UNIT-1

CONCEPT OF BRAND
A brand is a name, term, sign, symbol or design or a combination of them, which intends to
identify and distinguish the services of one seller from that of the other sellers in the market.

The American Marketing Association defines brand as “a name, term, design, symbol or any
other features that identifies one seller’s goods and services as distinct from those of other
sellers..A brand may identify one item, a family of items or all items of that seller.”

Aaker (1991), Keller (1998), Kotler (1994) and Lovelock (1999) defined brand as a

“Distinguishing name and/ or symbol intended to identify and differentiate”.

Brandt and Johnson (1997) and Gilmore (1997) defined it as a

“Tangible product plus intangible values”.

Branding

It is the process by which a marketer tries to build long term relationship with the customers by
learning their needs and wants so that the offering (brand) could satisfy their mutual aspirations.

Branding can be viewed as a tool to position a product or a service with a consistent image of
quality and value for money to ensure the development of a recurring preference by the
consumer.

Examples of brands:

By looking at the above symbols we can easily identify the name of the company or product.
This is the significance of a brand.
SIGNIFICANCE OF BRANDING FOR CONSUMERS
Here we will see how branding is important for consumers and how it influences their buying
behaviour.

1. Brands provide peace of mind.

Consumers want comfort, happiness, and satisfaction in their lives, and they get it in part through
the products they buy. If the brands they use consistently deliver a positive experience,
consumers form an opinion that the brand is trustworthy, which gives them peace of mind when
buying.
2. Brands save decision-making time.
So you are in the market for a new HDTV and decide to search Amazon. You type in “HDTV”
and get 101,685 results. How do you cull the list down to a manageable number of choices? You
choose a brand. Type in “Samsung HDTV,” and you reduce your choices to 1,319. Picking a
brand helps reduce the clutter, making it easier to find what you are looking for.
3. Brands create difference.
Any grocery store aisle has more product options than anyone can reasonably consider
purchasing. What allows us to select one peanut butter brand over another or over a generic
product? Branding helps define—in an instant, with a minimum of thought—what makes your
product different and more desirable than comparable products.
4. Brands provide safety.
People, by nature, generally avoid risk and seek safety. Imagine you’re on a business trip in an
unfamiliar city, and you need to pick a restaurant for dinner. You’re most likely to pick a
national restaurant brand over a local one because you’re familiar with the national brand. It’s
the safe and predictable choice because you know what to expect. Brands offer safety and reduce
the risk of disappointment.
5. Brands add value.
Why do consumers pay higher prices for brands compared to unbranded or generic products? Is
it better quality, the look and feel, or is it the brand’s stature in society? It’s probably a
combination of each. Successfully branded products make more money for their companies by
commanding premium prices.
6. Brands express who we are.
What smart phone do you own? What car do you drive? What shoes do you wear? The brands
we use make a statement about who we are and who we want to be. People become emotionally
attached to the brands they use and view them as part of their self-image. Apple’s classic
campaign shows how brands can reflect the personalities and self-perceptions of their users.
7. Brands give consumers a reason to share.
We all have opinions about the things we experience, and we like to share them with others.
Whether it’s a good book, a good movie, or a great meal, we become brand advocates when we
share positive brand experiences. In our increasingly social world, we have more opportunities
than ever to spread the benefit of our experiences. Strong brands give consumers a reason to
share their experiences.

SIGNIFICANCE OF BRANDING FOR FIRMS

1. United
Branding links your name, logo, online presence, product/services and appeal to the masses.
Make marketing skills consistent and the content the same across all channels. This brings a
united and clear message to customers, future partnerships and their competitors.

2. Asset
A brand is an asset. What you present to the public is a huge chunk of your business. The worth
is just as much as revenue and sales. A lot is at stake; finances, creativity and time is on the line.
Branding will make the difference between revenue/sales and debt/liquidation.

3. Sales
Speaking of sales, branding will create sales and revenue for your business. You will make
money based on how the branding marketing strategies work out. Customers will be tempted to
test you out, and your results will determine if you make more sales.

4. Deliverance
Branding is a proclamation. You hereby state that you will deliver on your promises and claims
the company makes. Everything the company stands for should be spread throughout the
organization too. Otherwise the company will be disconnected and customers will be confused
and grow distant. If you are not willing to make promises you can't keep, don't state it on your
brand.

5. Perception
Branding gives companies a chance to let customers see the business for who we really are. This
is the chance to be honest and open about what this company represents. The look, feel and
message conveyed will separate you from the pack.
 6. Preference
People are more attached to companies with a brand than companies that doesn't. Brands create
a bond filled with good memories and good times, and customers will never forget it. That
connection can't be strategized; it just happens.

7. Loyalty
A good branding will create customer loyalty. Loyal customers will continue to support you in
good and bad times. They will spread a positive message to people they know. Their influence
will introduce new people to your company.

8. Trust
As customers get to know your business they will begin to trust you.In order to build trust you
must give customers a reason to test you out. The branding must be spot on as the first customers
will determine how many more (or less) you will receive. Exceptional customer service,
experience with the product/services and positive online communication on social networks will
keep them coming back for more.

9. Extension
Branding can reach so many people in so many outlets. It reaches people offline, online, mobile
and niche markets. It reaches the many products and services you currently sell and plan to sell
in the future.

10. Protection
Branding protects you from competitors who want your success. Without it they will have no
problem making copycats of what made you popular and claim it for themselves. They can carry
the same or similar products but they won't be able to take your style and originality away.

BRAND EQUITY

What is Brand Equity?

Brand equity is a marketing term that describes a brand’s value. That value is determined by
consumer perception of and experiences with the brand. If people think highly of a brand, it has
positive brand equity. When a brand consistently under-delivers and disappoints to the point
where people recommend that others avoid it, it has negative brand equity.

Positive brand equity has value:

 Companies can charge more for a product with a great deal of brand equity.
 That equity can be transferred to line extensions – products related to the brand that include
the brand name – so a business can make more money from the brand.
 It can help boost a company’s stock price.

How Brand Equity Develops

Brand equity develops and grows as a result of a customer’s experiences with the brand. The
process typically involves that customer or consumer’s natural relationship with the brand that
unfolds following a predictable model:

 Awareness – The brand is introduced to its target audience – often with advertising – in a way
that gets it noticed.
 Recognition – Customers become familiar with the brand and recognize it in a store or
elsewhere.
 Trial – Now that they recognize the brand and know what it is or stands for, they try it.
 Preference – When the consumer has a good experience with the brand, it becomes the
preferred choice.
 Loyalty – After a series of good brand experiences, users not only recommend it to others, it
becomes the only one they will buy and use in that category. They think so highly of it that
any product associated with the brand benefits from its positive glow.

Elements of Brand Equity

 Brand identity of a company is reflected by its logos, symbols, slogans, signs, icons etc.

Brand can be seen as a person, product, an organization and as a symbol perspective.

 Brand image is the set of beliefs held about a particular brand.

Set of associations, usually organized in some meaningful way.

 Identity, personalities, communication, feedback on the products and most important the
use of the product or services evokes images or perceptions of the brand in the
customer’s mind.

 Brand Personality is the set of human characteristics associated with the brand.

Symbolic use of a brand is possible because customer often instill brands with human
personality traits.

 Brand Awareness is the Recognition and Recall of brand.

Strength of the awareness of brand.

Brand awareness is depends upon brand identity and brand personality.

Top of mind awareness

Higher position of the brand in mind

Higher purchase intention and the higher relative purchase of the brand.

 Brand Positioning create a distinct space in the consumer’s mind generally termed
‘Positioning’.

A strong position is always built upon consumer associations with the brand; that is, a
position that reflects how the brand is perceived in relation to competitors.

A.Cost Based Brand Equity

1. Historical Cost Method:
It aggregates all the historical marketing costs as the value (Keller 1998).In other words, the
method involves historical cost of creating the brand as the actual brand value. It is often used at
the initial stages of brand creation when specific market application and benefits cannot yet be
identified.

This represents the money that has been spent on the brand till date. Say Rs. 150 million have

been expended in creating a brand ‘X’ for a particular product. The value at which the brand can
be sold to another firm should be Rs. 150 million.
 2. Replacement Cost Method:
The Replacement Cost Method values the brand considering the expenditures and
investments necessary to replace the brand with a new one that has an equivalent utility to the
company.

3. Market Value Method:

Market based approach basically deals with the amount at which a brand is sold and is related
to highest value that a "willing buyer & seller" are prepared to pay for an asset. This
approach is most commonly used when one wishes to sell the brand.

B. Price Based Methods:

Some experts have thought of calculating Brand Equity on the basis of price particularly retail
prices of the brands.

1. Price Premium Method:

A comparison made of the retail price of a ‘branded’ product with that of unbranded product in
the same category. The difference speaks of “brand equity”. It also indicates “brand strength”.

It means that higher the retailer premium that a brand can charge, greater is the equity of brand in

the minds of a customer. Since price is the parameter-the brand equity cannot be generally
acceptable concept.

2. Market Share Equalisation Method:

Brand equity is arrived in case of this method in a wiser way if total market sales for say dental

cream say 57 percent is that of Colgate, 18 Dant Kanti, Babool 5 percent, Pepsodent say 10
percent.

These are not actual figures or the only brands. One can take different figures and brands. To

illustrate let say there are four brands priced for a given quantity say of 100 gram tubes and the
number of people using taken out of hundred persons.

Following is the statement configured:

The question is what are the prices at which the market shares for each of these brands equal?

Apparently the most popular brand is Colgate Dental Cream. It is obvious that if Colgate Dental

Cream raises the prices beyond a particular point, consumers are likely to shift to other brands.

Let us take if 37 persons shift from Colgate with big rise in Colgate Dental Cream and marginal
rise in other brands.

The changed scene created by forced situation, makes it amply clear that all four brands have
equal market shares. Here, it is the price that indicates the brand equity.

3. Price Premium at Indifference:

This is the method that attempts to compare the free prices of brands at the point of indifference.

Let us take two brands say Colgate and Dant Kanti. To avoid duplicity repeat same experiment

that was tried in market share equalization method. Keep increasing the price of Colgate from

26.50 to Rs. 27.00. Let us, on an average a customer jumps from Colgate to Dant Kanti at Rs.
27.00.
C. Customer Based Brand Equity:

Customer based methods of Brand Equity are also developed by some veterans. The heart of this
approach is the customer’s knowledge about the brand in spot light.

1. Brand Knowledge Method:

‘Brand Knowledge’ stands for the sum of brand awareness and brand image. Each of the

parameters can be measured on a 1-10 scale where standard measures such as recall, associations
or attitudes or users image and so on.

A weighted total of these parameters will be the measure of brand equity. The dimensions of
Brand Knowledge can be presented in the form of a chart as under for better understanding.

Brand Recall:
It can be better explained with a practical example. To have recall score for a brand, certain

questions are asked. There may be four or five questions. Let us take bathing soap brand say
“Mysore Sandal”.

One can ask say four questions regarding this soap:

1. What brand comes to your mind when I say toilet beauty soap?

2. Which brand comes to your mind when I say ‘lower price’.

3. Which brand comes to your mind when I say white, cream, and pink?

4. The advertisement for which brand says “Do you now understand why I buy this?

2. Attribute-Oriented Approach:

Under this approach, the methodology is, take the attributes of brands in a particular product

area. These attributes are rated in the range of 01 to 10 scales from consumers. The sum of the
scores of each brand reflects the Brand Equity of a given product.
Let us take the case of toilet soaps say at least 5 and decide the attributes and get the score from

consumers and total the score for each brand to determine the Brand Equity. Even these absolute
scores can be expressed as a percentage.

In terms of absolute figures compared ‘Cinthol’ has Highest Brand Equity and ‘Dettol’ has the

lowest. Even if percentage is taken, the same ranking will result. Though it gives weight-age to

attributes, the limitation of this method is that Brand Equity stands for more than brand
attributes.

3. Blind Test:
Blind test is a variation method of the earlier attribute. Under this method clear distinction is

drawn between subjective and objective attributes. Accordingly Brand Equity is defined as the

difference between the overall performance of a brand and the sum of the scores it gets on
objective parameters.

Let us take the example of 100 CC mobiles say “Yamaha RX”, “TVS Shaolin” and “Hero
Honda-Splendour”.

Taking overall brand level, there is preference for one brand or the other. Taking brand level

score out of 100 points. A respondent gives or respondents give the score when you ask the
question a consumer”.

How much does this brand score on hundred according to you ?” Say answer is- Yamaha 79,
Shaolin 84 and Splendour 88. Let us turn now to score when objective parameters are considered
such as-fuel consumption-that is so many kilometers per liter of petrol; Pick-up so many Kmph
in given time duration- Load carrying capacity-its minimum and maximum.

Then there is need of conducting a blind test on these attributes for the brands in question
without revealing the brand name to the customer.

If following are the average ratings taken from a sample of 300 respondents for each of the

objective attributes on a 00 to 10 scale, the findings will be:

It means that subjective parameters show that Brand Equity is highest for Splendour and lowest
for Yamaha.

The basic problem is that of identifying the subjective and objective parameters. It is much easier

in case of say two wheelers and four wheelers but not so easy in case of consumer non-durables
like talc powder, Shampoo, or say tooth paste and so on.

Again very important question arises as to why only we should take into account subjective
factors (net) as a measure of Brand Equity?
Note: the calculations given here are just to make you understand the concept, do not
worry about them