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Chapter 11: Creating Brand Equity

Subject
• Strategic brand management
- Combines the design and implementation of marketing activities and programs to build, mea-
sure, and manage brands to maximize their value with 4 main steps:
• Identifying & establishing brand positioning
• Planning & implanting brand marketing
• Measuring & interpreting brand performance
• Growing & sustaining brand value

- Brand role for consumers - a promise between the firm and the consumer
- Sets consumers expectations and reduce their risk
- In return for customer loyalty, the firm promises to reliably deliver a positive experience and
set of desirable benefits w its products & services
- Brands role for firms -
- Simplify product handling by helping organize inventory and accounting record
- Offers legal protection for unique features or aspects of the product
- Brand name can be protected through registered trademarks
- Manufacturing processes can be protected thru patents
- Packaging can be protected through copyrights and proprietary designs
- Intellectual property rights ensure the firm can safely invest in the brand and reap the benefits
of a valuable asset
- Branding is the process of endowing products and services with the power of a brand. All
about creating difference between products
- Marketers need to teach consumers “who” the product is by giving it a name and brand ele-
ments to identify it and why consumers should care
- Branding creates mental structures that help consumers organize their knowledge about prod-
ucts and services in a way that clarifies their decision making and provides value to the firm
- Must have consumers convinced there are meaningful differences among brands in the same
category
- Brand equity is the ADDED VALUE endowed to products and services with consumers

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- May be reflected in the way consumers think, feel , and act with respect to the brand, as well
as in the prices, market share, and profitability it commands
- Customer-based approaches view from the consumer’s perspective & recognized the power of
the brand lies in what they have seen, heard, learned, thought, and felt about it over time
- Customer-based brand equity - the differential effect brand knowledge has on consumer re-
sponse to the marketing of the brand.
- Positive vs negative
- 3 key ingredients:
- Brand equity arises from differences in consumer response. If no differences occur - brand
name product is essentially a commodity & competition will be based on price most likely
- Differences in response are a results of consumers brand knowledge - all the thoughts, feels,
images, experiences and beliefs associated w the brand. Must create strong, favorable, and
unique brand associations w customers
- Brand equity is reflected in perceptions, preferences, and behavior related to all aspects of the
marketing of a brand.
- Brand promise -marketer’s vision of what the brand must be and do for consumers
- Brand equity models
- Brandasset Valuator (BAV) compares the brand equity of thousands of brands across hun-
dreds of different categories w 4 key components/pillars of brand equity: energized differenti-
ation (measures degree to which a brand is seen diff from others as well as pricing power), rel-
evance ( measures the appropriateness and breadth of a brands appeal), esteem ( measures per-
ceptions of quality and loyalty, or how well the brand is regarded and respected), and knowl-
edge (measures how aware and familiar consumers are with the brand and the depth of their
experience)
- Energized differentiation and relevance combine to determine brand strength which is a lead-
ing indication that predicts future growth value
- Esteem and knowledge together create brand stature which is a “report card” of past perfor-
mance and a lagging indicator of current operating value.
- Pillar pattern: relationships among ^ these dimensions which help reveal much about a brands
current and future status
- Brand strength and stature combine to form the power grid which depicts stages in the cycle
of brand development in successive quadrants
- BRANDZ: model of brand strength (BrandDynamics Model) which is a system of brand eq-
uity measurements based on milliards browns meaningfully different framework and reveals a
brands current equity and opportunities for growth.

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- Employs a set of simple scores that summarize a brands equity and are relatable directly to
real world financial and business outcomes.
- Has 3 diff brand associations types which are crucial for building customer predisposition to
buy a brand — meaningful, different, and salient brand associations which are reflected in 3
imp outcome measures

- Power - prediction of brands volume share

- Premium - brands ability to command a price premium relative to the category average
- Potential - probability that a brand will grow value share
- according to the model , how well a brand is activated in the marketplace and the competition
that exists will determine how strongly brand predisposition ultimately translates into sales
- BRAND RESONANCE MODEL - also views brand building as an ascending series of steps
- Ensuring customers identify the brand and associate it w a specific product class or need
- Firmly establishing brand meaning in customers minds by strategically linking a host of tangi-
ble and intangible brand associations
- Eliciting the proper customer responses in terms of brand related judgement and feelings
- Converting customers brand responses to intense, active loyalty
- 3 main sets of brand equity drivers
- The initial choices for the brand elements or identities making up the brand. ie brand names,
URLs, logos, symbols, characters, spokespeople, slogans, jingles, packages, and signage
- The product and service and all accompanying marketing activities and supporting marketing
programs
- Other associations indirectly transferred to the brand by linking it to some other entity (person,
place, or thing)

- choosing brand elements

- Brand element choice criteria - 6
- First 3 are brand building
- memorable, meaningful, and likable
- Latter 3 are defensive and help leverage and preserve brand equity against challenges
- transferable, adaptable, and protectable
- developing brand elements
- Customers know a brand thru range of contacts and touch points

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- Personal observation and use, word of mouth, interactions w company personnel, online/tele-
phone experiences, and payment transactions

- brand contact is any info bering experience whether positive or negative, that a customer or
prospect has w the brand, its product category, or its market
- Integrating marketing is about mixing and matching marketing activities to maximize their ind
and collective effects

- Evaluated thru effectiveness and efficiency with which they affect brand awareness and cre-
ate, maintain, or strengthen brand associations and image
- Marketing programs should be put together so the whole is greater than the parts. Should work
alone and together
- Third and final way to build brand equity : BORROW it
- Create brand equity by linking the brand to other info in memory that conveys meaning to
consumers
- “Secondary” brand associations can be efficient and effective in strengthening a brand
- Linking to someone or someone else can be risky
- Internal branding - consists of activities and processes that help inform and inspire employees
about brand
- Must adopt an internal perspectives
- Brand bonding - occurs when customers experience the company as delivering on its brand
promise. Contacts must be positive
- Imp principles for internal branding:
- Choose the right moment. Turning points are idea opps to capture employees attention and
imagination
- Link internal and external marketing. They must match
- Bring the brand alive for the employees. Internal communications should be informative and
energizing
- Keep it simple. Dont overwhelm employees w too many details. Focus on key brand pillars in
the form of a brand mantra
- Measuring brand equity
- Indirect approach assesses protection sources of brand equity by identifying and tracking con-
sumer brand knowledge structure

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- Direct approach assesses the actual impact of brand knowledge on consumer response to diff
aspects of the marketing
- Program multiplier - determines marketing programs ability to affect the customer mind set
and is a function of the quality of the program investment
- Customer multiplier determines the extent to which value created in the minds and hearts of
customers affects market performance. Results depend on competitive superiority , channel,
and other intermediary support, & customer size and profile
- Market multiplier determines the extent to which the value shown by the marketer perfor-
mance of a brand is manifested in shareholder value. Depends on actions of financial analysts
and investors

- marketers need to fully understand the sources of brand equity and how they affect outcomes
of interest & how these sources and outcomes change, if at all, over time

- Brand audits are imp for the former, brand tracking for the latter
- audit is series of procedures to asses health of brand, uncover sources of brand equity ,and
suggest was to improve and leverage equity
- Tracking uses the brand audit as input to collect quantitate data from consumers over times,
providing consistent, baseline for about how brands and marketing programs are performing.
Help us understand where, how much and in what was brand value is being created to facili-
tate day to day decision making
- Marketers should distinguish brand equity from brand valuation, which is the job of estimat-
ing the total financial value of the brand
- Managing brand equity
- Brand reinforcement - constantly conveying brand meaning in terms
- What products it represents, what core benefits it supplies and what needs it satisfies
- How the brand makes the products superior and which strong, favorable, and unique brand as-
sociations should exist in consumers minds

- reinforcing requires brand to keep moving forward

- Imp to provide consistent marketing support
- Must recognize the trade-offs between activities that fortify the brand and reinforce its mean-
ing
- Brand revitalization
- Start with understanding what the sources of brand equity to begin with

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- devising a bradding strategy
- Brand architecture - reflects the number and nature of both common and distinctive brand ele-
ments . How to brand is critical. 3 main choices:

- It can develop new brand elements for the new product

- It can apply some of its existing brand elements
- It can use a combo of new and existing brand elements
- brand extension - product name of when firm uses an established brand to introduce a new
product.
- 2 categories
- Line extension - parent brand covers a new product within a product category it currently
serves
- Brand line consists of all products - original and line and category extensions - sold under a
particular brand
- Brand mix (assortment) - set of all brand lines that a particular seller makes
- Licensed product- one whose brand name has been licensed to other manufacturers that actu-
ally make the product
- Branding decisions
- Alternative branding strategies
- Individual or separate family names
- Corporate umbrella or company brand name
- Sub-brand name
- house of brands vs branded house
- Ind of sep family brand names is house of brands
- Use of an umbrella corporate or company brand name is branded house
- Both rep two ends of a continuum
- Sub-brand strategy falls in-between depending on which component of the sub brand receives
more emphasis
- ***** within branded house strat*******flag ship product - is one that best represents or em-
bodies the brand as a whole to consumers. Often first product by the brand which gained
fame, best seller, or award winning/highly admired product
- Plays key role in brand portfolio in that marketing them can have short term benefits like in-
creased sales and long term benefits like improved brand equity for a range of products
- two key components of any branding stratify are brand portfolios and brand extensions

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- Brand portfolios : set of all brands and brand lines a particular firm offers for sale in a particu-
lar category or market segment

- Maximize market coverage so no potential customers are being ignores, but minimize brand
overlap so brands are not competing for customer approval.
- Brands can play a number of specific roles as part of a portfolio
- Flankers - or fighter brands are positioned w respect to competitors brands so that more flag-
ship brands can retain their desired positioning
- Csh cows - capitalizing on their restore of brand equity
- Low-end entry level - to attract customers to the brand franchise. Traffic builders
- High-end prestige - add prestige and credibility to entire portfolio
- brand extensions
- 2 advantages : facilitate new product acceptance and provide positive feedback to the parent
brand and company
- Improved odds of new product success
- Can reduce launch costs
- Positive feedback effects - can help clarify the meaning of a brand and its core values or im-
prove consumer loyalty to the company behind the extension
- Can renew interest and liking for the brand and benefit the parent brand by explaining market
coverage
- Disadvantages - brand dilution & line extension tap
- Line extension strap - when line ext may cause brand name to be less strongly identified w
any one product
- Brand dilution - occurs when consumers no longer associate a brand w a specific or highly
similar set of products and start thinking less of the brand
- Intrabrand shifts in sales may not necessarily be undesirable if theyre a form of preemptive
cannibalizations
- Success characteristics
- customer equity - the aim of customer relationship management (CRM ) is to produce high
customer equity - sum of lifetime values of all customers
- Acquisition - depends on number of prospects, the acq probability of a prospect, acq spending
per prospect
- Retention is influenced by the retention rate and spending level

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- Add on spending is a function of the efficiency of add on selling, number of add on selling of-
fers given to existing customers and response rate to new offers
- BE and CE emphasize imp of customer loyalty and the notion that we create value by having
as many customers as possible pay high as price a possible
- But they emphasize diff things
- CE focuses on bottom line financial value
- BE emphasizes strategic issues in managing brands and creating and leveraging brand aware-
ness and image w customers