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From brand-added value to brand equity

Type of model: Brand model (structure model)
Author(s): R. Riezebos
Domain: Brand-added value/ brand equity

Figure 1: Riezebos’ Brand-Added Value / Brand Equity Model

Riezebos’ Brand-Added Value / Brand Equity model builds on David Aaker’s
Brand Equity Model. Aaker’s model did not make an explicit distinction between
the added value a brand offers customers/ consumers, and the added value
offered to the brand owner, and his model also fails to list market share as a
brand equity component. Riezebos’ model now fills both these gaps, with mar-
ket share split up into three sub-components.

Riezebos identifies three components of brand-added value (added value for
customer/ consumer) in his model, and four components of brand equity (added
value for brand owner/ company). Seeing as this model both assumes the cus-
tomer and the company perspective, it enables the tracking of the effects
measures/ interventions on the customer side have on the added value on the
company side (i.e. the brand equity). The model can, vice versa, also be used
to find out where measures are required on the customer side by assessing the


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scores on the brand equity dimensions. Riezebos defines brand-added value as
follows: ‘Brand-added value is the extent to which a brand and related associa-
tions contribute to the customer’s/consumer’s valuation of the brand product as
a whole’. This construct encompasses three components:
1. Perceived performance: refers to the material associations a brand evokes
in a customers/ consumer. Perceived performance consists of two sub-
components: perceived quality (which concerns the quality of characteris-
tics) and perceived material differentiation (which concerns the presence or
lack of certain characteristics). The more a brand succeeds in meeting a
customer’s/ consumer’s functional need, the higher the perceived perfor-
mance (and with that the extent of brand-added value). Perceived perfor-
mance places the emphasis on the rational side of brand equity.
2. Psycho-social meaning: the extent to which a consumer can express who
he/ she is, or wants to be, by using a brand. Consumers with a high level of
uncertainty avoidance in their behaviour – who hence have a tendency to
display socially accepted behaviour – are more likely to fall for brands that
score high on psycho-social meaning. Brands with a high psycho-social
meaning are also referred to as badge-type brands.
3. Brand name awareness: apart from the perceived performance and psycho-
social meaning, the level of brand name awareness can also contribute to
the added value a brand offers customers/ consumers. There are four levels
of awareness:
a. Complete unawareness of the brand name.
b. Passive recognition: consumers do not spontaneously mention the brand
name when asked to list brand names from the product class in question;
but consumers do recognize the brand name when it is presented to
them. Passive recognition is measured by way of aided recall or recogni-
tion.
c. Brand recall: consumers spontaneously (without being aided) produce
the brand name when asked to list brand names from the product class
in question. This form of brand name recognition is measured using
spontaneous recall.
d. Top-of-mind awareness (TOMA): the brand name that first pops into a
consumer’s head when asked to list brand names from the product class
in question.

If customers/ consumers affiliate a brand with high brand-added value, chances
are they – considering budgetary restrictions – will buy this brand occasionally,
or even repeatedly. A high level of brand-added value will, in other words, lead
to a high level of brand equity. Riezebos defines brand equity as follows: ‘Brand


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equity is the extent to which a brand has value for the brand owner/ company;
this value can come in the form of financial, strategic and management bene-
fits'. Brand equity is made up of three components that depend on the level of
brand-added value, and one component that is independent of that factor. The-
se components are:
1. Size of the market share: consumers are more likely to buy a brand with
high brand-added value than a brand with low brand-added value. A brand
with high brand-added value will therefore also have a greater market share.
And a brand with a large market share represents greater value for a brand
owner than a brand with a smaller market share.
2. Stability of the market share: the stability of a brand’s market share is de-
termined by the number of repeat purchases of that brand. A brand with a
stable market share provides both financial and strategic benefits for a com-
pany. Financial benefits come in the form of greater guaranteed future reve-
nue, and relatively low marketing advertising budget (bringing in new buyers
is more expensive than retaining existing ones). From a strategic point of
view, a brand with a relatively stable market share has greater value for a
brand owner, seeing as it will deter potential competitors, and basically forc-
es distributors and retailers to include the brand in their offering (in order to
avoid losing customers to other trade partners). We can therefore conclude
that a brand with a stable market share represents greater value to a com-
pany than a brand with an unstable or varying market share. Studies have
shown that the size of the market share is closely interlinked with its stability.
Brands with a relatively large market share normally achieve greater loyalty
among their customers than brands with a small market share. In the case of
small brands, this phenomenon is referred to as the double jeopardy phe-
nomenon (meaning that brands that are less successful not only achieve
fewer initial purchases, but also fewer repeat purchases). Aaker’s model
makes reference to the component ‘market share stability’ using the concept
‘brand loyalty’, but never makes it clear which party benefits from this com-
ponent (customer/ consumer or brand owner).
3. Actual price margin: this margin is the difference between the selling price
the brand owner charges his trade partners (in the case of manufacturers:
ex factory price) and the cost price of the brand product. In case of rising
demand for a brand (as can be expected when the level of brand-added val-
ue rises), the retail price (and with that the ex factory price) may go up
(slightly). On the other hand, rising demand will lead the cost price of a
brand product to go down, because constant costs can now be spread out
over a greater production unit. This means the actual price margin will re-


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ceive a boost from two sides. It will go without saying that a brand with a
high margin has more value for a brand owner than one with a low margin.
4. Any proprietary assets tied to the brand, such as patents, the legal protec-
tion of a brand, and the acceptance of the brand by distributors, such as re-
tailers. In the case of airlines, these include airport slots, and for publishers
copyrights. Contrary to the previous three components of brand equity, a
brand’s proprietary rights are hardly, or not at all, influenced directly by the
extent to which customers/ consumer ascribe added value to a brand.

Reference(s)
Riezebos, H.J. (1994), Brand-added value (theory and empirical research about
the value of brands to consumers). Dissertation Erasmus University Rot-
terdam, Eburon Publishers, Delft. *
Riezebos, R. (2002), Merkenmanagement (theorie en toepassing van het ont-
wikkelen, beheren en beschermen van merken en merkenportfolio‘s)
[Brand management (theory and application of the development, ma-
nagement and protection of brands and brand portfolios)]. Wolters-
Noordhoff, Groningen/ Stenfert Kroese. *
Riezebos, R. (2003), Brand management: a theoretical & practical approach.
Financial Times/ Prentice Hall, Harlow, U.K. *

* : Available in the EURIB library.

















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