Brand Assignment 2010

BRAND EQUITY

A brand is a name or symbol used to identify the source of a product. When developing a new
product, branding is an important decision. The brand can add significant value when it is well
recognized and has positive associations in the mind of the consumer. This concept is referred to
as brand equity.

What is Brand Equity?

Brand equity is an intangible asset that depends on associations made by the consumer. There are
at least three perspectives from which to view brand equity:

 Financial - One way to measure brand equity is to determine the price premium that a
brand commands over a generic product. For example, if consumers are willing to pay
$100 more for a branded television over the same unbranded television, this premium
provides important information about the value of the brand. However, expenses such as
promotional costs must be taken into account when using this method to measure brand
equity.
 Brand extensions - A successful brand can be used as a platform to launch related
products. The benefits of brand extensions are the leveraging of existing brand awareness
thus reducing advertising expenditures, and a lower risk from the perspective of the
consumer. Furthermore, appropriate brand extensions can enhance the core brand.
However, the value of brand extensions is more difficult to quantify than are direct
financial measures of brand equity.
 Consumer-based - A strong brand increases the consumer's attitude strength toward the
product associated with the brand. Attitude strength is built by experience with a product.
This importance of actual experience by the customer implies that trial samples are more
effective than advertising in the early stages of building a strong brand. The consumer's
awareness and associations lead to perceived quality, inferred attributes, and eventually,
brand loyalty.

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Strong brand equity provides the following benefits:

 Facilitates a more predictable income stream.

 Increases cash flow by increasing market share, reducing promotional costs, and
allowing premium pricing.
 Brand equity is an asset that can be sold or leased.

However, brand equity is not always positive in value. Some brands acquire a bad reputation that
results in negative brand equity. Negative brand equity can be measured by surveys in which
consumers indicate that a discount is needed to purchase the brand over a generic product.

Building and Managing Brand Equity

In his 1989 paper, Managing Brand Equity, Peter H. Farquhar outlined the following three stages
that are required in order to build a strong brand:

1. Introduction - introduce a quality product with the strategy of using the brand as a
platform from which to launch future products. A positive evaluation by the consumer is
important.
2. Elaboration - make the brand easy to remember and develop repeat usage. There should
be accessible brand attitude, that is, the consumer should easily remember his or her
positive evaluation of the brand.
3. Fortification - the brand should carry a consistent image over time to reinforce its place
in the consumer's mind and develop a special relationship with the consumer. Brand
extensions can further fortify the brand, but only with related products having a perceived
fit in the mind of the consumer.

Alternative Means to Brand Equity

Building brand equity requires a significant effort, and some companies use alternative means of
achieving the benefits of a strong brand. For example, brand equity can be borrowed by
extending the brand name to a line of products in the same product category or even to other

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categories. In some cases, especially when there is a perceptual connection between the products,
such extensions are successful. In other cases, the extensions are unsuccessful and can dilute the
original brand equity.

Brand equity also can be "bought" by licensing the use of a strong brand for a new product. As in
line extensions by the same company, the success of brand licensing is not guaranteed and must
be analyzed carefully for appropriateness.

Managing Multiple Brands

Different companies have opted for different brand strategies for multiple products. These
strategies are:

 Single brand identity - a separate brand for each product. For example, in laundry
detergents Procter & Gamble offers uniquely positioned brands such as Tide, Cheer,
Bold, etc.
 Umbrella - all products under the same brand. For example, Sony offers many different
product categories under its brand.
 Multi-brand categories - Different brands for different product categories. Campbell
Soup Company uses Campbell's for soups, Pepperidge Farm for baked goods and V8 for
juices.
 Family of names - Different brands having a common name stem. Nestle uses Nescafe,
Nesquik, and Nestea for beverages.

Brand equity is an important factor in multi-product branding strategies.

Protecting Brand Equity

The marketing mix should focus on building and protecting brand equity. For example, if the
brand is positioned as a premium product, the product quality should be consistent with what
consumers expect of the brand, low sale prices should not be used compete, the distribution
channels should be consistent with what is expected of a premium brand, and the promotional
campaign should build consistent associations.
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Finally, potentially dilutive extensions that are inconsistent with the consumer's perception of the
brand should be avoided. Extensions also should be avoided if the core brand is not yet
sufficiently strong.

Measuring Brand Equity

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. 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.

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. More recently a revenue premium approach has
been advocated.

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. Brands with high levels of
awareness and strong, favorable and unique associations are high equity brands.

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

Example

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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 Windstar
to the free star 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, Free star and Fusion.
By 2007, the Freestar was discontinued without a replacement. The Five Hundred names were
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".

BRAND CREATION & BRAND BUILDING

Steps in brand creation

we have seen the need of well-established brands and how important they are in the present
times. Let’s look at the process by which a brand is created.

Brand creation is not just naming or symbolically tagging a product but it goes much beyond
this. It is birth of a brand, which is headed towards fulfillment of all promises and guaranteeing
top class services and products. Such a brand enjoys top of mind recall from its customers and a
high level of brand loyalty.

Inception of an **** name or symbol **** successful launch **** brand **** top of mind
Idea or product of product of product recognition recall

Above process shows the way in which a true brand is born and becomes deep rooted in minds of
the customers.

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Name and symbol as a brand

the name is the first skirmish in the battle for consumer recognition and it is very important to
make it a preemptive strike. The most important aspect of a brand's name and symbol is that it
silently speaks everything about the company or product. Every name and symbol is associated
with certain values, features and it tries to build a relationship with the company or product.

Nike is the best example of how a symbol is best utilized and exploited and its strong association
with the products. Nike is symbolized by a tick mark or something which is always right. The
business card of a Nike employee has a tick on it instead of the company name and still people
make out the company where the person is employed just by looking at the tick

Many companies have failed to make a mark, as they could never convince their customers in the
shortest way i.e. through a meaningful symbol what they were promising to do. Well-established
companies are now spending cores of rupees to get a new logo that revamps their image and
creates a new brand of a company that has a new vision. Videocon, Mahindra and Mahindra and
Tata's are a few examples to give.

A corporate punch line is also an attempt to go one step forward and share your vision with other
people and this also helps in creation and establishment of a strong brand. No wonder Wipro, the
company headed by the richest Indian spent a massive amount of Rs.35 crore rupees for a new
logo, the bright sunflower and an impact punch line, Applying thought.

Successful launch of a product

Brands are created to serve the customer so it becomes mandatory for a company to first know
what the customer wants. A successful brand creation calls for a thorough survey of market to
find out what features are desired by customer in the product and whether he really wants the
product or not. A top class brand with best features and best services can fall flat on its mouth if

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customer does not need it. This is what precisely happened with Real Value a company that
introduced vaccumisers and fire fighting instruments in India. But the Indian consumer was not
ready for this product because of which the company failed completely in introducing a good
product.

The extensive market research is a prerequisite for the successful lanch of a brand.

Understanding the customers, their needs, likes and dislikes helps to know what the customers
want. 
Analyzing the competition: Competitors are companies which satisfy the same customer needs.
Once a company identifies its primary competitors, it must ascertain their characteristics,
specially their strategies, objectives, strengths and weaknesses, and reaction patterns. 
A customer value analysis should be carried out to reveal the company's strengths and
weaknesses relative to various competitors. 
The important steps involved are

Identify the major attributes customers' value. 

Assess the qualitative importance of the different attributes 
Assess the company's and competitors' performances on the different customer values against
their rated importance 
Examine how customers in a specific segment rate the company's performance against a specific
major competitor on an attribute-by-attribute basis 
Monitor customer values over time 
After the desired features are incorporated in the product and it is given a name, its future lies in
a launch that positions it at the right place and right time. A company should thus know where its
customers are. Aggressive advertising coupled with proper distribution will ensure proper
availability of the product. In case of a long lasting product, attention should be paid to after
sales service, which plays a major role in differentiating between two companies.

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Branding for service industries

Reasons for branding services:-

Although the principles for branding of goods and services are generally the same there occur
some differences. These arise from the different natures of both categories. The main differences
that influence branding policies are that services
 
·       have a changing level of quality,
·      The consumer has to become involved in the consumption of a service
Actively,
·       They are intangible and not storable.
 
When a brand in general gives the consumer more confidence in his choice this is even more
important for services. Their quality and other features are more difficult to assess. Because of
their intangibility and complexity it is harder for the customer to distinguish between the offers
from the wide range of service companies operating in the market place.
 
This especially applies to the market of accounting, auditing and consulting where consolidation
and globalisation increase competition. In an FT-article about branding accounting services
(Kelly 1998) a branding expert states that “more than 70 % of the Fortune 500 companies ...said
branding is increasingly important in helping them to choose where to get a service. They want
to be able to tell who is good at what.”  

Brand structures for services industries:-

As for services, literature suggests to use the companies name – a so called corporate brand – as
the overall family brand for all the services offered. Murphy (1990) calls this the “monolithic
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approach”. He argues that especially for companies which offer an enormous array of services
(e.g. consultants, banks) corporate names must be used to deliver more generalised benefits of
quality, value and integrity. de Chernatony (1996) comes to the conclusion that corporate brands
are a crucial means to help make the service offering more tangible in consumers minds and can
enhance consumers perceptions and trust in the range of services provided by the company. 
One disadvantage of corporate brands – little opportunity for developing second or sub-brands
for differentiated product lines– applies more to branded products. However Murphy (1990)
states that many companies have chosen an approach of “local autonomy but group-wide
coherence” as a system whereby individual divisions and products are largely free-standing but
mention is made in all literature and on all stationery and products that “company A is member
of the XYZ group”. This approach is very common amongst the Big Five accounting and
auditing firms. It allows their national member firms, to exploit the groups brand name and their
own (brand) name at the same time. Many member firms that had joined the global firms have
long traditions and a good reputation of their own. For them it is important to demonstrate their
clients that these qualities are not lost, on the contrary – other qualities and services are added. 
 
Kelly (1998) sees three obstacles to develop a strong global corporate brand for the large
accounting firms:
·       National partnerships value their individuality over “corporate” discipline
·       National regulations and cultures make it difficult to work smoothly under
one global set of values
·       The diversity of services offered makes specific branding impossible.
The first two points closely relate to quality and consistency, two issues that customer value in a
brand. They need to be monitored and controlled carefully. I think that – under the pressure to
globalise and with ongoing integration of national member firms at least the Big Five will be
able to overcome these obstacles to a greater extend. The third point should be tackled  with a
strong corporate brand that stands for all services. The “Big five” see one competitive advantage
over smaller firms in their ability to offer every service their client might need in every place of
the world.3.4       Choosing a brand name
 

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The decision for a brand name has to be taken carefully because it can have a long term influence
on the success of the branded product or – in the case of a corporate brand – of the whole
company. Murphy (1990) and Dibb (1997) give a list of factors to take care for

To pick out one issue of the process of developing a brand name, there is a big choice in the
spectrum from descriptive to free-standing names which are often artificial words with no
obvious relation to the good or service. Free standing or arbitrary names are more suitable if they
are to stand for a variety of services since there is no initial associations with this name. In
addition they are the potentially strongest form of trademark in legal terms. (Murphy 1990)
 

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As for professional services firms  a common theme in the brand names is the use of the
companies founder's names. For instance the name KPMG stands for Klynveld, Peat, Marwick
and Mitchell, Goerdeler. In the process of the merger between Price Waterhouse and Coopers &
Lybrand they had to develop a new name for the new company that would exploited the
reputation and heritage from both old names. This was important for the relationship with the
existing customers as well as for the relationship with all employees. The result was the name
PricewaterhouseCoopers. This corporate name is formed out of three names of founders of
companies where the new company originates from (Price, Waterhouse, Coopers). Both names
are completely free-standing. That’s why they properly address the issues of suitability for
different media, different markets and cultures and different products as well as the issue of
imitation and legal protection.

   Marketing a service brand

In general marketing strategies for services add three more P’s to the marketing mix, which stand
for Process, Physical evidence and People. The same principles apply to the branding of services.

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de Chernatony (1996) emphasises the importance of the people as the provider of the service.
The careful selection and training of staff firstly assures a higher level of quality of the service,
that is depicted by the brand. It is up to the people to give the processes more reliability and thus
to assure a higher homogeneity between the quality of the service and the personality and

message of the brand. Furthermore people have contact with the customer. They have to be
aware of the brands objectives so that they can “live them” and communicate them to the
customer. It is not enough to communicate the message of the brand externally to the customer;
the first step has to be internal communication. 

Here the principles of internal marketing play an important role. Staff is seen as the first
customer of the brand. Kotlers (1999) typology of marketing in service industries applies equally
to the marketing of brands in service industries:

The theme here is that the customer not only receives the message from the companies external
marketing activities, but also the message from the behaviour of the staff he has contact with.

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The impression the customer gets from the service, from the company and thus from the
personality of the corporate brand is also influenced by the friendliness and responsiveness of
staff, their perceived qualification and how the staff “lives” the philosophy of the corporate
brand. 

The element of physical evidence is about the environment in which the service is offered and
consumed, it is about the customers “feelings” (Dibb 1997). As for branding services, the
physical evidence is closely related to the personality of the brand, which can be described as an
emotional bond to the customer that grows out of the perceived characteristics of the brand. To
give the service a differentiation advantage it is important to create a distinguishable atmosphere
that the customer can relate to the service provider. This can be achieved by the use of corporate
brand signs, corporate colours and several other themes that are common for all outlets, all
employees everywhere the company presents itself to the public. 

As for branding auditing and consulting firms, physical evidence is more than just to have a
visible corporate identity. It is about bringing a message across. In this industry the message of
the brand has to establish the emotional bond to the customer which is one of the few ways for
differentiation. Kelly (1998) gives an good example when he says ”Some clients may ask how
brand building sits alongside the traditional virtues of a professional partnership – skilled
individuals with independent minds able to solve problems on a case by case basis. The real
challenge is turning that into a brand.” Up to now many accounting and auditing firms use their
job advertisements to send out their brand personality. Job ads for professional services are much
more than a means of attracting qualified people. They allow the companies to present
themselves with some unique personality. Today’s job advertisements not only use corporate
colours and logotypes, they tell little stories, transfer messages, describe corporate cultures, and
the skills and experiences of the people in these firms. For the companies the job advertisements
are a good way to present the variety of services offered when they search specialists for a
certain position. In that way the firms can make their brand and its personality more known
amongst possible employees and possible clients. 

 
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Processes are very important in services industries since in most cases the customer is directly
involved in the processes. Aspects that especially apply to the auditing and consulting industry
are extremely high quality, confidentiality, timing/availability, consistency and the avoidance of
the abuse of insider knowledge. The internal processes that assure these characteristics are less
important for the customer. For him it is important that these characteristics are met. Again a
brand can provide more confidence in the choice of a service provider. It allows to identify a
provider with a good reputation for high quality processes and results. As with most other
services the quality of the auditing or consulting processes can not be tested in advance.
Moreover, you can change your hairdresser if you are not satisfied but it is much harder to
change your auditor since public normally perceives this as some sort of sign for alert.

On the other hand, even if necessary, there are dangers in relating a brand to closely to the
quality of processes. Poor quality in only one single case can affect the whole brand. Many of the
professional services firms have faced the problem that one of their major clients went into
bankruptcy or was accused for some illegal activity. In such situations the media often ask about
the quality of the auditing processes.

We can see that the processes that deliver the service closely relate to consistency as one of the
issues customers value in brands.

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