What is a Brand?

Understanding and measuring the economic value creation of brands requires a clear understanding and definition of what a brand is. The word brand is derived from the old Norse word “brenna” which means to burn. By burning signs onto cattle skin farmers could demonstrate their ownership. Although the initial purpose of branding was to demonstrate the origin of an animal it quickly grew into a means of differentiation. Over time a farmer would establish a certain reputation for the quality of his cattle expressed by the branded mark on the animal.1 This enabled buyers to quickly assess the quality of the cattle and the price they were willing to pay for it. The information provided by the brand helped to guide the purchase decision. Facilitating choice is probably the most important purpose of branding in commerce. Understanding how the brand guides customer choice is crucial in defining what a brand is and what economic value it creates.