Brand equity is a phrase used in the marketing industry which describes the value of having a well-known brand name, based on the idea that the owner of a well-known brand name can generate more money from products with that brand name than from products with a less well known name, as consumers believe that a product with a well-known name is better than products with less well-known names.
Brand equity refers to the value of a brand.
The value premium that a company realizes from a product with a recognizable name as compared to its generic equivalent.
ADVANTAGES OF BRAND EQUITY :
ADVANTAGES OF BRAND EQUITY :
- Greater customer loyalty,
- Less vulnerability to competitive marketing actions,
- Less vulnerability to marketing crises,
- Larger price margins,
- More inelastic consumer response to price increases,
- More elastic consumer response to price decreases,
- Greater trade cooperation and support,
- Increased marketing communication effectiveness,
- Possible licensing opportunities, and
- Additional brand extension opportunities.
CREATING BRAND EQUITY
- Brand Memorability : Companies can create brand equity for their products by making them memorable, and superior in quality and reliability.
- Mass marketing campaigns can also help to create brand equity. If consumers are willing to pay more for a generic product than for a branded one.
- Brand Recognition - The brand is widely known and recognized, and consumers know what it provides in relationship to the competition.
MANAGING BRAND EQUITY
STRATEGIES TO MANAGE BRAND EQUITY :
1. BRAND REINFORCEMENT
1. BRAND REINFORCEMENT
- Brand Reinforcement is an activity associated with getting consumers who have tried a particular brand to become repeat purchasers and with attracting new users. Brand reinforcement is a primary objective of the development stage of the product's life cycle.
- Reinforcing a brand is commonly explored by creating more or greater brand awareness. Marketers study and expand buyer's established brand recall and recognition, with the aim to improving the strength, favorability, and uniqueness of their customer's brand associations.
- Brand Reinforcement can be done by :
- Maintaining brand consistency.
- Protecting sources of brand equity.
- Fortifying brand equity.
2. BRAND REVITALIZATION :
- A strategy to recapture lost sources of brand equity and identify and establish new sources of brand equity.The marketing strategy employed when a brand has reached maturity and profits begin to decline. Approaches to revitalisation may include one or all of market expansion, product modification or brand repositioning.
- A brand revitalisation programme involves approaches to reclaim lost avenues of brand equity. It also seeks to identify and establish new sources of brand equity.
- Examining changes in the marketing environment, competitors' strategies, consumer behaviour, evolutions of cultures and many other factors can help determine brand erosion and aid brand development.
1. Expanding Brand Awareness.
2.Improving brand image.
3. Entering new markets.
3. BRAND EQUITY MANAGEMENT SYSTEM
A brand equity management system is a set of organizational processes designed to improve the understanding and use of the brand equity concept within a firm.
IT IS DONE USING -
1. Brand equity charter -
--Provides general guidelines to marketing managers within the company as
well as key marketing partners outside the company.
--Should be updated annually.
BRAND EQUITY CHARTER COMPONENTS :
1. Define the firm’s view of the brand equity.
2. Describe the scope of the key brands.
3.Specify actual and desired equity for the
brand.
4.Explain how brand equity is measured.
5.Suggest how brand equity should be measured.
6.Outline how marketing programs should be
devised.
7.Specify the proper treatment for the brand in
terms of trademark usage, packaging, and communication.
2. Brand equity report
--Assembles
the results of the tracking survey and other relevant performance measures.
--To
be developed monthly, quarterly, or annually.
--Provides
descriptive information as to what is happening with the brand as well as
diagnostic information on why it is happening .
--In particular, one section of the report
should summarize consumer perceptions on key attribute or benefit
associations, preferences, and reported behaviour as revealed by the tracking study. Another section of the report should
include more descriptive market level information such as:
1) Product shipments and movement through
channels of distribution.
2) Relevant cost breakdowns.
3) Price and discount schedules where
appropriate.
4) Sales and market share information broken
down by relevant factors, e.g., geographic region, type of retail account or
customer, etc.
5) Profit assessments.
3. Brand equity responsibilities
--Organizational responsibilities and processes
that aim to maximize long-term brand equity.
--Establish position of VP or Director of
Equity Management to oversee implementation of Brand Equity Charter and Reports.
--Ensure that, as much as possible, marketing
of the brand is done in a way that reflects the spirit of the charter and the
substance of the report
MEASURING BRAND EQUITY
Brand equity can be measured by :
1. QUALITATIVE APPROACH
There are many different ways to uncover and characterize the types of associations linked to the brand.
Qualitative research techniques are often employed to identify possible brand associations and sources of brand equity.Qualitative research techniques are relatively unstructured measurement approaches whereby range possible consumer responses are permitted.
1. Free Association –
- The simplest and often most powerful way to profile brand association.
- It involves free association tasks whereby subjects are asked what comes to mind when they think of the brand without any more specific probe or cue than perhaps the associated product category (e.g. “what does the Relox name mean to you?” or “Tell me what comes to mind when you think of Rolex watches.”)
2. Projective Technique –
- Uncovering the sources of brand equity requires that consumers’ brand knowledge structures be profiled as accurately and completely as possible. Unfortunately, under certain situations, consumers may feel that it would be socially unacceptable or undesirable to express their true feelings.
- Projective techniques are diagnostic tools to uncover the true opinions and feelings of consumers when they are unwilling or otherwise unable to express themselves on these matters.
3. Ethnographic and Observational Approaches –
- Fresh data can be gathered by directly observing relative actors and settings.
- Consumers can be unobtrusively observed as they shop or as they consume products to capture every shade of their behaviour.
- Marketers such as Procter & Gamble seek consumers’ permission to spend time with them in their homes to see how they actually use and experience products.
2. QUANTITATIVE APPROACH
1. The incremental cash flow
2. Conjoint Analysis :
Quantitative research techniques are used to understand brand awareness in respect to recognition and recall and also through scaling precise measurement for source of brand equity is done.
Quantitative techniques are much prevalent as a research alternative. In quantitative techniques consumer are usually given option to rank a direct question. Quantitative techniques are used to check brand awareness part of brand knowledge and try to dig deep in understanding consumer perception of the brand.
- It is done from associating the brand with the product. Incremental cash flow also results from premium pricing and reduced expenses.
- Brand valuation is a relatively new phenomenon. Many different methods have been proposed because financial accounting standards for valuing intangible assets vary across countries.
2. Conjoint Analysis :
- A classical method for estimating brand equity is to include the brand name as a factor in the full-profile method of conjoint analysis performed at the individual level.
- By estimating brand equity at the individual rather than aggregate or segment level, brand managers can aggregate the individual-level measures to quantify both the mean and standard deviation of brand equity for any segment of interest.
- In addition, starting with individual-level measures difficult aggregation problems encountered in estimating the market share premium and price premium attributable to brand equity can be avoided.
- A difficulty with the conjoint analysis method in the context of brand equity measurement is that the conjoint card-sort task can lead to unrealistic product profiles.
- Another important concern with conjoint analysis is that it does not provide an understanding of the sources of brand equity and suggested directions for enhancing it.
3. Financial Brand Equity Metrics
- While financial metrics are always the first thing that executives want to see to confirm that a brand is profitable and should live to see another day, financial metrics should actually be the last part of the brand equity measurement process.
- That’s because financial metrics result from the brand strength and consumer metrics described below.
- With that said, financial brand equity metrics should gather the following data:
Cost to acquire new customers , Cost to retain customers
Quantitative measures are often the primary ingredient tracking studies that monitor brand knowledge structures of consumers overtime. These are used to measure -
1. Brand Awareness - the extent to which consumers are familiar with the qualities or image of a particular brand of goods or services . Recognition and Recall.
3. Recall – Brand recall relates to consumers’ ability to identify the brand under a variety of circumstances. With brand recall, consumers must retrieve the actual brand element from memory when given some related probe or cue. Thus brand recall is a more demanding memory task than brand recognition because consumers are not just given a brand element and asked to identify or discriminate it as one they had or had not already seen.
