17/08/2016 BrandEquity

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BrandEquity

Abrandisanameorsymbolusedtoidentifythesourceofaproduct.When
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developinganewproduct,brandingisanimportantdecision.Thebrandcanadd
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significantvaluewhenitiswellrecognizedandhaspositiveassociationsinthemind
oftheconsumer.Thisconceptisreferredtoasbrandequity.
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WhatisBrandEquity?
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Brandequityisanintangibleassetthatdependsonassociationsmadebythe
consumer.Thereareatleastthreeperspectivesfromwhichtoviewbrandequity:

FinancialOnewaytomeasurebrandequityistodeterminetheprice
premiumthatabrandcommandsoveragenericproduct.Forexample,if
consumersarewillingtopay$100moreforabrandedtelevisionoverthe
sameunbrandedtelevision,thispremiumprovidesimportantinformation
aboutthevalueofthebrand.However,expensessuchaspromotionalcosts
mustbetakenintoaccountwhenusingthismethodtomeasurebrandequity.

BrandextensionsAsuccessfulbrandcanbeusedasaplatformtolaunch
relatedproducts.Thebenefitsofbrandextensionsaretheleveragingof
existingbrandawarenessthusreducingadvertisingexpenditures,andalower
riskfromtheperspectiveoftheconsumer.Furthermore,appropriatebrand
extensionscanenhancethecorebrand.However,thevalueofbrand
extensionsismoredifficulttoquantifythanaredirectfinancialmeasuresof
brandequity.

ConsumerbasedAstrongbrandincreasestheconsumer'sattitudestrength
towardtheproductassociatedwiththebrand.Attitudestrengthisbuiltby
experiencewithaproduct.Thisimportanceofactualexperiencebythe
customerimpliesthattrialsamplesaremoreeffectivethanadvertisinginthe
earlystagesofbuildingastrongbrand.Theconsumer'sawarenessand
associationsleadtoperceivedquality,inferredattributes,andeventually,
brandloyalty.

Strongbrandequityprovidesthefollowingbenefits:

Facilitatesamorepredictableincomestream.
Increasescashflowbyincreasingmarketshare,reducingpromotional
costs,andallowingpremiumpricing.
Brandequityisanassetthatcanbesoldorleased.

However,brandequityisnotalwayspositiveinvalue.Somebrandsacquireabad
reputationthatresultsinnegativebrandequity.Negativebrandequitycanbe
measuredbysurveysinwhichconsumersindicatethatadiscountisneededto
purchasethebrandoveragenericproduct.

BuildingandManagingBrandEquity

Inhis1989paper,ManagingBrandEquity,PeterH.Farquharoutlinedthefollowing
threestagesthatarerequiredinordertobuildastrongbrand:

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17/08/2016 BrandEquity

1.Introductionintroduceaqualityproductwiththestrategyofusingthe
brandasaplatformfromwhichtolaunchfutureproducts.Apositive
evaluationbytheconsumerisimportant.

2.Elaborationmakethebrandeasytorememberanddeveloprepeatusage.
Thereshouldbeaccessiblebrandattitude,thatis,theconsumershouldeasily
rememberhisorherpositiveevaluationofthebrand.

3.Fortificationthebrandshouldcarryaconsistentimageovertimeto
reinforceitsplaceintheconsumer'smindanddevelopaspecialrelationship
withtheconsumer.Brandextensionscanfurtherfortifythebrand,butonly
withrelatedproductshavingaperceivedfitinthemindoftheconsumer.

AlternativeMeanstoBrandEquity

Buildingbrandequityrequiresasignificanteffort,andsomecompaniesuse
alternativemeansofachievingthebenefitsofastrongbrand.Forexample,brand
equitycanbeborrowedbyextendingthebrandnametoalineofproductsinthe
sameproductcategoryoreventoothercategories.Insomecases,especiallywhen
thereisaperceptualconnectionbetweentheproducts,suchextensionsare
successful.Inothercases,theextensionsareunsuccessfulandcandilutethe
originalbrandequity.

Brandequityalsocanbe"bought"bylicensingtheuseofastrongbrandforanew
product.Asinlineextensionsbythesamecompany,thesuccessofbrandlicensing
isnotguaranteedandmustbeanalyzedcarefullyforappropriateness.

ManagingMultipleBrands

Differentcompanieshaveoptedfordifferentbrandstrategiesformultipleproducts.
Thesestrategiesare:

Singlebrandidentityaseparatebrandforeachproduct.Forexample,in
laundrydetergentsProcter&Gambleoffersuniquelypositionedbrandssuch
asTide,Cheer,Bold,etc.

Umbrellaallproductsunderthesamebrand.Forexample,Sonyoffers
manydifferentproductcategoriesunderitsbrand.

MultibrandcategoriesDifferentbrandsfordifferentproductcategories.
CampbellSoupCompanyusesCampbell'sforsoups,PepperidgeFarmfor
bakedgoods,andV8forjuices.

FamilyofnamesDifferentbrandshavingacommonnamestem.Nestle
usesNescafe,Nesquik,andNesteaforbeverages.

Brandequityisanimportantfactorinmultiproductbrandingstrategies.

ProtectingBrandEquity

Themarketingmixshouldfocusonbuildingandprotectingbrandequity.For
example,ifthebrandispositionedasapremiumproduct,theproductquality
shouldbeconsistentwithwhatconsumersexpectofthebrand,lowsaleprices
shouldnotbeusedcompete,thedistributionchannelsshouldbeconsistentwith
whatisexpectedofapremiumbrand,andthepromotionalcampaignshouldbuild
consistentassociations.

Finally,potentiallydilutiveextensionsthatareinconsistentwiththeconsumer's
perceptionofthebrandshouldbeavoided.Extensionsalsoshouldbeavoidedifthe
corebrandisnotyetsufficientlystrong.

Marketing>BrandEquity

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