Brand equity

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Brand equity refers to the marketing effects and 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. Because of the well
known brand name the company some time charges premium prices from the consumer .[1][2][3][4]. 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 [5][6]. 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[7]. 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 [8].
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.

Contents
[hide]

• 1 Measurement

• 2 Positive brand equity vs. negative brand

equity

• 3 Family branding vs. individual branding

strategies

• 4 Examples

• 5 References

• 6 See also

[edit]Measurement

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.[7] 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[9].

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[10]. More recently a revenue premium approach has been advocated [4].

Consumer Level: This approach seeks to map the mind of the consumer to find out what associations with the
brand 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[5].
Brands with high levels of awareness and strong, favorable and unique associations are high equity brands[5].

All of these calculations are, at best, approximations. A more complete understanding of the brand can occur if
multiple measures are used.

[edit]Positive brand equity vs. negative brand equity

This article needs additional citations for verification.

Please help improve this article by adding reliable references. Unsourced material may
be challenged and removed. (November 2009)

A 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.

There are two schools of thought regarding the existence of negative brand equity. One perspective states
brand equity cannot be negative, hypothesizing only positive brand equity is created by marketing activities
such as advertising, PR, and promotion. A second perspective is that negative equity can exist, due to
catastrophic events to the brand, such as a wide product recall or continued negative press attention
(Blackwater or Halliburton, for example).

Colloquially, the term "negative brand equity" may be used to describe a product or service where a brand has
a negligible effect on a product level when compared to a no-name or private label product.

[edit]Family branding vs. individual branding strategies

The greater a company's brand equity, the greater the probability that the company will use a family
branding strategy rather than an individual branding strategy. This is because family branding allows them to
leverage the equity accumulated in the core brand. Aspects of brand equity includes: brand loyalty, awareness,
association, and perception of quality .

[edit]Examples
In the early 2000s in North America, the Ford Motor Company made a strategic decision to brand all new or
redesigned cars with names starting with "F". This aligned with the previous tradition of naming all sport utility
vehicles since the Ford Explorer with the letter "E". The Toronto Star quoted an analyst who warned that
changing the name of the well known Windstarto the Freestar would cause confusion and discard brand equity
built up, while a marketing manager believed that a name change would highlight the new redesign. The
aging Taurus, which became one of the most significant cars in American auto history, would be abandoned in
favor of three entirely new names, all starting with "F", the Five Hundred, Freestar andFusion. By 2007, the
Freestar was discontinued without a replacement. The Five Hundred name was thrown out and Taurus was
brought back for the next generation of that car in a surprise move by Alan Mulally. "Five Hundred" was
recognized by less than half of most people, but an overwhelming majority was familiar with the "Ford Taurus".

[edit]References

1. ^ Aaker, David A. (1991), Managing Brand Equity. New York: The Free Press

2. ^ Keller, Kevin Lane (2003). “Brand Synthesis: The Multidimensionality of

Brand Knowledge,” Journal of Consumer Research, 29 (4), 595-600

3. ^ Leuthesser, L., C.S. Kohli and K.R. Harich (1995). “Brand Equity: The Halo
Effect Measure,” European Journal of Marketing, 29 (4), 57-66.

4. ^ a b Ailawadi, Kusum L., Donald R. Lehmann, and Scott A Neslin (2003).

“Revenue Premium as an Outcome Measure of Brand Equity,” Journal of

Marketing, 67 (October), 1-17

5. ^ a b c Keller, Kevin Lane (1993). “Conceptualizing, Measuring, and Managing

Customer-Based Brand Equity,” Journal of Marketing, 57 (January) 1-22

6. ^ Lassar, W., B. Mittal and A. Sharma (1995). “Measuring Customer-Based

Brand Equity,” Journal of Consumer Marketing, 12 (4), 11-19

7. ^ a b Neumeier, Marty (2006). The Brand Gap: How to Bridge the Distance
Between Business Strategy and Design, Berkekley, CA : New Riders

Publishing.

8. ^ Grannell, Chris (2009). "Untangling Brand Equity, Value and Health",

Brandchannel, Fall 2008

9. ^ Chu, Singfat and Hean Tat Keh (2006). “Brand Value Creation: Analysis of
the Interbrand-Business Week Brand Value Rankings,” Marketing Letters, 17,

323-331
 10. ^ Aaker, David A. (1996), “Measuring Brand Equity Across Products and
Markets,” California Management Review, 38 (Spring), 102-120.

10. Paul Kilburn ad Alfred Riachi Brands vs non Branded Strategies, Journal of Marketing p 23, (12,1 2008).

[edit]See also
 Brand management

 Brand

 Brand language

 Customer engagement

 Equity (disambiguation)

 Marketing

 Product management

 Brand Architecture

 Brand extension

 Threaded marketing

 The Brand Trust Report

 Visual brand language

Categories: Branding | Product management | Branding companies

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