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Introduction
One of the most popular and potentially important marketing concepts to arise in
the 1980s was brand equity. Its emergence, however, has meant both good news and
bad news to marketers. The good news is that brand equity has elevated the
importance of the brand in marketing strategy and provided focus for managerial
interest and research activity. The bad news is that, confusingly, the concept has
been defined a number of different ways for a number of different purposes. No
common viewpoint has emerged about how to conceptualize and measure brand
equity.
Fundamentally, branding is all about endowing products and services with the
power of brand equity. Despite the many different views, most observers agree that
brand equity consists of the marketing effects uniquely attributable to a brand. That
is, brand equity explains why different outcomes result from the marketing of a
branded product or service than if it were not branded.
Branding is all about creating differences. Most marketing observers also agree with
the following basic principles of branding and brand equity:
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Brands are valued for their equity. Brands add value. Everyone in the marketing
profession agrees that brands can add substantial value. A variety of opinions exist
about brand equity. Some of these are as follows:
“Brand equity can be thought of as the additional cash flow achieved by associating
a brand with the underlying product or service”.
“Brand equity consists of differential attributes underpinning a brand which gives
increased value to the firm’s balance sheet”.
“Brand equity is a set of brand assets and liabilities linked to a brand, its name and
symbol; add to or subtract from the value provided by a product or service to a firm
and/or to that firm’s customers”.
“The brand “equity” (is) the total accumulated value or worth of a brand; the
tangible and intangible assets that the brand contributes to its corporate parent, both
financially and in terms of selling leverage.”
“Brand equity is the totality of the brand’s perception, including the relative quality
of products and services, financial performance, customer loyalty, satisfaction and
overall esteem toward the brand. It is all about how consumers, customers,
employees and all stakeholders feel about the brand.” (Konapp, 2000).
“Brand equity is defined in terms of marketing effects uniquely attributable to the
brands.
Example: When certain outcomes result from the marketing of a product or service
because of its brand name that would not occur if the same product or service did not
have the name”. (Keller, 1993).
“Broadly stated, brand equity refers to the residual assets resulting from the effects
of past marketing activities associated with a brand”.
“Brand equity can be measured by incremental cash flow from associating the brand
with the product”.
“Brand equity is the added value that is attributable to the brand name itself which
is not captured by the brand’s performance on functional attributes”.
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A brand adds value in a number of ways. According to Aaker, brand equity creates
value both for the marketer and the customer.
3. The final value to the customer comes in the form of usage satisfaction: For
instance, satisfaction from drinking Nescafé is different from drinking an unbranded
coffee. Brands transform customer experience. The brand associations and quality
move the product beyond its ‘thingness’ boundary enveloping it with images that
customers value and identify with.
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1. The effectiveness and efficiency of marketing programmes is increased by
brand equity assets: The expenditure associated with a brand to achieve a goal
generally tends to be less than an unbranded product aiming to achieve the same
goal.
2. Brand equity dimensions allow a firm to have greater customer loyalty: The
customers can exhibit preference and commitment to a brand only. A greater
number of loyal customers in the basket automatically reduce the expenditures that
need to be incurred in maintaining a customer base. Fewer customers would need to
be replaced. Accordingly, the expenditure would be lesser.
3. Brand equity allows a firm to charge premium: That is, a customer may willingly
support a brand in spite of greater sacrifice that needs to be made. In fact, brands
with premium pricing are the ones which enjoy strong equity in the market.
4. Brand equity provides great opportunities for growth: In fact, most firms now
rely on brand extensions to achieve growth rather than launch new brands. Brand
equity makes growth easier for the firms. It is how the value is added.
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Lovely’ in the fairness cream market. A brand blocks entry of rivals in a customer’s
mind on the same turf.
Brand equity holds immense potential to create economic value for the markets. The
advantages listed above make compelling reasons in favour of creation, protection
and enhancement of equity of a brand. It can only be done once it is understood
what drives brand equity.
2. Brand Awareness
3. Perceived quality
4. Brand Association
Brand loyalty has always been one of key concerns of marketers. A brand is valued
for its ability to have a dramatic impact on a firm’s marketing performance. Loyalty
provides insulation against competitive assaults. It also allows the opportunity to
command a premium. Earlier, brand loyalty was viewed purely from the angle of a
customer’s response or behaviour. Now, behavioural angle is combined with
attitudinal dimension in defining loyalty. “Brand loyalty is the biased (i.e., non-
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random) behavioural response (i.e., purchase), expressed over time by some decision
making unit, with respect to one or more alternative brands out of a set of such
brands, and is a function of psychological (decision making, evaluative) processes”.
Another definition of loyalty is proposed as “consisting of repeated purchases
prompted by a strong internal disposition”. Thus loyalty has both behavioural and
attitudinal dimensions to it.
Brand loyalty is not a dichotomous construct. It may operate at different levels. Five
levels of brand loyalty can be distinguished, extending from committed buyer at one
extreme to switcher or indifferent buyer at the other extreme. The other three are in-
between states. Each state implies a different type of brand equity asset and different
types of marketing challenges.
I. Switchers: At the lowest level, the indifferent buyer does not attach any
importance to the brand. The buying is done on a basis other than brand, like
availability or price. These buyers are switchers and are indifferent to the brand.
II. Habitual buyers: The second category of buyers comprises the ones satisfied with
the brand (absence of dissatisfaction). These buyers have no reason to switch but
may actually switch given the stimulations from the competitors. These can be called
‘habitual buyers’. They are vulnerable and can succumb to benefits offered by the
competition.
III. Switching-cost loyal customers: The third category of buyers is satisfied with
the brand, though they have switching costs in terms of time, money, and risk. This
category is somewhat safe because they would switch only when competition is able
to overcome switching costs for them. This set can be called ‘switching-cost loyal’
customers.
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IV. Affect driven loyal customers: The fourth category of loyalty implies that the
buyers like the brand. They tend to have some sort of emotional attachment to the
brand. This attachment may get developed as the result of prolonged relationship
(usage over a long period of time) or use experience or perceived high quality.
People in this category consider a brand as a friend. It is an affect driven loyalty.
A case in point could be Coke as a ubiquitous symbol of what America is all about,
or Harley-Davidson which portrays something about the Harley rider which words
cannot express.
The committed buyers are not usually available to the competition. They are a solid
asset base. The committed buyers spread a lot of good word-of-mouth publicity
around about the brand and thereby generate a market for it.
Loyalty implies customers who would continue to buy the brand. It represents a
future revenue stream. It also implies lesser loss of customers by way of defection or
attrition. Hence, firms with a greater proportion of loyal customers would have
relatively lesser marketing costs (lower advertising costs) and greater revenue (from
increased purchases and/or premium prices).
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brand equity to exist the customers remain loyal to the brand. When customers are
not loyal to the brand, the equity is not likely to exist.
2. Loyalty provides trade leverage. It is much easier to gain shelf space, trade
cooperation, etc., when a brand has a loyal customer base.
4. Loyal customers provide the firm with lead time to respond to competitive moves
(e.g., product improvement). Loyal customers do not move quickly to such
competitive endeavours, giving the firm the much needed time to effectively counter
competitive moves.
Brand recognition is at the bottom level of the awareness pyramid. When a person is
able to confirm prior exposure, the brand is said to have been recognised. It is
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gauged by aided recall measures. Brand recognition is particularly important under
low involvement buying situations, especially when the decision is taken in stores or
at the point of purchase. Recognition means some sense of familiarity, which is
sometimes sufficient in choice decision. Still higher level of awareness is reflected in
a person’s ability to recall a brand without any aid when a cue about a product class
is given. (e.g., “mention brands of tyres”). It indicates stronger brand position in the
mind. At a still higher level of awareness is the top-of-the- mind recall: the brand
that comes first to mind.
The top-of-the-mind awareness indicates the relative superiority a brand enjoys over
others. Sometimes, a brand is able to achieve such a dominant position that it
becomes the only recalled brand in the product category. Brand dominance,
competitively, is a coveted state which every marketer would like to achieve. A
dominant position prevents other brands from getting in the buyer’s mind. Hence,
dominant brand is the only one that is considered while making a purchase.
Very few brands are able to achieve dominance. The cases may include Johnson &
Johnson baby powder, Dettol antiseptic etc.
How does brand awareness create value? It does so in at least four ways.
i. Brand name acts as the central node to which other associations can be attached. It
is, therefore, the first communication task. Brand recognition must be created first,
without which other associations cannot be established. Brand awareness allows
easy access to these associations. Awareness acts as an anchor to which other
associations can be attached (e.g., attributes and benefits). It is for this reason that
marketers first establish a brand name and then expand its scope by incorporating
various attributes and benefit associations.
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iii. Third, awareness also acts as a surrogate for a firm’s commitment and substance.
A brand which enjoys recognition may imply extensive advertising support, long
standing of the firm, brand success, etc. It suggests that a brand is supported by a
firm. The perception of substance and commitment of the firm to the brand
sometimes influences buying in high involvement conditions.
iv. Final source of value from awareness is a brand’s ability to be considered in the
decision process. Brand awareness is a crucial determinant of its participation in the
consideration or evoked set. Generally, when a brand is not able to get recall, it is not
included in the consideration set. Recall is essential for finding membership in the
evoked set. Recall sometimes may also be an adequate condition to survive,
especially in low involvement buying. The mind share (top-of-the-mind recall) often
leads to market share.
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not have the ability to obtain and process brand information. A customer
relies on perceived quality and makes the purchase decision.
From the equity point of view, brand association can create value in a number of
ways. Brands are bought for what is associated with them. Customers also exhibit
loyalty for the same reasons. Associations form an information chunk representing
what the brand is. Information in chunks is relatively easy to process, store, and
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retrieve. Associations, in fact, also help in interpretation by providing the context.
Associations also influence recall of information. This is especially important during
decision making.
The other ways in which associations create value, is by becoming the basis of
differentiation. Brands are differentiated essentially on the basis of associations.
Associations that represent product attributes or benefits give consumers reason to
buy.
Examples of brand associations developed by top brands are:
o Downy is soft
o Tesla is electric
o Coca-Cola is classic
o Apple is simple
o ZARA is fashionable
Associations also stimulate positive feelings. These feelings, in turn, are transferred
to the brand. The feelings transform the use experience for customers. Finally,
associations provide basis for extending the brand into new product categories.
Case Study
Brand Equity in Acid Reflux
A targeted effort that supported the 2001 launch of AstraZeneca’s
gastroesophageal reflux disease (GERD) treatment Nexium (esomeprazole)
struck a fine balance in building brand equity while encouraging appropriate
use of the new medication. Nexium succeeded Prilosec (omeprazole), the long-
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time market-leading proton pump inhibitor (PPI) that achieved US sales of
$3.7 billion in 2001. Research showed that patients could benefit from
another treatment alternative. Nexium was launched to the medical
community on the strength of data comparing it with Prilosec. Nexium hit
the market with support befitting a potential megabrand-extensive direct-to
consumer television and print campaigns, along with direct communication
with self-identified frequent heartburn sufferers who previously requested
information from AstraZeneca about treatment options. To accelerate long-
term growth, the marketing team sought to build a documented brand
presence among others who may suffer from GERD and collaborated with
Reader’s Digest to reach 380,000 US households whose residents meet that
criterion.
The goal was to give a concentrated group of chronic heartburn sufferers an
early introduction to Nexium and imprint them with a favorable image of the
brand. It was significant that recipients had requested those communications
from a trusted publication, “Viewpoints on Health,” a custom information
source that Reader’s Digest sends to subscribers who have requested specific
information-diagnosis, treatment, products-about ailments suffered by a
member of their household. The magazine’s database includes subscriber
households reporting more than 30 ailments, with total ailments ranging
from 250,000 to more than 1.5 million. “Heartburn households” received two
16-page “Viewpoints on Health” booklets inside their July and August 2001
issues of Reader’s Digest. Content created by the Digest creative services
department educated readers about the implications of recurring heartburn,
treatment options, and health tips ranging from diet to meditation. In each
booklet, a four-page advertising insert described the potentially serious
nature of acid reflux disease and emphasized that only a doctor can diagnose
it. The insert included a free seven-day trial certificate-requiring an
accompanying prescription for pharmacy redemption-to encourage patients
to discuss with their doctors whether Nexium might be the right treatment
for them.
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To gauge the project’s impact, Reader’s Digest studied recipients’
involvement with the material. Their analysis revealed that approximately
90 percent of recipients recalled the booklets, two-thirds reported that they
read most of the content, and of those, 83 percent rated the content good or
excellent. Fully two-thirds of recipients recalled the product ads and 47
percent confirmed that the association with Reader’s Digest added to their
credibility. Trustworthy consumer information is the cornerstone of pharma
marketing. Judging from the substantial consumer feedback, a helpful booklet
helped connect credible content with Nexium as a treatment option for acid
reflux disease. AstraZeneca’s collaboration with a respected publication
enhanced the brand’s reputation with heartburn sufferers.
That’s the essence of all successful advertising.
Questions
1. Analyze how Nexium developed its brand equity in acid reflux.
2. Analyse the role of Reader’s Digest in establishing the brand equity for
Nexium.
Strong brands perform radical alterations while weak brands do marginal ones.
Imagine radical value enhancements that brands like Rolex, Cartier, Mont Blanc and
Armani create. What drives their value? These alterations are affected by their image
in the customer’s mind. The brand image is the driver of brand equity. Imagine a
customer who is not familiar with a brand like Rolex. This customer would assess
the brand’s worth on the basis of ‘thing’ rather than a brand. It is so, because ‘Rolex’
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represents nothing and hence, does not alter this valuation much. It does not exist as
a perceptual entity. There is no intervening variable between the brand and the
valuation.
The image that consumers hold about brands does not tend to be uniform. Brand
image is a perceptual construct. It varies depending upon the receiver’s (customer’s)
own ‘looking glass’ or perceptual fitter. Accordingly, image may not be as intended
or not as clear. According to Gardner and Levy, “The image of a product associated
with the brand may be clear cut or relatively vague; it may be varied or simple; it
may be intense or innocuous.
Sometimes, the notions people have about a brand do not even seem very sensible or
relevant to those who know what the product is ’really’ like. But they all contribute
to the customer’s decision whether or not the brand is the one “for me”
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Soft Associations: The soft associations are more emotional.
Example: A car brand can be visualized as exciting, vibrant and youthful.
Soft association can be negative such as associating a brand with inefficiency, dull,
old, unchanging etc.
A brand’s image is a composite concept. It carries with it other sub images. The three
contributing sub images in a brand are: the image of product or service provider
(corporate image); the image of the user and the image of the product or service.
Image of the Company: Every brand carries an invisible shadow of its
manufacturer. Like brands, companies also live in customers’ minds as a network of
associations. An inappropriate corporate image may act as a burden on an otherwise
good product. It is capable of providing both strength and weakness to a brand. It is
for this reason that good companies always keep track of their image in the public
eye. As and when the need arises, they perform a marketing communication exercise
to keep it relevant so that it provides a lift to the company’s brands rather than
becoming a burden on them.
Image of the User: What comes to mind when one thinks of Pepsi? It clearly spells a
profile of the user. The brand has an unambiguous definition of its users. The brand
user profile may contain signals about a user’s sex, age, occupation, life style,
activities, mindset, etc.
The user image in case of ‘Pepsi’ is embodied in its slogan ‘choice of the new
generation’ or ‘Generation Next’.
Product Image: A brand’s image is also determined by the image of the product
it carries. All products have dimensions like functionality and emotionality,
technology intensiveness, old and young, inherent to them.
Products like perfumes, chocolates, champagne, whiskey, high end clothing tend to
be associated with emotions and a lot of symbolism
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On the other hand, products like house cleaners, headache remedies, dishwashing
liquids and domestic insecticides tend to be driven by functionality and reason. The
brand image, therefore, has to take shape within the boundaries of structural limits
imposed by the product image. This is not to suggest, however, that a brand image
would always have to fall in line with the product image.
Brand personality is the way a brand speaks and behaves. It means assigning human
personality traits/characteristics to a brand so as to achieve differentiation. These
characteristics signify brand behaviour through both individuals representing the
brand (i.e. it’s employees) as well as through advertising, packaging, etc. When
brand image or brand identity is expressed in terms of human traits, it is called
brand personality. For instance - Zara brand speaks the personality and makes the
individual who wears it stand apart from the crowd. Microsoft represents
uniqueness, value, and intellectualism.
It is a comprehensive concept, which includes all the tangible and intangible traits of
a brand, like, beliefs, values, prejudices, features, interests, and heritage. Brand
Personality is a set of human characteristics associated with a brand. In general, it
expresses how the brand behaves. It may include a brands gender, age, socio-
economic class, psychographic, emotional characteristics.
Example: IBM is ‘older’ while Apple is ‘younger’
Coke is ‘conforming’ while Pepsi is ‘irreverent’
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Brand Personality is eagerly searched by brand strategists and researchers to find
out differences in responses by different consumers provide useful insights.
In essence, it can be said that ‘Personality traits are what the brand will live and die
for. Brand personality traits can be categorized as follows:
Examples:
1. Axe- Seduction, masculinity, individuality, unconventionality
2. Levi’s -Rebellion, sensuality, being cool
3. Spinz -Young, Modern, Active, Outdoor, Cheerful, Friendly
The concept of brand personality is useful because of following reasons.
It enriches understanding
It helps gain an in-depth understanding of consumer perceptions of and
attitudes towards the brand
It can provide more insight than is gained by asking about attribute
perceptions
It contributes to a differentiating identity
It can differentiate brands especially where brands are similar in product
attributes
It in fact, can define not only the brand but the product class context and
experience.
Guides the communication effort
Communicates the brand identity with richness and texture
Creates brand equity
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Builds long-term brand equity
Differentiates the brand and makes it distinct from other competitive
offerings
Serves as a powerful relationship device
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