In the market, we often see numerous products that are very similar but with different brand names and hence different prices. A bottle of wine may typically cost $20, but with a brand name of Alfa Romeo on it, the wine now costs $70. A worthless ice scraper costs $50 with Saab’s name written on it.

So why are products with brand names written on it priced so high? Why is there a market for these branded products when other company offerings could offer exactly the same function? I believe that the key is branding of the company.

Other than being a decision heuristic for consumers, I believe that the most important point is that a good brand helps consumer convey their status and prestige compared to others. Brands names are one of the best ways to show a person’s personality qualitatively. A man that wears a suit made by Giorgio Armani, leather shoes made by Lloyd, and drives an Aston Martin super car has the symbol of wealth and extravagant tastes. Whereas another man with a casual dress shirt, and drives an estate car shows that they are low profile and very practical to their daily demands.

In the market, I believe it could be argued that there are different consumer types and that companies have to choose between what type of consumers to target. However, I believe that companies that opt to go for the route of providing a prestige brand are much better off. Companies like Apple, Lamborghini, Burberry are prestigious brands that are actively sought for by consumers and they don’t need to worry about the lack of market share. They also have a much higher leverage with pricing and the design of their offerings, as they are leaders in their market. Therefore, I believe that since consumers heavily view brand names as the key for the identity, companies should try to establish their brands to help better promote and improve the consumer’s identity. Of course, this involves a lot of resources to build up a brand as a prestigious product, but in the long run companies successful in doing so would have a greater chance of becoming a multi-million dollar organization.

Article on the Role of Brand Names in Our Consumer Driven Society