Background of the Organization
Microsoft Corporation is a multinational technology company that was formed in 1975 by Bill Gates and Paul Allen. Its headquarters is located in Redmond, Washington. According to Cruz & Houser (2014), the firm began as a software development company that makes operating systems for personal computers and office productivity software for PC. Today, Microsoft Company is creating, developing and supporting various software products for many computing devices in the world. It has grown to be one of the largest enterprises that deal with technology in the world, and it competes with other companies on a global scale. A study conducted by Cruz & Houser (2014) indicates that Microsoft has reached revenue of more than $90 billion and has employed more than 138,000 workers. The technical innovations of this corporation and its leadership in the consumer markets as well corporate markets give it a competitive advantage over its rivals. According to Cruz & Houser (2014), Microsoft has motivated and inspired every day based on how its customers use its software to find creative solutions to business challenges. Microsoft Corporation has also focused on seven essential divisions namely; clients, home and entertainment, servers and tools, Mobile and embedded devices, MSN, as well as Microsoft Business Solutions (Cruz & Houser, 2014). With these divisions, the firm has different strategies to implement.
Objectives of the Assignment
The primary aim of this paper is to evaluate the current situation of Microsoft company brand at the local and international market levels. By doing so, the essay will critically appraise the contemporary branding theory and concepts and assess the key impact of these concepts on brand management practice. Another objective is to determine the reason for the success of this company and to pinpoint its activities and customers' preference for this brand against other favorite brands. The paper also aims to discuss the types of brand extensions used in Microsoft as well as the implications of the identified brand extensions. Lastly, the essay purposes to determine the branding strategies and their effectiveness in the Microsoft Corporation.
Brand Management Application
A brand refers to a mark, a unique design, or a symbol that differentiated the company's products from the products of its competitors. The idea of branding has been associated with quality, credibility and satisfaction in the mind of the consumers. Aaker & Biel (2013) argue that the term 'brand' needs to be looked in a different perspective other than the mark. According to him, a brand is a particular product or service provided by a company. Therefore, before deciding on branding methods and strategies, it is required of the brand managers to determine the market from a global perspective.
Meanwhile, the normative framework for brand management proposed by Balmer (2012) has been influential in hypothesizing the continuous process of selecting, Implementing and controlling a brand image over time. The rule of brand management proposed by Heding et al., (2015) indicates that every product ought to follow the concept of a brand. The rule of managing the brand concept is to follow three distinct stages namely; introduction, expansion and fortification. The objective of fortification is to reinforce and strengthen the extended brand image by elaborating its meaning to products outside the first category.
Studies show that as competition becomes stiff in the marketplace, it is crucial for the company to change its brand (Kapferer, 2012). The image associated with a brand is identified as a critical differentiating factor for the company and helps the enterprise gain more advantage over its competitors. When the customers buy products, the credibility or prestige of a brand appears to be more influential compared to the quality of the item. According to the analysis carried out by Cruz & Houser (2014), Microsoft Company, for instance, has succeeded in winning more customers and becoming one of the best technology firms due to its innovative branding practices. For example, since its inception in 1975, Microsoft Company has changed its brand logo about five times as shown below. By doing so, it has attracted consumers all over the world.
Managing a brand and making it known in the world is not an easy task. For this process to be successful Leekha Chhabra & Sharma (2014) point out that the brand manager and the marketers must come up with reasonable ideas. The most important tool that the marketers use to make the public aware of the new product is advertising on the social media, television, and other channels that have many users. However, it is believed that promoting the new products through the TV and the social media can make the item to be known widely.
Therefore, advertising is the most significant way for marketers to interact with the customers and position the company's brand in the minds of the consumers (M'zungu et al., 2010). Conversely, it is imperative for the Microsoft Company to review the strengths and weakness of its brands before launching the new product. This move ensures that the company introduces a product that will receive a positive view as it satisfies the needs of the consumers. When the consumers view the new product positively, it gives the company the opportunity to extend its brand.
As stated in the above section, the brand extension should be done within the same brand framework. Milberg et al., (2010) suggest that customers' assessment as an acceptance of brand extension is based on the level of perceived fit between the parent brand and the extended brand. The fit is hypothesized as a shared connection between the parent brand and the extension product. Rosenbaum-Elliott, et al., (2015) outline that perceived fit is made up of various dimensions such as similarity, typicality and relatedness. These dimensions determine the type of the brand extension used in a product. Due to the increased level of communication in the technology industry, the Microsoft Corporation has developed two kinds of brand extensions in targeting the target markets. They include line extension and category extension.
Line extension refers to a type of brand extension that targets a new market segment with an existing product class (Todor, 2014). For instance, Microsoft Corporation uses its strong brand name to launch new software products within the same category. Some examples of the software products the company has launched using line extension include Microsoft Office, Microsoft Windows, Microsoft x-box and Microsoft Internet Explorer. Launching a new product under an existing brand name has an advantage to the new brand as it gains instant recognition and prestige with much less advertising outlay.
A category occurs when consumers treat two or more separate objects equally. Therefore, category extension refers to the approach of taking an existing brand name, and use that particular brand name to enter into another product category (Milberg et al., 2010). In the case of a Microsoft Corporation, the company initially focused on developing computer software. The company then used the same brand to launch Microsoft phones as a new category of its product. Unlike line extension, category extension is more complicated because for it to be functional, the brand must enter the unique product class (Muge Arslan & Korkut Altuna, 2010). The reason for applying this type of extension is to take advantage of the identity of the existing brand name (Microsoft) to market its new products (Microsoft phones) in the new and existing market.
Impacts of Brand Extension
The two brand extensions: - line and category extensions have both positive and negative impacts on brand management. Even though these two types of extension aim at targeting the market segment, they differ slightly regarding how they approach the market. (Leekha Chhabra & Sharma (2014) have argued that line extension has an advantage over category extension. For instance, he asserts that the use of line extension has assisted the Microsoft Corporation to target the market segment efficiently because it is based on an existing product class. For that reason, when the company launches new products within the same type, it can reach the consumers very fast without further advertisement.
Category extension has influenced Microsoft to manufacture other product categories in the market. In this case, the company has taken advantage of the exiting brand to give the customers a promising impression of the new product. However, Kapferer (2012) claims that category extension is more complicated because it has to wait for the product to enter a new product class. In this context, it has attracted various problems related to the sustainability, transferability and potential lack of fit. Most importantly, Kapferer (2012) sees line extension as harmless because it has an equal customer base compared to category extension that he claims requires time and money to reach the target market.
Branding Strategies Employed in Microsoft Company
Since the inception of Microsoft Company, the firm has been guided by brand strategy when it comes to branding its products and services. In most cases, the brand strategy aims at enhancing the internal and external opportunities of the company's products (Todor, 2014). Before selecting the type of brand strategy to use, it is the responsibility of the brand manager to ensure that that the brand strategy is strategic, visionary and proactive as opposed to reactive and tactical policies. A hint of developing a brand strategy is that it is closely associated with the business strategy. In other words, the brand manager should ensure that the business and the brand strategies coincide. This implies that the two approaches are dependent on each other; therefore, there is need to develop them simultaneously to support each other.
Microsoft Corporation has firmly employed and accepted the value of branding as an essential component of the company's marketing policy. The rule of branding is that is the organization's branding department must set clear objectives for it to have a strategy. In this perspective, Milberg et al. (2010) outline that brand strategy attains its goals provided that the Microsoft Company defines and supports distinctive and staple proficiencies. Therefore, the organization can achieve the purpose of the branding strategy by understanding the product features and distributing them to their brands. Microsoft Corporation has embraced two primary branding strategies namely; brand positioning and brand extension strategy.
Brand positioning strategy
Brand positioning refers to the style of creating a company's product and designing it in a way that it occupies a distinct place in the consumer's mind to establish a competitive advantage. In other words, this strategy illustrates how a brand is different from that of its competitors. Therefore, a brand positioning strategy involves building brand associations in the minds of the target consumers to make them view the product in a unique way (Heding et al., 2015). This type of branding strategy is common in the Microsoft Company. For a long time, the Microsoft users have always perceived the Microsoft products as the best even though the company faces stiff competition from Apple and other leading firms.
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