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Brand Equity

C H A P T E R

Brand Equity

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Copyright 2002, Harsh V Verma

6 1

Brand Management Text and Cases (Ed-2)

Harsh V Verma

Excel Books

C-6

Brand Equity

In the beginning of the 90s, four issues were identified as the strategic challenges for marketers and researchers. These were: i. ii. Measuring brand equity Measuring marketings effectiveness

iii.
iv.

A better new product process


Measuring customer satisfaction

Copyright 2002, Harsh V Verma

6 2

Brand Management Text and Cases (Ed-2)

Harsh V Verma

Excel Books

C-6

Brand Equity

Defining Brand Equity


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

associating a brand with the underlying product or service


(Biel, 1992). Brand equity consists of differential attributes underpinning a brand which

gives increased value to the firms balance sheet.


(Chernatony and McDonald). Brand equity is a set of brand assets and liabilities linked to a brand, its

name and symbol add to or subtract from the value provided by a product or
service to a firm and/or to that firms customers.
Cont.

(Aaker, 1991).
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Copyright 2002, Harsh V Verma

Brand Management Text and Cases (Ed-2)

Harsh V Verma

Excel Books

C-6

Brand Equity

Conceptualizing Brand Equity

Drive Toward or Against Brand

Product

Perception/ Knowledge structure

Customer behaviour: Discriminati on and value

Worth of the Brand

Brand Communication and Contacts

Brand Equity (Surplus )


Cont.
Copyright 2002, Harsh V Verma

6 4

Brand Management Text and Cases (Ed-2)

Harsh V Verma

Excel Books

C-6
Value to Customers

Brand Equity

Brand equity assets can enhance or decrease value for customers. A brands equity is valuable to customers because: It helps customers in information processing. A brand is useful in aiding customers in interpreting, processing, and storing information about products and brands. It simplifies this process. A brands assets enhance customer confidence in the purchase decision. One feels more confident in purchasing a brand (imagine buying an unbranded product, e.g., like tooth paste). The final value to the customer comes in the form of usage satisfaction.
Cont.
Copyright 2002, Harsh V Verma

6 5

Brand Management Text and Cases (Ed-2)

Harsh V Verma

Excel Books

C-6
Value of Marketer

Brand Equity

Brand equity also plays a critical role in enhancing value for the marketer. A firm benefits from the equity in the following ways:
The effectiveness and efficiency of marketing programmes is increased by brand equity assets. The expenditure associated with a brand to achieve a

goal generally tends to be less than an unbranded product aiming to achieve the same goal.
Brand equity dimensions allow a firm to have greater customer loyalty. Brand equity allows a firm to charge premium. Brand equity provides great opportunities for growth. Brand equity is a good source of achieving leverage in distribution channels. Finally, brand equity is a provider of competitive advantage. It imposes

barriers on the entry of competitors.


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Copyright 2002, Harsh V Verma

Brand Management Text and Cases (Ed-2)

Harsh V Verma

Excel Books

C-6

Brand Equity

Brand Image Constellation


Brand equity is the value side of the brand. Most often, this value is

monetized and defined in economic terms: the incremental cash flows which
could be traced to the brand name. A brand is a constellation of meanings and associations. These are not in the product that a brand enrobes; rather, they are all engineered in the prospects mind. They live, grow and die in the mind. They also add or subtract value. A brand is what it stands for in the consumers perceptual space. It is an identity which is at the core of equity

creation. Brand name is just a cue. A subtle trigger makes a brand surface
in the mind.
Cont.
Copyright 2002, Harsh V Verma

6 7

Brand Management Text and Cases (Ed-2)

Harsh V Verma

Excel Books

C-6

Brand Equity

Brand Alters Revenue

Brand perception Brand + Contribution/Equity

Product Revenue

Contribution/Equity

Cont.
Copyright 2002, Harsh V Verma

6 8

Brand Management Text and Cases (Ed-2)

Harsh V Verma

Excel Books

C-6

Brand Equity

Brand Image/Brand Equity Relationship

Brand image

All non -image factors contributing to brand equity

Brand equity

Market value of a brand

Source: Biel, Alexander, L. How Brand Image Drives Brand Equity, Journal of Advertising Research, Nov-Dec 1992, P.Rc-7.

Copyright 2002, Harsh V Verma

6 9

Brand Management Text and Cases (Ed-2)

Harsh V Verma

Excel Books

C-6

Brand Equity

Brand Image Dimensions


A brand in a customers mind is a complex network of associations. Biel proposes that these associations can be of two types: Hard Associations Soft Associations

Brand image has three components: Image of provider Image of user Image of the product.
Cont.
Copyright 2002, Harsh V Verma

6 10

Brand Management Text and Cases (Ed-2)

Harsh V Verma

Excel Books

C-6

Brand Equity

Differential Effect of Brand Knowledge

Brand Name

Brand Value

+
Product
Marketing Effects Product Value

+ (-)

These are three key elements in Kellers framework of brand equity:


i. ii. Differential effect Brand knowledge
Cont.
Copyright 2002, Harsh V Verma

iii. Customer response


6 11

Brand Management Text and Cases (Ed-2)

Harsh V Verma

Excel Books

C-6

Brand Equity

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Leather That Weathers Unique Sole Water Resist Oiled Upper

Attribute Associations

Product Related

Wood Land Shoes

Price Above Rs 1500 Non-Product Related Package Green Box

User Young, Rugged Tough, Adventurous


Usage Outdoors Tough Sports
Cont.

Copyright 2002, Harsh V Verma

6 12

Brand Management Text and Cases (Ed-2)

Harsh V Verma

Excel Books

C-6

Brand Equity

Symbolic benefits

Functional: Speeds Faster, Powerful Experiential: Thrill of Driving

Benefit Ferrari

Symbolic: Prestige Part of a Select Group

Cont.
Copyright 2002, Harsh V Verma

6 13

Brand Management Text and Cases (Ed-2)

Harsh V Verma

Excel Books

C-6

Brand Equity

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Beliefs Easy to Use
Spray

Attribute Belief Associations Evaluation

Attributes

(+)
(+) (+)
Rexona Deodorant

Price

Save Money

Perfume

Smells great

(-) (+ +) (-)
Strong Embarrassment

Deostral

Confidence Effective

Indian

Local
Copyright 2002, Harsh V Verma

6 14

Brand Management Text and Cases (Ed-2)

Harsh V Verma

Excel Books

C-6

Brand Equity

Assets and Liabilities


David Aaker defines brand equity as a set of brand assets and liabilities linked

to a brand, its name and symbol add to or subtract from the value provided by a
product or service to a firm and/or to that firms customers. The following are the assets and liabilities on which the brand equity is based:

Brand loyalty
Name awareness Perceived quality

Brand association in addition to perceived quality


Other proprietary assets linked to brand patents, trademarks, etc.
Cont.

Copyright 2002, Harsh V Verma

6 15

Brand Management Text and Cases (Ed-2)

Harsh V Verma

Excel Books

C-6

Brand Equity

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Aaker Equity as assets and liabilities Brand loyalty Name awareness Perceived quality Brand associations Other proprietary assets Addition or subtraction from the value provided by a product Lasser, Mittal and Sharma Brands superiority Performance Social image Value Trustworthiness Identification

Comparative opinions of experts on brand equity Biel Key Terms Converting image into equity Image of maker Image of product Image of user Images of competing brands Keller Consumer based brand equity Brand knowledge structures Brand awareness Brand image.

What drives Equity

Equity

Additional cash flow achieved by associating a brand with the product

Differential effect of brand knowledge on consumer response

Superiority achieved by the brand name

Copyright 2002, Harsh V Verma

6 16

Brand Management Text and Cases (Ed-2)

Harsh V Verma

Excel Books

C-6
Brand Report Card

Brand Equity

Kevin Lane Keller suggests that the worlds strongest brands share ten characteristics. On the basis of the attributes shared by the worlds top brands, a brand report card could be constructed. Ten Attributes Shared by the Worlds Top Brands are: 1. Excellent Delivery of Desired Benefits 2. Staying Relevant 3. 4. 5. 6. 7. 8. 9.
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Pricing Reflects Value Proper Positioning Consistency Brand Portfolio and Hierarchy Coordinated Support of all Marketing Activities Understand Brand Meaning Long-term support
Copyright 2002, Harsh V Verma

10. Monitoring sources of equity


Brand Management Text and Cases (Ed-2) Harsh V Verma

Excel Books