Professional Documents
Culture Documents
Faculty Name:
Vishal Desai
Lesson # 7
BRAND EQUITY
Subtitle
A brand with high equity - brand has the ability to create some sort of
positive differential responses in the marketplace
• When someone asks for referral, the brand is the first one that is
recommended India’s premier M-school
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Brand equity defined:
Brands, if managed well, add value to the product
Definitions
• (Aaker 1991)
• (Keller 2004)
Help them interpret and store huge quantities of information about the
product and the brands
For example:
First
Second
Third
• For example:
Fifth
• A strong brand name will have an edge in gaining both shelf facing
and cooperation in implementing marketing programs
• For example:
BRAND EQUITY
The Brand awareness is the 1st critical condition for achieving brand
success
It includes
Brand Recall
(Babool, Sensodyne)
Brand Recognition
(Anchor, Meswak, Binaca)
When a person is able to confirm the prior exposure, the brand is said
to have been recognized
That is, upon seeing the brand elements like- name, packaging,
symbol, etc
• Aided recall
• Unaided recall
• What all brands names come to your mind when you think of
detergents?
---- Surf, Nirma, Ariel
Aided Recall:
• Mention the detergent brands which are the soak and rinse type
(usage form)
---- Surf, Ariel
• Mention the detergent brands which are good for washing woolens
(applications) ----
Ezee, Genteel
For example:
• Toothpaste – Colgate
• Vanaspati – Dalda
• Falls below the line because they are not known to a substantial
group of consumers
• But they do have a high recall among their respective loyal customers
• An area in the upper left hand corner populated by brands with high
recognition but low recall
Moving away from Graveyard indicates that brand’s sales and market
share may increase
• While evaluating quality the customer takes into account the brands
performance on factors that are significant to him and makes a
relative analysis about the brand’s quality by evaluating the
competitor’s brand also
Starbucks can sell its coffee at a higher price than solid market
competitors because consumers associate the brand with quality
and value
Brand associations are the attributes of a brand which comes into the
consumers mind when the brand is talked about
For example
• Advertisements
For example:
• Nike swoosh
• Nokia sound
For example:
Most popular brand associations are with the owners of the brand
For example:
The customer must be persuaded that the brand possess the features
and attributes satisfying their needs
Thus, if the consumer has the tendency to buy the brand again and
again it will lead to brand equity
• Behavioral loyalty
(purchase repeatedly)
• Attitudinal loyalty
(customer feels some devotion to the brand and prefers the brand)
• Cognitive loyalty
(brand name comes at top -of - mind recall and consumer’s first
choice whenever purchase decision arise)
Committed
Buyer
• Each brand is perceived to be adequate and the brand name plays little
role in the purchase decision
• Includes buyers who are satisfied with the product or at least not
dissatisfied
• Consist of those who are also satisfied and in addition, have switching
cost-cost in time, money, or performance risk associated with
switching
• Or perhaps there is a risk that another brand may not function well in
a particular use context
• Committed customers
• Their confidence is such that they will recommend the brand to others
These five levels do, however signify the various forms that loyalty
can take and how it impacts upon brand equity
The first four represent customer perception of the brand along with
four dimensions of brand equity
The fifth includes two sets of market behavior measures that represent
market – based information rather than information directly from
customers
- Price Premiun
- Satisfaction/Loyalty
- Perceived Quality
- Leadership/Popularity
Associations/Differentiation Measures
- Perceived Value
- Brand Personality
- Organisational Associations
Awareness Measures
- Brand Awareness
- Market Share
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1)Price Premium
A basic indicator of loyalty is the amount a customer will pay for the
brand in comparison with another brand offering similar or fewer
benefits
This is called a “dollar metric”. For Eg: How much more would you pay for
a Toyota Camry than for a Honda Accord?
The price premium can be the best single measure of brand equity
available, because it directly captures the loyalty of the customers in a
most relevant way
• For example:
Compaq used IBM as its primary frame of reference when others, such
as Dell and Lenovo, were making larger inroads at much lower price
point. Thus Compaq’s price overtime reflected an increasingly inflated
valuation of its brand equity
• For example:
In some regions Budweiser may face strong local brands that have little presence
elsewhere. To compare Budweiser’s strength in these regions, a composite
measure needs to created to arrive at the average price premium based on
regional brand and competitor. Eg: Surf v/s Ghadi Detergent and Surf v/s Ariel.
• There are markets in which price differences are not very relevant
because of legal restrictions or market forces make it difficult for such
differences to emerge. Eg: Price control of pharma drugs, or cap on price of
movie tickets in Tamil Nadu.
The reference can be the last use experience, or simply the use
experience from the customers view
3) Perceived Quality:
• A category leader
5)Perceived Value:
One role of brand identity is to create value proposition
• Whether there is a reason to buy this brand over others? India’s premier M-school
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Problems/Cautions:
• This measure will be sensitive to the brand set that is used as a frame
of reference by the customers
This is especially the case for the brands that have only minor
physical differences and are consumed in a social setting where the
brand can make a visible statement about the consumer
• I have a clear image of the type of person who would use the brand
The last two items reflect user imagery and brand heritage, two
drivers of brand personality that are often relevant dimensions of
brand identity
8)Brand Awareness:
• Recognition
• Recall
• Graveyard statistics
• Top of mind
• Brand dominance
• Brand familiarity
• There are varieties of awareness levels and the appropriate one to use
will differ across brands and product classes, making comparison
difficult
9) Market Share:
The performance of the brand as measured by the market share often
provides valid and sensitive reflection of the brand’s standing with the
customer
When the brand has relative advantage in the minds of the customers,
market share should increase or at least not decrease
Market share data have the advantage of being both available and
accurate
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+ Problems/Cautions:
• The biggest problem is that market share indicators are responsive to
the short term strategies that often undermine brand equity
• Market share can also respond negatively even if a brand cuts its
brand-building activities or generates ineffective or negative brand
building efforts
• There are duties, taxes, and retail policies that could be the issue for
the products such as beer/wine/fuel/pharma drugs
It measured brand equity for 450 global brands and more than 8000
local brands in twenty-four countries
1. Differentiation:
2. Relevance:
3. Esteem:
Differentiation
Relevance
Esteem
Knowledge
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Differentiation:
Measures how distinctive the brand is in the marketplace
For example:
Is it meaningful to him/her?
Is it personally appropriate?
For example:
For example:
The logic is that a brand must have both the characteristics in order to
be strong
For example:
Closely related to perceived quality and the extent to which brand is growing
in popularity
There are brands for which a decline or growth in popularity affects esteem.
Eg:Blackberry
• Maruti, Pepsi, Amul, etc are esteemed in the consumer’s mind, based on
the popularity more than quality
It indicates that the consumer is not only aware of the brand but also
understands what the brand stands for
For example:
For instance, some brands rank high in esteem than in knowledge. Eg:
Truck from Tata, Harley Davidson
Conversely a brand may have high knowledge but low esteem. Eg:
Lava, Karbonn mobile phones
2 3
(Knowledge and Esteem)
1 4
Weak Brands Eroding Brands
(Babool, Lava) (Motorola,Philips,
Nokia)
Low High
Brand Stature
Differentiation and Relevance
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+ The Power Grid:
• It sets the strategic process by identifying the strength or weakness of
the brand
• Quadrant 1:
• Quadrant 2:
The true potential of the brand is not being realized. The strategy
should be to build the stature of the brand
The challenge for the brand here would be to continue being a leader
• Quadrant 4:
Unless steps are taken, these brands will lose esteem and could
eventually fade from consumer’s consciousness
Its annual survey of 2,000 respondents started with 133 U.S. brands,
and by 1995 covered over 700 brands in 100 categories
1)Salience:
2)Perceived Quality:
3)User satisfaction:
• A brand that leads its market sector is more stable and powerful than
the second, third, fourth
2)Stability:
• Long-lived brands with identities that have become part of the fabric
of the market and even the culture are particularly powerful and
valuable
• Brand are more vulnerable when they are in the markets with growing
or stable sales levels and a price structure in which successful firms
can be profitable
4)International:
• The broader the market scope for the brand, the more valuable it is; a
national brand is worth more than a regional brand
6) Support:
7)Protection:
1) Apple
2) Google
3) Coca-Cola
4) IBM
5) Microsoft
6) GE
7) McDonald’s
8) Samsung
9) Intel
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10) Toyota
+ The business-oriented (versus consumer-oriented) view of Interbrand
criteria is useful in part because it is a step closer to putting financial
value on the board
Local regional brands may be more profitable than Local Brands due
to economies of scales and better consumer connect. Eg: Maruti v/s
General Motors
Older brands may lose their brand strength. Eg: Kodak ,Nokia and Blackberry
lost their relevance in terms of new technology.
The Interbrand system does not consider the potential of the brand to support
extensions into another product classes
End