The following series is an excerpt about brands from the book Basic Economicsby Thomas Sowell:
Even when the various brands of a product are made to the same formula by law, as with aspirin, quality control is promoted when each producer of each bottle of aspirin is identified than when the producer is anonymous. Moreover, the best-known brand has the most to lose if some impurity gets into the aspirin during production and causes anyone injury or death. This is especially important with foods and medicines.
McDonald’s not only has to meet the standards set by the government, it has to meet the standards set by the competition of Wendy’s and Burger King. If Campbell's soup were identified on the label only as ‚”soup”‚ —or ”Tomato Soup,” ”Clam Chowder‚” etc.—the pressures on all canned soup producers to maintain both safety and quality would be less. (added: Brands are one of the best forms of consumer protection.)
In countries where there are no brand names, or where there is only one producer created or authorized by the government, the quality of the product or service tends to be notoriously low. During the days of the Soviet Union, the country’s only airline, Aeroflot, became the epitome of bad service and rudeness to passengers. After the dissolution of the Soviet Union, a new privately financed airline began to have great success, in part because its passengers appreciated being treated like human beings for a change. The management of the new airline declared that its employment policy was that it would not hire anyone who had ever worked for Aeroflot.
Similarly, one of the reasons for the great success of McDonald’s in Moscow-the largest McDonald's in the world, with lines of people waiting to get into it—is that it was being compared to the previous had quality of service in Soviet restaurants, not to Wendy’s or Burger King. Competition in the marketplace affects not only price but quality. Brand names make the competitors responsible for both.