Brand Equity

Brand Equity

Brand equity is one of the popular and potentially important concepts in marketing that emerged in the 1980s. It has raised the importance of the brand in marketing strategy. Many scholars have expressed their views in defining brand equity.
“Brands have equity because they have high awareness, many loyal consumers, a high reputation for perceived quality, proprietary assets such as access to distribution channels or to patents, or the kind of brand associations (such as personality associations).”
—David A. Aaker, Managing Brand Equity, (Free Press 1991)

Brand Equity

Kevin Lane Keller defines brand equity:

“Brand equity is defined in terms of marketing effects uniquely attributed to the brands – for example, when certain outcomes result from the marketing of a product or service because of its brand name that would not occur if the same product or service did not have the name.”
—Kevin Lane Keller, “Conceptualising, Measuring, and Measuring Customer-Based Brand Equity,” Journal of Marketing, (January 1993)
The power and value of different brands vary in the marketplace. There are clearly two extremes in this regard. On one extreme are brands that customers largely do not know. They are unknown faces to a large number of customers. Next in hierarchy are branded for which customers have fairly high levels of awareness. Enjoying a better status in the hierarchy are branded with a high degree of acceptability among customers. Further on, there are brands for which customers have a high degree of preference. At the other extreme, there are those brands that command a high degree of brand loyalty. A brand loyal customer would not accept a substitute and would go elsewhere to acquire that brand.
“Brand loyalty is the biased behavioral response, expressed over time by some decision-making unit, with respect to one or more alternative brand out of a set of such brands, and is a function of psychological processes.”
—Jagdish N. Sheth, Banwari Mittal, and Bruce I. Newman, Consumer Behaviour, 1999
Loyalty is at the heart of equity and a very important brand equity asset. Few customers are fiercely brand loyal to this degree. Based on customer’s degree of commitment toward brands, David A. Aaker categorized customers in five groups based on their attitudes toward a brand, from the indifferent or switcher at one extreme and most committed on the other extreme. The other three categories fall in between the extremes:
No brand loyalty. Such customers will change brands, particularly for price reasons.
Satisfied but change the brand. They are satisfied with the brand but apparently have no reason to remain attached to it.
The customer is satisfied and stays with it because changing brand would incur costs.
Customer values the brand and considers it as a friend.
The customer is devoted to the brand with intense feelings.
Brand equity is highly related to categories of customers that fall into categories 3, 4, and 5. Brand loyalty is an area of key interest for marketers because it has the ability to have a dramatic impact on marketing performance. Brand equity and associations can add or subtract value for the customer and the company. The assets of brand equity, such as perceived quality and associations can boost customer confidence in buying decision and provide user satisfaction or even delight.
Brand loyalty of consumers provides insulation against attacks by competitors.
The company can afford to charge higher prices than competing brands.
Leverage brand into extensions.
Gets channel support and cooperation.
Attract new customers due to strong positive word-of-mouth.

Building Brand Equity

Branding a new product or ingredient is an important decision that should be taken seriously and with much forethought. Ultimately, B2B and consumer brand recognition can add significant value and greatly distinguish a company and its products. This concept, referred to as building brand equity, takes several essential marketing elements into account.
Product branding is a process that builds a conceptual identity that will reflect a key message. The objective is to develop a name that is strategically sound and makes sense to the company and target audiences over time. The process is structured in a way that allows the company to become active participants and help the name evolve through the efforts and guidance of its marketing team.
Brand equity by itself is an intangible asset. Its development depends on associations made by other companies and consumers as well as the media. There are several factors to consider when launching a brand.
First, invest time and money for the long-term-creating a brand takes time. Realize the creation and final selection of a name will not happen overnight. Competition in the global marketplace is tough; achieving a unique and competitive sales and marketing advantage by crafting that special name is imperative to successfully promote your product.
Next, think beyond the name. A brand name should be easy for your target markets to remember. Also take into account that the brand logo and identifier (tag line) should work together to strengthen the overall image.
Finally, build it up. The brand and its marketing elements should create a consistent image over time that develops a special relationship in the minds of your customers. This process includes advertising, publicity and all of your marketing communications elements. Often brand extensions can strengthen the brand, but such products or ingredients should be related.

Brand Development

Development of a brand name provides the company with a platform to distinguish itself and its product as unique, to increase awareness and generate sales. A strong corporate branding strategy also adds significant value in terms of helping the entire company to implement a long-term vision. There are several benefits to creating a branding strategy that a company can exploit.
Overall, building equity in a strong product brand should be part of a company’s overall business strategy. It should portray what the company aims to achieve and how it wants to be known in the industry and beyond. A compelling product brand encapsulates a vision, values, personality, position and image among many dimensions.
Launching a brand with a solid marketing campaign can often help to overcome potential pitfalls that may occur down the road. B2B or consumer market research can help determine the direction a company needs to take to move a product forward.

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