The Impact of Brand Equity

By
DilawarSadiq

A Report
Submitted in fulfillment of the requirements
For the subject Quantitative Research Method
To Dr.Shah NawazAdil
At Iqra University
Main campus, Karachi

Karachi,
Pakistan May,
2020
Abstract

Customers are more educated than old years, they evaluate branded and unbranded product in
terms of quality, value and price.Theresearch purpose of creating brandquality and focuses on the
analysis of the brand associations with the mind of consumers and how it helps to build a strong
brand in order to get financial benefit by using brand equity. The value of the paper lies in
providing detailed report on branding importance that highlights the importance of making the
marketing function in order to maintain trust, consistency, and a defined set of expectations on
customer’s mind. The customer is in the middle if one see the business sphere, marketer and
companies need to see first how customer reacts to brandedproduct.

Key word: Brand Equity, Consistency, Trust

Introduction

Brand serves several valuable functions. If we start from definition of branding then “A brand is a
name, term, sign, symbol, design, or a combination of these elements that is intended to identify
the goods or services of a seller and differentiate them from competitors.” Kotler, et. al. But the
question arise how customer learn to buy branded product. It may be because of the image of a
particular brand as it is commonly understanding by consumers or any other aspects. While
discussing brand concept then there are two common brand concept categories. First is function-
oriented which is associated with product performance, reliability and durability. Second is
prestige-oriented brand concept, which is associated with images of luxury and status (Park et
al.,1991). So basically brands are built on the product level which accompany by organizations
marketing practice. Basically a customer experience speaks about the product and passes on to
friend circle or relatives. So because of this, branding used by organizations as an effective
marketing strategy tool with frequent success in past even today. According Farquhar 1989,
Egyptian used to brand their bricks as brand Identification as they guarantee quality to customer.
Customer adds value to sale of product which ultimately in financial sense called asset. According
to Lisa wood Sheffield University UK (2000) the term brand equity defined the relationship
between customer and branded product. The management of brand concept or brand image is an
activity that is strategically undertaken by firms in order to strengthen and build equity in brands,
and to achieve long- run competitive advantage (Park et al. 1986). According to Joseph Arthur
Rooney(1995)while looking at branding strategyexample can be find where branding has not been
quite successful, and marketers has to reform the appropriate strategy in such case. Whatever
problem occurs during any stage of product development; name of the particular brand will have
impact on it. So caution will have to use while selecting any name of brand for selected product.
Once select the appropriate name according the target audience, marketer will form the advertising
strategy to support the brand among target market. Finally, keeping the brand in a strong position
is a critical concern. Due to importance of this topic researcher pursue two objectives; examine the
existing literature on branding; examine the customer’s attitude and behavior related to branding
and its importance in order to get benefits of brandequity.

Hypothesis

H: customer buys product just because of brand name and quality without considering the price of
product.

H: customers switch to local product if Local companies maintain product quality.

The brand as a businessequity

As said by chiengFayrene Y. L et Al brand equity concept starts its existing in 1980. The
association of the notion of brand to capital is relatively recent, starting in the early1980s,
when the growth of companies being bought and mergers showed that the essential basis of
the company’s assets was not only the possession of easily quantifiable material assets, but
that the brand also formed an important part of that capital (Guillaume, 1993).Brand value is
defined as “a set of assets and liabilities linked to the brand, its name and symbol, which
incorporate or diminish the value supplied by a product or service exchanged with the
company’s clients” (Aaker, 1994). According Doyle, (1995) the brand is said to be a
company intangible asset as said in previously it is financial term and it generates a value.
When product is identified by customer, from its brand name, then brand value generates the
additional cash-flow which is contributed by that particular product. It examined financial
and customer based. According Baalbek (2012) mentioned its third perspective which was
employee based. Young bum kwon mentioned in 2013 that customer based and employee
based is similar. Here, assets or liabilities refer to those which are linked with the brand
name or symbol in such a way that if they were changed, some of these assets or liabilities
would be affected.

There were several brand equity models presented by different authors but the
researcher took two models to evaluate, the first model is Aaker’smodel and second model
 is presented by Lumingwang and Adam Finn(2013)

According Aaker1992, Keller1993, Yoo&Donthu 1997, Christodoulides et Al. 2006 said

that through consumer mind-set awareness, association, loyalty, and perceived quality can
be measured in order to see customer perception.

There are many independence variables but we are selecting only THREE independence
variables.

o Anchor for attracting

Provide value tocustomers
Brand otherassociation
by Enhancingcustomers:
o Familiarity-Liking
Awareness o Signal of substance/commitment
o Brands to be considered. o Interpretation
o Processing
of
information
o Confidence inpurchase
decision
o Satisfaction
Brand Equity
o Reasons tobuy
o DifferentiatePosition
Perceived s
Quality o Price
o Channel Provide value to Firms by
MemberInterest Enhancing:
o Extension
o Efficiency and
effectiveness of
Marketingprogram
o Prices/margins
o Tradeleverage
o CompetitiveAdvantage
Perceived Value o CompetitiveAdvantage
Figure 1. Aaker’s Customer Based Brand Equity Framework (source: Aaker’s 1992, 1996)

What Is Brand Equity?

Brand equity refers to a value premium that a company generates from a product with a
recognizable name when compared to a generic equivalent. Companies can create brand equity
for their products by making them memorable, easily recognizable, and superior in quality and
reliability. Mass marketing campaigns also help to create brand equity.

When a company has positive brand equity, customers willingly pay a high price for its products,
even though they could get the same thing from a competitor for less. Customers, in effect, pay a
price premium to do business with a firm they know and admire. Because the company with
brand equity does not incur a higher expense than its competitors to produce the product and
bring it to market, the difference in price goes to margin. The firm's brand equity enables it to
make a bigger profit on each sale

Understanding Brand Equity

Brand equity has three basic components: consumer perception, negative or positive effects, and
the resulting value. Foremost, consumer perception, which includes both knowledge and
experience with a brand and its products, builds brand equity. The perception that a consumer
segment holds about a brand directly results in either positive or negative effects. If the brand
equity is positive, the organization, its products, and its financials can benefit. If the brand equity
is negative, the opposite is true.

Finally, these effects can turn into either tangible or intangible value. If the effect is positive,
tangible value is realized as increases in revenue or profits and intangible value is realized as
marketing as awareness or goodwill. If the effects are negative, the tangible or intangible value is
also negative. For example, if consumers are willing to pay more for a generic product than for a
branded one, the brand is said to have negative brand equity. This might happen if a company
has a major product recall or causes a widely publicized environmental disaster.

Key Takeaways

Brand equity refers to a value premium that a company generates from a product with a
recognizable name when compared to a generic equivalent.

Brand equity has three basic components: consumer perception, negative or positive effects, and
the resulting value.

Often, companies in the same industry or sector compete on brand equity.

Examples of Brand Equity

A general example of a situation where brand equity is important is when a company wants to
expand its product line. If the brand's equity is positive, the company can increase the likelihood
that customers might buy its new product by associating the new product with an existing,
successful brand. For example, if Campbell's releases a new soup, the company is likely to keep
it under the same brand name rather than inventing a new brand. The positive associations that
customers already have with Campbell's make the new product more enticing than if the soup
has an unfamiliar brand name.

Brand Awareness:

Brand awareness is the level of consumer consciousness of a company. It measures a potential

customer’s ability to not only recognize a brand image, but to also associate it with a certain
company’s product or service.

Brand awareness is best spread through both inbound and outbound marketing efforts. When
competition in an industry is high, brand awareness can be one of a business’s greatest assets.

Why is brand awareness important:

With the vast amount of products options, having a differentiated message and an audience that
can distinguish a company’s brand from its competitors is crucial. It can mean the difference
between success and failure for a company.

Entire marketing campaigns can be constructed around promoting awareness of a brand.

Spreading brand awareness is especially important during a company’s first few years, when
they are trying to make a name for themselves.

When consumers are aware of the product a company offers, they will more likely go straight to
that company if they need that product, instead of researching other places that they can acquire
that product. Businesses with strong branding are viewed as accepted by the market. Therefore,
they are trusted more by consumers who are looking to purchase a new product.

 Brand awareness refers to the familiarity of consumers with a particular product or

service.

 A brand awareness campaign seeks to familiarize the public with a new or revised
product and differentiate it from the competition.

 Social media has become an important new tool in brand awareness marketing.

Perceived quality:

Perceived quality can be defined as the customer's perception of the overall quality or superiority
of a product or service with respect to its intended purpose, relative to alternatives. Perceived
quality is, first, a perception by customers. It thus differs from several related concepts, such as:

a) Actual or objective quality: the extent to which the product or service delivers superior service
b) Product-based quality: the nature and quantity of ingredients, features, or services included
c) Manufacturing quality: conformance to specification, the "zero defect" goal
Perceived quality cannot necessarily be objectively determined, in part because it is a perception
and also because judgments about what is important to customers are involved. An evaluation of
washing machines by a Consumer Report expert may be competent and unbiased, but it must
make judgments about the relative importance of features, cleaning action, types of clothes to be
washed, and so on that may not match those of all customers. After all, customers differ sharply
in their personalities, needs, and preferences.

Perceived quality is an intangible, overall feeling about a brand. How-ever, it usually will be
based on underlying dimensions which include characteristics of the products to which the brand
is attached such as reliability and performance. To understand perceived quality, the
identification and measurement of the underlying dimensions will be useful, but the perceived
quality itself is a summary, global construct.

DIMENSIONS OF PERCEIVED QUALITY: THE PRODUCT CONTEXT

1. Performance: How well does a washing machine clean clothes?

2. Features: Does a toothpaste have a convenient dispenser?
3. Conformance with specifications: What is the incidence of defects?
4. Reliability: Will the lawn mower work properly each time it is used?
5. Durability: How long will the lawn mower last?
6. Serviceability: Is the service system efficient, competent, and convenient?
7. Fit and finish: Does the product look and feel like a quality product?

DIMENSIONS OF PERCEIVED QUALITY: THE SERVICE CONTEXT

1. Tangibles: Do the physical facilities, equipment, and appearance of personnel imply quality?
2. Reliability: Will the accounting work be performed dependably and accurately?
3. Competence: Does the repair shop staff have the knowledge and skill to get the job done right?
Do they convey trust and confidence?
4. Responsiveness: Is the sales staff willing to help customers and provide prompt service?
5. Empathy: Does the bank provide caring, individualized attention to its customers?

What Is Perceived Value?

In marketing terminology, perceived value is the customers' evaluation of the merits of a product
or service and its ability to meet their needs and expectations, especially in comparison with its
peers.

Marketing professionals try to influence consumers' perceived value of a product by describing

the attributes that make it superior to the competition.

KEY TAKEAWAYS

 The marketing of a product or service involves attempting to influence its perceived

value.
  Perceived value is the customer's evaluation of the quality or desirability of a product
compared to its peers.

Perceived Value:

Perceived value comes down to the price the public is willing to pay for a good or service. Even
a snap decision made in a store aisle involves an analysis of a product's ability to fulfill a need
and provide satisfaction compared to other products under different brand names.

The work of the marketing professional is to enhance the perceived value of the brand they are
selling.

The pricing of products takes perceived value into consideration. In some cases, the price of a
product or service may have more to do with its emotional appeal than with the actual cost of
production.

Even a snap decision made in a store aisle involves an analysis of a product's perceived ability to
fulfill a need and provide satisfaction

A company's brand is meant to communicate a set of expectations associated with its products or
services. That's why a well-established brand can command a higher price than its generic
equivalents. Advil and Motrin both contain ibuprofen, but both brands are priced higher than
generic ibuprofen.

Luxury goods, however, carry the perception of value to another level with the addition of
prestige. The highest value of luxury goods is not associated with their utility but with the
prestige that owning and using it entails. The perceived value of a Rolex watch is not based on
its functionality but with its image as a mark of personal success and refined taste.

At the opposite end of the scale, some brands are marketed as smart bargains. The perceived
value of a product may be its low price in comparison with competitors of equal quality.
Lumingwang and Adam Finn (2013) presented new CBBE model which was extended with
uniqueness and BrandEmotions.

Past Brand
loyalty
Future Brand
Loyalty
Current Brand
Awareness

Current Brand
Associations

Customer Based
CurrentPerceived Band Equity
Quality

CurrentPerceived
value for theCost

Uniqueness Future price

premium

Brand Emotions

Figure 2. Luming Wang and Adam Finn (2013) CBBE Model.

 So this research is conducted basically customer based brand equity and survey method
is being put in practice in order to see customer perception regarding brand in order to
get benefit from brand equity and to see its impact onbusiness.

Research Methodology:

The research methodology will consist of both primary and secondary data. The analysis will be
done by the use of qualitative and quantitative approaches.
Sample size
In this survey, statistical population 100 taken and convenience sample method used to collect
the data which took 3 weeks to complete. Male and female respondents were included between
the ages of 18 to 40+. More specifically, the sample size of 100 people .
Data analysis of questionnaire
SPSS software was used to analyze data collected from questionnaire.

Findings
Age Wise Clarification of the Respondents:

AGE

Cumulative
Frequency Percent Valid Percent Percent

Valid 20 TO 25 28 28.0 28% 28%

26 TO 30 57 57.0 57% 85%

30 TO 35 11 11.0 11% 96%

36 TO 40 2 2.0 2% 98%

40+ 2 2.0 2% 100%

Total 100 100.0 100%

Analysis and Interpretation:
From the above table it is clear that, among 100% of respondents 28% of them are between 20- 25,
57% of them are between 26- 30,11% of them are between 30-35,2% of them are between 36-40 and
2% are them 40+ From this analysis it is clear that, out of 100 respondents, more number of
respondent are in the age of 26 to 30 who aware the brand equity.
Gender Wise Clarification of the Respondents:

GENDER

Cumulative
Frequency Percent Valid Percent Percent

Valid MALE 77 77.0 77% 77%

FEMAILE 23 23.0 23% 100%

Total 100 100.0 100%

Analysis and Interpretation:

From the above table it is clear that, among 100% of respondents 77% of them are MALE and 23%
of them FEMALE.

Occupation Wise Clarification of the Respondents:

OCCUPATION

Cumulative
Frequency Percent Valid Percent Percent

Valid STUDENT 19 19.0 19% 19%

EMPLOYED 60 60.0 60% 79%

OWN BUSINESS 16 16.0 16% 95%

UN-EMPLOYED 5 5.0 5% 100%

Total 100 100.0 100%

Analysis and Interpretation:

From the above table we can observe that among 100% of respondents 19% of them are STUDENT,
60% are EMPLOYED, 16% are doing OWN BUSINESS and only 5% of them are UN-
EMPLOYED. One can assume that most people who aware the brand is employed.
Factor Analysis:

KMO and Bartlett's Test

Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .895

Bartlett's Test of Sphericity Approx. Chi-Square 2748.326

df 105

Sig. .000

Communalities

Extraction

brandvalue1 .879
brandvalue2 .944
brandvalue3 .841
brandvalue4 .826
brandvalue5 .895
brandquality1 .919
brandquality2 .846
brandquality3 .955
brandquality4 .892
brandquality5 .874
brandaware1 .918
brandaware2 .852
brandaware3 .935
brandaware4 .941
brandaware5 .926

Extraction Method: Principal Component

Analysis.
 Component Matrix

Component

1 2 3

brandvalue1 .919
brandvalue2 .826
brandvalue3 .916
brandvalue4 .906
brandvalue5 .941
brandquality1 .783 .553
brandquality2 .875
brandquality3 .853
brandquality4 .914
brandquality5 .899
brandaware1 .851
brandaware2 .809
brandaware3 .871
brandaware4 .957
brandaware5 .962

Extraction Method: Principal Component Analysis.

a. 3 components extracted.

Rotated Component Matrix

Component

1 2 3

brandvalue1 .693
brandvalue2 .861
brandvalue3 .582 .522
brandvalue4 .604 .522
brandvalue5 .648 .528
brandquality1 .913
brandquality2 .644 .581
brandquality3 .843
brandquality4 .699 .518
brandquality5 .750
brandaware1 .865
brandaware2 .839
brandaware3 .860
brandaware4 .621 .651
brandaware5 .569 .574 .522

Extraction Method: Principal Component Analysis.

Rotation Method: Varma with Kaiser Normalization.
a. Rotation converged in 5 iterations.

Questionnaire result

Do you buy only branded product?

Particula No. of Respondents Percentage

r
Yes 74 74%
No 26 26%

Questionnaire provided these major findings, most of the respondents prefer to buy branded product
which is 74% is Yes and26% answer is No

Which of the following , according to you help build a good brand image?

Particula No. of Respondents Percentage

r
Quality 56 56%
competitive pricing 35 35%
competitive pricing 9 9%

Questionnaire provided these major findings, most of the respondents prefer to buy Quality product
which is 56%, the 35% answer is Competitive Pricing and 9% answer is Good Value Added
Service
Are you a price sensitive consumer?

Particula No. of Respondents Percentage

r
Yes 75 75%
No 25 25%

Questionnaire provided these major findings, most of the respondents prefer to Price is most
important which is 75% is Yes and25% answer is ‘No’

Where have you seen advertisements for Example Brand?

Particula No. of Respondents Percentage

r
Billboards 5 5%
Newspapers 20 19.8%
Online 40 39.6%
Tv 14 13.9%
Others 22 21.8%
Radio 0 0%

From the above table we can observe that among 100% of respondents 5% of respondents Billboard,
Newspapers 19.8% online 39.6% tv is 13.9% and orhers is 21.8% respondents.

The main reason to buy branded product is quality which does matter to customers, if new
companies/ organization look at the product quality wise then there is no way to stop reach on
success.

Finding andConclusion

Research has attempted to review brand and customer relation in order to use brand
equity to get benefit. Ultimately the goal of different branding technique is to increase
customer awareness which can be substantial pay offs for companies. The company’s
main focus should be on customer requirement and quality, In the case of Indian
customer they perceive brand with quality and value of money so business should
focus on quality. If local entrepreneur emphasis on quality then product itself will
 create awareness among customer and repeat sale will occur, which will generate
loyal customer and marketing cost eventually reduce. On the basis of the survey,
practical suggestion is that Consumer buy branded product when quality is important
to them. The Companies should do more advertisement than other means of publicity.
Like T.v advertisement create more awareness aboutbrand.

Perceived Brand Future Brand

Quality Loyalty

Perceived Value
of money

Customer Based Brand

Band Equity
Brand Loyalty

Brand Awareness
Future Price
Premium

Brand
Association

Validation of hypothesis
The constructed Hypothesis were validated as under
H- 01: All customers trust in branded product when quality is important to them.

H-02If quality is better, 56%% customer does not care about brand name they switch
to local product.if local companies give quality then customer likely to switch to
localbrand.
Originality/value

Companies, academicians talking about branding in theory but customer perception about
branding is the subject to identify whether customer buy just because of brand or any other
reason behind their purchase. On the other hand,what should do as entrepreneur of small size or
mid-size business to use brand as equity. Basically research addresses the benefits of branding
along with customer perception towards branding to unbranded products, where entrepreneur
need to know how to use branding strategy. In order to implement branded strategy without
failure, marketers have to reform the appropriate branding strategy which will generate greater
turnover thanexpected.

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https://www.investopedia.com/terms/b/brandequity.asp
https://perceivedquality.co/