Chapter 1 Introduction 1. 1 Introduction Brand equity has become a very strong part for every product. Brand equity refers to the marketing effects or outcomes that accrue to a product with its brand name compared with those that would accrue if the same product did not have the brand name and, at the root of these marketing effects is consumers’ knowledge. In other words, consumers’ knowledge about a brand makes manufacturers/advertisers respond differently or adopt appropriately adept measures for the marketing of the brand. Brand equity helps a product to stay strong than other competing brands.
Brand equity is the positive effect of the brand on the difference between the prices that the consumer accepts to pay when the brand known compared to the value of the benefit received. 1. 2 origin of the project and thesis work: As bachelor of business administration (BBA) degree requires an attachment of a report assigned and endorsed by the faculty advisor (supervisor of the report). This report has been originated to make a study on the “Brand Equity- The ultimate destination of a Brand” thesis report also required for the completion of BBA program of Stamford University.
As a part of my study and completion of the BBA degree, the thesis work was assigned by “Ms. Sara Sarwari” Assistant professor of Marketing, Department of business administration; Stamford University Bangladesh. She also approved the topic and authorized me to prepare this report as a part for the fulfillment of the said requirement. 1. 3 objective of the report: Each report has some objectives. The main objective of this thesis report is to fulfill the academic requirement of BBA and gather some particular experience.
But it is not only the foremost objective of this report; the following are other objectives of the heading of the report: Branding has become a very important part in business. To have a strong foot hold in the market a product must be branded. Better brand equity helps a product to stay ahead than its competitors. The more brand equity a product has the more will be the profit of the product. The objectives are summarized as follows: * To know about brands and branding. * To have a better understanding of brand equity. * To get a better idea about how to improve brand equity. To have better orientation on brand , brand equity, and in brand management * To be familiar with the different approaches of building and measuring brand equity. 1. 4 Scope of the study: This study would focus on the following areas of the brand equity: * To discuss the definition of brand and brand equity * Building brand equity * Measuring, managing, and protecting brand equity Each of the above areas would be critically analyzed in order to have a clear view of the total concept of brand equity 1. 5 Methodology: Report work requires adherence to some rules and methodologies.
Rules were followed to relieve the data collection procedure. Completeness and accuracy of study depends on the information and data analysis. Methodology is a set of method in a particular area of activity or research activity. a) Study design: The report is fully comprehensive in nature. Information has been acquired from both primary and secondary source. In addition to these, other necessary information has been accumulated from the daily news paper, relative journal and so on. b) data sources: Data is one of the most important elements to prepare a study effectively.
To make the report factual and reliable of data and information have been collected using different ways. The various sources of data are used widely in this program, which are discussed below: * Source of primary data: The primary data are those, which are collected as fresh and for the first time and thus happen to be original in character. This report has been prepared though extensive use of primary data. I have used various sources to collect primary data in this study program. They are as follows: * Informal discussion with professional * Observation while working in different sides Source of secondary data: The secondary data are those which have already been collected by someone Else and which have already been passed through the statistical process the necessary Qualitative and quantities information has been obtained from the secondary source. The sources are as follows: * Different sites of internet * Miscellaneous books * Some international articles * Stamford library & reference 1. 6 Limitations of the Study I, the student of “Department of Business Administration (Marketing)”, just have completed my formal education stage.
This is the first thesis for me. My first thesis, so my knowledge field is not enough. So my tasks are not mistake free. But I have tried my level best. Besides above, have to face some other limitations,they are: * The main constraint of this term paper is insufficiency of information which was required for study. * Limitation of time was one of the most important factors that shortened the present study. Due to time constraints, the sample had to be restricted. * Another drawback is lack of knowledge about this topic, which could be very much useful. Confidential of data was another important barrier that was faced during the conduct of this study. * Unavailability of data. * Sufficient publications, facts and figures and records are not available. These makes narrowed the scope of the real analysis. Chapter 2 Brand – An overview Brand A brand is the identity of a specific product, service, or business. A brand can take many forms, including a name, sign, symbol, color combination or slogan. The word brand began simply as a way to tell one person’s cattle from another by means of a hot iron stamp. A legally protected brand name is called a trademark.
The word brand has continued to evolve to encompass identity – it affects the personality of a product, company or service. 2. 1 Brand definition: American marketing association (AMA) says brand a name, term, design, symbol, or any other feature that identifies one seller’s good or service as distinct from those of sellers. The legal term for brand is trademark. A brand may identify one item, a family of items, or all items of that seller. Philip kotler: A seller’s promise to deliver a specific set of feature, benefits and service consistent to the buyers. 2. 2 Brand Concepts:
A brand is the personality that identifies a product, service or company (name, term, sign, symbol, or design, or combination of them) and how it relates to key constituencies: Customers, Staff, Partners, and Investors etc. Some people distinguish the psychological aspect, brand associations like thoughts, feelings, perceptions, images, experiences, beliefs, attitudes, and so on that become linked to the brand, of a brand from the experiential aspect. The experiential aspect consists of the sum of all points of contact with the brand and is known as the brand experience.
The psychological aspect, sometimes referred to as the brand image, is a symbolic construct created within the minds of people and consists of all the information and expectations associated with a product or service. People engaged in branding seek to develop or align the expectations behind the brand experience, creating the impression that a brand associated with a product or service has certain qualities or characteristics that make it special or unique. A brand is therefore one of the most valuable elements in an advertising theme, as it demonstrates what the brand owner is able to offer in the marketplace.
The art of creating and maintaining a brand is called brand management. Orientation of the whole organization towards its brand is called brand orientation. Careful brand management seeks to make the product or services relevant to the target audience. Brands should be seen as more than the difference between the actual cost of a product and its selling price – they represent the sum of all valuable qualities of a product to the consumer. There are many intangibles involved in business, intangibles left wholly from the income statement and balance sheet which determine how a business is perceived.
The learned skill of a knowledge worker, the type of mental working, the type of stitch: all may be without an ‘accounting cost’ but for those who truly know the product, for it is these people the company should wish to find and keep, the difference is incomparable. A brand which is widely known in the marketplace acquires brand recognition. When brand recognition builds up to a point where a brand enjoys a critical mass of positive sentiment in the marketplace, it is said to have achieved brand franchise.
One goal in brand recognition is the identification of a brand without the name of the company present. For example, Disney has been successful at branding with their particular script font (originally created for Walt Disney’s “signature” logo), which it used in the logo for go. com. Consumers may look on branding as an important value added aspect of products or services, as it often serves to denote a certain attractive quality or characteristic (see also brand promise). From the perspective of brand owners, branded products or services also command higher prices.
Where two products resemble each other, but one of the products has no associated branding (such as a generic, store-branded product), people may often select the more expensive branded product on the basis of the quality of the brand or the reputation of the brand owner. 2. 3 What makes up a brand? A brand is the combination of certain things to represent itself. There are certain elements behind every brand to describe itself. Such elements are given below Logo| Colors| Posters,| Warranty| Voicemail| Messages| Offices| Salespeople| Signage| Reputation|
Sponsorships| Landscaping| Design| Packaging| Community service| Customer manuals| Community involvement| Product development| Advertising| Response to crises| 2. 4 Features of a good brand. A good brand should be composed of some specific features. They are given below- * Suggest the products benefits and qualities, * Be easy to pronounce, recognize and remember, * Be distinctive, e. g. Kodak, Exxon and Oracle; * Be extendable, e. g. Amazon. com expanded from a bookseller into other Categories; * Not carry poor meanings in other countries and languages, e. . Nova means “doesn’t go” in Spanish. 2. 5 Why should an organization define Brand? An organization may define its brand for certain purposes. Such as- 1. to ensure that you have a fresh, compelling and competitive proposition 2. to ensure that your brand works strongly at an emotional as well as at a rational level 3. to ensure that your brand can be delivered consistently and in full by all its stakeholders There are various dimensions based on which a product or service can be branded. Some of these dimensions are given below- 1.
Its central organizing thought – defining it for internal & stakeholder use in one sentence 2. Its slogan – defining it for use with customers in one sentence 3. Its personality – what would it be like if it were a human being? 4. Its values – what does it stand for/against? 5. Its tastes/appearance – what does it look like? What does it sound like? What does it like and dislike? 6. Its stories – what are the stories you tell about how it all came about/what sort of brand it is? 7. Its emotional benefits – how it avoids/reduces pain or increases pleasure 8. Its hard benefits – the “pencil sell” . 6 Brand variables Global Brand: A global brand is one which is perceived to reflect the same set of values around the world. Global brands transcend their origins and creates strong, enduring relationships with consumers across countries and cultures. Global brands are brands sold to international markets. Examples of global brands include Coca-Cola, McDonald’s, Marlboro, Levi’s, Shell etc.. These brands are used to sell the same product across multiple markets, and could be considered successful to the extent that the associated products are easily recognizable by the diverse set of consumers.
Local Brand: A brand that is sold and marketed (distributed and promoted) in a relatively small and restricted geographical area. A local brand is a brand that can be found in only one country or region. It may be called a regional brand if the area encompasses more than one metropolitan market. It may also be a brand that is developed for a specific national market, however an interesting thing about local brand is that the local branding is mostly done by consumers then by the producers. Examples of Local Brands in Dhaka are Otobi, square etc. Ambient Brand:
An Ambient Brand is a movement, where the brand is organized around values and social needs instead of promoting a specific product. It is a virtual space, defined by values and occupied by a community of like minded people. Whereas a traditional brand is entirely independent of products and their parent corporations, an ambient brand is an independent social movement that companies can participate in. They are not selling products, they are allowing their company to participate in a social movement and allow their brand to be identified with this.
It exists as a shared values space where consumers gather, converse and ultimately transact with organizations that are in alignment with the values associated with that community. Corporations do not create ambient brands. They must qualify for inclusion within them by demonstrating that they share the values and will service the interests of their associated communities. The brands develop organically as a result of emerging social and cultural codes and are materialized through eoples ability to organize around them through the use of mainly virtual communities on the web. 2. 7 Types of brand names: Brand names come in many styles. A few include: Acronym: A name made of initials such as UPS or IBM Descriptive: Names that describe a product benefit or function like Whole Foods or Airbus Alliteration and rhyme: Names that are fun to say and stick in the mind like Reese’s Pieces or Dunkin’ Donuts Evocative: Names that evoke a relevant vivid image like Amazon or Crest Neologisms: Completely made-up words like Wii or Kodak
Foreign word: Adoption of a word from another language like Volvo or Samsung Founders’ names: Using the names of real people like Hewlett-Packard or Disney Geography: Many brands are named for regions and landmarks like Cisco and Fuji Film Personification: Many brands take their names from myth like Nike or from the minds of ad execs like Betty Crocker The act of associating a product or service with a brand has become part of pop culture. Most products have some kind of brand identity, from common table salt to designer jeans.
A brandnomer is a brand name that has colloquially become a generic term for a product or service, such as Band-Aid or Kleenex, which are often used to describe any kind of adhesive bandage or any kind of facial tissue respectively. 2. 8 Brand identity: A product identity, or brand image are typically the attributes one associates with a brand, how the brand owner wants the consumer to perceive the brand – and by extension the branded company, organization, product or service. The brand owner will seek to bridge the gap between the brand image and the brand identity.
Effective brand names build a connection between the brand personality as it is perceived by the target audience and the actual product/service. The brand name should be conceptually on target with the product/service (what the company stands for). Furthermore, the brand name should be on target with the brand demographic. [6] Typically, sustainable brand names are easy to remember, transcend trends and have positive connotations. Brand identity is fundamental to consumer recognition and symbolizes the brand’s differentiation from competitors.
Brand identity is what the owner wants to communicate to its potential consumers. However, over time, a product’s brand identity may acquire (evolve), gaining new attributes from consumer perspective but not necessarily from the marketing communications an owner percolates to targeted consumers. Therefore, brand associations become handy to check the consumer’s perception of the brand. [7] Brand identity needs to focus on authentic qualities – real characteristics of the value and brand promise being provided and sustained by organisational and/or production characteristics. Visual Brand Identity:
The visual brand identity manual for Mobil Oil (developed by Chermayeff & Geismar), one of the first visual identities to integrate logotype, icon, alphabet, color palette, and station architecture to create a comprehensive consumer brand experience. The recognition and perception of a brand is highly influenced by its visual presentation. A brand’s visual identity is the overall look of its communications. Effective visual brand identity is achieved by the consistent use of particular visual elements to create distinction, such as specific fonts, colors, and graphic elements.
At the core of every brand identity is a brand mark, or logo. In the United States, brand identity and logo design naturally grew out of the Modernist movement in the 1950s and greatly drew on the principles of that movement – simplicity (Mies van der Rohe’s principle of “Less is more”) and geometric abstraction. These principles can be observed in the work of the pioneers of the practice of visual brand identity design, such as Paul Rand, Chermayeff & Geismar and Saul Bass. Brand parity: Brand parity is the perception of the customers that all brands are equivalent. . 9 Branding approaches 2. 9. 1Company name: Often, especially IN the industrial sector, it is just the company’s name which is promoted (leading to one of the most powerful statements of “branding”; the saying, before the company’s downgrading, “No one ever got fired for buying IBM”). In this case a very strong brand name (or company name) is made the vehicle for a range of products (for example, Mercedes-Benz or Black & Decker) or even a range of subsidiary brands (such as Cadbury Dairy Milk, Cadbury Flake or Cadbury Fingers in the United States). . 9. 2 Individual branding: Each brand has a separate name (such as Seven-Up, Kool-Aid or Nivea Sun (Beiersdorf)), which may even compete against other brands from the same company (for example, Persil, Omo, Surf and Lynx are all owned by Unilever). 2. 9. 3 Attitude branding and Iconic brands: Attitude branding is the choice to represent a larger feeling, which is not necessarily connected with the product or consumption of the product at all. Marketing labeled as attitude branding include that of Nike, Starbucks, The Body Shop, Safeway, and Apple Inc..
In the 2000 book No Logo,[11] Naomi Klein describes attitude branding as a “fetish strategy”. “A great brand raises the bar — it adds a greater sense of purpose to the experience, whether it’s the challenge to do your best in sports and fitness, or the affirmation that the cup of coffee you’re drinking really matters. ” – Howard Schultz (president, CEO, and chairman of Starbucks) The color, letter font and style of the Coca-Cola and Diet Coca-Cola logos in English were copied into matching Hebrew logos to maintain brand identity in Israel.
Iconic brands are defined as having aspects that contribute to consumer’s self-expression and personal identity. Brands whose value to consumers comes primarily from having identity value comes are said to be “identity brands”. Some of these brands have such a strong identity that they become more or less “cultural icons” which makes them iconic brands. Examples of iconic brands are: Apple Inc. , Nike and Harley Davidson. Many iconic brands include almost ritual-like behaviour when buying and consuming the products. There are four key elements to creating iconic brands (Holt 2004): 1. Necessary conditions” – The performance of the product must at least be ok preferably with a reputation of having good quality. 2. “Myth-making” – A meaningful story-telling fabricated by cultural “insiders”. These must be seen as legitimate and respected by consumers for stories to be accepted (See Brand anthropology). 3. “Cultural contradictions” – Some kind of mismatch between prevailing ideology and emergent undercurrents in society. In other words a difference with the way consumers are and how they some times wish they were. 4. The cultural brand management process” – Actively engaging in the myth-making process making sure the brand maintains its position as an icon. 2. 9. 4 “No-brand” branding: Recently a number of companies have successfully pursued “No-Brand” strategies by creating packaging that imitates generic brand simplicity. Examples include the Japanese company Muji, which means “No label” in English (from ???? – “Mujirushi Ryohin” – literally, “No brand quality goods”), and the Florida company No-Ad Sunscreen. Although there is a distinct Muji brand, Muji products are not branded.
This no-brand strategy means that little is spent on advertisement or classical marketing and Muji’s success is attributed to the word-of-mouth, a simple shopping experience and the anti-brand movement. [12][13][14] “No brand” branding may be construed as a type of branding as the product is made conspicuous through the absence of a brand name. “Tapa Amarilla” or “Yellow Cap” in Venezuela during the 80? s is another good example of no-brand strategy. It was simple recognized by the color of the cap of this cleaning products company. 2. 9. 5 Derived brands:
In this case the supplier of a key component, used by a number of suppliers of the end-product, may wish to guarantee its own position by promoting that component as a brand in its own right. The most frequently quoted example is Intel, which secures its position in the PC market with the slogan “Intel Inside”. 2. 9. 6 Brand extension: The existing strong brand name can be used as a vehicle for new or modified products; for example, many fashion and designer companies extended brands into fragrances, shoes and accessories, home textile, home decor, luggage, (sun-) glasses, furniture, hotels, etc.
Mars extended its brand to ice cream, Caterpillar to shoes and watches, Michelin to a restaurant guide, Adidas and Puma to personal hygiene. Dunlop extended its brand from tires to other rubber products such as shoes, golf balls, tennis racquets and adhesives. There is a difference between brand extension and line extension. A line extension is when a current brand name is used to enter a new market segment in the existing product class, with new varieties or flavors or sizes. When Coca-Cola launched “Diet Coke” and “Cherry Coke” they stayed within the originating product category: non-alcoholic carbonated beverages.
Procter ; Gamble (P;G) did likewise extending its strong lines (such as Fairy Soap) into neighboring products (Fairy Liquid and Fairy Automatic) within the same category, dish washing detergents. 2. 9. 7 Multi-brands: Alternatively, in a market that is fragmented amongst a number of brands a supplier can choose deliberately to launch totally new brands in apparent competition with its own existing strong brand (and often with identical product characteristics); simply to soak up some of the share of the market which will in any case go to minor brands.
The rationale is that having 3 out of 12 brands in such a market will give a greater overall share than having 1 out of 10 (even if much of the share of these new brands is taken from the existing one). In its most extreme manifestation, a supplier pioneering a new market which it believes will be particularly attractive may choose immediately to launch a second brand in competition with its first, in order to pre-empt others entering the market.
Individual brand names naturally allow greater flexibility by permitting a variety of different products, of differing quality, to be sold without confusing the consumer’s perception of what business the company is in or diluting higher quality products. Once again, Procter & Gamble is a leading exponent of this philosophy, running as many as ten detergent brands in the US market. This also increases the total number of “facings” it receives on supermarket shelves. Sara Lee, on the other hand, uses it to keep the very different parts of the business separate — from Sara Lee cakes through Kiwi polishes to L’Eggs pantyhose.
In the hotel business, Marriott uses the name Fairfield Inns for its budget chain (and Ramada uses Rodeway for its own cheaper hotels). Cannibalization is a particular problem of a “multibrand” approach, in which the new brand takes business away from an established one which the organization also owns. This may be acceptable (indeed to be expected) if there is a net gain overall. Alternatively, it may be the price the organization is willing to pay for shifting its position in the market; the new product being one stage in this process. 2. 9. 8 Private labels:
With the emergence of strong retailers, private label brands, also called own brands, or store brands, also emerged as a major factor in the marketplace. Where the retailer has a particularly strong identity (such as Marks ; Spencer in the UK clothing sector) this “own brand” may be able to compete against even the strongest brand leaders, and may outperform those products that are not otherwise strongly branded. 2. 9. 9 Individual and Organizational Brands: There are kinds of branding that treat individuals and organizations as the “products” to be branded. Personal branding treats persons and their careers as brands.
The term is thought to have been first used in a 1997 article by Tom Peters. [15] Faith branding treats religious figures and organizations as brands. Religious media expert Phil Cooke has written that faith branding handles the question of how to express faith in a media-dominated culture. Nation branding works with the perception and reputation of countries as brands. Chapter 3 Brand Equity 3. 1 Definition of Brand equity: Brand equity refers to the marketing effects or outcomes that accrue to a product with its brand name compared with those that would accrue if the same product did not have the brand name.
And, at the root of these marketing effects is consumers’ knowledge. In other words, consumers’ knowledge about a brand makes manufacturers/advertisers respond differently or adopt appropriately adept measures for the marketing of the brand. The study of brand equity is increasingly popular as some marketing researchers have concluded that brands are one of the most valuable assets that a company has. Brand equity is one of the factors which can increase the financial value of a brand to the brand owner, although not the only one.
Elements that can be included in the valuation of brand equity include (but not limited to): changing market share, profit margins, consumer recognition of logos and other visual elements, brand language associations made by consumers, consumers’ perceptions of quality and other relevant brand values 3. 2 Branding Elements to Create a High Equity Brand You create these associations in everything you do – advertising messages, logos, names used, segments served, etc. If you use a statement in your advertising that you are the “Team to Trust” – you hope that “trust” will become a brand association.
If you serve a specific segment, then that segment is likely to become associated with your brand. Everything you do in terms of marketing and actions creates brand associations. Basic Branding Elements: * Brand Name * Slogans * Logo * Symbols/Pictures * Marketing Messages * Markets Served Traditionally, your branding elements are the most noticeable features associated with the brand itself – the brand name, slogans, logo, and symbols or pictures used on product offerings and contained in any marketing messages.
But, it is important to know that branding elements extend to the content of the marketing message itself and even your positioning within the marketplace. Every aspect of these elements creates your brand image. It is important that this image is relevant to your customer, clear in what it stands for, and offers some point of differentiation from your competition. 3. 3 Customer Based Brand Equity The customer based brand equity model approaches equity from the perspective of the consumer.
Understanding the needs and wants of consumer and devising products and programs to satisfy them are at the heart of successful marketing. The basic premises of the CBBE model is that the power of a brand lies in what customer have learned, felt, seen, and heard as a result of their experience over time. In other words, the power of a brand lies in what resides in the customers mind. The basic premise pf the CBBE model is that the power of a brand lies in what customers have learned, felt, and heard about the brand as a result of there experience over tie.
In other words, the power of a brand lies in what resides in the mind of customer. Customer based brand equity is formally defined as the differential effect that brand knowledge has on consumer response to the marketing of the brand. There are three ingredients to this definition: * Differential effect Differences in consumer response * Brand knowledge A result of consumers’ knowledge about the brand * Consumer response to marketing Choice of a brand Recall of copy points from an ad Response to a sales promotion Evaluations of a proposed brand extension
A brand is said to have positive customer based brand equity when consumers react more favorably to a product. 3. 4 Sources of brand equity: Customer based brand equity occurs when the consumers has a high level of awareness and familiarity with the brand and holds some strong favorable, and unique association in memory. So the two sources of brand equity are Brand Awareness and Brand image. 3. 4. 1 Brand Awareness Brand awareness is the first step in creating brand image. Brand awareness is strength of node in memory. It consists of brand recognition and brand recall performance.
Awareness can be created through increasing the familiarity of the brand through repeated exposure (for brand recognition). Forging strong associations with the appropriate product category or other relevant purchase or consumption cues (for brand recall). Awareness is created not only through advertising but also through other devices such as logos, packaging and associations (such as community sponsorship). Consequences f brand awareness marketer can get three advantages in consumer decision making: * Learning advantages * Register the brand in the minds of consumers * Consideration advantages Likelihood that the brand will be a member of the consideration set * Choice advantages * Affect choices among brands in the consideration set 3. 4. 2 Brand Image Positive brand image is created through favorable brand associations. There are three considerations here. First, the brand associations should be salient: they should be aimed at increasing the probability of buying, repeat buying or recommending the brand to others. Second, the brand associations should be strong. Do the associations come to mind readily? It is not enough if positive associations exist in customers’ mind.
They should be strong enough. Customers do not choose a brand from a set of all known brands. Rather, they choose a brand from a small set of brands that come to their mind unprompted when they think of a brand. This set, known as the ‘evoked set’, is considerably smaller than the ‘Elicited set’ of brands, like brands that customers know about and can rate when prompted to by the researcher. The evoked set generally consists of brands with strong associations. Third, at least some of the brand associations should be unique. For instance, reliability may be a good association for a computer.
But if most brands are considered sufficiently reliable, then this association does not benefit one brand over another. It provides no rationale for choosing one product over another. Therefore,Associations should not only be strong, but at least some of them should be unique if we are to create brand equity. The image of your brand must embody the character of the company, the characteristics of the product itself (or service), and the image of the user. Brand image then becomes the sum total of knowledge, experience and feelings a person carries in connection with your brand name.
At each and every contact point from the website design to the receptionist that answers the phone, the brand image is either reinforced or diminished. This response depends on how well you are delivering the brand promise and whether your customer can move your brand to the stage three– brand preference. 3. 5Benefits of Brand Equity: Strong brand equity provides the following benefits: * Facilitates a more predictable income stream. * Increases cash flow by increasing market share, reducing promotional costs, and allowing premium pricing. * Brand equity is an asset that can be sold or leased. Brand Equity improvement increases business value and provides many strategic advantages to your company: * Positive brand equity allows you to charge a price premium relative to competitors with less brand equity. * Strong brand names simplify the decision process for low-cost and non-essential products. * Brand names can give comfort to buyers unsure of their decision by reducing their perceived risk. * Brand names are used to maintain higher awareness of your products, and they provide for continuity when company’s are acquired or reorganized. * Company’s use brand equity to gain leverage when introducing new roducts. * The brand name is often interpreted as an indicator of quality. * Strong brand equity insures that your products are considered by most buyers.. * Your brand can be linked to a quality image that buyers want to be associated with. * Higher brand name equity leads to greater loyalty from customers. * Strong brand equity is the best defense against new products and new competitors. * Improvements in brand equity lead to higher rates of product trial and repeat purchasing due to buyers’ awareness of your brand, approval of its image/reputation and trust in its quality. Brands have many of the same implications as capital assets (like equipment and plant purchases) on a company’s bottom line, including the ability to be bought and sold and the ability to provide strategic advantages. * Strong brand names simplify the decision process for low-cost and non-essential products. * Brand name can give comfort to buyers unsure of their decision by reducing their perceived risk. * High brand equity makes sure your products are included in most consumers consideration set. * Allow you to charge a price premium compared to competitors with less brand equity. Brand names are company assets that must be invested in, protected and nurtured to maximize their long-term value to your company. * Maintain higher awareness of your products. * Use as leverage when introducing new products. Brand names represent real assets that must be invested in, protected and nurtured to maximize their long-term value to your company. Brands have many of the same implications as capital assets (like equipment and plant purchases) on a company’s bottom line. Brand names increase business value, including the ability to be bought and sold and the ability to provide strategic advantages. . 6 Does brand equity vary across customers? Brand equity does vary across individuals, as we would expect, and we can measure these differences. The data collected in brand equity studies can also be used to segment the market into various groups based on the benefits they seek. Using the utility estimates from the conjoint models, we can identify benefit segments in your market. These segments can then be compared to each other to highlight differences in brand equity between various types of product users, different levels of price-sensitivity, and different levels of feature importance.
Demographic and psychographic profiles of these benefit segments can ultimately be used to target specific advertising messages to groups of potential purchasers based on the desires of those groups. Coupons might be sent to those in the most price-sensitive segments, while detailed product literature might be sent to those who place more value on specific features of your products. 3. 7 Brand Equity as a Corporate Value. Both brand and equity are two complex terms and concepts, so you might wonder whether they cause a problem in the corporate value statement.
But there are valuable reasons to include this value in the corporate values statement. According to a study done by Kevin Lane Keller and Keith Richey “A successful 21st century firm must carefully manage its corporate brand personality… three core dimensions of corporate brand personality … are crucial for marketplace success are outlined as Heart, Mind and Body. These traits have an interactive effect”. In this way it is possible to see your company as a private person. But then the next step is to project the company’s behavior to individual traits.
Keller and Richey do this by attributes as discipline and creativity for the mental dimension. But then it becomes hard to find out when you need one or (more of) the other. Yet the idea of defining and building up a brand is quite important. Companies who tend to such a direction are those where representation is very important. As a single corporate value I wouldn’t recommend to use it. It is hard to match other values. As a corporate concept it is very valuable, but for internal use only. Chapter 4 Building Brand Equity 4. 1 Approaches to build Brand Equity: Brand equity is the sustained value that customers placed on a brand over others.
Brand equity is built through a consistent and sustained delivery of promise. This suggests that brand equity is built over time. Equity is not built in a day. Merely understanding the equity markets is enough should tell an individual something vital about equity building. Brand equity is value is viewed in terms of trust, dependability, security and more importantperception. When a brand has gained equity, it guarantees the fact that less amount of money will be spent on marketing activities without much concern for what the implications will be. When brand equity is built, efforts need to put in place to ensure it sustainability.
Like every structure, it takes time to build something but within hours, days, a permanent damage can be made that can make the structure goes under. Having established that, let us look at some components that can assist the brand equity to build properly: 1. Superior customer service: Many brands often forget what bring them to the top. Because they now have more customers, they treat their old customers as nobody. So the brand should be focused to retain the existing customers as well as creating new customers. If do so the perception of the brand will remain positive among the people. 2. Unreliable product/service quality:
Many brands start to cut corners to make more profit. This will erode brand equity. The brand should always symbolize its core components and unique attributes based on which it is built. It shouldn’t compromise with the quality in terms of price. If the customer thinks the brand worth the price then the brand can charge high price premiums. 3. Changes that reduce perceived values: Some brands just make some internal changes that are not called for just to show off. When such changes are made particularly those that affect point of contact with the brand, the brand image suffers immediately.
That is why people who hold the baton in every brand must be keen observers so they can have accurate assessment of the changes that need to be made. 4. 2 Building and Managing Brand Equity: In his 1989 paper, Managing Brand Equity, Peter H. Farquhar outlined the following three stages that are required in order to build a strong brand: 1. Introduction – introduce a quality product with the strategy of using the brand as a platform from which to launch future products. A positive evaluation by the consumer is important. 2. Elaboration – make the brand easy to remember and develop repeat usage.
There should be accessible brand attitude, that is, the consumer should easily remember his or her positive evaluation of the brand. 3. Fortification – the brand should carry a consistent image over time to reinforce its place in the consumer’s mind and develop a special relationship with the consumer. Brand extensions can further fortify the brand, but only with related products having a perceived fit in the mind of the consumer. 4. 3 Alternative Means to Brand Equity: Building brand equity requires a significant effort, and some companies use alternative means of achieving the benefits of a strong brand.
For example, brand equity can be borrowed by extending the brand name to a line of products in the same product category or even to other categories. In some cases, especially when there is a perceptual connection between the products, such extensions are successful. In other cases, the extensions are unsuccessful and can dilute the original brand equity. Brand equity also can be “bought” by licensing the use of a strong brand for a new product. As in line extensions by the same company, the success of brand licensing is not guaranteed and must be analyzed carefully for appropriateness. . 4 How to Use Brand Equity Information for building brand equity: Market simulations and scenarios can be performed. Using estimated utilities, we can simulate market preferences for our products and those of the competition. Various scenarios can be created which involve the introduction of new products or modifications to existing products to determine the effects of these changes on preferences. This information can be used to: * Evaluate product line extensions with and without the use of an existing brand name. * Introduce new products with and without brand name affiliation. Estimate the premium your brand carries relative to competition for the same features/benefits. * Determine the effects of improving Brand Equity or reducing your investment in a high-equity Brand. * Estimate the impact of moving into new geographic areas where your brand name is unknown or has negative perceptions. * Understand the effects of co-branding with a company who has more or less Brand Equity than does your brand. * Monitor Brand Equity over time for your company and your competitors in order to make timely decisions to counteract changes in competitors’ Brand Equity. Measure the effectiveness of your advertising and marketing campaigns in building your brand image. * Clearly, brand equity varies across individuals, but we can measure these differences and segment the market into various groups based on perceived benefits. Using the utility estimates from the conjoint models, we can identify benefit segments in your market. These segments can then be compared to each other to highlight differences in Brand Equity between various types of product users, different levels of price-sensitivity, different levels of feature importance.
Demographic and psychographic profiles of these benefit segments can ultimately be used to target groups with specific messages. Chapter 5 Measuring, Managing, and protecting Brand Equity 5. 1 Managing and measuring brand equity To understand how to implement a brand equity measurement and managing system, it is important to take a perspective of the brand value chain. 5. 1. 1 The brand value chain: The brand value chain is a structured approach to assessing the sources and outcomes of brand equity and the manner by which marketing activities create brand value.
In the brand value chain there are four value stages: 1. Marketing program investment. 2. Customer mind set. 3. Market performance. 4. Shareholder value. And three program multiplier: 1. program quality 2. Market place condition. 3. Investor sentiment. The brand value chain has several basic premises. Fundamentally, it assumes that the value of ultimate resides with customers. Based on this insight, the model net assumes that the brand value creation process begins when the firm invests in a marketing program targeting actual or potential customers.
The marketing activities associated which the program then affects the customer mindset with respect to the brand-what customers, then results in certain outcomes for the brand in terms of how it performs in the marketplace-the impact of individual customer actions regarding how much and when they purchase, the price that they pay, and so forth. Finally, the investment community considers this market performance and other factors such as replacement cost and purchase price in acquisitions to arrive at assessment of shareholder value in general and a value of the brand in particular.
Figure : The Brand Value Chain Marketing Program Investment. Customer Mindset Market Performance Program Quality Marketplace Condition Investor Sentiment VALUE STAGES Shareholder Value Product Communication Trade Employee Other Awareness Associations Attitude Attachment Activity Price premiums Price elasticities Market share Expansion success Cost structure Profitability Stock price P/E ratio Market capitalization MULTIPLIER Clarity Relevance Distinctiveness Competitive reaction Channel support Customer & profile Market dynamics
Growth potential Risk profile Brand contribution The model also assumes that a number of linking factors intervene between these stages. These linking factors determine the extent to which value created at one stage transfers or “multiplies” to the next stage. Three sets of multipliers moderate the transfer between the marketing program and the subsequent three value stags: the program multiplier, the customer multiplier, and the market multiplier. 5. 2 Brand Tracking Studies Tracking studies involve information collected from consumers on a routine basis over time.
Such studies typically employ quantities to provide marketers with current information as to how their brands and marketing programs are performing on a number of key dimensions identified by the brand audit or other means. A number of issues must be addressed in implementing a brand equity tracking system. These issues include: 1. what to track 2. how to track 3. how to interpret marketing studies 5. 2. 1 What to track. Brand tracking studies are basically concerned with the measurement of the sources of brand equity and the elements of brand building blocks.
To a greater extent, each brand faces a unique situation that must be reflected I different types of questions in its tacking survey. 5. 2. 1 Product-Brand Tracking: Tracking an individual branded product involves measuring brand awareness and image for the brand as well as measuring the level of achievement on the brand building blocks. Given that brands often complete at the augmented product level, it is important to measure all associations that may distinguish competing brands. It is also important to track more general, “higher-level” judgments, lickings, and other outcome-related measures. . 2. 2 Corporate or Family Brand Tracking Studies In the case of a family or corporate bran, some additional questions may be warranted. Besides the measures of corporate credibility, other specific measures of corporate brand associations are possible, including some of the following (illus tread with GE corporate brand): 1. How well managed is GE? 2. How easy is it to do business with GE? 3. How concerned is GE with its customers? 4. How approachable is GE? 5. How accessible is GE? 6. How much do you like doing business with GE? A number of firms track corporate image.
When a brand is identified with multiple products, as with a corporate or family branding strategy, one important issue is which particular products the brand reminds consumer of. 5. 2. 3 Global Tracking If tracking involves diverse geographic markets then it may be necessary to have a broader set of background measures to put the brand development in those markets in the right perspective. 5. 3 How to Conduct Tracking Studies Here the key focus is concentrated on the brand element(s) to be used in the studies. Concluding tracking studies also requires deletions in trams of 1. Whom to track 2. When and where to track 5. How to Interpret Tracking Studies To develop sensitive tracking measures, it may be necessarily to phrase questions in a comparative or temporal manner. One of the most important tasks in conducting brand tracking studies is to identify the determinates of brand equity. The impact of the different multipliers the brand value chain must not be overlooked. 5. 5Measuring Brand Equity After building the brand equity, the prime concern that the organization has to do is to measure the position or the market acceptance of the brand. This measuring can be done based on two approaches. They are- 1. Firm, product, and consumer level approach. . Utility estimation approach. 5. 5. 1Firm, product, and consumer level approach. There are many ways to measure a brand. Some measurements approaches are at the firm level, some at the product level, and still others are at the consumer level. Firm Level: Firm level approaches measure the brand as a financial asset. In short, a calculation is made regarding how much the brand is worth as an intangible asset. For example, if you were to take the value of the firm, as derived by its market capitalization – and then subtract tangible assets and “measurable” intangible assets- the residual would be the brand equity.
One high profile firm level approach is by the consulting firm Interbrand. To do its calculation, Interbrand estimates brand value on the basis of projected profits discounted to a present value. The discount rate is a subjective rate determined by Interbrand and Wall Street equity specialists and reflects the risk profile, market leadership, stability and global reach of the brand. Product Level: The classic product level brand measurement example is to compare the price of a no-name or private label product to an “equivalent” branded product.
The difference in price, assuming all things equal, is due to the brand. More recently a revenue premium approach has been advocated. Consumer Level: This approach seeks to map the mind of the consumer to find out what associations with the brand that the consumer has. This approach seeks to measure the awareness (recall and recognition) and brand image (the overall associations that the brand has). Free association tests and projective techniques are commonly used to uncover the tangible and intangible attributes, attitudes, and intentions about a brand.
Brands with high levels of awareness and strong, favorable and unique associations are high equity brands. All of these calculations are, at best, approximations. A more complete understanding of the brand can occur if multiple measures are used. However, brand equity is not always positive in value. Some brands acquire a bad reputation that results in negative brand equity. Negative brand equity can be measured by surveys in which consumers indicate that a discount is needed to purchase the brand over a generic product. 5. 5. 2Utility estimation approach. * How to Measure Brand Equity?
Most evaluations of Brand Equity involve utility estimation. In essence, the value (utility) of a brand name product’s features/benefits and price level versus unbranded measures. The difference between total branded utility and total unbranded utility of the product features/benefits is the value of brand equity. Another approach is to measure the price premium for the branded product over the unbranded product. In other situations, the utility of the brand is measured directly and added to the feature utilities to produce an overall utility for the product.
Besides utilities, there are other important determinants of brand equity. These contributing factors include: awareness (aided, unaided), associations with various attributes, as well as overall perceptions. Generally, recognized brands should be measured. It is also useful to obtain estimates of marketing, advertising and promotional expenses for the major brands in the market. Armed with utility estimates, key performance measures (awareness, association scores, preference) and expenditure levels, we can develop a complete picture of the relative value of each brand.
This information allows you to understand the major forces driving brand equity and purchase decisions that lead to superior brand equity strategies. * How to Estimate Utilities (Value) We use trade off analysis (e. g. , conjoint analysis, discrete choice modeling) to estimate utilities. These are very powerful and proven techniques for measuring the value people place on product features, prices and brand names. The most effective research designs for measuring Brand Equity use a two-stage conjoint model: First, we measure the utilities of all key features of the product, including price and brand name, and in total.
Respondents are also asked how they make tradeoffs, and what criteria drive their decision making. From this data we are able to derive utilities for each product feature (often combining and re-defining terms to arrive at the real underlying buying factors) and calculate an estimate of brand equity. This demands careful analysis because experience has shown that price utility is usually understated when it is included with many other product features. And without an accurate estimate of price utility, we can not measure the true monetary value of Brand Equity. Second.
Additionally information is collected to correct the understated price utility. This step uses choice-based conjoint task or discrete choice modeling to evaluate just two attributes: price and brand name. Several Brands are shown at different price levels and respondents are asked to choose which one they would purchase. By isolating price with Brand name, we are able to accurately measure price utility. Brand equity (stage 2) is linked back to the first stage conjoint model. Together these approaches yield brand equity, price sensitivity and feature utilities. * Managing Multiple Brands:
Different companies have opted for different brand strategies for multiple products. These strategies are: * Single brand identity – a separate brand for each product. For example, in laundry detergents Procter ; Gamble offers uniquely positioned brands such as Tide, Cheer, Bold, etc. * Umbrella – all products under the same brand. For example, Sony offers many different product categories under its brand. * Multi-brand categories – Different brands for different product categories. Campbell Soup Company uses Campbell’s for soups, Pepperidge Farm for baked goods, and V8 for juices. Family of names – Different brands having a common name stem. Nestle uses Nescafe, Nesquik, and Nestea for beverages. Brand equity is an important factor in multi-product branding strategies. 5. 6 Managing Brand Equity in Rapidly Changing Markets: Several years ago, brand equity received the ultimate accolade in a capitalist society: a dollar value- sometimes listed with other intangible assets in the annual report. The highest valued brand today is Coca Cola. Its value according to Financial World is $39 billion. That’s the extra margin people will pay to get the real thing over a generic brand.
On the other hand, IBM’s brand, though third in value this year, was by one estimate actually negative last year. In other words, if you put the IBM logo on the product, it actually reduced the value of that product versus an unknown brand. Both of these companies, Coca Cola and IBM, have gone through enormous change, yet one managed to build its equity and one lost it. Though each company’s management decisions and style had something to do with the outcomes, they also faced different types of rapid change, one far more challenging than the other.
Coca Cola was taking its core product, Coke, and expanding the product in new form factors and new overseas markets. The brand promise stayed the same whether it was sold in a Coke store in New York or a road side stand in Mongolia – refreshment, good times, and pure Americana. While maintaining a brand’s strength through all this continuous change is certainly not a no-brainer – witness the New Coke debacle and the Pepsi Challenge – a brand encountering this kind of rapid change is easier to manage than the kind of change IBM faced: disruptive change.
Disruptive change occurs when a stable market encounters a new technology or social phenomenon that totally alters the solutions customers will demand. The digitization of video is a perfect example: it will alter the way we consume cable and broadcast programming, the way we rent movies, the way we use our computers – and companies in these industries will have to change rapidly and radically.
Another example: The social phenomenon of “the new temperance” has led to whole new beverage categories as “alcohol free beers” as well as the spectacular growth of coffee bars. Bars that survived have espresso machines installed. Our public libraries are going through this kind of brand redefinition: once the repository of books, their focus on book acquisition dropped while the focus on electronic access and community activities went up, and now they are public media and Internet access centers as much or more than they are lenders of books.
Managing a brand through disruptive change requires guarding the historical brand promise – in IBM’s case, a single source supplier for all computing needs, safety, security – while expanding the brand promise (and product line) to incorporate the new disruptive technology, in IBM’s case, client server networking between disparate types of equipment. Looking at some of the world’s strongest brands, they have each distinguished themselves from all competitors in the market. And each has been managed through periods of rapid change which have actually strengthened the brand.
Despite morphing of markets and products, we immediately recognize each brand’s promise, just by looking at a name and symbol – both in terms of product category and in emotional benefit. Think of the technology names with which we are familiar. Intel makes the world’s fastest processors. Branding through a period of continuous change has so strongly associated this symbol with attributes of speed and power that people buying 286 computers are still looking for Intel Inside.
It gives buyers the emotional benefit of feeling smart, like they know what they’re doing when they buy a PC, and secure that they’re buying the best. That brand has so much equity that even the Pentium scandal where headlines screamed that Pentium doesn’t calculate accurately didn’t slow Intel sales. So one of the benefits of branding is protection from customer wrath in times of trouble. I’ve talked about the case for higher margins – certainly true for Intel.
A strong brand also yields higher repurchase rates, because buyers tend to be risk averse, and why try something new if you already know and like the brand you’ve bought before. Continuing with the Intel brand example: Intel gets better productivity from its marketing efforts because it doesn’t have to spend any time or money explaining what Intel is. You see a banner for Intel at a trade show and all it has to say is Intel. An ad for Intel products can really focus on the products and benefits and doesn’t have to explain Intel.
Best of all, every headline, every claim has more power and credibility because it comes from Intel. 5. 7 Managerial Implications of Brand Equity: We address three topics in this section (brand and brand equity management, the equity of store brands and brand equity on the Internet) and mention a number of research needs that were indentured in the workshop. 5. 7. 1Brand Equity Management. Senior executives responsible for managing corporate brands are also often in charge of advertising.
This may react an assumption that management of corporate communications will also result in proper brand management because ®rms’ primary brand management goal is often thought to be increased market awareness of the brand, associated with strong brand identity. The broader de®nition of brand equity that we have adopted in this report implies, however, that a successful management of the brand assets must involve more than just advertising and consider all the aspects of product strategy and marketingmix.
This implies, among other things, that communications between ®rm and consumers must be designed to enhance brand equity by improving consumers’ perceptions of the®rm’s credibility to deliver what is promised (Erdem and Swait 1998). Further research is needed on the issue of consumer learning in the presence of brands to guide brand managers through the process of de®ning long-term brand management Strategies. Existing research makes us realize that knowledge of consumer dynamic choice processes are integral to creating a strong brand.
Brand extension research suggests thatbrands should extend to product categories where the brand’s unique association is relevant(Broniarczyk and Alba 1994b). Co-branding research suggests that one mechanism for brand to maintain a consistent positioning and broaden its appeal is to partner with another that possesses associations on which the ®rst brand fares poorly (Park, Jun, and Shocker1996). Many of the same issues that affect the transfer of brand bene®ts to line extensions and brand associations (e. g. co-branding) also affect the branding decisions of merging institutions. “Which brand do we go with? ‘ is a question often heard in ®rms going through mergers. Everyone realizes this is an essential question, but there is little theoretical or empirical research to guide decision making in this area. Approaches to brand equity measurement that are choice-based (see Section 4) have shown the feasibility and usefulness of measuring consumer-based brand equity in monetary terms. However, they do beg the question of calculating the dollar value of umbrella brands or of multiple products under a portfolio of brands. Research is needed into the mechanisms that govern the aggregation of brand equity across products and/or brands. . 7. 2The Equity of Store Brands. In many markets, private labels or store brands have become a dominant feature. For a discussion of factors behind the emergence and success of store brands in Western markets see Quelch and Harding (1996) and Steenkamp and Dekimpe (1997). In spite of the emergence and growing importance of store brands, academic research has largely concentrated on the equity of national brands. However, a number of important differences between national brands and store brands require that further and separate attention be given to the latter.
First, apart from being a source of pro®tability, carrying a store brand in a particular category also strengthens the retailer’s negotiating position vis-aA-vis manufacturers. Second, store brands can be used to encourage consumer loyalty to the chain rather than to national brands. Third, the marketing of store brands has been done differently than that of national brands (e. g. advertising for store brands, although substantial and increasing, is still much less than for national brands). Below, we identify a number of key issues which we believe require future research. ) How does store brand positioning (e. g. , reasonable quality/low price, high quality/ reasonable price, premium quality/premium pricing) impact the ability of a retail chain to use the store brand as a means to differentiate itself from other chains and thus build store equity? 2) Should a consistent positioning be used for all product categories? If so, is this desirable as the competitive context differs across categories? What are the implications of the consistency of the positioning (or lack of it) across different product categories for store credibility and store equity? ) Several studies have documented the asymmetry in effects of price promotions: price cuts by national brands hurt store brand sales more than vice versa (Allenby and Rossi 1991, Blattberg and Wisniewski 1989, Sethuraman 1995). Since a key competitive weapon of many store brands is its price, price promotions may even strengthen their value positioning. Research is
