Trademarks
provide reliable reference points that enable consumers to identify products on
the market that are likely to meet their requirements and to use their own
experience and other sources information to evaluate marked products and inform
their decision-making.
According
to the economic theory of trademarks, consumers respond and give weight to
trademarks in their decision-making because they value the information that
trademarks signify or because trademarks are a source of some other kind of
benefit.[1]
Trademark can also distinguish goods through identifying and differentiating
competing products on the basis of their trade origin. For the consumer,
trademarks can be a source of guidance about the quality, condition of marked
products. The competing products may vary on the basis of quality or price or
any other characteristic, which consumer values positively or negatively. The
information provided by the trademark may not be required, if the consumer has
previously used the product but where, the consumer has never used the product,
the trademark plays an important part in their decision making. It provides
necessary information regarding the characteristics of the product, reducing
the search cost for the consumer. But this function is restricted on the basis
that the trademark should a recognized trademark.
Some
of the additional functions of the trademark in context with marketing are as
follows:
Trademark and communication
Trademarks
identify products that are likely to be consistent in terms of quality and
other characteristics of interest to consumers. They can therefore facilitate
communication in the form of providing information relation to the product’s
characteristics therefore providing a basis for identifying and differentiating
“brands” of products in terms of their quality and other features of the
products. Trademarks help consumers to recognise brands on the basis of past
experience and form their opinion about a particular brand.
Trademarks
are the best means of communication for a firm as they can reduce the risk of
error in communication and accurate in providing the information regarding the
marked products.
Trademarks identify products that are likely to have a
deep level of consistency. They signify the consistency that can be achieved
through unitary control of production. A firm is not
restricted to establishing a single brand or marketing identity for its
products, but can use trade marks to establish a portfolio of separate marketing
identities for the same kind of product. This enables a firm to market products
with different levels of quality or different combinations of characteristics,
which may enable it to increase its profits from its activities.[2] For
example, strong brands today have source and quality-limited messages. TIDE,
CHEER and IVORY SNOW do not identify different detergent manufacturers—they
all, in fact, come from Proctor & Gamble—and each transmits not a general,
but a specific and very different cleaning signal—TIDE “is so powerful, it
cleans down to the fibre,” CHEER is for all temperatures and IVORY SNOW is “99
and 44/100ths percent pure. . . .”[3]
Each has its own distinct image. Each poses a separate value proposition. So,
is can but said that trademark
facilitate communication about the products in terms of their identity and
distinguish products that are likely to be consistent with each other in this
respect and do so in a way that should be readily apparent to consumer.
Trademarks can also provide a useful channel of
communication between producers and consumers: Producers can use them as
reference points to convey information about their products as well as producers
can use them to acquire information about the preferences of consumers and
feedback from consumers. For example: The quality of some products may be a
matter of subjective taste and preference or may reflect knowledge, skills and
other capabilities that are specific to a particular firm and cannot easily communicated.
In that case, some of the characteristics of an undertaking’s products may be
unknown to other firms. A trade mark can therefore reduce the communication
costs that would have to be incurred in specifying a particular set of
characteristics and verifying compliance.
As
trademark communicate about the quality and other characteristics of the
product and quality characteristics are ones which all consumers are regard as
adding value to a product, though they may differ in how much they are willing
to pay for a higher quality product and in their willingness to accept a lower
quality product at a lower price. This process of deciding a higher quality
product or low quality product creates an image of the brand. Thus, encouraging
potential consumer, who may prefer a particular brand of product because they
enjoys a particular status or image
given to them by using that product even though it may not differ from
its alternatives.[4] A
trademark can communicate information relating to the behaviours of the
undertaking. For example the after sales service, etc, this behaviour of an
undertaking as an organization can also be viewed as contributing to the
characteristics of a product if some consumers would give these matters weight
in their decision-making once made aware of them.[5]
Trademark Reduces Informational Search Costs
As
stated above a trade mark has the identifying and differentiating power on the
basis of their trade origin. The trademark is the guide to the consumer. It tells
about the quality, condition and other characteristics of the marked product. The
markets are filled up with identical and competing products, which may change
the consumer’s value positively or negatively. The trademark which can easily
identified i.e. recognised trademark can reduce the cost consumer incur in
searching for what they desire, and the lower the cost of search in more
competitive market.
The
courts have also recognised for decades this search cost theory attached with
the trademark law. In 1987 William Landes and Richard Posner influentially
presented a “search costs” theory of trademark laws. They explained that
trademarks are socially valuable because they reduce consumers’ search costs,
by allowing both sellers and buyers to economize on trademarks’
The
price of any product is sum of its monetary price and the consumers cost of a
market search. A search cost is the consumer’s cost of obtaining information
about the product in terms of quality, price, location of sales or any other
information. The type of search, and how extensive it is, varies with the type
of product sought[6].
Trademark
provides two kinds of information which can reduces the consumer’s search cost:
1. Trademark
identifies the source of the produce. It acts as reference point for the
consumer, so that the consumers can relate to their past experience with the
brand or through recommendation by other consumers, thus decreases the search
cost.
2. Trademark
provides information about the product.
For
products that consumers tend to purchase less frequently or that involve
relatively substantial expenditure, consumers may try to use the experience of
others as a source of guidance. Again, trademarks provide a means of assistance
both through signifying likely consistency and through providing a reliable
reference point that third parties can use to publicize their experience and
other information.[7]
The experience of others may also provide useful guidance about the credence
characteristics of products. A single strong brand can convey product-related
attributes, user imagery, usage imagery, personality, and functional,
experiential and symbolic benefits, and “the strength of a brand association
increases both the likelihood that the information will be accessible and the
ease with which it can be recalled by ‘spreading activation.’”
Furthermore,
the protection of the trademark may not always reduce search cost, when the
producer owns a mark the identifies or describes the product, the productivity
of other firms trademark decreases since they are not entitled to use a mark
that describe their products. As a result, the consumers will need to search
further to determine whether a brand under a different name is really the same
product. Further, the competing firms will have to use some other name,
probably long name, to describe their products and consumers having less recall
of long names may retain less information from those brands, increasing the
search cost.
The Investment and Advertising Functions of a Trademark
Trademark
law provides broad protection for strong trademark in order to provide
incentive to invest in producing a quality product and advertising to
strengthen the mark. A trademark is strong when the consumer identifies the
mark with the brand and its source. [8]The
strength of the incentive that the owner of a trade mark has to avoid action
that may damage the trade mark’s reputation and marketing power is related to
the scale of the investment that has been made in building up and maintaining
this marketing power and investment in building up the kind of track record
that justifies a good reputation, it includes expenditure on increasing the
trade mark’s level of recognition and increasing its appeal to consumers in
other ways such as through advertising and promotional activity[9].Trademark
owner have an incentive to invest in advertising to strengthen marks and
increase brand identification when strong marks are afforded broad protection.
In
order to develop a strong mark, a trademark owner must consistently produce a
quality product. When trademark owner consistently produce high quality goods,
consumers come to rely on the brand based on consistency. The result is repeat
purchases, which, in turn, strength en the trademark further and lower search
cost since the consumers have information from experience with the brand.
Without trademark protection, consumers would not be able to identify brands
and companies would have no such incentive for investment. As a result search
cost would increase as consumers would be forced in incur the cost of
distinguishing between high quality and law quality goods. The end result would
be an overall drop in the quality of goods.
[3] Swann, Aaker and
Reback, 2001, http://www.inta.org/TMR/Documents/Volume%2096/vol96_no4_04.pdf, accessed on
25/7/2011
[4] Swann, Aaker
and Reback, 2001, http://www.inta.org/TMR/Documents/Volume%2096/vol96_no4_04.pdf, accessed on
25/7/2011
[5] An Economic Perspective on
Trade Mark Law (Edward Elgar Publishing, 2011)
[6] Kenner Parker
Toys, Inc. v. Rose Art Industries, Inc. - Confusing Play on Words Costs Dough
for Rose Art http://heinonline.org/HOL/Page?handle=hein.journals/utol25&div=14&g_sent=1&collection=journals accessed on
21/7/2011
[7] A. G, An Economic Perspective on
Trade Mark Law (Edward Elgar Publishing, 2011
[8] Kenner
Parker Toys, Inc. v. Rose Art Industries, Inc. - Confusing Play on Words Costs
Dough for Rose Art http://heinonline.org/HOL/Page?handle=hein.journals/utol25&div=14&g_sent=1&collection=journals accessed on
21/7/2011
[9] A. G, An Economic Perspective on
Trade Mark Law (Edward Elgar Publishing, 2011)
No comments:
Post a Comment