UCSI UNIVERSITY

MARKETING PROCESSES 5

CREATING BRAND EQUITY

 How Does Branding Work?

The American Marketing Association defines a brand as “a name, term, sign, symbol, or
design, or a combination of them, intended to identify the goods or services of one seller or
group of sellers and to differentiate them from those of competitors.”

A brand is thus a product or service that adds dimensions that differentiate it in some way
from other products or services designed to satisfy the same need. These differences may be
functional, rational, or tangible-related to the product performance of the brand. They may
also be more symbolic, emotional, or intangible-related to what the brand represents.

1. The Role of Brands

Brands identify the source or maker of a product and allow consumers to assign responsibility
to a manufacturer or distributor. Brands perform several functions for both consumers and
firms.

 Brands’ role for consumers

It is a means to set consumers’ expectations and reduce their risk. A brand may even be
“predictably unpredictable” if that is what consumers expect, but the key is that it fulfils or
exceeds customer expectations in satisfying their needs and wants.

Consumer may evaluate the same product differently depending on how it is branded. Brands
can also take personal meanings to consumers and become an important of their identity. For
some consumers, brands can even take on human-like characteristics.

 Brands’ role for firms

First, they simplify product handling or tracing, and help to organise inventory and
accounting records. A brand also offers the firm legal protection for unique features or
aspects of the product. Brand loyalty provides predictability and security of demand for the
firm and creates barriers to entry that make it difficult for other firms to enter the market.

To firms, brands thus represent enormously valuable pieces of legal property that can
influence consumer behaviour, be bought and sold, and provide the security of sustained
future revenues to their owner. Some believe that strong brands result in better earnings and
profit performance for firms, which, in turn, creates greater value for shareholders.

 Branding in Asia

Asian businesses were more involved in performing the distribution function for the regions
imports and exports. Kwon Ping Ho, chairman of Banyan Tree Group, outlined five
challenges for Asian brands with global ambitions:

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 a. Asian companies must overcome inherent parochialism.
b. Asian brands must adopt a corporate culture that reflects a global perspective.
c. Asian brands must maintain their Asian brand identity as they go global.
d. Asian brands must rise above the cheap low-quality image.
e. Asian companies must think like a global brand even if it is small.

2. The Scope of Branding

How then do you “brand” a product? A brand is a perceptual entity that is rooted but reflects
the perceptions and perhaps even the idiosyncrasies of consumers. Branding is endowing
products and services with the power of a brand. Branding is all about creating differences.

To brand a product, it is necessary to teach consumers “who” the product is, “what” the
product does, and “why” consumers should care. Branding involves creating mental
structures and helping consumers organize their knowledge about products and services in a
way that clarifies their decision-making and provides value to the firm.

For branding strategies to be successful and brand value to be created, consumers must be
convinced that there are meaningful differences among brands in the product or service
category. The key to branding is that consumer must not think that all brands in the category
are the same.

 Defining Brand Equity

Brand equity is the added value endowed to products and services. This value may be
reflected in how consumers, think, feel, and act with respect to the brand as well as the prices,
market share, and profitability that the brand commands for the firm.

Marketers and researchers use various perspectives to study brand equity. Customer-based
brand equity can be defined as the differential effect that brand knowledge has on consumer
response to the marketing of that brand.

A brand is said to have positive customer-based brand equity when consumers react more
favourable to a product and the way it is marketed when the brand is identified as compared
to when it is not. There are three key ingredients to this definition:

o Brand equity arises from differences in consumer response. If no differences

occur, then the brand name product can essentially be classified as a commodity or
generic version of the product.
o Differences in response are a result of consumer’s brand knowledge, the
thoughts, feelings, images, experiences, and beliefs associated with the brand.
Brands must create strong, favourable, and unique brand associations with customers.
o Brand equity is reflected in perception, preferences, and behaviour related to all
aspects of the marketing of a brand. Stronger brands lead to greater revenue. These
key benefits of brand equity include:

i. Improved perceptions of product performance

ii. Greater loyalty
iii. Less vulnerability to competitive marketing actions

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 iv. Less vulnerability to marketing crises
v. Larger margins
vi. More inelastic consumer response to price increases
vii. More elastic consumer response to price decreases
viii. Greater trade cooperation and support
ix. Increased marketing communications effectiveness
x. Possible licensing opportunities
xi. Additional brand extension opportunities
xii. Improved employee recruiting and retention
xiii. Greater financial market returns

The challenge for marketers is building a strong brand is in ensuring that customers have the
right type of experiences with products and services and that their marketing programs create
the desired brand knowledge structures for the brand.

The quality of the investment in brand building is the critical factor, not necessarily the
quantity, beyond some minimal threshold amount. A brand promise is the marketer’s vision
of what the brand must be and do for consumers.

 Asian brands and brand equity

Ian Batey, who developed the Singapore Girl icon for Singapore Airlines, identified four
types of East Asian assets that may serve as springboards for branding.

a. Golden assets – These refer to natural commodities such as rice, wheat, fruit, etc.
which are abundant in the region and usually exported. Yet, no Asian brand with a
global standing exists in this category.
b. Acquired assets – These refer to a branding opportunity on the back of an identity that
enjoys strong credibility. Asia’s reputation for quality personal services and
hospitality is an area where a global Asian hotel brand can emerge.
c. Potential assets – These refer to the building of a global Asian brand from scratch.
d. Combining acquired assets with potential assets – This hybrid approach may be
achievable in the arts and entertainment industry by leveraging Asia’s extraordinary
history.

1. Brand Equity Models

 Brand Asset Valuator

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Advertising agency Young and Rubicam (Y&R) developed a model of brand equity called
Brand Asset Valuator (BAV). The four key components of brand equity based on BAV are:
a. Energised differentiation measures the degree to which a brand is seen as different
from others.
b. Relevance measures the breadth of a brand’s appeal.
c. Esteem measures how well the brand is regarded and respected.
d. Knowledge measures how familiar and intimate consumers are with a brand.

Differentiation and relevance combine to determine brand strength. Esteem and knowledge
combine to create brand stature. Brand strength and brand structure can be combined to
form a Power Grid that depicts the stages in the cycle of brand development in successive
quadrants.

 Brandz

Marketing research consultants Brown and WPP have developed the BRANDZ model of
brand strength, at the heart of which is the Brand Dynamics model, a system of brand equity
measurements that reveals a brand’s current equity and opportunities for growth.

Brand Dynamics maintains that there are three brand associations crucial for building
customer predisposition to buy a brand – meaningful, different, and salient brand
associations. The success of a brand along those three dimensions is, in turn, reflected in
three important outcome measures:

a. Power: a prediction of the brand’s volume share

b. Premium: a brand’s ability to command a price premium relative to the category
average
c. Potential: the probability that a brand will grow value share

How well a brand is activated in the marketplace and the competition that exists will
determine how strongly brand predisposition ultimately translates into sales.

 Brand Resonance Model

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The brand resonance model views brand building as an ascending, sequential series of steps,
from bottom to top.

a. Ensuring identification of the brand with customers and an association of the brand in
customers’ minds with a specific product class or customer need.
b. Firmly establishing the totality of brand meaning in the minds of customers by
strategically linking a host of tangible and intangible brand associations.
c. Eliciting the proper customer responses in terms of brand-related judgment and
feelings.
d. Converting brand response to create an intense, active loyalty relationship between
customers and the brand.

These brand building blocks can be assembled to build a brand pyramid with customers as
listed in figure below.

a. Brand salience relates to how often and easily the brand is evoked under various
purchase or consumption situations.
b. Brand performance relates to how the product or service meets customers’ functional
needs.
c. Brand imagery deals with the extrinsic properties of the product/service, including
the ways in which brand attempts to meet customers’ psychological or social needs.
d. Brand judgments focus on customers’ own personal opinions and evaluations.
e. Brand feelings are customers’ emotional responses and reactions with respect to the
brand.
f. Brand resonance refers to the nature of the relationship that customers have with the
brand and extent to which customers feel that they are “in sync” with the brand.

Resonance is characterized in terms of the intensity or depth of the psychological bond

customers have with the brand, as well as the level of activity engendered by this loyalty.

 Building brand equity

Marketers build brand equity by creating the right brand knowledge structures with the right
consumers. There are three main sets of brand equity drivers:

a. The initial choice for the brand elements or identities making up the brand.

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 b. The product, service, and all accompanying marketing activities and supporting
marketing programs.
c. Other associations indirectly transferred to the brand by linking it to some other
entity (e.g., a person, place, or thing).

1. Choosing Brand Elements

Brand elements are those trademarkable devices that serve to identify and differentiate the
brand. Brand elements can be chosen to build as much brand equity as possible. The test of
the brand-building ability of these elements is what consumers would think or feel about the
product if they only knew about the brand element.

 Brand Element Choice Criteria

There are six criteria in choosing brand elements. The first three (memorable, meaningful,
and likeable) can be characterized as “brand building” in terms of how brand equity can be
built through the judicious choice of a brand element.

The latter three (transferable, adaptable, and protectable) are more “defensive” and are
concerned with how the brand equity contained in a brand element can be leverage and
preserved in the face of different opportunities and constraints.

a. Memorable. Short brand names such as Qoo and Kao can help, particularly in much
of Asia where English is not the first language. Moreover, the brand name should also
look distinctive to be memorable in Asia.
b. Meaningful. Meaningfulness should be interpreted in the values that consumers seek.
More generally, prudent marketers in the Asia Pacific should probe folklore, taboos,
superstitious and religious connotations conveyed by colours, numbers, or symbols
where these form part of a brand name.
c. Likeable. Concrete brand names such as Sunkist, Bluebird, and Head & Shoulders
evoke much imagery.
d. Transferable. Often companies enter one Asian market after another. Such companies
are likely to choose a name suited for one market but not for the next. Using an
existing corporate or brand name may be considered more consistent on a regional
basis.
e. Adaptable. As many Asian brands modernise, their elements need to be adaptable and
yet retain the traditional values of the brand.
f. Protectible. It is important that names that become synonymous with product
categories – such as Kleenex, Scotch Tape, and Xerox – retain their trademark rights
and not become generic.

 Developing Brand Elements

Brand elements can play several brand-building roles. Brand elements should be easily
recognized, recalled, inherently descriptive, and persuasive. Memorable or meaningful brand
elements can reduce the burden on marketing communications to build awareness and link
brand associations.

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The different associations that arise from the likeability and appeal of brand elements may
also play a critical role in the equity of the brand. Brand names are not the only important
brand element.

Often the less concrete brand benefits are, the most important it is that brand elements capture
the brand’s intangible characteristics. A powerful brand element is slogans. They are
extremely efficient to build brand equity. They help consumers grasp what the brand is and
what makes it special

2. Designing Holistic Marketing Activities

Brands are not built by advertising. Customers come to know a brand through a range of
contacts and touch points: Personal observations, Personal use, Word of mouth, Inter-actions
with company personnel, On-line or telephone experiences, Payment transactions.

A brand contact can be defined as any information-bearing experience a customer or

prospect has with the brand, the product category, or the market that relates to the
marketer’s product or service. Any of these contacts can be positive or negative.

Integrating marketing is about mixing and matching marketing activities to maximize their
individual and collective effects. Marketers need a variety of different marketing activities
that reinforce the brand promise.

 Internal Branding

Marketers must adopt an internal perspective to consider what steps to take to be sure
employees and marketing partners appreciate and understand basic branding notions, and
how they can help—or hurt brand equity. Internal branding is activities and processes that
help to inform and inspire employees.

Brand bonding occurs when customers experience the company as delivering on its brand
promise. The brand promise will not be delivered unless everyone in the company lives the
brand. Some important principles for internal branding are:

a. Choose the right moment – Turning points are ideal opportunities to capture
employees’ attention and imagination.
b. Link internal and external marketing – internal and external messages must match.
c. Bring the brand alive for employees – A professional branding campaign should be
based on marketing research and supervised by the marketing department. Internal
communications should be informative and energising.

3. Brand Communities

A brand community is a specialised community of consumers and employees whose

identification and activities focus around the brand. Three characteristics identify brand
communities:

a. A “consciousness of kind” or sense of felt connection to the brand, company, product,

or other community members.

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 b. Shared rituals, stories, and traditions that help to convey the meaning of the
community.
c. A shared moral responsibility or duty to both the community and individual
community members.

A strong brand community results in a more loyal, committed customer base. Building a
positive, productive brand community requires careful thought and implementation.

4. Leveraging Secondary Associations

The third and final way to build equity is, in effect, to “borrow it.” That is, brand associations
may themselves be linked to other entities that have their own associations, creating
“secondary” brand associations.

The brand may be linked to certain source factors: The company—through branding
strategies, Countries or other geographical regions—identification of product origin,
Channels of distribution—channel strategy, Other brands—ingredient or co-branding,
Characters—licensing, Spokespeople—endorsements, Sporting or cultural events—
sponsorships, Other third-party sources—awards or reviews.

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