BADM 324 - Chapter 2 PP

CHAPTER 2
Enhancing
Brand Equity
and
Accountability
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posted to a publicly accessible website, in whole or in part.
Chapter Objectives
After reading this chapter you should be able to:

1. Explain the concept of brand equity from both the
company’s and the customer’s perspectives.
2. What are some of the positive outcomes that
result from enhancing brand equity?
3. Describe the different models of brand equity from
the customer’s perspective.
4. Understand how marcom efforts must influence
behavior and achieve financial accountability.
posted to a publicly accessible website, in whole or in part. 2
Are There Too Many Social Media Brands?
Which Brand is “Best”?
(Measures are important!)
1. Harris Interactive Poll (2400 adults) (discontinued in favor of #2)

• “Which three brands do you consider to be the best?”
• [2007 – Coca-Cola, Sony, Toyota]
2. Harris Interactive Brand Equity (EquiTrend) Study (40,000 adults)

• Familiarity, quality, and purchase considerations
• [2014 – Amazon, Apple, Android, Hershey’s Netflix, Pandora,…]
3. Interbrand’s “Best Global Brands”

• Brand sales as a % of total company sales
• Earnings (profits) for a brand
• NPV of the brand earnings, discounted by interest rates, risk, market leadership,
stability and global reach
• [2007 – Coca-Cola, Microsoft, IBM; 2014 – Apple, Google, Coca-Cola]
4. Young & Rubicam’s Brand Asset Valuator (700,000 adults)

• Brand strength: differentiation, relevance
• Brand stature: esteem, knowledge
Brand Defined
Brand: a name, term, sign, symbol, or design,

or a combination of them intended to identify
the goods and services of one seller or group of
sellers and to differentiate them from those of
the competition.
Definition of Brand Equity
Brand equity: the goodwill (equity)

that an established brand has built up
over its existence.
As Brand Equity Increases…
• A higher market share is achieved

• Brand loyalty increases
• Premium prices can be charged
• The brand earns a revenue premium
Revenue Premium
The revenue differential between a branded

item and a corresponding private-labeled item.
Revenue premium=
(volumeb)(priceb)-(volumepl)(pricepl)
Children’s Taste Preferences
Young & Rubicam’s “Brand Asset Valuator”
and Creating Strong Brands
• Methodology:
• Interviews with over 1,000,000 consumers
• 51 countries
• 45,000 brands
• 40 measurement scales
• “DREK” sequence (measures of brand equity):

• differentiation -> relevance -> esteem -> knowledge
• Power Grid:
• brand strength (differentiation, relevance)
• brand stature (esteem, knowledge)
• Brand Development Cycle
Figure 2.1: Power Grid and
Brand Development Cycle
Figure: 2.2: A Customer-Based Perspective
on Brand Equity
The Brand Awareness Pyramid
Brand Awareness
Figure 2.3: Brands and Their Management
The Brand Concept and Brand Concept
Management
• Brand concept: the specific meaning that brand
managers create and communicate to the target
market.
• this is accomplished by appeals to functional, symbolic,
and experiential needs
• Brand concept management: the analysis,
planning, implementation, and control of a brand
concept throughout the life of a brand.
How Brand Concepts Can Be Developed:
• Functional needs (solving problems): products that

attempt to fulfill the consumer’s consumption-
related problems
• Symbolic needs (associating the brand with
symbolic objects): directed at consumers’ desire for
self-enhancement, role position, group
membership, and belongingness
• Experiential needs (sensory pleasures, personal
experience): products that provide sensory
pleasure, variety, and/or cognitive stimulation.
An Appeal to Functional Needs
An Appeal to Symbolic Needs
An Appeal to Experiential Needs
Dimensions of Brand Personalities
• Sincerity (e.g., Disney)

• Excitement (e.g., Hummer)
• Competence (e.g., Toyota)
• Sophistication (e.g., Rolex, Cartier)
• Ruggedness (e.g., Timberland boots)
Illustration of a Sincere Brand
Illustration of What Was Once an Exciting
Brand
Illustration of a Sophisticated Brand
Illustration of a Rugged Brand
Three General Ways Brand Equity is Enhanced
• Allow brand to speak-for-itself

• Create message-driven associations
• Leveraging current meanings or
associations
Figure 2.5: Leveraging Brand Meaning from
Various Sources
Co-branding and Ingredient Branding
• Co-branding
• A partnership between two brands
• Ingredient branding
• Inclusion of one brand within the other
Gore-Tex
What Benefits Result from Enhancing Brand
Equity?
• Increased consumer loyalty

• Long-term growth and profitability for the
brand
• Maintain brand differentiation from
competitive offerings
• Insulate brand from price competition
Measuring World-Class Brands
Measuring World-Class Brands (slide 1 of 2)
Quality: score ranging from 0 to 10 (unacceptable/

poor to outstanding/ extraordinary)
Salience: score ranging from 0 to 100 (percentage of

people who feel sufficiently well informed about a
brand to rate it)
Equity: score ranging from 0 to 100 (determined by

multiplying the quality and salience scores and
dividing the product by 10)
Interbrand’s Top 20 Global Brands (2015)
Affecting Behavior and Achieving Marcom
Accountability
• Creating brand awareness and boosting

brand image serve little positive effect
unless individuals make purchases or
engage in some other form of desired
behavior.
ROMI
• The effect of marcom, or of its specific elements

such as advertising, can be gauged in terms of
whether it generates a reasonable revenue return
on the marcom investment.
• In marketing, return on investment is called return
on marketing investment (ROMI)
• (In accounting, ROI = net income/avg. O.E.)
Difficulty of Measuring Marcom
Effectiveness
• Choosing a Metric
• Gaining
Agreement
• Collecting
Accurate Data
• Calibrating
Special Effects
Choosing a Metric
• Change in brand awareness

• Improved consumer attitude toward the
brand
• Increased purchase intentions
• Larger sales volume (e.g., via scanner data;
marketing mix models)
Gaining Agreement
Marketing Marketing
Departments’ Departments’
Measures of Success: Measures of Success:
• Discounted cash flows • Measures of brand

• Net present values of awareness, image,
investment decisions equity, sales, …
Collecting Accurate Data and Calibrating
Special Effects
• What exact sales figures should be used to

calculate sales?
• How much relative effect does each program

element have on sales volume compared to the
effect of other elements?
Marketing-Mix Modeling – Example

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CHAPTER 2

After reading this chapter you should be able to:

1. Harris Interactive Poll (2400 adults) (discontinued in favor of #2)

2. Harris Interactive Brand Equity (EquiTrend) Study (40,000 adults)

3. Interbrand’s “Best Global Brands”

4. Young & Rubicam’s Brand Asset Valuator (700,000 adults)

Brand: a name, term, sign, symbol, or design,

Brand equity: the goodwill (equity)

• A higher market share is achieved

The revenue differential between a branded

• “DREK” sequence (measures of brand equity):

• Functional needs (solving problems): products that

• Sincerity (e.g., Disney)

• Allow brand to speak-for-itself

• Increased consumer loyalty

Quality: score ranging from 0 to 10 (unacceptable/

Salience: score ranging from 0 to 100 (percentage of

Equity: score ranging from 0 to 100 (determined by

• Creating brand awareness and boosting

• The effect of marcom, or of its specific elements

• Change in brand awareness

• Discounted cash flows • Measures of brand

• What exact sales figures should be used to

• How much relative effect does each program

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