Branding As An Innovative Strategy

Running Head: BRANDING AS AN INNOVATIVE STRATEGY 1

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BRANDING AS AN INNOVATIVE STRATEGY 2

Table of Contents

Research Question .................................................................................................................................... 2

Abstract ........................................................................................................................................................ 3

Introduction .................................................................................................................................................. 3

Literature Review ....................................................................................................................................... 6

Innovations by firms ............................................................................................................................... 6

Trademark Indicators ............................................................................................................................. 6

Brands as Commercial Signatures ...................................................................................................... 8

Trademarks in Europe (Spain) ............................................................................................................. 9

Technological Developments and Branding .................................................................................... 10

Branding as a Concept ............................................................................................................................ 10

Methodology ............................................................................................................................................... 12

Research setting ...................................................................................................................................... 13

Primary Data Collection .......................................................................................................................... 13

Secondary Data Collection ...................................................................................................................... 13

Interviews elaboration ............................................................................................................................ 14

Results ......................................................................................................................................................... 14

Discussion and conclusions ......................................................................................................................... 15

References .................................................................................................................................................. 16

Appendix ..................................................................................................................................................... 17

Research Question

Branding as an innovative strategy by companies making entry into new emerging

markets.

BRANDING AS AN INNOVATIVE STRATEGY 3

Abstract

This paper will aim to establish the emergence of global luxury brands premium

brands. It will give a unique context of luxury consumption and highlight several

developments in literature review. It will also aim to advance the paradigm of consumer

centric luxury branding. This paper is concerned with the emerging topic of trademark

which is defined as a “distinctive sign, which identifies certain goods or service as those

provided by a specific person or enterprise” (WIPO, 2004). The paper will aims at

exploring how branding helps luxury international firms to maintain their price when the

firm attempts to introduce its product portfolio in a new, foreign market. Furthermore, I

will analyze how multinational firms use diverse or unique trade mark across countries.

It further looks to the relationship between trademark strategy choices and economic

returns.

Introduction

The aim of this paper is to give an empirical background on technological

activities adopted by firms in foreign countries. Internationalization of technology has

led to increased interest by policy makers in recent times due to the lack of clear

BRANDING AS AN INNOVATIVE STRATEGY 4

evidence to back up the subject. This paper will thus delve into much detail as regards

the technological patterns from host countries. Different literature shows that there are

several strategies that area adopted by firms as they make attempts to enter a new

foreign market. After the establishment of new products in home markets most firms

always rely on branding as a technological strength to break barriers into emerging

markets. This process usually involves lots of Research and Design activities.

Luxury is a practice as old as humanity. The luxury brands ideology however is a

special form of branding and a big cultural force that pushes fashion and consumption

lifestyle. It is indeed a new concept (Ahuja & Novelli, 2017). This transformation

happened in the late 1990’s where the luxury market was changed from a collection of

small owned businesses that focused on premium quality into a consolidated economic

sector that was pushed by powerful brands and corporations that embraced luxury. The

effect of the presence of such corporation is the increase in investments in product

design, marketing and marketing to appeal to the target market (Brown & Eisenhardt,

1997).

This study will examine the increased emergence of luxury brands and also examine

previous conceptualization of luxury brands. This is done through the illustration of the

unique context of luxury consumption and the literature review to this effect. The

discussion will commence with the evolutionary growth of luxury brands in the market

and the industry. Then an examination and the essence of social, cultural and external

trends that have greatly influenced modern day consumerism of luxury brands will be

done. Previous concepts on luxury brands will give important contributions to

BRANDING AS AN INNOVATIVE STRATEGY 5

discussions on branding being a protection and trademarks are used to establish a

premium price position in a new foreign market (Cohen & Levinthal, 1990)t.

Given the increasing trends on globalization of production markets, the

globalization of technology still remains a contentious subject. This thesis will thus offer

empirical data on the discussions on technological activities of firms operating on

foreign grounds. It is based on the analysis of the US patents in some of the

internationalized firms. Even though some firms are very active in foreign lands such as

automobile and pharmaceuticals. A large part of this deals with the process of

machinery technologies (Henderson, 2006). A comparison of technological advantage

of companies at home and abroad shows that in a lot of the cases, firms often choose

technologies abroad. Thus the adaptation of processes and products to suit foreign

markets and the provision of technical support is a huge factor in the process of

internationalization of technology. This is also consistent with the fact that firms engage

in small scale activities to monitor technological advancements in foreign countries.

Little evidence however exists to ascertain the fact that most international firm venture

abroad to compensate some of their weaknesses abroad (Brown & Eisenhardt, 1995).

This paper is divided in the following sections. The first section gives a

description of what a trademark is as regards the Intellectual Property Right and

economics. The other section will deal with the analytical and conceptual issues that

come up in the process of consideration of trademarks as an indicator for assessing

structural transformation. The final section will make a conclusion of summation of the

findings and identification of further areas of research.

BRANDING AS AN INNOVATIVE STRATEGY 6

Literature Review

Innovations by firms

Innovation is continually becoming a vital issue for firm’s development in the

world economies. This brings the urgency for the need to assessment to determine

innovative performance. Trademarks can thus be a complementary indicator for tools

for innovation and industrial dynamics. Most empirical studies are based on the study of

community trademarks which is intellectual property feature (Christensen, 2006). The

branding business has been in existence in the economic life. Trademarks are therefore

an outcome of the establishment of recognizable goods and services and identities of

firms. They assist in marketing of innovations and differentiating goods and services.

Such characteristics are thus an indicator of product innovation and changes in the

specific sector.

Recent institutional developments in the regulations of trademarks as increased

availability of databases have increased the use of trademark statistics as a source of

information in industrial studies. Trademarks as such confer the use of exclusive use of

brands increasing the ability of increase economic returns (Abernathy & Utterback,

1978).

Trademark Indicators

Trademark based indicators offer a partial measure of the level of innovative output for

profit oriented organization. Innovation is the introduction of a new product in the

market. As an intellectual property right trademarks are meant to differentiate products

BRANDING AS AN INNOVATIVE STRATEGY 7

between firms. To this effect the filing of new trademarks by different economic actors is

a reflection of introduction of new offerings aimed at persuading new customers (Dosi,

1982). Companies pay higher fees in the process of registration and renewal of rights in

the international market. This process entails the creation of a new brand name and

economic decision. Trademarks indicators reveal promise for increased research on

product innovation in different sectors. Despite this, trademarks counts get affected by

bias leading to difficulties in data consolidation. Trademarks are an Intellectual Property

that is given by a government agency through the process of examination dependent on

legal criteria and a mix of human and technical resources administered by an agency

(Shane, 2009). After the filing of an application, a database search is conducted to

ensure that a criterion is met. Patents on the other hand are given to inventions on non-

obviousness basis. Patents could be denied if they are thought to have the intention of

confusing the consumers of a product. This could be as a result of certain marking that

could be similar to another product.

The initial international trademark was arrived at the Paris Convention in 1883,

the countries agreed to offer the foreign applicants the same protection as the nationals.

To this effect WIPO then emerged as a global coordinating institution that promoted

intellectual property rights and also facilitated the trademarks registration (Teece,

Pisano, & Shuen, 1997). This role came from the 1891 Madrid agreement dealing with

International Registration of Trademarks. This was the genesis of protection beyond

market of origin of products. Slogans today are a combination of letters, words, letters

and numerals and constitute a huge part of innovations and commercial processes

helping the process of differentiating the quality of products in the market. Different

BRANDING AS AN INNOVATIVE STRATEGY 8

statistics reveal that trademarks result in the second highest volume of Intellectual

Property Revenue just after patents.

Brands as Commercial Signatures

Brands are therefore commercial signatures that firms form to maintain and

reinforce for different marketing goals thus the introduction of a new product is a

relevant subject. Different brand names have different sources. Some have names that

are related to the founder’s .As such brands have genuine cultural references; this was

more common in the late 19

Century with the advent of consumerism. Brands like

Coca-Cola and MacDonald are liked and disliked in equal measure. Such brands have

become synonymous with these great iconic innovations ( Hamel & Prahalad, 1990).

On a daily basis, branding is central to any business in modern day. However

how loyalty and awareness translates asset for certain companies is very unclear. The

influence and rationale of trademark is often neglected in the study of modern firms. The

economics field has less to say on branding activity. The classical economic view

regard prices and quantities are most critical variables. The process of incorporating

other variables like quality of goods, reputation and features has been rarely dealt with

in economic theory. Thus brand decisions are implicitly part of an advertising policy. A

trademark ought to be filed with the expected value and the exceeding opportunity cost

of applying to i (Peteraf, Di Stefano, & Verona, 2013)t. The reason for brands being

indispensable in the provision of products is because they facilitate consumer choice

through a combination of wide variety. In management literature the question is always

“to brand’ or not to brand. The strategic motivation behind the creation of brands is to

build a certain level of inelasticity around the product to achieve a level of premium

BRANDING AS AN INNOVATIVE STRATEGY 9

pricing through differentiation. Improvement of conditions for appropriation also

increases the innovation returns in the event that other means do not bear fruits.

Another motivation is the extension of the protection conferred by intellectual property

rights. Penetration of new geographical markets also increases diversification in the

market. Saving expenditure on promotion builds on loyalty hence increasing strategic

motivation (Tandon, Lampert, & Ahuja, 2013).

The process of maintaining trademarks ensure that companies make very

important economic decisions. Companies are then able to distinguish themselves from

others hence in the process rising above competition in the market (Shane, 2009).

Trademarks in Europe (Spain)

The use of trademarks in Spain has had a long history with the oldest trademark

of 1890 still in use. It is referred as Real Companghia Vinicola do Notre de Portugal. It

was however registered as an International Trademark in 1925. Majority of these

trademarks are wine related. This study on Spain makes a combination of public

statistics with data from firm based business surveys. Trade marks allowed resident

companies of Spain Patent and Trademark Office to surpass the annual GDP growth

(Tandon, Lampert, & Ahuja, 2013). The traders in Portugal are mainly made of business

firms with a minority being private individuals. The trademarks in Spain are classified on

the basis of Nice Agreements that include classes of pharmaceuticals, cosmetics, paper

products and footwear. In Spain the non-residents are fewer traders of service classes

in comparison to the residents since majority of the service products are non-tradable.

BRANDING AS AN INNOVATIVE STRATEGY 10

Technological Developments and Branding

The need to monitor new technological advancements is important in the

determination of the type of branding that a firm adopts. This is done in accordance

while at the same time monitoring new technological developments and the generation

of new technologies abroad. All this has been attributed to increasing cost of technology

and Research and Design of products. A company could be very active abroad in

technologies where there is a level of complimentary relationship between the host

country and the domestic country. In most cases companies often exploit the

relationship in foreign country to alleviate itself from its competition. The aim of this

paper however is to distinguish empirically between the patterns of foreign technology

at a firm level. It will be based on detailed examination of patenting activities in the US.

The most common location where firms operate in is the US, Germany and the UK. In

most cases some firms are only available in foreign locations in fields that they have

strong home presence.

Branding as a Concept

The whole concept of think and not to buy on first consideration is best

regarded as being hypocritical with the consideration that the operational purposes of any given

business is usually aligned along the lines of making more money. Nonetheless, market trends

have seen companies move towards being conscious about the environment by adopting various

strategies geared towards its sustainability. Patagonia is one of the companies which has dared to

take this path that is most dreaded by many companies. It comes out rather ironical that as

opposed to promoting their outdoor wear products they have opted for a campaign option that

sits to discourage buyers from making purchases on the consideration that their jacket production

BRANDING AS AN INNOVATIVE STRATEGY 11

process causes great harm to the environment. It is a sure plus for companies as a competitive

advantage with consideration of the fact that whole ideal of consumerism is cut out and instead

people get to actually buy products which they need and can recycle. What is progressed is

attending to a market niche, which is conscious about nature with respect to enjoying nature

without actually getting down to its destruction (Cohen & Levinthal, 1990). That is

conceptualized through the concept is a case of maintenance of high ethical as well as

environmental standards that sits as a competitive advantage. What is conceptualized through the

whole process of consumers being conscious about their purchases is more of a case of brand

placement as a means of boosting the sense of self-worth for consumers. Indeed, other business

can actually get down to adopting the same culture of consumption being vigorously promoted

by Patagonia and actually be successful in their varied industries.

To score success in duplication of the strategy sits with the fact that it would mean

another company equally adopts the same ethical approach of business that is fronted by

Patagonia as opposed to simply the creation of a compelling marketing strategy that are specific

to a certain set of consumers ( Hamel & Prahalad, 1990). Success of duplication of the model is

actionable in the basis of social responsibility influencing consumer patterns. Consumers tend to

purchase from socially responsible companies. Committing to be socially conscious to the

environment develops a sense of self-worth as projected in the sense of Patagonia. Through

investment in socially responsible initiatives of production and marketing is a sure asset that

many companies are yet to tap into.

BRANDING AS AN INNOVATIVE STRATEGY 12

Methodology

This thesis aims at exploring how branding helps luxury international firms to

maintain their price when the firm attempts to introduce its product portfolio in a new,

foreign market. The thesis will follow a theoretical and academic focus, mainly based on

secondary sources. Throughout the analysis of brand as an innovative strategy the

thesis will focus more on primary sources.

BRANDING AS AN INNOVATIVE STRATEGY 13

Research setting

Primary Data Collection

Secondary Data Collection

BRANDING AS AN INNOVATIVE STRATEGY 14

Interviews elaboration

Results

BRANDING AS AN INNOVATIVE STRATEGY 15

Discussion and conclusions

BRANDING AS AN INNOVATIVE STRATEGY 16

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BRANDING AS AN INNOVATIVE STRATEGY 17

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