Established companies such as Coca-Cola and McDonalds do not need to waste profits on advertising as they already have a vast and loyal customer base.

Student ID: 0080379103
Student Name: Jing SUN

Word count: 1639

The role of advertising in the developments of brand image and brand extension in established companies.

Utilizing advertising in a most effective and efficient way is always a concern in most companies, as advertising requires a costly investment in both capital and human resources, which in return is expected to create positive outcomes. With a large volume of consumers and brand loyalties created in established, some argue that advertising can be merely a waste of money. While this idea addresses two major …show more content…

Dobni and Zinkhan (1990) defined brand image as a set of beliefs that encompass physical functions and social/emotional meanings of a brand. The reason why established companies still need to focus on enhancing brand image is that they often have to satisfy various stakeholders, including consumers, suppliers, NGOs, funders, retailers. If these stakeholders perceive the company negatively, they would take back their supports (Gray and Blamer, 1998). Sales and profits may decline as the past loyal consumers would no longer buy the products and the potential consumers could not be willing to pay for future consumptions. Capital support may be aborted as well, as capital funders would tag a company with bad brand image as low-growing-potential (Gray and Blamer, 1998). Thus, established companies still need to focus on retaining and developing a positive brand image to keep their stakeholders satisfied.
Both informational and transformational advertising strategies may play irreplaceable functions in building a brand image, through informing, persuading and reminding stakeholders about the brands (Padgett and Allen, 1997). Firstly, advertising can enhance a brand’s intrinsic value, which is regarded as the capability in performing functionally. Before purchase, informational advertising informs the benefits and functions a product may offer. After purchase, informative advertising may help to keep reminding consumers the using experience with key