The Competitive Significance Of Brands

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Deven Desai, Spencer Weber Waller, Jul 29, 2014

Brands and brand management have become a central feature of the modern economy and a staple of business theory and business practice. Brands also have important effects on competition and the marketplace; yet the two key areas of law concerned with competition—trademark and antitrust—have missed the importance of branding.

Contrary to the law’s conception of trademarks, brands are used to indicate far more than source and/or quality. Indeed those functions are far down on the list of what most businesses want for their brands. Brands allow businesses to reach consumers directly with messages regarding emotion, identity, and self-worth such that consumers are no longer buying a product but buying a brand.

As a competition matter, businesses pursue that strategy to move beyond price, product, place, and position and create the idea that a consumer should buy a branded good or service at a higher price than the consumer might otherwise pay. Branding explicitly contemplates reducing or eliminating price competition as the brand personality cannot be duplicated. This practice can be understood as a product differentiation tactic, which allows a branded good to turn a commodity into a special category that sees higher margins compared to the others in that market space. Despite these clear strategies and effects, trademark and antitrust law are somewhat blind…

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