Branding in Service Markets: S-D Logic and Brand Strategy

Introduction and Research Questions

No "brand" or global economy exists in a vacuum. In countries throughout the world, significant and evolving fiscal components vitally contribute to long-term trends occurring in both brands and economies, particularly in sizeable emerging economies (Vargo & Lusch, 2006; Haig, 2011). Although branding theory has been primarily developed in the context of consumer products, most economies demonstrate that the majority of companies sell services rather than products. As Haig (2011, p. 3) notes, "Branding 'presells' the product or service to the user." Through investigating the evolution of branding theory in the service realm, this paper seeks to enhance understanding not only of branding in service markets but also of service-dominant (S-D) logic.

Just as marketing increasingly influences most aspects of consumers' lives, brands and branding have become significant components in the contemporary progressive marketplace. Organizations like the WTO, as well as many others, regularly utilize branding marketing and management practices. In turn, branding has become critical to structuring commercial and economic activities throughout the world. Some marketers even argue that brands rank among the most significant ideoscapes in the globalization process (Heding, Knudtzen, & Bjerre, 2009).

This paper addresses the primary research question: How may branding be effectively implemented in service markets? The following four sub-research questions support the primary research question:

1. What characteristics compose the concept of branding?
2. How does S-D logic correlate with service markets?
3. What are a number of challenges to effectively implementing branding in service markets?
4. What considerations may strengthen branding in service markets?

The objectives of the paper are to: (a) conduct a literature review identifying the characteristics of the branding concept, the evolution of branding theory in the service realm, S-D logic and its relationship to service markets, challenges to effectively implementing branding in service markets, and considerations that may contribute to more effective service branding; (b) analyze and discuss findings from the literature review, including similarities and contrasts; (c) present conclusions relating to the findings; and (d) make recommendations for effectively implementing branding in the service market as well as for future research.

Bad branding may cause good products to fail. Similarly, bad branding may negatively impact good services. Consequently, understanding how branding works in service markets, as well as what differentiates good branding from bad, comprises a credible concern for research. Just as no brand or global economy exists in a vacuum, no study can materialize without reaching out and drawing from other relevant studies.

Characteristics Composing the Branding Concept

Even though consumers may not be able to purchase youth, they can buy products. Consequently, commercial messages routinely assert that particular products will convey what consumers really want. TV commercials typically represent the product as something more than the actual product — things important to the consumer such as sex, success, and youth. For example, the context for the marketing of a car may include a "successful crowd of people in an upscale neighborhood, or the man who buys the car gets the woman, or the woman who buys the car is young, beautiful, and desirable while she's driving it" (Sharpe, 2005, p. 657). Marketing attaches those and other meanings to products.

Marketing sells a benefit or an image more attractive and bigger than the actual product. Attaching a benefit or an image to a product allocates that proposed larger meaning to what the organization desires to sell. As car manufacturers and dealers desire to sell cars, they design their marketing efforts to sell something bigger first, and then by association, they sell the cars. This concept relates directly to branding (Sharpe, 2005). The majority of brand definitions have been based on the following, which Aaker proposed in 1991 (Pike, 2010):

"… a distinguishing name and/or symbol (such as a logo, trademark, or package design) intended to identify the goods or services of either one seller or a group of sellers, and to differentiate those goods from those of competitors." (Pike, 2010, p. 129)

A brand constitutes a design, name, sign, term, or a unifying combination of them, designed so consumers may readily distinguish and identify a product or service from competitors. "Brand names communicate attributes and meaning that are designed to enhance the value of a product beyond its functional value" (McDowell & Batte, 2005, p. 17). The brand provides a symbol that makes it easy for the consumer to rapidly identify a product while simultaneously facilitating the repurchase process.

Pike (2010) asserts that branding constitutes more than the presentation of symbols. The concept of brand identity includes the self-image the organization desires for the brand, while brand image depicts the actual image of the brand that consumers hold. The marketer uses brand positioning elements — the product's name, symbol, and slogan — "to cut through the noise of competing and substitute products to stimulate an induced destination image that matches the brand identity" (Pike, 2010, p. 130). Analyzing the level of congruence between brand image and brand identity, in relation to brand performance measurement, presents a measure of brand equity.

Branding depicts a concept inherent in marketing. "[B]ecause the customer perceives the product as being valuable . . . branding is more about the customer than it is about the product. It's the personality of the product that people relate to" (Sharpe, 2005, p. 657). People readily associate Allstate Insurance with the tagline "You're in good hands," and link State Farm Insurance, Allstate's competitor, with "Like a good neighbor, State Farm is there" (Ibid.). This reflects an emotional relationship that customers experience with a product's personality.

Name recognition as well as the familiarity of a company logo often helps promote sales of a particular product. Branding, however, encompasses more than a particular company name, logo, product, or customer service. "It's about the customer's perception of the product and the relationship with the personality of the product. . . . It's more about loyalty and confidence and all of the things that make a relationship good" (Sharpe, 2005, p. 657). According to Warnaby (2009), place branding — an emerging field — not only draws from classical branding theory but also from relationship marketing, services marketing, tourism marketing, and urban planning.

Whether marketers design promotions to sell customers on visiting particular places, purchasing certain cars, or buying another product, they must ensure customers do more than merely recognize the brand. Customers must be motivated to act. The marketing message must be consistent to be effective, and to build brand loyalty, the message must be repeated. When repeated loudly and consistently enough, the message begins to not only sound right to customers — it begins to resonate in their minds (Sharpe, 2005).

The brand also serves as a substantial financial and political power at the macro-level of culture, particularly as it relates to globalization concerns. Just as the growing impact of marketing touches most aspects of consumers' lives, brands and branding have likewise become "an increasingly dominant market economic and commercial ideoscape" (Heding, Knudtzen, & Bjerre, 2009, p. 210). With organizations like the WTO implementing branding in their marketing and management practices, branding will likely remain central to structuring commercial and economic activities globally.

The process of branding reportedly even existed during the Stone Age, as hunters chose particular "brands" of weapons to help ensure successful hunts. According to Hampf and Lindberg-Repo (2011), however, brands similar to contemporary ones did not begin to materialize until the 16th century. Knowledge, procedures, and theories within branding began to substantially develop in 18th-century England and France. "On a very practical level, consumers like brands because they package meaning. They form a kind of shorthand that makes choice easier" (McDowell & Batte, 2005, p. 17). The development of mass media advertising largely contributed to current branding theories originating and beginning to evolve during the mid-20th century.

Prior to the advertising industry fully organizing as an institution, two diverse principles guided branding. The first, consistent with economic ideas of branding, was to establish a name representing an ongoing business — to convey the legitimacy, prestige, and stability of the manufacturer, educate the consumer about the product's basic value proposition, and instruct on the use of novel products. The second principle "was to treat consumers as gullible dupes who could be swayed if only product claims were inflated enough" (Holt, 2002, p. 80).

During the 1920s and forward, specialists began to replace those two strategies, ushering in the contemporary branding paradigm built on two pillars: abstraction and cultural engineering. Earnest Elmo Calkins, reported to be one of the earliest branding leaders, constructed the concept that manufacturers needed to position their brands as solid expressions of esteemed moral and social ideals. He "championed a new style of advertising that proposed that products materially embodied people's ideals (e.g., their aspirations concerning their families, their place in society, their masculinity and femininity), which were only tenuously linked to functional benefits" (Holt, 2002, p. 80). Advertising renovated allegories, metaphors, and brands to symbolize psychological and social properties.

Evolution of Branding Theory

Instead of magical messages praising product benefits, marketers started to blatantly reveal their intentions regarding branding efforts. They meticulously promoted a relationship linking product attributes with a package of enviable personal characteristics that, when conjoined, "declared to constitute the modern good life. . . . They [advertisers] directed consumers as to how they should live and why their brand should be a central part of this kind of life" (Holt, 2002, p. 80). During this period, companies assumed the role of cultural authorities. Firms adapted scientific management principles used to organize workers to try to orchestrate their customers' preferences. Behaviorism also began to influence advertisers, who consequently started to perceive their expertise as replicating methodical science.

In time, marketing progressed from a low-profile function primarily focused on distribution to "a significant strategic tool for senior management and from a quasi-professional trade to an institutionally legitimated science supported by academic research, education, expanding doctoral programs, and licensing organizations" (Holt, 2002, p. 81). The erroneous belief nonetheless prevailed that marketers could methodically utilize sophisticated academic theories and methods as tools "to direct consumers to value their brands" (Ibid.). Although Holt significantly contributed to describing the evolution of branding, a dearth of literature exists to explain branding's evolutionary development. Little research also identifies the cause and effect inherent in the evolution of branding theories. Consequently, as the causal connections among various theories had not yet been fully explored, Hampf and Lindberg-Repo (2011) extended their research beyond existing literature to examine this realm.

Prior to the 1970s, a significant consumer movement contested the utilization of brands, and companies were unsure how to best highlight their brands or whether consumers cared about them. As a result, marketers considered it critical to employ research to ascertain the significance of brands in the purchasing process. Research on everyday products during this time indicated that consumers preferred products with a well-known brand; only 25% of respondents in a study by Marquardt et al. "did not pay attention to the brand at all" (Hampf & Lindberg-Repo, 2011, p. 2). These consumers reported perceiving price — not brand — as the primary consideration when purchasing a product.

Hampf and Lindberg-Repo (2011) explain that the marketing mix, which Neil H. Borden constructed during the 1950s, depicts a well-known term in contemporary marketing. E. Jerome McCarthy later promoted the popularity of the marketing mix when he proposed the following four P's as vital to the process: Product, Price, Place, and Promotion. These components "symbolize marketing tools that companies could use to achieve their goals" (Hampf & Lindberg-Repo, 2011, p. 2). Ironically, more recently these four P's do not explicitly link to branding.

The idea supporting the postmodern branding paradigm purports that brands prove more valuable when proffered as cultural resources — as cultural blueprints that serve as functional elements for individuals to produce the self as they choose. Consumers, however, must perceive resources to be authentic. "To be authentic, brands must be disinterested; they must be perceived as invented and disseminated by parties without an instrumental economic agenda, by people who are intrinsically motivated by their inherent value" (Holt, 2002, p. 83). Because most postmodern consumers see contemporary branding efforts as reeking with sponsors' commercial intent, they do not typically perceive modern branding efforts as authentic.

Due to recession constraints during the 1970s, branding techniques fell lower on the marketing agenda until the mid-1980s, when they resurfaced augmented with numerous extensions and refinements (Hunt, 2010). Holt (2002) asserts that five new branding techniques emerged by the 1990s that aimed to present brands as pertinent as well as genuine cultural resources. Four of these are described as follows:

Ironic, reflexive brand persona. This approach diametrically opposed the fatherly voice of contemporary ads. These ads attempted to detach the brand from blatant attempts to influence the consumer, a common practice during the 1990s.

Coattailing on cultural epicenters. This technique wove the brand into cultural epicenters such as "arts and fashion communities . . . ethnic subcultures (e.g., the African-American ghetto for Tommy Hilfiger, Nike, Sprite, and Fubu), professional communities (e.g., professional sports for Nike, commercial arts for Apple), and consumption communities" (Holt, 2002, p. 84). When a brand builds an ongoing, credible relationship within a community, it crafts an impression of itself as a vested community member worthy of its standing.

Life world emplacement. This technique asserts that the brand's value stems from unbiased daily life circumstances, not from commercial sponsorship. "Consumers[, nevertheless,] recognize that marketers promiscuously stitch stories and images to their brands that may have nothing to do with the brands' real history and consumption" (Holt, 2002, p. 84). Consequently, consumers search for proof that a brand has actually earned its status.

Stealth branding. Stealth branding permits marketers to break away from consumer ascriptions of cultural coercion. Rather than implementing overt branding efforts, companies access the allegiance of tastemakers to invest efforts in distributing the concept of inherent cultural value in the brand. "The promise of stealth branding has stimulated a publishing and consulting frenzy, promoting concepts like grassroots, viral, tribal, and buzz" (Holt, 2002, p. 85).

According to Hunt (2010), the trend toward social marketing — which asserts that marketing challenges extend to nonprofit, micro, and normative organizations — depicts one of two trends that materialized during the 1970s. "The second can be termed the societal issues trend. It concerns topics as diverse as consumerism, ethics, marketing and ecology, the desirability of political advertising, social responsibility, and whether the demand for public goods should be stimulated" (Hunt, 2010, p. 15).

In 1985, results of a debate within the American Marketing Association (AMA) led a committee to evaluate how marketing could best be defined. The AMA Board ultimately approved the following recommended definition: "Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives" (Bennett as quoted in Hunt, 2010, p. 115).

During the 1980s and continuing through the 2000s, the following seven research streams evolved, viewing marketing as both an economic and a social practice: (1) market orientation, (2) services marketing, (3) relationship marketing, (4) quality management, (5) value and supply-chain management, (6) resource management, and (7) network analysis (Hunt, 2010, pp. 15–16).

Holt (2002) explains that in contemporary marketing, "marketers work with a palette of techniques derived from the foundational principle of the postmodern branding paradigm: consumers will view brands as valuable resources for identity construction when brand meanings are perceived to be authentic — original and disinterested" (Holt, 2002, p. 85).

Baker and Saren (2010) purport that the following four conclusions evolved from both qualitative and quantitative research regarding branding: (1) Changes have occurred across all five content themes, indicating significant evolution in the concept of marketing since its earliest definition. (2) The greatest change has occurred in the nature of the relationship between provider and user — from one-way, narrow, discrete transactions to the recognition and positioning of relationships as a key strategic resource. (3) Changes in the marketing environment have resulted in a broadening and softening of the original concept and its transfer to other domains, including services and not-for-profit. (4) Marketing has shown itself to be adaptable, flexible, international, and open (Baker & Saren, 2010, p. 20).

Vargo and Lusch (2004) report that "marketing moved from a goods-dominant view, in which tangible output and discrete transactions were central, to a service-dominant view, in which interchangeability, exchange processes, and relationships are central" (p. 2). These authors define services as "the application of specialised competences (knowledge and skills) through deeds, processes, and performances to the benefit of another entity or the entity itself . . . Thus, the service-centred dominant logic represents a reoriented philosophy that is applicable to all marketing offerings" (Vargo & Lusch as cited in Baker & Saren, 2010, p. 21).

Firms have begun to recognize more and more that brands rank among their most valuable assets, and have begun to augment the level of resources they invest in building their brands. According to Merz, He, and Vargo (2009), their research suggests that "marketing managers might benefit from investing resources in building strong brand relationships with all of their stakeholders and a service-dominant firm philosophy built around brand value co-creation" (p. 1).

Table 2 below reflects the evolution of branding theory, including brand eras, relevant literature, and basic concepts (adapted from Merz, He, & Vargo, 2009, p. 4).