based on their own expertise and perspectives. As a result, “branding” has become a popular buzzword. To fully grasp its significance and value, it is necessary to establish a common understanding of what a “brand” truly is.

Defining and practicing “brand”
From a legal standpoint, a brand is a trademark—an identifier that distinguishes the goods and services of one seller from others in the same category. It can take the form of a name, sign, symbol, device, or a combination thereof. The owner or licensee of a trademark has the exclusive right to use it within the marketplace, having registered it with the appropriate authorities.

From a business perspective, a brand is a tool that companies use to promote their goods and services and secure future earnings. From the consumers’ point of view, a brand represents a promise and the fulfillment of an experience at every touchpoint. When effectively managed, brands create long-term value for organizations.

In practice, a brand exists at the intersection of promise and expectation. A company communicates its brand as a promise, both explicitly and implicitly. This promise resides in the hearts and minds of consumers as an expectation. When the brand promise aligns with consumers’ expectations, it holds significant value for both parties. True brand value is generated through this co-creation between consumers and the brand. However, businesses and consumers perceive their brand from their own perspectives—brand expression versus brand image, seller versus buyer.

Successful businesses view their brands as tools that cut through the noise of a crowded marketplace. The parent company or organization conveys its brand’s position through carefully crafted Brand Signals that convey meaning, differentiating the brand. These signals reinforce the brand’s chosen position, persuading consumers to consider, prefer, and ultimately choose their offering. Brands are utilized as differentiation tools in business strategies.

On the other hand, consumers consider brands in almost every purchase they make. Brands serve as guides for navigating the marketplace. Each brand distinguishes itself, enabling consumers to identify their preferred products and services among less desirable options. When brand meaning and relevance are clear, the brand occupies a stronger position in consumers’ minds, increasing the likelihood of their selection. Consumers use brands as identification tools.

Without brands, the marketplace would be overwhelming. Imagine a world without brands: You walk into a store in search of ketchup, only to be faced with a wall of identical red bottles labeled simply as “ketchup.” Without brands, there would be no signals to illustrate the differences between the numerous choices, except for size and price. No names, no unique packaging—nothing! Which bottle would you choose, and how would you make that decision?

This illustrates how purchasing would become a daunting task, and repeat purchases would be nearly impossible. However, in reality, consumers have a system for differentiating products, tracking their experiences, and simplifying their purchasing decisions. Brands provide a means of classification, differentiation, and identification that enable consumers to make choices.

As you scan the shelves filled with ketchup bottles, your brain subconsciously processes each brand signal: the bottle shape, label, name, logo, color scheme, and graphics. You recognize your preferred brand—Heinz—and you proceed with your purchase.

Brand value
It’s crucial to note that different parties define “value” in various ways. Businesses measure brand value in terms of profit margin, market share, and goodwill. However, each brand owner assesses these factors based on their individual objectives.