brand equity

+

Lesson # 7

BRAND EQUITYSubtitle

Subject:

BRAND BUILDING

Faculty Name:

Vishal Desai

Deviprasad Goenka Management College of Media Studies (dgmcms.org.in)

Batch

(BMM class of 2015)

Year (TY)

India’s premier M-school


+Concept: Brand equity is the value of the brand in the marketplace

A brand with high equity - brand has the ability to create some sort of

positive differential responses in the marketplace

This can mean that:

• A brand is easily recognizable when encountered in advertising or

seen on a yard sign

• A brand is one of the first ones recalled when a relevant prompt is

used

• Individuals would be willing to pay a premium price for a brand’s

offering

• When someone asks for referral, the brand is the first one that is

recommended


+

Brands, if managed well, add value to the product

The value, as perceived by the customers is important as it impacts

the customer’s evaluation of the brand

Definitions

• (Marketing Science Institute 1988, cited in Chay 1991)

‘Brand equity is the set of associations and behaviors on the part of

a brand’s customers, channel members and the parent corporation

that permits the brand to earn greater volume or greater margins

than it could without the brand name, and that gives the brand a

strong, sustainable and differential advantage over competitors’

Brand equity defined:


+• (Biel 1992)

‘Brand equity can be thought of as the additional cash flow achieved

by associating a brand with the underlying product or services’

• (Aaker 1991)

‘Brand equity is a set of brand assets and liabilities linked to a

brand, its name and symbol, that adds value to or subtracts from the

value provided by a product or service to a firm and /or to that

firm’s customers’

• (Keller 2004)

defines brand equity from the customer’s perspective as ‘the

differential effect the brand knowledge has on consumer response to

the marketing of that brand’


+HOW BRAND EQUITY GENERATES VALUE:


+

Brand equity assets generally add or subtract value for customers

Help them interpret and store huge quantities of information about the

product and the brands

Also affect customer’s confidence about the purchase decision

Both perceived qualities and brand associations can enhance

customer’s satisfaction with the use experience

For example:

Knowing a piece of work came from Rolex can affect the

experience of wearing it: the user can actually feel different

Providing value to the Customer:


+

Brand equity has the potential to add value to the firm by generating

marginal cash flow in at least half dozen ways

First

• It can enhance programs to attract new customers or recapture old

ones

Second

• The perceived quality, the associations and a well-known name can

provide reasons to buy and can affect use satisfaction

Providing value to the firm:


+• Enhanced brand loyalty is especially important in buying time to

respond when competitors innovate and obtain product advantage

Third

• Brand equity will usually allow higher margins by permitting both

premium pricing and reduced reliance upon promotions

• In many contexts, the element of brand equity serves to support

premium pricing

• A brand with a disadvantage in brand equity- invests more in

promotions just to maintain its position in distribution channel


+ Fourth

• Brand equity can provide a platform for growth via brand-

extension s.

• For example:

Park Avenue- (Shirts, Shaving cream, Jeans, Perfumes, Soap

& Razors). It would have been much more expensive to extend

into several products without Park Avenue name

Fifth

• Brand equity can provide leverage in the distribution channel; the

trade has less uncertainty dealing with a proven brand name

• A strong brand name will have an edge in gaining both shelf facing

and cooperation in implementing marketing programs


+ Sixth

• Brand equity assets provide a competitive advantage that often

presents a real barrier to competitors

• For example:

Tide – detergent for tough family laundry jobs may preempt an

attribute that is important for a given segment. Another brand

would find it difficult to compete with Tide for the ‘tough

cleaning job’ segment


+MAJOR BRAND ASSET

CATEGORIES:

BRAND EQUITY

BRAND

AWARENESSPERCEIVED

QUALITY

BRAND

ASSOCIATIONS

BRAND

LOYALTY


+

The Brand awareness is the 1st critical condition for achieving brand

success

It includes

Brand recognition - it is the ability to confirm to prior exposures (Yes,

I have seen it earlier)

Brand recall – it is the ability to remember the brand when the

product category is thought about

Top of the mind recall

BRAND AWARNESS:


+The Brand Awareness Pyramid:

Dominant in the mind

(Colgate)

Top of the mind

(Pepsodent, Close up)

Brand Recall

(Babool, Sensodyne)

Brand Recognition

(Anchor, Meswak, Binaca)

Unaware of the brand

(Crest, Mentadent)


+

It is at the bottom level of the pyramid

When a person is able to confirm the prior exposure, the brand is said

to have been recognized

It is particularly important under low involvement buying situations,

especially when decision is taken stores or at the point of purchase

Recognition means some sense of familiarity which sometimes is

sufficient in choice decision

In brand recognition test, ability of the consumers to identify the

brand elements is tested

That is, upon seeing the brand elements like- name, packaging,

symbol, etc

Brand Recognition:


+

A more rigorous test of brand awareness is brand recall

Recall related to the ability of the customer or prospect to retrieve the

brand from memory

Brand recall may be tested in two forms:

• Aided recall

• Unaided recall

Brand Recall:


+

Unaided Recall:

• What all brands names come to your mind when you think of

detergents?

---- Surf, Nirma, Ariel

Aided Recall:

• Mention the detergent brands which come in blue color (product

attribute) ----

Surf, Rin, Henko, Fena

• Mention the detergent brands which are the soak and rinse type

(usage form)

---- Surf, Ariel

Brand Recall: A Hypothetical Exercise:


+• Mention the detergent brands which are bought in large quantities

(quantity of purchase)

---- Surf, Nirma, Fena, Wheel

• Mention the detergent brands which are to be given to the

servant/maid for washing purpose(usage situation)

---- Nirma, Fena, Wheel

• Mention the detergent brands which are effective in stain removal

(motivation) -

--- Surf, Ariel

• Mention the detergent brands which are good for washing woolens

(applications) ----

Ezee, Genteel


+ The above examples reveal that Surf, Nirma, and Ariel are the three

strongly entrenched brands (because of unaided recall)

Surf enjoys the greatest breadth (on variety of situations it is recalled)


+

A higher level of awareness is Top of the mind recall

It indicates the relative superiority a brand enjoys over others

Sometimes a brand is able to achieve such a dominant position that it

becomes the only recalled brand in the product category

For example:

• Toothpaste – Colgate

• Vanaspati – Dalda

• Adhesive bandage – Band Aid

• Liquid antiseptic – Dettol

Top of the Mind Recall:


+ Such brands are called the ‘Dominant Brands’ in that product

category

A dominant position prevents other brands from getting into the

consumers mind and be considered while making a purchase


+Graveyard Model:


+ The relative power of recall versus recognition is shown in the figure

which depicts the “Graveyard Model”

Developed by Young & Rubicam Europe under the guidance of Jim

William

In this model, brands in a product class are plotted on recognition

versus recall graph

One finding consistent across dozens of product classes – brand tends

to follow the “curved line”


+ There are two exceptions, each of which reveals the importance of

recall

1)Healthy Niche brands

• Falls below the line because they are not known to a substantial

group of consumers

• Therefore they have relatively low recognition

• But they do have a high recall among their respective loyal customers

• Thus their low recognition is not necessarily an indication of their

poor performance

• Healthy niche players sometimes have the potential to expand

recognition and thus the scope of their customer base


+2)Graveyard:

• An area in the upper left hand corner populated by brands with high

recognition but low recall

• Being in the graveyard can be deadly: Customers know about the

brand, but will not come to the mind when considering a purchase


+

One point of graveyard model is that high recognition is not

necessarily the mark of a strong brand – it is associated weak ones as

well

The dynamics of the brands located in the upper-middle or upper-right

part of the figure can be important predictors of the future brand

health

Moving toward the graveyard is associated with sliding sales and

market share

Moving away from Graveyard indicates that brand’s sales and market

share may increase

Thus Graveyard model provides evidence that recall is as important as

recognition


+

According to Aaker (1991), the quality of the brand as perceived by

the customers also leads to brand equity

If the perceived quality is high, it will lead to ‘price premium, price

elasticity, and brand usage’ and it will be available across the product

classes though the importance may vary

“Perceived quality can be defined as the customer’s perception of

the overall quality or superiority of a product or service with respect

to its intended purpose, relative to alternatives. Perceived quality is,

first, a perception by customers”

Perceived quality cannot necessarily be objectively determined,

because it is a perception and also because judgments about what is

important to the customers are involved

PERCEIVED QUALITY:


+• Perceived quality is an intangible, overall feeling about a brand

• Perceived quality refers to the customer’s perception about the total

quality of the brand

• While evaluating quality the customer takes into account the brands

performance on factors that are significant to him and makes a

relative analysis about the brand’s quality by evaluating the

competitor’s brand also

• Perceived quality affects the pricing decisions of the organizations

• Superior quality products can be charged a price premium

• Perceived quality gives the customer a reason to buy the product

• It also captures the channel member’s interest


+ For example:

Starbucks can sell its coffee at a higher price than solid market

competitors because consumers associate the brand with quality

and value


+

Brand association is anything which is deeply seated in the

customer’s mind about the brand

Brand should be associated with something positive so that the

customer relate your brand to being positive

Brand associations are the attributes of a brand which comes into the

consumers mind when the brand is talked about

Brand association can also be defined as the degree to which a

specific product/service is recognized within its class or category

BRAND ASSSOCIATIONS:


+ While choosing a brand name, it is essential that the name chosen

should reinforce an important attribute or benefit association that

forms its product positioning

For example

Big Bazaar – associations like ‘value for money’, ‘variety of

products’, ‘fashion trends for the youth’,etc come to mind


+ Brand associations are formed on the following basis:

• Customers contact with the organization and its employees

• Advertisements

• Word of mouth publicity

• Price at which brand is sold

• Celebrity/big entity association

• Quality of the product

• Products and schemes offered by competitors

• Product class/category to which the brand belongs

• POP (point of purchase), display, etc


+ Brand associations are not benefits, but are images and symbols

associated with a brand or a brand benefit

For example:

• Nike swoosh

• Nokia sound

• Lux – film stars

• Pepsi – blue color

• Britania – ting –ting-ta-ding


+ Associations are not “reasons –to – buy” but provide acquaintance

and differentiation that’s not replicable

For example:

• Hyatt hotel – luxury and comfort

• BMW – sophistication, fun driving, superior engineering

Most popular brand associations are with the owners of the brand

For example:

• Bill Gates – Microsoft

• Reliance – Dhirubhai Ambani


+ Positive brand associations are developed if the product which the

brand depicts is durable, marketable, and desirable

The customer must be persuaded that the brand possess the features

and attributes satisfying their needs

A positive brand association helps an organization to gain goodwill,

and obstruct the competitors entry into the market


+

The importance of the brand loyalty as a construct of brand equity has

been delineated by Aaker (1991), who treated it as a behavioral

dimension

However, brand loyalty as an attitudinal dimension has also been

identified and defined

As ‘the tendency to be loyal to a focal brand , which is demonstrated

by the intention to buy the brand as the primary choice’

Thus, if the consumer has the tendency to buy the brand again and

again it will lead to brand equity

BRAND LOYALTY:


+ The advantages of the brand loyalist are that

• they ‘represent barriers to the entry for competitors

• are a basis for price premium

• time to respond to the competitors innovations

• and a barricade against deleterious price competition

Loyalty is of sufficient importance than other measures


+ Three levels of loyalty have been identified (Gremler and Brown

1996)

• Behavioral loyalty

(purchase repeatedly)

• Attitudinal loyalty

(customer feels some devotion to the brand and prefers the brand)

• Cognitive loyalty

(brand name comes at top -of - mind recall and consumer’s first

choice whenever purchase decision arise)


+ Brand loyalty is a measure of the attachments that a customer has to a

brand

It reflects how likely a customer will be to able switch to another

brand, especially when that brand makes change – in price or feature

It is one indicator of brand equity, which demonstrably links to future

profit, since brand loyalty directly translates into future sales


+Loyalty pyramid:

Committed

Buyer

Likes the Brand-

Consider it a friend

Satisfied Buyer with Switching Costs

Satisfied/Habitual Buyer-No reason to change

Switchers/Price Sensitive Indifferent - No Brand Loyalty


+

The bottom level

• The non-loyal buyer who is completely indifferent to the brand

• Each brand is perceived to be adequate and the brand name plays little

role in the purchase decision

• Whatever is on sale or convenient is preferred

• These buyers might be termed as switcher or price buyers


+

The second level:

• Includes buyers who are satisfied with the product or at least not

dissatisfied

• These buyers might be termed as habitual buyers

• However, they can be difficult to reach since there is no reason for

them to be on the outlook for alternatives


+

The third level:

• Consist of those who are also satisfied and in addition, have switching

cost-cost in time, money, or performance risk associated with

switching

• Perhaps they have invested in learning a system associated with a

brand. Eg: Machinery,Tractors,Chemicals,etc

• Or perhaps there is a risk that another brand may not function well in

a particular use context

• To attract these buyers, competitors need to overcome the switching

cost by offering an inducement to switch or by offering a benefit large

enough to compensate

• This group may be called switching - cost loyal


+ The fourth level:

• Those who truly like the brand

• Their preferences may be based upon an association, a set of use

experience or a high perceived quality

• However, liking is often general feeling that cannot be closely traced

to anything specific; it has a life of its own

• The group might be termed as friends of the brand because there is an

emotional feeling attachment


+ The top level:

• Committed customers

• They have pride of discovering and/or being users of a brand

• The brand is very important to them either functionally or as an

expression of who they are

• Their confidence is such that they will recommend the brand to others


+

These five levels are stylized, they do not always appear in the pure

form and more levels could be conceptualized

These five levels do, however signify the various forms that loyalty

can take and how it impacts upon brand equity


+BRAND EQUITY MEASUREMENT

SYSEMS:

Every organization has to measure their brand strength from time to

time to judge their brand equity

The four most used methods are:

• Brand Equity Ten

• The Young & Rubicam’s Brand Asset Evaluator (BAV)

• Total Research’s Equity Trend

• The Interbrand Model


+

The ten measures nominated are grouped into five categories

The first four represent customer perception of the brand along with

four dimensions of brand equity

The fifth includes two sets of market behavior measures that represent

market – based information rather than information directly from

customers

The Brand Equity Ten:


+ Loyalty Measures

- Price Premiun

- Satisfaction/Loyalty

Perceived Quality / Leadership Measures

- Perceived Quality

- Leadership/Popularity

Associations/Differentiation Measures

- Perceived Value

- Brand Personality

- Organisational Associations

Awareness Measures

- Brand Awareness

Market Behaviour Measures

- Market Share

- Market Prices and Distribution Coverage


+

A basic indicator of loyalty is the amount a customer will pay for the

brand in comparison with another brand offering similar or fewer

benefits

In measuring price premium, or any brand equity measure, it is useful

to segment the market by loyalty

The price premium measure is defined with respect to a competitor or

set of competitors , who must be clearly identified

Loyalty Measures:

1)Price Premium


+ The price premium can be determined by simply asking customers

how much more they would be willing to pay for the brand

This is called a “dollar metric”. For Eg: How much more would you pay for

a Toyota Camry than for a Honda Accord?

The price premium can be the best single measure of brand equity

available, because it directly captures the loyalty of the customers in a

most relevant way


+ Problems/Caution:

• It is defined only with respect to a competitor or set of competitors

• In a market with many brands several sets of price premium measures

will be needed, and even then an important emerging competitor

might be missed

• For example:

Compaq used IBM as its primary frame of reference when others, such

as Dell and Lenovo, were making larger inroads at much lower price

point. Thus Compaq’s price overtime reflected an increasingly inflated

valuation of its brand equity


+• An interpretation problem will exist when a brand has different

competitors in different markets

• For example:

In some regions Budweiser may face strong local brands that have little presence

elsewhere. To compare Budweiser’s strength in these regions, a composite

measure needs to created to arrive at the average price premium based on

regional brand and competitor. Eg: Surf v/s Ghadi Detergent and Surf v/s Ariel.

• There are markets in which price differences are not very relevant

because of legal restrictions or market forces make it difficult for such

differences to emerge. Eg: Price control of pharma drugs, or cap on price of

movie tickets in Tamil Nadu.

• In such context the price premium concept becomes less meaningful


+

Satisfaction is a direct measure of how willing customers are to stick

to a brand

Enormous progress has been made in the past decade in the

measurement of satisfaction

A direct measure of satisfaction can be applied to existing customers-

who used the product/service in last year

The reference can be the last use experience, or simply the use

experience from the customers view

• Are you satisfied?

• Are you delighted with your experience with this brand?

• Does the product or service meet the expectations?

2)Customer Satisfaction/Loyalty:


+• Would you buy the brand on the next opportunity?

• Would you recommend the product or service to others?

• Were there problems and in inconveniences associated with the use of

the product/services?

Satisfaction is an especially powerful measure in service business,

where loyalty is often the cumulative result of the user experiences

Satisfaction can also be measured by asking directly questions about

loyalty

It allows the market to be segmented into loyal users, price chasers

and those in-between


+ Another type of measure would be the level of loyalty in terms of

number of brands, where customers would be asked if they felt loyal

to one, two, three or more brands or if they see all brands as equal

The percentage of the customers who are loyal to a given brand or

include it in a set of two or three preferred brands can be a relevant

statistic


+ Problems/Caution:

• An important limitation of satisfaction measure – they do not really

apply to the non-consumers. Eg: Even if a person cannot afford a Mercedes

Benz, he can still place a premium for the brand.

• Thus, there is really no measure of the extent of brand equity beyond

customer base


+

Perceived Quality is one of the key dimensions of brand equity

It is highly associated with other key brand identity measures,

including specific functional benefit variables

Perceived Quality also has the important attribute of being applicable

across product classes

Perceived Quality and Leadership Measures:

3) Perceived Quality:


+ Perceived Quality can be measured with scales such as:

• High quality v/s low quality

• Best in category v/s worst in category

• Consistent quality v/s inconsistent quality

• Finest quality v/s average quality v/s inferior quality


+ Problems/Cautions:

• Perceived Quality involves a product frame of reference

• There is also issue of loyalty segments

• The interpretation of the Perceived Quality for the loyalty segments

versus those loyal to another brand could be different . Eg: Perceived

Quality for Alto is the fuel efficiency where as a for high end car is the attention it

gets from others.


+

Leadership has three dimensions

• It reflects in part the “number one” syndrome

Leadership thus can be measured by scales that ask whether a brand is

the following:

• A category leader

• Growing more popular

• Respected for innovation

4)Leadership and Popularity:



• It has not been as well documented and researched

• Therefore there is little proof that it is important enough to merit

attention


+

One role of brand identity is to create value proposition

Value proposition usually involves a functional benefit, is basic to

brands in most product classes

The value measure provides a summary indicator of the brand’s

success at creating that value proposition

By focusing on value rather than functional benefits, a measure is

created that can apply across all product class

Brand value thus can be measured by the following:

• Whether the brand proves good value for the money?

• Whether there is a reason to buy this brand over others?

Association/Differentiation Measures:

5)Perceived Value:



• This measure will be sensitive to the brand set that is used as a frame

of reference by the customers

• The relevant set can be cued by using phrases such as “among

comparable brands” or “among brands with which it competes”


+

For some brands, brand personality provides links to the brand’s

emotional and self-expressive benefits as well as a basis for brand-

customer relationship and differentiation

This is especially the case for the brands that have only minor

physical differences and are consumed in a social setting where the

brand can make a visible statement about the consumer

When considering brand personality across products, one option

would be to measure a personality spectrum such as the Big Five

6)Brand Personality:


+ Candidate scale might include:

• Does the brand have a personality?

• Is the brand interesting?

• I have a clear image of the type of person who would use the brand

• This brand has rich history

The last two items reflect user imagery and brand heritage, two

drivers of brand personality that are often relevant dimensions of

brand identity



• Not all brands are personality brands

• Using personality as a general indicator of the brand strength will be a

distortion for some brands

• Particularly those who position themselves primarily with respect to

functional advantages and value


+

Brand-as-organization, also can be a driver of differentiation

It is particularly likely to be a factor when brands are similar with

respect to attributes, when the organization is visible or when a

corporate brand is involved

To tap the brand-as-organization, scale such as these could be

considered:

This brand is made by an organization I would trust

I admire the brand X organization

I would be proud (or plead) to do business with the brand X

organization

7)Organizational Association:



• Brand-as-organization, is not relevant for all brands and an irrelevant

measure can be misinterpreted


+

Awareness reflects the presence of the brand in the minds of the

customers

It can be a driver in some categories and it usually has a key role to

play in brand equity

Awareness measures can reflect the scope of the brand’s reach in

terms of segments

Increasing awareness is one mechanism to expand market reach of the

brand

Awareness can also affect perception and attitudes

Awareness Measures

8)Brand Awareness:


+ Brand awareness reflects both the knowledge and the salience of the

brand in customer’s mind

Awareness can be measured on different levels:

• Recognition

• Recall

• Graveyard statistics

• Top of mind

• Brand dominance

• Brand familiarity

• Brand knowledge or salience



• There are varieties of awareness levels and the appropriate one to use

will differ across brands and product classes, making comparison

difficult


+

The performance of the brand as measured by the market share often

provides valid and sensitive reflection of the brand’s standing with the

customer

When the brand has relative advantage in the minds of the customers,

market share should increase or at least not decrease

In contrast, when competitors improve their brand equity, their share

should respond

In this sense, market share is good summary measure

Market share data have the advantage of being both available and

accurate

Market Behavior Measures:

9) Market Share:



• The biggest problem is that market share indicators are responsive to

the short term strategies that often undermine brand equity

• Market share can be obtained by enticing price switchers with

promotions and price deals which compromise the long term value of

the brand

• Market share can also respond negatively even if a brand cuts its

brand-building activities or generates ineffective or negative brand

building efforts


+

It is important to measure the relative market price at which the brand

is being sold

To do so, the prices of various varieties of the brand weighted by their

relative sales volumes need to be obtained

The relative market price could be defined as the average price at

which the brand was sold during the month, divided by the average

price at which all brands were sold

It is important to distinguish the brand equity based on a change in

distribution coverage from that created by strengthening the brand’s

perceived quality or identity

Another measure of brand strength, then, is distribution coverage,

which could be measured by either of the following

10) Market Price And Distribution Coverage:


+ The percentage of stores carrying the brand

The percentage of people who have access to the brand



• Creating price-level statics is difficult in a messy market with

different channels, different variants of brand offerings and a complex

set of competitors. Eg: Chic/Nyle shampoo in sachet pack is market leader in

south India. OR Shampoo sachet sales are more in local retail stores and bottle

sales in large format stores.

• There are duties, taxes, and retail policies that could be the issue for

the products such as beer/wine/fuel/pharma drugs

• Distribution coverage will have similar data-gathering and

/interpretation problems


+ The most ambitious effort to measure brand equity across products

Developed by Young & Rubicam (Y&R) - a major global advertising

agency

It measured brand equity for 450 global brands and more than 8000

local brands in twenty-four countries

Each brand was examined using thirty-two item questionnaire that

included – four sets of measures, in addition to a set of brand

personality scale

1. Differentiation:

2. Relevance:

3. Esteem:

4. Knowledge:

Young & Rubicam’s Brand Asset Valuator:


+

The Young & Rubicam Model of Brand Dynamics:

Differentiation

Relevance

Esteem

Knowledge


+

Measures how distinctive the brand is in the marketplace

If there is no point of difference, a brand’s value will be low

According to Y&R hypothesis – a new brand with ambitions to

become strong must start by developing a point of real difference

For example:

Brands like Ferrari, Bacardi, etc stand apart from their

competitors

Differentiation:


+

Measures whether a brand has personal relevance for the respondent

Is it meaningful to him/her?

Is it personally appropriate?

Unless a brand is relevant to a significant segment, it will not attract a

large customer base

For example:

Ferrari & Jaguar – very high differentiation but extremely low in

relevance ; few individuals consider that this cars are impractical

for daily use and also too expensive

Relevance:


+

There is a strong association between relevance and household

penetration

For example:

In India Samsung has high relevance and also market

penetration, while its competitor Apple has low relevance and

penetration


+

Brand strength represents differentiation multiplied by relevance and

thus penetration

The logic is that a brand must have both the characteristics in order to

be strong

For example:

• Amazon and Disney tend to be high on brand strength

(Brand Strength = Differentiation X Penetration)


+

Measures whether a brand is held in high regards and considered the best in

class

Closely related to perceived quality and the extent to which brand is growing

in popularity

Esteem combines perceived quality with perception of a growth or decline in

popularity

There are brands for which a decline or growth in popularity affects esteem.

Eg:Blackberry

There are countries (such as Japan) , in which perceived popularity accounts

for greater variability in esteem than does perceived quality

Esteem:


+ For example:

• Maruti, Pepsi, Amul, etc are esteemed in the consumer’s mind, based on

the popularity more than quality


+

A measure of understanding as to what a brand stands for

It indicates that the consumer is not only aware of the brand but also

understands what the brand stands for

According to Y&R hypothesis – the true understanding of the brand -

is the culmination of brand building effort

It is not simply built on exposure; it is generated by real customer

intimacy with the brand

For example:

• Cadbury & Nestle depicts true knowledge through brand

building

Knowledge:


+

Esteem and Knowledge complete the hierarchy and combine to form

the brand stature construct

Comparing brand's esteem with its knowledge often provides some

important insights

For instance, some brands rank high in esteem than in knowledge. Eg:

Truck from Tata, Harley Davidson

Conversely a brand may have high knowledge but low esteem. Eg:

Lava, Karbonn mobile phones

(Brand Stature = Esteem X Knowledge)


+

Brand Strength: Brand must possess both Differentiation and

Relevance to be strong (VIP Bags).

Brand Stature: It is a combination of Esteem and Knowledge and

reflects current brand performance(Toyota).

Power Grid: Brand Strength vs. Brand Stature:


+

High

Bra

nd S

tren

gth

(Know

ledge

and E

stee

m)

Low

Brand Stature

Differentiation and Relevance

High

1

Weak Brands

(Babool, Lava)

2

Unrealized Potentials

(LG, Renault)

3

Leadership

(Sony, Google, Disney)

4

Eroding Brands

(Motorola,Philips,

Nokia)


+ The Power Grid:

• It sets the strategic process by identifying the strength or weakness of

the brand

• On the vertical axis we plot brand strength, while on horizontal axis

the brand stature

• Quadrant 1:

Weak brands that could not leverage their strengths

• Quadrant 2:

The true potential of the brand is not being realized. The strategy

should be to build the stature of the brand


+• Quadrant 3:

The challenge for the brand here would be to continue being a leader

• Quadrant 4:

It spells ‘danger’ for the brand, an indicator of eroding potential.

These brands have failed to maintain relevant Differentiation.

If unattended, their stature will also begin to fall.

Unless steps are taken, these brands will lose esteem and could

eventually fade from consumer’s consciousness


+

Developed by Total Research

It provides nice contrast to the Y&R Model

EquiTrend is based on small set of simple yet powerful questions

Although limited in scope compared to Y&R, it has developed data

overtime that greatly enhance its ability to make judgments about the

dynamics of brand equity and its effect

Its annual survey of 2,000 respondents started with 133 U.S. brands,

and by 1995 covered over 700 brands in 100 categories

EquiTrend:


+ EquiTrend is based on measures of three brand equity assets:

1)Salience:

• The percentage of respondents who have an opinion about the brand

• Thus, it goes beyond the more conventional concepts of awareness,

recognition, and recall by demanding that respondents hold opinions

2)Perceived Quality:

• It is at the heart of EquiTrend, because it has been found by Total

Research to be highly associated with brands liking, trust, pride, and

willingness to recommend

• It is essentially the average quality rating among those who had an

opinion about the brand


+• Quality is measured using an 11-point scale ranges from

“outstanding” to “unacceptable”

3)User satisfaction:

• It is the average quality rating a brand receives among the consumers

who use the brand most often

• It provides look at the strength of brands within their user base

• One problem with measuring user satisfaction is that some brands,

such as Mercedes, have such a small incidence of usage that a

national sample becomes inadequate to estimate user satisfaction


+

Interbrand, a UK based branding consulting company, used a very

different approach to identify the strongest brand in the world

It is a set of criteria, chosen subjectively, included the business

prospects of the brand and the brand’s market environment, as well as

consumer perceptions

500 brands were evaluated based on seven criteria

Interbrand’s Top Brands:


+1)Leadership:

• A brand that leads its market sector is more stable and powerful than

the second, third, fourth

• This criterion reflects economies of scale for the first-place brand in

communication and distribution, as well as the problems that also

brands have in maintaining distribution and avoiding price erosion

2)Stability:

• Long-lived brands with identities that have become part of the fabric

of the market and even the culture are particularly powerful and

valuable


+3)Market Conditions:

• Brand are more vulnerable when they are in the markets with growing

or stable sales levels and a price structure in which successful firms

can be profitable

4)International:

• Brands that are international are more valuable than national or

regional brands, in part because of the economies of sale

• The broader the market scope for the brand, the more valuable it is; a

national brand is worth more than a regional brand


+5)Trend:

• The overall long-term trend of the brand in terms of sales can be

expected to reflect the future prospect

• A healthy growing brand indicates that it remains contemporary and

relevant to the customers

6) Support:

• Brands that have received consistent investment and focused support

are regarded as stronger than those that have not

• However, the quality of the support should be considered along with

the level of support

7)Protection:

• The strength and the breadth of a brand’s legal trademark protection is

critical to the brand’s strength


+ Based upon the criteria, Interbrand determined that the top ten brands

in the world in 2013 were as follows:

1) Apple

2) Google

3) Coca-Cola

4) IBM

5) Microsoft

6) GE

7) McDonald’s

8) Samsung

9) Intel

10) Toyota


+ The business-oriented (versus consumer-oriented) view of Interbrand

criteria is useful in part because it is a step closer to putting financial

value on the board

Interbrand uses its brand rating to determine a multiplier to apply to

earnings


+Disadvantages of Interbrand Model

Small niche brands may be more profitable than leadership brands

Local regional brands may be more profitable than Local Brands due

to economies of scales and better consumer connect. Eg: Maruti v/s

General Motors

Older brands may lose their brand strength. Eg: Kodak ,Nokia and Blackberry

lost their relevance in terms of new technology.

The ability of a market to create or protect margins is difficult to project

The Interbrand system does not consider the potential of the brand to support

extensions into another product classes

Trademark it self does not create brand value


+

1)Benchmarking against the best:

• Too often managers believe that their positioning alternatives are

restricted to what has always been done in their category

• A consideration of brands in other categories, can suggest new

identity options

• When one value evaluates identity implementation programs, a useful

benchmark be other brands with similar identity goals

Why Measure Brand Equity Across Products And

Markets:


+2) Insights into brand building:

• Brand equity measurements over product classes and markets

provides an opportunity to generate insights about and basic

principles for effective brand building and brand management.

• The identification of brands that follow or depart from patterns can

provide guidance to others facing similar contexts.

• A brand whose perceived quality is falling , while its awareness and

differentiation remain high can look to see how other brands in the

same situation handled the problem


+3)Tools to manage a brand portfolio:

• Many organizations offer number of brands across variety of markets

and countries

• If these brands are managed separately and independently, or on ad

hoc basis, then overall resource allocation among the brands may not

be made appropriately


+

End

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