Brands & Brand Equity

Consumers buy products; they choose brands!

What is a brand?
A brand is a name, term, sign, symbol, or design, or a combination of them, intended to identity the goods or services of one seller or group of sellers and to differentiate them from those of competitors
- American Marketing Association

What does a brand convey?

A brand can convey up to 6 levels of meanings: Attributes Benefits Values Culture Personality User

Why brands?
Brand signals the source of the product

Protects customer and producer from competitors who have identical products Consumers form relationships with brands, not products or companies
Brand makes an emotional and trustbased connection with consumer and distinguishes it from competition

Why is branding critical?

Brand loyalty is the foundation of business Every purchase opportunity presents itself an excuse to change brands and shift loyalties
Father buys cigarettes every day Mother buys diapers every week Family buys groceries every month

Branding determines status quo vs. shift

Why is it hard to build brands?

Proliferation of competitors

Pressure to compete on price

Fragmenting markets and media Complex brand strategies and relationships Bias towards changing strategies Bias against innovation Pressure to invest elsewhere Short term pressures

Brand Equity

Brand equity
Brand Equity is a set of assets linked to a brands name and symbol that adds to the value provided by a product or service to a firm and/or that firms customers Brand Equity is a set of liabilities linked to a brands name and symbol that subtracts from the value provided by a product or service to a firm and/or that firms customers

Brand equity: Key aspects

Brand equity is a set of assets
Management of brand equity involves investment to create and enhance these assets

Each brand equity asset creates value in a variety of very different ways
It is imperative to be sensitive to the ways in which strong brands create value

Brand equity creates value for customer and firm For assets or liabilities to underlie brand equity, they must be linked to name/symbol of the brand

Value to the customer

Brand equity assets can help customers interpret, process and store huge quantities of info about products / brands It can affect customers confidence in purchase decision
Due to past-use experience or familiarity with brand

Both perceived quality and brand associations can enhance customers satisfaction with use experience
Knowing brand is Arrow can can make user feel different

Value to the firm

Brand equity can enhance programmes to attract new customers or recapture old ones Perceived quality, associations and known name provide reasons to buy & affect use satisfaction

Usually allows higher margins by permitting both premium pricing and reduced promotions
Can provide leverage in the distribution channel Brand equity assets provide a competitive advantage that present a barrier to competitors

Tide Cheer Gain Bold Dash

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For extra-tough family laundry jobs Works in cold, warm or hot water A detergent with fragrance Includes fabric softener Concentrated power

Dreft
Oxydol

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For babys clothes

For sparkling whites

Era
Solo

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Concentrated liquid detergent

Heavy duty, with a fabric softener

Major asset categories

1. Brand name awareness 2. Perceived quality 3. Brand loyalty 4. Brand associations

Brand awareness
A known devil is better than an unknown angel Awareness refers to the strength of a brands presence in the consumers mind

Consumers instinctively prefer a brand that they have previously seen to one that is new to them
Familiar brand has an edge!

The awareness pyramid

Dominant

Top of mind Unaided awareness Aided awareness Unaware of the brand

Value of brand awareness

Anchor to which other associations can be attached Provides the brand a sense of familiarity
Customers like the familiar

Awareness can be a signal of presence, commitment and substance

Awareness gets brand into the consideration set

Giving it a chance to get purchased!

Perceived quality
Perceived quality can be defined as the customers perception of the overall quality or superiority of a product or service with respect to its intended purpose, relative to alternatives

Perceived quality
Perceived quality is an intangible and overall feeling about a brand Perceived quality cannot necessarily be objectively determined because it is a perception

Perceived quality could be different for the corner store versus the department store
Both are judged by a different set of criteria

Perceived quality differs from satisfaction

A positive attitude could be generated because a product of inferior quality is very inexpensive

Perceived quality
Perceived quality is a brand association, elevated to the status of a brand asset:
Among all brand associations, only perceived quality has been shown to drive financial performance Perceived quality is often a major strategic thrust of a business Perceived quality is linked to and often drives other aspects of how a brand is perceived

Perceived vs. actual quality

Consumers may be overly influenced by a previous image of poor quality A company may be achieving quality on dimension that consumers do not consider important Consumers rarely have all the info necessary to make rational or objective judgment on quality

Consumers may not know how best to judge quality

Maybe looking at wrong cues Ex., when buying tyres

Value generated by perceived quality

In many contexts, perceived quality provides the pivotal reason to buy Could differentiate and be a principal positioning characteristic of a brand Provides the option of charging a premium price Could be meaningful to channel members and thus aid in gaining distribution

Brand loyalty
Brand loyalty, a central construct in marketing, is a measure of attachment that a customer has to a brand It reflects how likely a customer will be to switch to another brand
Especially when that brand makes a change, either in price or in product features

It is one indicator of brand equity which is demonstrably linked to future profits

Brand loyalty directly translates into future sales

Brand loyalty
A brand has value only in its potential to create loyal customers It is simply much less costly to retain customers than to attract new ones
The Hindu

Considering loyalty as an asset encourages and justifies loyalty-building programmes

Which helps create / enhance brand equity

The loyalty pyramid

Committed

Fence Sitters
Considers it a friend

Passively Loyal
With switching costs

Satisfied / Habitual Buyer

No reason to change

Switchers / Price Sensitive

No brand loyalty

Strategic value of brand loyalty

Brand loyalty reduces the marketing costs of doing business It provides trade leverage Helps attract new customers Brand loyalty provides a firm with time to respond to competitive threats

Brand associations
Brand equity is supported by associations that consumers make with a brand Brand association is anything linked in memory to a brand
Associations include product attributes, celebrity spokesperson and symbol

Association not only exists but has level of strength

A link to a brand will be stronger when it is based on many experiences or exposures to communications, rather than few Will also be stronger when supported by a network of other links

Types of associations
Product attributes Intangibles Customer benefits Relative price Use / application User / Customer Celebrity / person Lifestyle / personality Product class Competitors Country / geographic area

Value of brand associations

Brand associations helps process / retrieve info

An association can provide an important basis for differentiation

Many brand associations involve product attributes or customer benefits that provide specific reason to buy Some associations are liked and stimulate positive feelings that get transferred to the brand