17/08/2016

BrandEquity

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BrandEquity

Abrandisanameorsymbolusedtoidentifythesourceofaproduct.When

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developinganewproduct,brandingisanimportantdecision.Thebrandcanadd
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significantvaluewhenitiswellrecognizedandhaspositiveassociationsinthemind
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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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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.

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