Professional Documents
Culture Documents
Brand Equity PDF
Brand Equity PDF
AccountingEconomicsFinanceManagement
MarketingOperationsStatisticsStrategy
Marketing>BrandEquity
SearchNetMBA
BrandEquity
Abrandisanameorsymbolusedtoidentifythesourceofaproduct.When
SiteInformation
developinganewproduct,brandingisanimportantdecision.Thebrandcanadd
Home
significantvaluewhenitiswellrecognizedandhaspositiveassociationsinthemind
oftheconsumer.Thisconceptisreferredtoasbrandequity.
About
Privacy
WhatisBrandEquity?
Reprints
TermsofUse
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:
http://www.netmba.com/marketing/brand/equity/ 1/3
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
Home|About|Privacy|Reprints|TermsofUse
http://www.netmba.com/marketing/brand/equity/ 2/3
17/08/2016 BrandEquity
Home|About|Privacy|Reprints|TermsofUse
Copyright20022010NetMBA.com.Allrightsreserved.
Thiswebsiteisoperatedbythe
InternetCenterforManagementandBusinessAdministration,Inc.
http://www.netmba.com/marketing/brand/equity/ 3/3