BRAND EQUITY

BRAND EQUITY : is a set of brand assets and liabilities linked to a brand , its name and symbol , that add to or subtract from the value provided by a product or service to a firm and /or to that firms customers. For assets or liabilities to underlie brand equity they must be linked to the name and/or symbol of the brand.

BRAND EQUITY
The assets and liabilities on which brand equity is based can be grouped into 5 categories 1) Brand Loyalty 2) Name awareness 3) Perceived quality 4)Brand associations in addition to perceived quality 5)other proprietary assets : patents, trademarks,channel relationship etc.

Brand Loyalty

Reduces marketing costs Trade Leverage Attracting new consumers 1) Creates Awareness 2) Reassurance Time to respond to competitive threats Anchor to which other associations can be attached Familiarity-Liking Signal of Substance/Commitment Brand to be considered

Provides value to customer by enhancing customers: Interpretation/ Processing of information Confidence in purchase decision Use satisfaction

Brand Awareness

Provides value to firm by enhancing : Efficiency and effectiveness of marketing programs Brand loyalty Prices/Margins Brand extensions Trade Leverage Competitive advantage

Brand equity

Perceived quality

Reason to buy Differentiate/Position Price Channel Member interest Extensions

Brand associations

Help process/retrieve information Differentiate /Position Reason-to buy Create positive attitude /feelings Extensions

Other proprietary Brand assets

Competitive advantage

BRAND EQUITY
Name Awareness Brand Loyalty Brand Equity Provides value to customer by enhancing customers Interpretation /Processing of information. Confidence in the purchase decision. Use satisfaction/delight Perceived quality Brand Associations Other proprietary brand assets

Provides value to firm by enhancing:Efficiency and effectiveness of marketing programs Prices/Margins Brand Extensions Trade Leverage Competitive advantage

Brand Loyalty
Brand Loyalty pyramid
Committed buyer

Likes the brand, considers brand as a friend

Satisfied buyer with switching costs Habitual buyer- no reason to change Switchers /price sensitive- indifferent- no brand loyalty

Measuring Brand Loyalty

Behavior Measures: Repurchase rates: What % of Maruti Zen owners purchase Maruti on their next purchase % of Purchases: of the last five purchases made by a customer, what % went to each brand purchased? Number of Brands Purchased: What % of coffee buyers bought only a single brand?, two brands? Switching costs: If it is expensive or risky for a firm or consumer to change suppliers, then the brand loyalty is on the higher side. E.g : Investment in computer system or software like SAP

Strategic value of Brand Loyalty

Reduced Marketing Costs: It is much less costly to retain customers then to attract new one ( COST RATIO IS 1:4) Trade leverage: Strong pull (brand loyalty) from consumers will ensure preferred shelf space because stores know that customers will have such brands on their shopping list. Attracting new customers: Time to respond to competitive threats:If a competitor develops a superior product , a loyal following will allow the firm time needed for the product improvements to be matched and neutralized.

Creating & Maintaining Brand Loyalty

Treat the customer Right Stay close to customer Measure/Manage Customer Satisfaction Create switching cost Provide extras

Creating & Maintaining Brand Loyalty

Measure / Manage Customer Satisfaction : Regular surveys of customer satisfaction are useful in understanding how customers feel and it also helps in adjusting product and services. Dominos Pizza conducts weekly phone surveys of customers measuring dimensions like response time, lumpiness of dough, freshness of pepperoni and attitude of delivery people. A bonus pool is distributed based upon these measures. Create Switching costs: Reward loyalty directly. For e.g The airlines frequent flyers program .

Brand Awareness
Ability of a potential buyer to recognize or recall that a brand is a member of a certain product category.

Top of Mind Brand recall Brand Recognition Unaware of brand The awareness Pyramid

 Brand awareness creates value in the following\g ways : 1) Anchor to which other associations can be attached : for e.g McDonalds:- Golden arches, clean/efficient, kids , fun etc. 2) Familiarity/Liking: recognition provides the brand with familiarity and people like the familiar. 3)Substance /commitment: The firm has been in business for a long time. The firm is widely distributed and the brand is successful. 4) Brands to consider ----- it enters the evoked or consideration set.

How to achieve Awareness

Be different , Memorable: Involve a slogan or jingle: e.g Lifebuoy hai jahan , tandorosti hai wahan. Symbol exposure: colonel sanders --KFC, golden archesMcdonalds---> symbol should closely associate with the brand. Publicity--- advertisement. Event Sponsorship --- Femina Miss India, Manikchand Filmfare awards. Consider brand Extensions : one way to gain brand recall is to put the name on other products.

Recognition v/s Recall- The Graveyard Model

High

Graveyard Recognition

Brand

Niche Brands

Low

Low

Recall

High

BRAND RECOGNITION
Brand Recognition: Familiarity and Liking : Recognition reflects familiarity gained from past exposure . Recognition doesn't necessarily involve remembering where the brand was encountered before, why it differs from other brands , or even what the brands product class is. It is simply remembering that there was a past exposure to the brand. When consumers see a brand and remember that they have seen it before (perhaps even several times) , they realize that the company is spending money to support the brand. Since it is generally believed that companies will not spend money on bad products , consumers take their recognition as a signal that the brand is good.

Brand Recall
A brand (for e.g. HDFC Bank) is said to have recall if it comes to consumers minds when its product class (for e.g. , banking companies ) is mentioned. Whether or not a customer recalls your brand can be the deciding factor in getting on a shopping list or receiving a chance to bid on a contract. The graveyard model was developed by Young and Rubicam Europe under the guidance of Jim Williams. In this model , brands in a product class are plotted on a recognition v/s recall graph.

The Graveyard Model

For e.g , the recall and recognition of each of the brands in the automobile category could be measured and these measurements could be used to position each brand on the graph. One finding consistent across dozens of product classes is that brands tend to follow the curved line shown in the figure. There are two exceptions , each of which reveals the importance of recall. One exception is healthy niche brands , which fall below the line because they are not known to a substantial group of consumers , and therefore have relatively low overall recognition.

The Graveyard Model

But because they do have high recall among their respective loyal customer groups , their low recognition is not necessarily an indication of poor performance. And healthy niche players sometimes have the potential to expand recognition and thus the scope of their customer base. The second exception is the graveyard , an area in the upper left hand corner populated by brands with high recognition but low recall. Being in the graveyard can be deadly. Customers know about the brand , but it will not come to mind when considering a purchase .

The Graveyard Model

One point of the graveyard model is that high recognition is not necessarily the mark of a strong brand it is associated with weak ones as well. Movement towards the graveyard is associated with sliding sales and market share. If however , the brand is moving away from the graveyard , sales and market share can be expected to increase. Thus the graveyard model provides evidence that recall is as important as recognition.

Perceived Quality
Defn : customers perception of the overall quality or superiority of a product or service with respect to its intended purpose, relative to alternatives.

Perceived Quality
Quality dimensions : 1) Performance : How well does a washing machine wash clothes---> primary operating characteristics of service 2) Features: secondary elements like on/off timer in washing machine etc. 3) Conformance with specifications: --- absence of defects----trouble free . 4) Reliability--- will the vacuum cleaner work the same way each time it is used. 5) Durability: How long will the washing machine last 6) Serviceability: is the service system efficient , competent and convenient. 7) Fit and finish:- does the product look and feel like a quality product.

Perceived Quality
Research has shown that in many product classes a key dimension which is visible can be pivotable in affecting perceptions. 1) Stereo Speakers: larger size means better sound 2) Tomato ketchup-- thickness means quality. 3) Supermarkets--- fresh products means overall quality. 4) cars: a solid door-closure sound implies good workmanship and a solid safe body. 5) lawn mover-- noise signals quality

 6) Cleaners: A scent like lemon signals cleaning power 7) Medicine : for adults , bitter means better. In addition to information about a brands product features (intrinsic cues) there are a host of other brand associations- such as the amount of advertising used, the brand name or the price (extrinsic cues) that can influence perceived quality.

 Extrinsic cues perceived quality 1) Advertising: The amount of advertising supporting a brand can signal that the firm is backing the brand. This logically implies that it must be a superior product. 2) Price as a quality cue: Chivas Regal was a struggling brand until it decided to raise its price higher than competitors.Its sales increased thereafter. Product itself was not changed.

 The relevance of price as a quality cue will depend on other cues available, the individual himself and the product. When intrinsic cues are available , people will be less likely to rely on price. The use of price as a quality cue will differ across product classes Product classes which are difficult to evaluate are more likely to have price as a quality cue. As per research, price tends to signal quality in wine, perfume and durables.

Brand Associations
Apple produced a good computer , the Apple 2, but created a great distinction. It made using a computer a friendly , unintimidating process. Everything at Apple, from its logo to its down-to earth founders , underscores its uniqueness Tom Peters

 A brand association is anything linked in memory to a brand. Thus McDonalds could be linked to - A character such as Ronald McDonald - A Consumer segment such as kids - A feeling such as having fun - A symbol such as the Golden arches

There are 11 types of associations. They are Product attributes Intangibles Customer benefits Relative Price Use/ Application User/ Customer

Celebrity/ Person Lifestyle / Personality Product class Competitors Country/ Geographic area

Product Attributes
Probably the most used positioning strategy is to associate an object with a product attribute or characteristic. E.g - Crest- strong association with cavity control - Volvo durability and safety - BMW talks of performance with their tag line , The ultimate driving machine

Positioning by Product attributes and benefits

: Colgate --- white strong teeth
Close-Up is positioned on fresh breath Promise--- Gum care. Car ads show technical features like MPFI, Power steering, Delta V technology etc. Dettol : hygiene

Intangibles
An intangible factor is a general attribute , such as perceived quality, technological leadership etc. Customers perceive companies like Sony, IBM as technology leaders without knowing the specs of specific models or exactly in what way they are superior

Customer Benefits
As most product attributes provide customer benefits , there usually is a one-to one correspondence between the two. Cavity control is both a product characteristic of Crest and a key customer benefit. BMW is good handling (a product characteristic ) providing the customer driving satisfaction (a customer benefit) Benefits are normally two rational benefit and psychological benefit.

 A rational benefit is closely linked to a product attribute and would be part of a rational decision process A psychological benefit , often extremely consequential in the attitude-formation process, relates to what feelings are engendered when buying and /or using the brand.

Product
Computer computer Shampoo Shampoo Fairness cream

Feature
Bubble Memory Touch screen entry Built-in conditioner Natural protein Neem extracts

Rational Benefit
Cant lose your work Easy to use Full, thick hair Safe to use every day Better skin shade

Psychological Benefit
Job safety/ security Feeling professional Confidence about looks Exciting/sexy Confidence about looks

Country or Geographic area

A country can be a strong symbol, as it has close connections with products, materials and capabilities E.g Germany- beer and upscale automobiles Italy-shoes and leather goods France- fashion and perfume These associations can be exploited by associating a brand with a country.

Use ,application, Occasion and time :

The idea behind this positioning strategy is to find an occasion or time of use Thus you associate the brand with a use or application Kelloggs --- breakfast Odomos-- USED AT NIGHT Good Knight ---- to fight mosquitos at night Arm and hammer baking soda--- extended its fresh/clean postiioning as an odour destroying agent in refrigerators. Campbell souplunch time product

Price Quality:
Is a powerful approach particularly in a developing economy like India. In early 1970s , Nirma positioned itself as good quality product that lathered well, cleaned well and the price was nearly 50% lower then Surf. Timex use price quality positioning and succeeded in USA. Zenith used Price quality positioning for its Home PCs----value for money

Positioning by Price Quality:

Another dimension of P-Q positioning is that the product is positioned on high quality and price is kept high to communicate this high quality. For e.g In certain product categories it is not possible to assess quality Perfumes. Premium products positioned at the high end of the market use this positioning e.gRolex, Mercedes, Rolls- Royce, Cartier etc.

Product User/customer
The brand manager can determine a target audience for whom the product will be positioned e.g --- Farex, Cerelac--- is for small Kids(0-12 Months). Cosmetics industry A) Noxells cover girl- product for wholesome, healthy and blonde women B) Revlon: associated with more sophisticated women

Positioning By competitor
In most positioning strategies, the frame of reference is one or more competitors. e.gAvis-Were number two, we try harder campaign Sabroso a coffee liqueur positioned itself against the well established Kahlua with respect to quality and also with respect to the type of liqueur . Its print ad should two bottles side by side and used the headlines Two great imported coffee liqueurs. One with a great price. Subaru

Positioning by cultural symbols

Marlboro cigarettes chose the American cowboy as the central focus to help differentiate its brand from competitors and developed the Marlboro man. Pillsburys doughboy Air Indias Maharaja

Positioning by Product class

Some products need to make critical positioning decisions that involve product-class associations. For e.g--- Maxim freeze dried coffee , the first one in the market needed to position itself with respect to regular and instant coffee. Dove positioned itself apart form the soap category as a cleansing cream product , for women with dry skin.

Positioning by Product class

The soft drink 7- Up was for long time positioned as a beverage that had a fresh clean taste that was thirst quenching. Research uncovered the fact that most people did not regard 7-Up as a soft drink but rather as a mixer beverage. The brand tended to attract only light soft-drink users. The positioning strategy was then developed to position 7Up as a mainline soft drink as a logical alternative to the colas but with a better taste. The successful uncola campaign was the result.

Celebrity/ Person
A celebrity often has strong associations. Linking a celebrity with a brand can transfer those associations to the brand. E.g 1) Rahul Dravid and Castrol: Dravid is dependable. So even Castrol is dependable lubricant. 2) V. Anand and NIIT : Anand plays chess which requires brains and NIIT is into software which also requires brains

 In the mid eighties , Nike faced a challenge from Reebok . Reebok had exploited the aerobics craze to take over first place in the athletic shoe market. Nike responded with Air Jordans, basketball shoes using air-cushioning technology featuring patented pressurized gas pockets in the soles (Pump it up) The shoe was a smash success , with first year sales of over $100 mn. Its key was the endorsement by Michael Jordan, the basketball legend.

 A person attached to the brand need not be a celebrity. The Maytag repair man and the Marlboro man have strong identities and characteristics that have become important brand associations. The person need not even be real. It can be a cartoon symbol such as Gattu of Asian Paints and utterly butterly girl of Amul.