MBA 221

MARKETING MANAGEMENT

REPORT #5 -- WEEK #3

BY: JOSHUA JAMOROL AND DEOVIE FERNANDEZ ESTRELLANTE

TOPIC: CREATING BRAND EQUITY

What is Brand Equity?

Brand equity is the level of sway a brand name has in the minds of consumers, and
the value of having a brand that is identifiable and well thought of. Organizations
establish brand equity by creating positive experiences that entice consumers to
continue purchasing from them over competitors who make similar products.
Brand equity is typically attained by generating awareness through campaigns that
speak to target-consumer values, delivering on promises and qualifications when
consumers use the product, and loyalty and retention efforts. 

 Brand Awareness: Can consumers easily identify your brand? Messaging and

imagery surrounding your brand should be cohesive so consumer can always
identify it, even for a new product. What kinds of values do consumers associate
with the brand?  Perhaps they think of sustainability, quality, or family-friendly
qualities.
 Brand Experience: How have first-hand experiences with your brand gone? This
could mean that the product performed the way it was supposed to, that encounters
with brand representatives and customer service teams have been accommodating
and helpful, and that loyalty programs have been worthwhile.
Why is Brand Equity Important?

 A key benefit of establishing positive brand equity is the benefits it can have
on ROI. Organizations that leverage the power of branding often earn more
money than competitors, while spending less - whether on production,
advertising, or elsewhere.  For example, positive brand equity enables
brands to charge price premiums. When consumers believe in the values put
forth by a brand and the quality of their products, they will pay higher prices
to purchase from that brand. Additionally, should an organization want to
add new product offerings, marketing them under the same umbrella brand
 will help the new product take off faster, as trust has already been
established. This is especially important as a rising number of consumers,
roughly 80%, now refuse to do business with or buy from a brand that they
don’t trust, and nearly 90% intend to disengage from a brand that breaches
their trust.

David Aacker created a model which features all the components of brand equity.
We aren’t going to break down all of them, but here are four of the most important
ones:

 Brand Awareness: Can consumers easily identify your brand? Messaging and
imagery surrounding your brand should be cohesive so consumers can always
identify it, even for a new product. What kinds of values do consumers associate
with the brand?  Perhaps they think of sustainability, quality, or family-friendly
qualities.
 Brand Attributes: How have first-hand experiences with your brand gone? This
could mean that the product performed the way it was supposed to, that encounters
with brand representatives and customer service teams have been accommodating
and helpful, and that loyalty programs have been worthwhile.
 Perceived Quality: Elevating perceived value will enhance the customer
experience and increase sales. Perceived quality is when customers judge the
product quality based on the overall brand experience. The product itself might be
good, but if the customer did not have well past experiences with the brand, they
are less likely to react positively to the product and the brand. 
 Brand Loyalty: Brand loyalty is made up of past and current experiences with the
brand, brand awareness, and the brand’s attributes. Though brand loyalty is mostly
customer preference, building up these other brand qualities will allow you to
increase your profit margins and gain more control over your customer influence. 

How to Create Brand Equity

There are obvious payoffs to establishing brand equity, but it takes a lot of work
and research upfront to build and maintain this status. It begins with conducting
research into the values and needs of a target audience, as well as identifying what
makes your brand different. Once established, organizations must continue to
spread awareness to earn new business, while fostering loyalty among existing
customers.
Understand Your Why

In Simon Sineck’s book Start with Why, he argues that compelling

organizations have a purpose behind their brand. Too many advertisers focus
on the How (How my product will make your day easier) versus the Why (Why
does this organization do what it does). For companies like Apple, the Why is
immediately apparent? They defy the status quo and stretch what’s possible.
Because Apple's advertising focuses on their brand (and not their computers),
they were able to expand their product lines into new areas such as phones and
music, where other computer companies failed.

Drive Awareness

Once you have a compelling message, you must drive awareness for both your
brand and your company focus. This often means emphasizing brand values
over product attributes, and emotional connections over conversions.  In a
world focused on the next immediate transaction, it can be hard to advocate for
such long-term planning.

Customer Experience

Due to the rise of social media and the individual consumer’s voice, brands are no
longer just defined by what advertisements say. Brands are what consumers
discuss or perceive. Having a focus on the customer and putting them in the center
of your company will help elevate your overall brand. Consider Amazon’s review
system. The site encourages users to be active in reviewing products and
communicating with sellers to ensure they get exactly what they need - rather than
just making a sale.

How to Measure Brand Equity

Brand equity can seem like and abstract concept that is difficult to measure or
quantify. Depending on the goals of your branding efforts, there are multiple
methods that can be used to measure equity through brand tracking efforts.
 Financial

For those looking to assign a numeric value to a brand, consider the following

o Company Value: To measure the brand equity, you could think of the firm
as an asset. When subtracting the tangible assets from the overall value of
the firm, you would be left with the brand equity.
o Market Share: What is your company’s market share? Leaders in the
market tend to have higher brand equity.
o Revenue potential: What does the revenue potential look like for your
product? How does this compare to your company’s current revenue?
Product Value

A good way to measure product value is to compare a generic product with the
branded product. In the case of soap, Unilever can measure if women were more
likely to purchase Dove over the store brand. Additionally, you could consider
what users potentially prefer, such as Coca Cola compared to Pepsi, for example.

Brand Audit

Conducting a brand audit can also help you get a better understanding of how your
brand is performing. To begin a brand audit, review comparison sites, social
channels, and web analytics. Pull this data together to see how consumers are
talking about you and if this is in line with the vision for your brand.

Understanding Consumer Perception

Although not as quantifiable, mapping consumer perception to your brand is also

an important aspect of understanding brand equity.

 Recall and Recognition: Do people remember your brand without a prompt

(unaided brand awareness) or do they need an aide? (aided
awareness). Understanding how familiar people are with your brand can help you
address any gaps in the market.
 Emotions Associated with the Brand: Failing to address negative emotions with
your brand can be a costly mistake. Even if your brand holds a monopoly of the
market, consumers who are eager to switch will do so as soon as a competitor
grows into maturation.

Examples of Companies with High Brand Equity

There are a few brands that stand out as those who have arguably mastered positive
brand equity. These brands have achieved consistent, identifiable design, unaided
awareness, and, in many cases, unwavering consumer preference over competitors.

Apple 

In 1997, John Sculley, a former executive at Pepsi who went to Apple, said to the
Guardian, "People talk about technology, but Apple was a marketing company. It
was the marketing company of the decade." In the 1990s, Apple nearly went out of
business. As Marc Gobi, author of Emotional Branding, said “It goes beyond
commerce. This business should have been dead 10 years ago, but people said
we've got to support it.” This support comes from the loyalty of Apple product
users, so that when Steve Jobs returned to Apple, there was a base for him to build
upon.

Coca-Cola

Nowhere is the emphasis on brand more prevalent than in the constant debate of
Pepsi versus Coca-Cola. While Pepsi shares may be higher due to its diversified
portfolio, Coke still outshines Pepsi in both companies’ key product lines. The
Pepsi Challenge campaign in the 1980s forced the Coca-Cola Company to take a
look at their product line in one of their marketing campaigns (The Pepsi
Challenge). Coke even sweetened their drink to try to meet consumer demand, but
was faced with backlash. Coca-Cola began focusing on its brand more so than the
product. They emphasize how Coca-Cola brings families together using
relationships and nostalgia (i.e. Share a Coke campaign). The brand uses a logo,
font, and consistent colour scheme that are immediately identifiable.

Final Thoughts

The shifting focus to the consumer means that organizations must actively think
about the brand image they are creating for themselves, as well as how each action
and initiative contributes to overall brand awareness and perception. Through
solutions such as Marketing Evolution’s brand optimization, organizations can
gain insight into what makes its brand resonate with customers. Equipped with this
information, marketing teams can make strategic, data-driven decisions about how
to optimize future strategies designed to build brand equity and drive ROI.