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Creating Brand Equity
Creating Brand Equity
CHAPTER 9
CREATING BRAND EQUITY
Every business has a brand! Why? Because your brand is your business™!
In this chapter we will address the following questions:
The ability of a brand to simplify decision making and reduce risk is invaluable;
Brands also perform valuable functions for firms;
Simplify product handling or tracing;
Help to organize inventory and accounting records;
Offers the firm legal protection for unique features or aspects of the product;
Intelectual property;
Brands can signal a certain level of quality so that satisfied buyers can easily choose
the product again;
Brand loyalty provides predictability and security of demand;
Loyalty also can translate into a willingness to pay a higher price—often 20 to 25
percent more;
Competitive advantage;
Sustained future revenues to their owner.
Marketers build brand equity by creating the right brand knowledge structures with the right
consumers.
There are three main sets of brand equity drivers:
The initial choices for the brand elements or identities making up the brand (e.g., brand
names, URLs, logos, symbols, characters, spokespeople, slogans, jingles, packages,
and signage).
The product and service and all accompanying marketing activities and supporting
marketing programs.
Other associations indirectly transferred to the brand by linking it to some other entity
(e.g., a person, place, or thing)
Memorable
Meaningful
Likeability.
Transferable.
Adaptable
Protectible
Personalization
Integration
Internalization
Positive associations
Negative associations
Individual names;
Blanket family names;
Separate family names for all products;
Corporate name combined with individual product names.
Brand Extensions
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Recognizing that one of their most valuable assets is their brands, many firms have decided
to leverage that asset by introducing a host of new products under some of their strongest
brand names.
Most new products are in fact line extensions—typically 80 to 90% in any one year.
ex:
Advantages of brand extensions:
New-Product Success
Positive Feedback Effects
Brand Portfolios
All brands have boundaries—a brand can only be stretched so far. Multiple brands are often
necessary to pursue multiple market segments.
Other reasons for introducing multiple brands in a category include:
The brand portfolio is the set of all brands and brand lines a particular firm offers for sale to
buyers in a particular category.
Customer equity
We can relate brand equity to one other important marketing concept, Customer equity.
Customer equity - „ The sum of lifetime values of all customers“.
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A brand is ‘a name, sign, term, symbol, or design, or combination of them, with the intention
to identify the services or goods of one seller of group of sellers and to differentiate them from
those of competitors’.
Brand equity is the added value endowed on services and products. It can be reflected in the
way consumers feel about a brand.
Customer-based brand equity: the effect that brand knowledge has on consumer behavior
and attitude to the marketing of that brand.
Brand knowledge: consists of all the feelings, thoughts, experiences, images, beliefs etc that
become associated with the brand.
1. The initial choices for the brand identities or elements making up the brand.
2. The way the brand is integrated into the supporting marketing program.
3. The associations indirectly transferred to the brand by linking the brand to some other
entity.
A brand audit: assesses the health of the brand and assesses the sources of brand equity
and suggests ways to improve its brand equity.
Brand valuation: should not be mistaken for brand equity. Brand valuation is the estimated
financial value of the brand.
Companies must always keep track of shifts and changes in the environment that can cause
a brand to lose popularity or marketshare. If a firm wants to revitalize a brand it should first
begin with going back to the sources of brand equity from the beginning of the brand.
When an organization uses an established brand to introduce a new product the product is
called a brand extension.
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The parent brand: the existing brand that ’gives birth’ to a brand extension.
In a line extension the parent brand covers a new product within a product category it
currently serves.
In a category extension the parent brand is used to enter a different product category from
the one it currently serves.
A brand line consists of all of the products that are sold under a particular brand.
A brand mix: is the set of all brand lines that a particular firm makes available to buyers.
A licensed product: one whose brand name has been licensed to other manufacturers that
actually make the product.
Advantages of brand extensions: they can enhance the acceptance of the new product by
customers; they can provide positive feedback to the parent brand and company.
Disadvantage of brand extension: because of line extensions the strength of the brand name
can decrease and get less strongly identified to one product.
Brands can play a number of different roles within a brand portfolio. Each brand must have a
well-defined position in the portfolio.
Cash cows: low growth opportunities but they still are profitable enough for management to
keep around.
Flankers: are positioned with respect to the competitors brands so that more important
‘flagship’ brands can retain their desired position.
Low-end entry level: relatively low-priced brand in the portfolio often may be to attract
customers to other (more expensive) brands.
High-end prestige: relatively high priced brand to add prestige to the entire portfolio.