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Brand Equity

A brand is a name or symbol used to identify the source of a product. When developing a new product, branding is an important decision. The brand can add significant value when it is well recognized and has positive associations in the mind of the consumer. This concept is referred to as brand equity. What is Brand Equity? Brand equity is an intangible asset that depends on associations made by the consumer. There are at least three perspectives from which to view brand equity:

Financial - One way to measure brand equity is to determine the price premium that a brand commands over a generic product. For example, if consumers are willing to pay $100 more for a branded television over the same unbranded television, this premium provides important information about the value of the brand. However, expenses such as promotional costs must be taken into account when using this method to measure brand equity. Brand extensions - A successful brand can be used as a platform to launch related products. The benefits of brand extensions are the leveraging of existing brand awareness thus reducing advertising expenditures, and a lower risk from the perspective of the consumer. Furthermore, appropriate brand extensions can enhance the core brand. However, the value of brand extensions is more difficult to quantify than are direct financial measures of brand equity. Consumer-based - A strong brand increases the consumer's attitude strength toward the product associated with the brand. Attitude strength is built by experience with a product. This importance of actual experience by the customer implies that trial samples are more effective than advertising in the early stages of building a strong brand. The consumer's awareness and associations lead to perceived quality, inferred attributes, and eventually, brand loyalty.

Strong brand equity provides the following benefits:

Facilitates a more predictable income stream. Increases cash flow by increasing market share, reducing promotional costs, and allowing premium pricing. Brand equity is an asset that can be sold or leased.

However, brand equity is not always positive in value. Some brands acquire a bad reputation that results in negative brand equity. Negative brand equity can be measured by surveys in which consumers indicate that a discount is needed to purchase the brand over a generic product. Building and Managing Brand Equity In his 1989 paper, Managing Brand Equity, Peter H. Farquhar outlined the following three stages that are required in order to build a strong brand:

1. Introduction - introduce a quality product with the strategy of using the brand as a platform from which to launch future products. A positive evaluation by the consumer is important. 2. Elaboration - make the brand easy to remember and develop repeat usage. There should be accessible brand attitude, that is, the consumer should easily remember his or her positive evaluation of the brand. 3. Fortification - the brand should carry a consistent image over time to reinforce its place in the consumer's mind and develop a special relationship with the consumer. Brand extensions can further fortify the brand, but only with related products having a perceived fit in the mind of the consumer. Alternative Means to Brand Equity Building brand equity requires a significant effort, and some companies use alternative means of achieving the benefits of a strong brand. For example, brand equity can be borrowed by extending the brand name to a line of products in the same product category or even to other categories. In some cases, especially when there is a perceptual connection between the products, such extensions are successful. In other cases, the extensions are unsuccessful and can dilute the original brand equity. Brand equity also can be "bought" by licensing the use of a strong brand for a new product. As in line extensions by the same company, the success of brand licensing is not guaranteed and must be analyzed carefully for appropriateness. Managing Multiple Brands Different companies have opted for different brand strategies for multiple products. These strategies are:

Single brand identity - a separate brand for each product. For example, in laundry detergents Procter & Gamble offers uniquely positioned brands such as Tide, Cheer, Bold, etc. Umbrella - all products under the same brand. For example, Sony offers many different product categories under its brand. Multi-brand categories - Different brands for different product categories. Campbell Soup Company uses Campbell's for soups, Pepperidge Farm for baked goods, and V8 for juices. Family of names - Different brands having a common name stem. Nestle uses Nescafe, Nesquik, and Nestea for beverages.

Brand equity is an important factor in multi-product branding strategies.

Brand recall
Brand Recall is the extent to which a brand name is recalled as a member of a brand, product or service class, as distinct from brand recognition. Common market research usage is that pure brand recall requires "unaided recall". For example a respondent may be asked to recall the names of any cars he may know, or any whisky brands he may know.

Some researchers divide recall into both "unaided" and "aided" recall. "Aided recall" measures the extent to which a brand name is remembered when the actual brand name is prompted. An example of such a question is "Do you know of the "Honda" brand?" In terms of brand exposure, companies want to look for high levels of unaided recall in relation to their competitors. The first recalled brand name (often called "top of mind") has a distinct competitive advantage in brand space, as it has the first chance of evaluation for purchase.

[edit] Brand Recognition

Brand Recognition is the extent to which a brand is recognized for stated brand attributes, parts, offerings, or communications. In some cases brand recognition is defined as aided recall - and as a subset of brand recall. In this case, brand recognition is the extent to which a brand name is recognized when prompted with the actual name. A broader view of brand recognition is the extent to which a brand is recognized within a product class for certain attributes. Logo and tagline testing can be seen as a form of brand recognition testing. For example, if a product name can be associated with a certain tagline, logo or attribute (safety and Volvo; "Just do it" - Nike) a certain level of brand recognition is present.

Definition of 'Brand Potential Index (BPI)'

The correlation between a given brand's market development index and its brand development index for a specific market or geographic area. The Brand Potential Index (BPI) compares actual and potential customers within a market area to the percentage of consumers within a geographic area in the United States who buy a product compared to the percentage of all consumers in the entire United States who buy the same product. It is always calculated for a limited geographic region.

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Definition of 'Brand Personality'

A set of human characteristics that are attributed to a brand name. A brand personality is something to which the consumer can relate, and an effective brand will increase its brand equity by having a consistent set of traits. This is the added-value that a brand gains, aside from its functional benefits. There are five main types of brand personalities: excitement, sincerity, ruggedness, competence and sophistication.

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Definition of 'Brand Piracy'

When a product is named similarly to a well-known brand so that consumers may mistake it for the actual brand-name. Brand piracy is common among products that can easily be replicated. The copies often have logos that resemble the design of the genuine product, be it layout, symbols,

color or font. Oftentimes, this is done on purpose by a company to mislead consumers and gain some market share.

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Definition of 'Brand Loyalty'

When consumers become committed to your brand and make repeat purchases over time. Brand loyalty is a result of consumer behavior and is affected by a persons preferences. Loyal customers will consistently purchase products from their preferred brands, regardless of convenience or price. Companies will often use different marketing strategies to cultivate loyal customers, be it is through loyalty programs (i.e. rewards programs) or trials and incentives (ex. samples and free gifts).

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Definition of 'Brand Identity'

How a business wants a brand's name, communication style, logo and other visual elements to be perceived by consumers. The components of the brand are created by the business itself, making brand identity the way in which a business wants consumers to perceive its brands, not necessarily how it is actually perceived.

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Definition of 'Brand Extension'

A common method of launching a new product by using an existing brand name on a new product in a different category. A company using brand extension hopes to leverage its existing customer base and brand loyalty to increase its profits with a new product offering. For brand extension to be successful, there usually must be some logical association between the original product and the new one. A weak or nonexistent association can result in brand dilution. Also, if a brand extension is unsuccessful, it can harm the parent brand.

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Brand Value
People are willing to pay more for a brand than a product. Brand value is the extra money a company can make from its products solely because of its brand name. As an example, how much more is a consumer willing to pay for a coffee at Starbucks as opposed to a coffee at a fast-food restaurant? Pepsi

Brand Extensions Beware

Brand extensions, or line extensions, describe the common business practice of using your brand name on a new product or service or new varieties or sizesusually within the same category. More than half of all new brands brought to market each year are brand extensions. So, for instance, when Pepsi wants to market a diet cola, it extends its brand equity everything that has gone into building the brand that is the Pepsi generationinto the product called Diet Pepsi.
So why the beware in the title? Because brand extensions are not always logical or smart. Sometimes they can be just plain confusingeven if the brand name is extended into the same category. Recently, PepsiCo introduced a new no-calorie soda and called it Pepsi One. But what is Pepsi One? Does it have just one calorie? No it has none. How is it different from Diet Pepsi? Its sweetened with Splenda, but most consumers dont know that. Its no surprise then, that Diet Pepsi outsells Pepsi One by a 10-to-1 margin. Number one-selling Coca-Cola made a similar market move, presumably to stay in parity with its rival, and released Coke Zero. Its not difficult to predict similarly disappointing sales for Coke Zero.

Conversely, both Coke and Pepsi entered the lucrative and high profit-margin bottled water business with smart brand extensions: Cokes Dasani brand and Pepsis Aquafina. Can you imagine the disastrous results if they had called their products Coke Water or Pepsi Water? Yuck.

Brand Equity: Coke vs. Pepsi

All that said, we still dont know the answer: who has the most brand equity? Coke or Pepsi? If theres one thing Ive learned over the years while working at Zoom Creates, its that doing

a rebrand is a big deal. If the company we are rebranding has any brand equity at all, it will be important to keep some elements of the original brand in order to maintain familiarity. Taking a brand that is easily recognized and people feel comfortable with and rebranding to the point of no recognition at all would most certainly be a bad move. Look at the similarities among all rebrands over the years for both Coke and Pepsi [see image at right]. By comparing the timeline of each brand, it is clear that Coke has held tighter to its original concept that Pepsi has, but whether or not that directly affects the sales is unclear. What is clear, however, is that by looking at the chart, we are seeing two entirely different branding strategies: Pepsi has been changed significantly over the years, possibly to keep up with the times or to keep the look fresh and youthful. Coke, on the other hand, has made itty bitty changes spanning decades and the mark today is strikingly similar to what it was in 1887. I can only speak for myself when I say that I have more respect for the Coca-cola brand. It strikes me as stable and unchanging through recessions, wars, times of peace, president after president. To look at the evolution of the Pepsi logo gives me the feeling that the mark is lost and even after more than 200 years is still searching to find itself. While I admire their ongoing efforts, I feel like shouting, just PICK ONE already!. Feel free to leave your opinionated comments below if you are compelled to do so. How do you feel about the strategies of each brand? Do you think it has helped them over the years or not? Which strategy do you feel is most effective?

Brand Recognition
Pepsi is also a well known brand, and although they have changed their brand design numerous times over the years, the brand name has remain unchanged. The more consistent you are with your branding, the more familiar it will be to consumers over time. For email marketers, your email brand is that which appears in the From field to identify yourself as a sender. When a recipient recognizes the sender identity, they are more likely to read your message. Of course, you might have specific product or service brand designs inside your message, but the sender identity is the first thing that represents you to your recipients. Keeping that brand consistent will foster awareness over time.

Brand identity prism with pepsi as an example

Pepsis brand identity has transformed over the years, but primarily it has remained as a youthful brand which empowers people to enjoy their youth. The external and internal indicators of Brand Identity have been modified many times. Its logo, trademark, etc have undergone many changes over time but the distinct identity of Pepsi has been maintained. We also see a consistency in brand positioning for Pepsi as a Youth oriented brand. Its tagline in India YEH HAI YOUNGISTAN MERI JAAN exemplifies that essence. Pepsis brand identity using Kapferers Identity prism is as follows

Sources of Brand Equity Pepsis primary sources of brand equity are derived from its unique name with an American connotation to it. Its logo, a sphere with 3 different colors aids brand recall. The brand endorsers over the years, starting from Shahrukh khan, Sachin Tendulkar to Ranbir Kapoor, M.S Dhoni have been a major source of equity for the brand. The brand has always looked for young faces in order to relate with its youth target audience . Pepsi also drives it equity from its rival coke (which is the market leader with nearly 70% market share) as its only global competitor primarily through creative advertising and communication strategy. Another source of Pepsis Brand Equity is the huge consumer base of more than 200 million across the world. Pepsicos Indian Subsidiary is trying to follow on its footsteps and is

planning to tap the next 1 billion consumers at the bottom of the pyramid with its exclusive offerings like Iron chusti and Gluco+ . Its innovative Campaigns are also a predominant source of Pepsis Brand Equity in India. Several campaigns like Youngistaan ka Wow targeted at Youth and celebrating their audacious self belief, thus bringing the brand closer to its Customers, The Game, a series of five gaming-based television films developed specially for the ongoing IPL season, Change the Game and First Ball ka Kaptan considering the cricket world cup and T-20 world cup have been successful in leveraging the love for the game and reinforce the association of the game with Pepsi. The CSR activities of the company also generate a lot of Brand equity, Its the only soft drink manufacturer with a positive water balance in India. Pepsis wide Product Portfolio helps in increasing the depth and Breadth of Brand Awareness.

Pepsi Redesign

Pepsi's Brand Personality

Think back a while and you'll probably remember that Pepsi underwent sort of a brand personality overhaul. They created a new logo (one that smiles at you) and launched their groundbreaking Joy It Forward campaign. Pepsi had always portrayed themselves as hip and youthful but the brand wasn't really involved in things that were hip and youthful, until the Joy campaign. They aligned themselves with social and environmental programs and recently they have launched the Pepsi Refresh project giving away over 1 million dollars in grants to fund great ideas that will move the world forward.

Ranbir replaces SRK as Pepsi brand ambassador

How to Protect Brands From Piracy

Brand piracy is the counterfeiting of a retail product by the production and sale of a product that uses a confusingly similar name, logo, masthead, or other phrases or images to confuse the consumer. A number of legal and practical steps can be taken to help protect a company's brands from this piracy. By utilizing these techniques a company can help protect its brands from being diluted by sales of similar, but inferior counterfeit consumer products. Read more: How to Protect Brands From Piracy | Properly organize and trademark the company name. A company always should be formally incorporated or organized as a limited liability company. However, in many cases, the name of the company also should be trademarked. For example, Google is a corporation organized in the state of Delaware. At the same time, the word Google is a registered trademark of Google Inc. By both incorporating and trademarking the name, the founders of Google were able to gain the most legal protection for this very important brand. 2 Trademark the corporate logos and other distinctive images that help the business and its products stand out. These marks should include the logos and images used on company letterhead and other marketing materials such as brochures and websites. Sponsored Links

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3 Trademark all derivatives of the company name and its products. For example, Pepsi has trademarked the names and logos of products such as Pepsi Next, Pepsi Vanilla, Cherry Pepsi and so on. Before going into a new market or introducing a new product, thoroughly research the prospective name or names and secure their protection. 4 Register the appropriate domain names that you are currently using and that you might use in the future. Before entering a new market or introducing a new product, thoroughly research and register any prospective new domain names. 5 File a complaint with the federal government. The federal government has set up a special agency and website to coordinate efforts to protect companies and consumers from brand piracy. If you and/or your company have been the victim of brand piracy, it is important to

file a complaint with the federal government. A link to the brand piracy website can be found in the Resources section.

Read more: How to Protect Brands From Piracy |