Introduction

Brand equity is a valuable asset for the organization. It can

generate value in terms of revenue, customer experience and the awareness of a typical
organization. It means creating awareness for the products and making the customers feel
valuable so that they are not willing to buy from competitors. Keller defined brand equity as
response of customers upon the brand based on the effect of marketing of that particular brand
(Keller, 1993). Aaker asserted that brand equity is based on many factors such as customer
loyalty, perceived value and other brand associations (Aaker, 1996). This report will highlight
the Aaker’s Brand Equity Model and Osterwalder’s Brand Proposition Canvas. The report will
also apply the implications of these two model with real-life company to clearly understand the
importance of brand equity in today competitive market.

Literature Review

Overall Theory
David Aaker’s Brand Equity Model
David Aaker identified brand equity as the total assets and
liabilities of the brand. The assets in his definition means loyalty, awareness, perceived quality,
associations of the brand and others. He also argued that customer experiences are key
determinants in identifying the power of the brand (Aaker, 2004). David Aaker’s Brand Equity
Model consists of 5 key elements. These elements are Brand Loyalty, Brand Awareness,
Perceived Quality, Brand Associations and Other assets relating to brand. Each component of
the brand equity model contributes to the value generation for both the organization and
customers in many different ways. Firstly, the assets of the brand equity can benefit customers.
They can add value for the customers in interpreting, processing and acquiring certain amount
of information relating to the brands. The perceived quality and brand association can enhance
the user experience of the customer and help them make right purchase decision. For example,
a man buying a Ferrari sport car will get the exact experience he wants to get from driving such
luxurious sport car. A brand like Ferrari has strong values in perceived quality and association.
People can know that it is a really fast car and expensive by seeing one in the street.
The brand equity also generate value for the organization
itself. Having a strong brand equity, organization can have a strong profit generating cash flow.
As the above example, people who are the fans of Ferrari cars are still and willing to buy Ferrari
due to the strong brand equity that Ferrari possess. Loyalty and perceived quality of the brand
is the determinant factor in retaining customers and generating profit from the existing
customer base. Brands can promote their products more conveniently if their brands are
familiar with customers and customers show positive attitude towards them. Brand association
is also critical in acquiring the share of mind of customers in competing with the rivals. It can
enhance the effort of marketing to attract customer attention.

Osterwalder’s Value Proposition Canvas

The value proposition canvas was developed by
Alexander Osterwalder in 2005 as part of his Business Model Canvas. It is used to create a
product market fit between customers and the product. It helps the company to foresee what
factors are necessary to position their products in the market that will fulfill their customers’
needs and wants. The value proposition canvas is based on two components of the business
model canvas namely customer segment and value proposition. The value proposition consists
of three elements

Product and Services: This consists of all the products and services that the company will offer
to the customers. In this section, the company must find out if their products or services will
generate benefit for the customers either tangible or intangible and how these products will
help customers to aid in their needs and wants.
Gain Creators: These include the added value that the product or service can provide for the
customer and meet with their expectations.

Pain Relivers: These are the features or benefit from the company’s product or service that will
help customers solve problems, help them find ways to face difficulties and eliminate their
risks.
The customer segment also has three components.
They are as follow:

Jobs to be done: In this part, companies must understand what the customer is using their
products for. These may include functional, social and emotional tasks relating to their daily
activities.
Pains: These include the experience that customers have while they are performing their tasks.
The experience may be from emotions, risks and etc.
Gains: Include all the positive benefit that the customer expects. These may be in the form of
emotional, social or functional activities that will make them happier or easier in their daily life.

Evaluation
Through David Aaker’s brand equity model, organizations can
leverage their revenue and value creation through the five components of the model. If the
organization can enhance their brand loyalty and brand awareness, they can not only attract
new customers but also generate more cash flow from the loyal customer base. The loyal
customer base will also hard to get penetrate by other competitors since they barely consider
other brands in their purchase journey. Perceived quality and brand association will be critical
factor in why customers should buy the product. These factors enhance better positioning in
the market thereby creating barriers for competitors to fight for the market share.
The Osterwalder’s proposition canvas will further enhance the
company to produce products or services that will fit the customers’ needs and wants. Through
the value proposition canvas, companies can better understand the value they need to deliver
to the customers and how these values are important in the customers’ jobs to be done. It will
also help guide companies in delivering the necessary solutions that customers are expecting to
solve their problems using the company’s products. Also, the canvas is easy to navigate and
company can fill up anything they want in the canvas to create a bigger picture for the product
market fit.

Starbuck’s Brand Equity

Application and Evaluation

Starbucks is one of the most famous café available nearly all around
the world. It is described as one of the largest coffeehouse chains. Based in Seattle, Starbucks
has 34,630 stores in all around the globe (Starbucks.com.sg). The brand equity of Starbucks can
be seen as follow.

Brand Loyalty: Starbucks used digital platform to enhance its brand loyalty program. It
introduced Starbuck Rewards which is an application-based loyalty program. Customers can
open accounts and collect reward points called “Stars” in the application. These points can be
exchanged with rewards such as a refill of coffee. Customers can also use the mobile
application to pre-order their drinks to save time. Starbucks hit a huge success for delivering
digital customer experience.

Brand Awareness: Starbucks brand awareness comes from the famous Siren Logo. The logo
remains consistent for many years which makes people think that green is the trademark of
Starbucks. Also, Starbucks partner with other organizations like Apple and Google enhance
more awareness. It also uses many social media platforms such as Facebook, Instagram,
Twitter, etc. to promote their brands. It has million of followers on these platforms. The
contents for promotional activities are consistent with each other boosting the brand
awareness.
Perceived Quality: Starbucks has a strong perceived quality. Whenever people think of
consuming a premium quality coffee, Starbucks come to their mind first. Starbucks also offer
variety of in-store experience which affects the perception of the customers. They have unique
store designs built specifically for the culture of the respective location their outlets are located.
People can not only experience the taste of a good coffee but also feel their own culture.
Starbucks also adopted a unique way to take order by writing down customers’ name on the
cup which give customers an exclusive experience.

Brand Associations: The most popular brand associations of Starbucks is the terms they use to
determine the size of their cups: Tall, Vente and Grande. These unique size terms are what
make Starbucks stand out from others. Starbucks also has unique drinks in their menu such as
Frappuccino which customers are recognize easily they are from Starbucks.

Other Proprietary Assets: Starbucks has registered trademarks for terms such as Venti and
Frappuccino. They also have patents for brewing techniques and the designs for their cups.
These trademarks and patents protect Starbucks from other competitors in copying their
footprints.
Starbucks has been building the equity of their brand really well
through many innovative and different ways. They have developed digital enhance customer
loyalty programs to retain their customers. They always stay connected with their customers
through many social platforms which make them visible. Due to such efforts, customers have
good perception with Starbucks and they are likely to choose Starbucks over other coffee
shops. They also produce their own coffee beans which is the expansion of business into new
market segment. Starbucks can also tap into new market such as coffee machines market. Since
it is already a well-know brand, it can co-develop and produce coffee machines with
professional coffee makers to grow the business into the new market.
According to the David Aaker’s model, Starbucks can enhance
improvement in areas such as brand awareness, brand associations and brand loyalty. These
areas are critical for enhancing long-term success for the companies. Today world is connected
with digital internet, the pace of changes in digital technology brings many opportunities for
every organization. It takes just one click for people to know any information they want.
Therefore, integrating digital technology in the brand equity model will create more
opportunities to get Starbucks expose and connected to their customers. All three components
of the model (awareness, associations and loyalty) are connected to each other. Improving one
of the areas will bring consecutive effects in others.

Recommendation
Starbucks can find more areas in the digital platform to enhance
their brand awareness. With increasing and innovative changes in digital technology, there are
many new opportunities for Starbucks to promote its brand and stay connected with their
customers. For instance, Facebook created metaverse using AI technology. Companies like
Samsung and Nike are promoting their brands in the metaverse acquiring the first mover
advantage. Starbucks can also learn their footprints and make their visibility in newly developed
social platforms. Starbucks can also improve their Starbucks Rewards program to further
enhance brand loyalty. They can make improvement in the user surface, introduce new kind of
reward systems that will interest their customers and create contests and campaigns in the
form of gamification. This will help the Rewards program and users more exciting. Starbucks
need to control the in-store experience and quality of their products to be consistent around
the world. It is critical for maintaining the customers’ perception of Starbucks. Customer
experience is the key in perceived quality. Hence, maintaining the service quality is also critical
in enhancing the customer perceived value. Starbucks should also participate in environmental
concerned campaigns. They can replace their cups and straws with recycle materials. They can
also use healthy ingredients in their drinks to promote brand associations. In such way, people
will think of Starbucks not only as a coffee maker but also an environmental friendly coffee
chain. This will enhance positive brand association for Starbucks.
 Toyota’s Brand Equity

Application and Evaluation

One of the most leading car manufacturers in the world,
Toyota is producing cars in various segments for 75 years. The brand equity model of Toyota
can be analyzed as follow.

Brand Loyalty: Toyota has introduced a new loyalty program called Loyal-T back in 2021.
Customers can generate points whenever they spend a penny in Toyota for vehicle purchase,
service and repairing. These points can be saved and redeemed for future services. Hence,
customers can save cost in next required services. Cars from Toyota are cheap to maintain.
They are also durable and last for more than a decade. These factors contribute to why people
are still loyal to Toyota and choose them over other competitors.

Brand Awareness: Toyota used different channels of marketing to promote their brands. They
have accounts in social platforms like Facebook and Instagram with million of followers. The
organization also has websites for specific locations where their stores are opened. Customers
can directly contact to Toyota through the website. Toyota also take part in racing community.
They have a racing team called “Toyota Gazoo” which takes part in various segment in the
motorsport industry. Also, electric cars like Prius and strong performance cars such as Supra
and LFA make Toyota more aware to public. Even the Toyota Supra is featured in the Fast &
Furious franchise driven by the late Paul Walker.

Perceived Quality: The reliability of Toyota cars is what make them famous in the market.
People think of Toyota whenever they heard the word “Reliability”. Toyota is not only
perceived as reliable cars. They are also famous for producing luxurious cars like Lexus LS460
which is famous back in the 90’s where Mercedes even purchase a LS460 to make reverse
engineering before producing the S-Class. Toyota is also considered is as one of the best sport
car manufacturers. They have top performance sport cars like Supra, MR2 and GT86. Hence,
customer can choose a wide range or cars that suit them the best under Toyota.

Brand Associations: Many of Toyota cars are affordable. They have a wide range of cars starting
from small city cars to big pickup trucks like Tundra. Toyota is positioned itself in different type
of market segments. As mentioned above, people who purchase Toyota has only one reason.
They want reliable cars with great technology and designs.

Other proprietary assets: Toyota invest a lot in R&D. They always come up with leading age
technology and affordable cars for their customers. Their investments in R&D achieves
competitive edge in the market. They even come up with Mirai which is a Hydrogen Fuel Cell
car. This car will bring a new level of playing field in the automotive industry where the
environmental concern is growing bigger in the recent years.
Through the brand equity model, Toyota can deliver values to both
customer and themselves. Customers are able to purchase reliable and safety cars from Toyota.
Due to its investment in R&D effort, Toyota is able to deliver the reliable and high-tech cars to
customers. Since, Toyota is a global operation, it has many outlets around the world. So,
customers are easily access to Toyota outlets and purchase the desired vehicles. Toyota
produces different type of cars for different types of terrain and lifestyle. Hence, customers
have a wide range of cars to choose that will reflect their lifestyle.
Toyota can also generate value through the Aaker’s model,too.
Owning to the growing awareness and innovative royalty program, Toyota can sustain more
profitable business model pushing it to become world best selling car manufacturer. Eco-
friendly cars like Prius give Toyota a chance to prove that it is still protecting the environment
giving it a chance to increase public image and brand association. Strong R&D resulting into new
hydrogen fuel cell car like Mirai give Toyota a competitive advantage in the market.
Recommendation
Although Toyota is well-known in the market, it still has many
opportunities in the market to drive its awareness. It can be featured in video games and other
forms of entertainment to get more engagement with customers. Sometimes, creating
awareness though real-life events have more impact. Like the Tundra that drove to through fire
to save victims. The owner of that Tundra got a new one from Toyota for his bravery and the
car was being showed in the Toyota museum. It was a great endorsement opportunity for
Toyota to gain more awareness. The company needs to consider new loyalty programs to
enhance customer loyalty. Since, many of Toyota older models are being used today because of
their durability. Toyota should consider re-manufacturing spare parts for the widely used old
models. This will really be appreciated by the customers and boost the customer loyalty
towards the brand. Toyota can also tap into the electric car market like Tesla. Environmental
concern is a very serious issue arising nowadays. If the company can expand its products into
the environmental friendly market, that will further enhance the perceived quality and brand
association of Toyota. People will view Toyota as a reliable and environmental sustaining
company. Customers will also feel proud of driving a car manufactured from company which
emphasizes on maintaining the environment.

Conclusion

Brand equity is an important element for every organization. As

we can see above, famous organizations like Toyota and Starbucks have applied the model of
brand equity adequately. Building a brand equity is a long journey. It cannot be formed
overnight. The way the customers feel and perceive towards the brand is an important notion
in competing with rivals. People will look for how strong and reliable the brand is and how their
products can solve the problems they are facing. Hence, constantly improving the brand equity
will take up the share of mind in customers which will be effective against other competitors.
With the advancement of digital technology, companies can find numerous opportunities in
promoting their brand and boosting the customer loyalty. Therefore, it is important for every
organization to constantly enhancing their brand equity to be successful in the long-run.