BENEFITS OF PRODUCT PROTECTIVE MARKING Michal Stoklasa 1, Halina Starzyczná 2. - PDF

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BENEFITS OF PRODUCT PROTECTIVE MARKING Michal Stoklasa 1, Halina Starzyczná 2 1 Slezská univerzita, Obchodně podnikatelská fakulta, Univerzitní nám. 1934/3,73340 Karviná 2 Slezská

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BENEFITS OF PRODUCT PROTECTIVE MARKING Michal Stoklasa 1, Halina Starzyczná 2 1 Slezská univerzita, Obchodně podnikatelská fakulta, Univerzitní nám. 1934/3,73340 Karviná 2 Slezská univerzita, Obchodně podnikatelská fakulta, Univerzitní nám. 1934/3,73340 Karviná Abstract: The main aim of this article is to identify the attitude of Moravian-Silesian consumers to the product protective marking, based on its benefits. The authors therefore define brand in marketing, product protective marking, brand benefits, and brand value. After the secondary research on theoretical background, authors research the current situation of product protective marking in the Czech Republic and design their own categorization. This is the first benefit of this article that can be used by our Czech ministries to make the situation in product protective marking a bit clearer. The primary research is conducted on representative sample of 719 for Moravian-Silesian region, based on 4 demographic characteristics: age, gender, education, and income. The main goals are to assess consumers knowledge of these brands and what benefits the brands provide. The outcomes are mostly according to premises from the secondary research, 73.1 % of respondents check only sometimes or only for specific brands that they know. The perceived benefits of consumer brands, EU Geographical Indication, and regional brands are described. Based on this, two conclusions are drawn: the ministry of Agriculture should adopt our categorization and educate consumers, and companies should choose regional brand when thinking about product protective marking. Keywords: brand, brand benefits, product protective marking, consumer brands, EU Geographical Indication, regional brands. JEL classification: M Introduction The European Union seeks to promote the product protective brands in the framework of its economic policy, to help small businesses and craftsmen gain a competitive advantage in the European single market. Small manufacturers are not suited to fight with established local or even multinational competitors. One of the possible solutions is to engage in wider group of products with the same characteristics and common promotion, known as product protective brands. This offers a competitive advantage created by the use of already-known brand positioning, which allows consumers to easily and quickly recognize products with certain characteristics. The EU itself provides for several kinds of product protective markings, for other it issues recommendations, and many more are developing in different Member States. In the Czech Republic, there is a wide range (hundreds) of these brands and consumers have a hard time understanding what each of them on product packaging means. Categorization of these brands is in the Czech Republic not clear. Even the websites of individual ministries and their supported organizations publish different facts and no coherent categorization has been determined. This article aims to identify the attitude of Moravian-Silesian consumers to the product protective marking, based on its benefits. The authors therefore define the brand in marketing, product protective marking, and design their own categorization of product protective marking used in the Czech Republic. A research will be conducted on representative sample of the MS region to determine consumer attitudes toward these brands. The main goals will be to assess their knowledge of these brands and what benefits the brands provide 2. Brands and brand systems in marketing The terms trademark/brand/marking are in certain situations nearly interchangeable but for the purpose of this article mean different things and need to be defined. Therefore, in this chapter the authors define brand in marketing with closer look on differences with trademarks and markings, define product protective markings, benefits of brands, and brand value. 2.1 Definition of brand in marketing The American Marketing Association (In Vysekalová et al., 2011, p. 136) defines a brand as follows Brand name, title, character, artistic expression, or a combination of the foregoing criteria. Its purpose is to distinguish the goods or services of one seller or group of sellers of goods or services from competing vendors. This definition is taken over by many authors (Kotler and Keller, 2007; Keller, 2007; Anchor and Kouřilová, 2008). The brand is a product or service and its features differentiate it in some way from other products or services that are designed to satisfy the same needs (Kotler and Keller, 2007, p. 312). These differences may be rational and tangible, relating to product design, or symbolic, emotional and intangible, related to what the brand represents. Brands themselves are valuable intangible assets which need to be handled with care (Keller, 2007). Vysekalová et al. (2011, p. 136) states that the brand is what sells. Consumers can evaluate exactly identical product differently, depending on the brand it carries. Brand reflects perception and sometimes typical features of the consumers that buy them (Kotler and Keller, 2007, p. 312). Brand value is the added value of products and services. This value can be reflected in how consumers think, feel and behave in regard to a particular brand, as well as it may be reflected in prices, market share and profitability of the brand (Kotler and Keller, 2007, p. 314). Hesková (2008) states that the marketing view of the brand is much broader than the above definition. The brand is a powerful incentive that should cause awareness of the overall image of the product, respectively about the added value. (Hesková, 2008, p. 4). Another view of the brand offers according to Vysekalová et al. (2011, p. 136) Bárta: Brand = Product + added value and it leaves ample room for the characteristics of what is herein referred to as an added value. Authors consider this view of the brand to be beneficial because it allows an easy explanation for the consumer motivation to buy certain protective branded products. For example, consumer choosing a regional brand (Beskydy product) could be motivated by the connection with the place where he was born, grew up and lives; consumer choosing consumer brand (Czech Made) could be patriotic. An important aspect of a brand is its positioning. Kotler and Keller (2007, p ) characterize the positioning as placing the brand in the minds of consumers to maximize the potential benefits of the company over the competition. Vysekalová et al. (2011, p. 136) adds that the brand positioning is a collection of perceptions in the mind of the customer and should answer questions such as veracity, specificity and product compatibility with the position that is desired over the competition. Pelsmacker, Guenes and Bergh (2003, p. 60) reported that brand binds to a key product and its different functional and emotional value compared to the competition. Authors understand brand positioning as a kind of consumer simplification that is created in the mind for each brand based on the experience with the product, so it can be easily distinguished from the competition. It is therefore important to create positive associations with the brand. Marketing term brand is not clear in the Czech legislation, as it only knows the concept of a trademark. It is governed by Act no. 441/2003Sb., On Trademarks. Under this act, each trademark is a brand, but a brand is a trademark only if it was registered as a trademark. Another term used is marking it is being used by the EU to define product protective marking basically brands that customers can see on the product packaging. In this article, both marking and branding are used respectively to its meaning Brands guaranteed by the state can be seen as the beginning of integrated systems (programs) of product marking, so-called multilevel brand, which serves to link the various fragmented systems of quality marking. Efficient joint marketing communication could help individual protective markings, whether it is any type of product (food, cosmetics, textiles, art products, souvenirs, etc.). (Kerr, 2006) These systems promoted by states and the EU showed the way to other brands. Branded programs are composed of several previously separate brands, which use the same criteria for product evaluation. Thus facilitating consumer market orientation, which is currently flooded with a wide range of various brands. Hesková (2006, p. 107) states that consumers nowadays know paradoxically less brands due to their excessive quantity. These brands are then not able to affect consumer behaviour, as was the intention of their creators. This is because of the lack of brand marketing communication, lack of consumer education and problems with the quality for consumer protection. (Hesková, 2006, p. 107) For better consumer orientation, the brand programs could be grouped into 4 groups (Hesková, 2006, p ): State brands (programs) - the first state brand program in the world appeared at the end of the 19th century, their development began after World War II (Keller, 2007). In the Czech Republic, the boom can be seen in the last decade, frequent are environmental programs and so-called Bio-brands, e.g. BIO - product of ecological agriculture . Furthermore, the government branded programs include Consumer Brands, e.g. Czech Quality and KLASA. Brands (programs) of professional unions and associations - these branded programs are focused on brand connection with a certain level of quality. Another very strong new trend are the regional programs originating in response to the single European market, these programs in some aspects may be included in the state branded programs (because they are often times regulated by the regional government). Examples could be program of network quality hotels Korunka or Bavarian Quality Assured . Corporate brands - have the longest tradition. These are classic manufacturers brands (e.g. Pepsi, Shell), but since the 70s of the 20th century Europe also sees a strong expansion of private retailers brands (e.g. Tesco Quality, K-Classic). Branded corporate programs use further division according to the following criteria (Hesková, 2006, p. 109): o Economic Level - wholesale, retail, alliances etc. o Sector - food, textiles, automotive etc. o Organizing principle - branches, cooperative association, franchising etc. o Form brands of manufacturers, private discounters, department stores etc. EU brands created by the European Union and applicable after adoption of the Acquis Communautaire in the member state. The advantage is their validity throughout the whole territory of the EU. The EU began to use the geographical branding after 1995 (Germany, the Netherlands, and Ireland) to support some lagging sectors (Hall, 2004). Examples include the geographical indication of products. Furthermore, a number of brands has been established in the field of eco-labels, for example The EU Eco-mark (in accordance with the Regulation no. 1980/2000). (Kaufmann and Durst, 2008) 2.2 Brand benefits for various target groups Brand offers many benefits to consumers, traders and producers. As follows from the preceding definition of positioning, the brand can facilitate buying decisions by reducing the time and reducing the risk of purchases (Cayla and Eckhardt, 2007). For consumers, brands offer a significant decrease in product search cost (Keller, 2007). For traders, brands are important because a strong brand attracts customers and enhances the traders image (Pelsmacker, Guenes and Bergh, 2003, p. 75). Novotný and Duspiva (2014) describe the contribution to traders in increased customer confidence, and also in -636- reduced risk from buying products of famous brands, which creates good distribution relationships. Authors consider the advantage of a strong brand for the trader to be all marketing communications that the producer offers on favourable terms (POP / POS materials, advertisement, etc.). For producers, brands are again significant in terms of reducing the risk, because the consumer purchases the known product again. Horner and Swarbrooke (2003) describe the benefits of increasing the producers strength to retailers, protection against competition in the form of ability to set a higher price for well-known brand, and cutting costs by maintaining loyal customers accustomed to buy one brand. Keller (2007) mentions the producers opportunity to create a market entry barrier for other companies with a strong brand, which is a significant competitive advantage. Hesková (2008, p. 5) provides the following five benefits of brands: Brand is a tool of differentiation sets apart from the competition. Brand is a tool to guide the customer in the market - it is a guarantee of quality. Brand is a tool of manufacturer and distributor relationship gives assurances. Brand is a barrier to entry for competitors - its non-price tool. Brand is a value for the producer - increasing intangible assets of the company. These benefits also imply certain brand value that is discussed below. 2.3 Brand value According to Aaker (2003, p. 8), brand value is a set of benefits (assets) and disadvantages (liabilities) associated with a name and a brand symbol, which increases or decreases the value that product or service brings the company and / or customer. This value consists of four, later expanded into five, categories (Aaker, 2003, p. 8): Knowledge of the brand. Loyalty to the brand. Perceived Quality. Associations connected with the brand. Other proprietary brand assets. To calculate brand value, there are a number of methods, e.g. according to Pelsmacker, Geuens and Bergh (2003, p. 67), these are: financial analysis, market analysis, brand analysis, analysis of legal aspects. Pelsmacker, Geuens and Bergh (2003, p. 69) for marketers, the value of the brand in terms of customers is more important than its financial value. , this brand value in terms of customer can be expressed by the following factors: Awareness. Perceived Quality. The induced associations. Other assets. High brand loyalty. According to Pelsmacker, Geuens and Bergh (2003, p. 69) Each of these factors is determined and influenced by the marketing communications and strategy, and brings many benefits. Brand awareness Brand awareness comprises of two categories, brand recognition and brand recall. Brand recognition defines Keller (2007, p. 98) as the ability to confirm an earlier acquaintance with the brand, if the customer is given the necessary impulse, Aaker calls this the brand identification. Brand recall defines Keller (2007, p. 98) as the ability to recall a brand for a product category. Brand loyalty According to Aaker (2003, p. 20), the value of the brand is largely made up of customer loyalty and brand loyalty. Pelsmacker, Geuens and Bergh (2003, p. 73) say that the true value of the brand is -637- a reality only when the customer purchases the brand and is loyal to it, we can say that the real asset for the company is the loyalty to the brand. Aaker states 5 categories of customers according to their loyalty: non-customers (buying competitors goods or are not interested in the product line at all), price sensitive customers (the price is critical for them), passively loyal customers (buying brand because of habit), customers on tilt (randomly buying more brands), loyal customers (with high loyalty). Pelsmacker, Geuens and Bergh (2003, p. 73) also reported five categories according to customer loyalty: price switcher, vague, disloyal; happy, accustomed to buy, who has no reason to change; satisfied buyer who switches between brands; buyer that favours our brand, has a relationship with it; determined buyer. Perceived Quality According to Keller (2007, p. 264), there is no need to define quality as an independent category, as it can be defined as the overall level of product quality, perceived by the customer compared to adequate alternative. According to Aaker (2003, p. 17), it is necessary to make this a separate category because of its importance, even though the perceived quality of the product is related to the brand associations. Associations connected with the brand According to Aaker (2003, p. 23), brand value is also largely supported by the associations, which customers connect with the brand. In the background of these associations is the brand identity - that is, what the brand has to create in the customer's mind. Pelsmacker, Geuens and Bergh (2003, p. 72) reported six categories of associations connected with the brand: the specific qualities, abstract qualities, functional benefits, psychosocial benefits, value, final value. 3. Methods and Sample The authors deal with this topic for over 6 years. During this time, several researches have been conducted, leading to tens of articles and several monographs. The process of creating this article was as follows: secondary research on the theoretical background, secondary research on articles about the examined topic (to find out what research has already been done in the EU and the CR), secondary research on the current state of product protective markings (as this area is unclear to Czech ministries, consumers and companies), and finally own primary research on the areas that needed to be examined more closely. For the own primary research, quota sampling was used (based on data from the Czech Statistical Office), four demographic factors were taken into account: gender, age, education and income. Overall, there are inhabitants in Moravian-Silesian Region in the category of 15 and older, so with a 5 % error the minimum number of questionnaires is over 384. In total, questionnaires were collected in several phases. From these, representative sample has been formed (according to demographic criteria of gender, age, education and monthly net cash income) for the Moravian-Silesian region consisting of 719 questionnaires. Demographic characteristics of the sample are shown in Tab. 1. For each demographic factor the values shown are: target value (as determined by the Czech Statistical Office for the whole region), the actual relative value and absolute value. The highest deviation of the sample is 0.2 %, for example in the category of net monthly cash income of CZK and more, that is in absolute terms one respondent. The whole questionnaire consisted of 11 questions structured into 5 areas based on Aakers brand value for customers. For this article, only four questions focused on the benefits of product protective marking were chosen. Questions with multiple choices were weighted and data were transformed into normalised data Tab. 1. Sample characteristics Factor Category Target Actual relative Actual (in %) (in %) absolute Gender Female Male Age Education Primary or none Secondary Secondary diploma Tertiary Income CZK CZK CZK CZK Source: own research One hypothesis was formulated: Hypothesis 1: The loyalty to product protective marking is dependent on knowledge of benefits. 4. Results and Discussion This chapter is structured into secondary research on the current state of product protective marking, own primary research, and hypothesis verification. 4.1 Current state of product protective marking in the Czech Republic Currently, there is around 200 different brands that can be used as the product protective marking in the Czech Republic. Each year, around 30 more are established. Additionally, there are several hundreds more brands that are used locally. There is no way that consumers, and even companies, can know them all and know what benefits these brands should bring them. The categorization of protective marking in the Czech Republic is not clearly stipulated. Even the websites of individual ministries and their sponsored organizations publish different facts and no coherent categorization has been determined. Therefore, the authors create their own categorization based on several other work
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