Brand Equity


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another online presentation about brand equity

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Brand Equity

  1. 1. Brands & Brand Equity
  2. 2. Consumers buy products; they choose brands!
  3. 4. What is a brand? <ul><li>A brand is a name, term, sign, symbol, or design, </li></ul><ul><li>or a combination of them, </li></ul><ul><li>intended to identity the goods or services </li></ul><ul><li>of one seller or group of sellers </li></ul><ul><li>and to differentiate them from those of competitors </li></ul><ul><li>- American Marketing Association </li></ul>
  4. 5. What does a brand convey? <ul><li>A brand can convey up to 6 levels of meanings : </li></ul><ul><li>Attributes </li></ul><ul><li>Benefits </li></ul><ul><li>Values </li></ul><ul><li>Culture </li></ul><ul><li>Personality </li></ul><ul><li>User </li></ul>
  5. 6. Why brands? <ul><li>Brand signals the source of the product </li></ul><ul><li>Protects customer and producer from competitors who have identical products </li></ul><ul><li>Consumers form relationships with brands, not products or companies </li></ul><ul><li>Brand makes an emotional and trust-based connection with consumer and distinguishes it from competition </li></ul>
  6. 7. Why is branding critical? <ul><li>Brand loyalty is the foundation of business </li></ul><ul><li>Every purchase opportunity presents itself an excuse to change brands and shift loyalties </li></ul><ul><ul><li>Father buys cigarettes every day </li></ul></ul><ul><ul><li>Mother buys diapers every week </li></ul></ul><ul><ul><li>Family buys groceries every month </li></ul></ul><ul><li>Branding determines status quo vs. shift </li></ul>
  7. 8. Why is it hard to build brands? <ul><li>Proliferation of competitors </li></ul><ul><li>Pressure to compete on price </li></ul><ul><li>Fragmenting markets and media </li></ul><ul><li>Complex brand strategies and relationships </li></ul><ul><li>Bias towards changing strategies </li></ul><ul><li>Bias against innovation </li></ul><ul><li>Pressure to invest elsewhere </li></ul><ul><li>Short term pressures </li></ul>
  8. 9. Brand Equity
  9. 10. Brand equity <ul><li>Brand Equity is a set of assets linked to a brand’s name and symbol that adds to the value provided by a product or service to a firm and/or that firm’s customers </li></ul><ul><li>Brand Equity is a set of liabilities linked to a brand’s name and symbol that subtracts from the value provided by a product or service to a firm and/or that firm’s customers </li></ul>
  10. 11. Brand equity: Key aspects <ul><li>Brand equity is a set of assets </li></ul><ul><ul><li>Management of brand equity involves investment to create and enhance these assets </li></ul></ul><ul><li>Each brand equity asset creates value in a variety of very different ways </li></ul><ul><ul><li>It is imperative to be sensitive to the ways in which strong brands create value </li></ul></ul><ul><li>Brand equity creates value for customer and firm </li></ul><ul><li>For assets or liabilities to underlie brand equity, they must be linked to name/symbol of the brand </li></ul>
  11. 12. Value to the customer <ul><li>Brand equity assets can help customers interpret, process and store huge quantities of info about products / brands </li></ul><ul><li>It can affect customers’ confidence in purchase decision </li></ul><ul><ul><li>Due to past-use experience or familiarity with brand </li></ul></ul><ul><li>Both perceived quality and brand associations can enhance customers’ satisfaction with use experience </li></ul><ul><ul><li>Knowing brand is Arrow can can make user feel different </li></ul></ul>
  12. 13. Value to the firm <ul><li>Brand equity can enhance programmes to attract new customers or recapture old ones </li></ul><ul><li>Perceived quality, associations and known name provide reasons to buy & affect use satisfaction </li></ul><ul><li>Usually allows higher margins by permitting both premium pricing and reduced promotions </li></ul><ul><li>Can provide leverage in the distribution channel </li></ul><ul><li>Brand equity assets provide a competitive advantage that present a barrier to competitors </li></ul>
  13. 14. <ul><li>Tide : For extra-tough family laundry jobs </li></ul><ul><li>Cheer : Works in cold, warm or hot water </li></ul><ul><li>Gain : A detergent with fragrance </li></ul><ul><li>Bold : Includes fabric softener </li></ul><ul><li>Dash : Concentrated power </li></ul><ul><li>Dreft : For baby’s clothes </li></ul><ul><li>Oxydol : For sparkling whites </li></ul><ul><li>Era : Concentrated liquid detergent </li></ul><ul><li>Solo : Heavy duty, with a fabric softener </li></ul>
  14. 15. Major asset categories <ul><li>Brand name awareness </li></ul><ul><li>Perceived quality </li></ul><ul><li>Brand loyalty </li></ul><ul><li>Brand associations </li></ul>
  15. 16. Brand awareness <ul><li>A known devil is better than an unknown angel </li></ul><ul><li>Awareness refers to the strength of a brand’s presence in the consumer’s mind </li></ul><ul><li>Consumers instinctively prefer a brand that they have previously seen to one that is new to them </li></ul><ul><li>Familiar brand has an edge! </li></ul>
  16. 17. The awareness pyramid <ul><li>Dominant </li></ul><ul><li>Top of mind </li></ul><ul><li>Unaided awareness </li></ul><ul><li>Aided awareness </li></ul><ul><li>Unaware of the brand </li></ul>
  17. 18. Value of brand awareness <ul><li>Anchor to which other associations can be attached </li></ul><ul><li>Provides the brand a sense of familiarity </li></ul><ul><ul><li>Customers like the familiar </li></ul></ul><ul><li>Awareness can be a signal of presence, commitment and substance </li></ul><ul><li>Awareness gets brand into the consideration set </li></ul><ul><ul><li>Giving it a chance to get purchased! </li></ul></ul>
  18. 19. Perceived quality <ul><li>Perceived quality can be defined </li></ul><ul><li>as the customer’s perception of the overall quality </li></ul><ul><li>or superiority of a product or service </li></ul><ul><li>with respect to its intended purpose, </li></ul><ul><li>relative to alternatives </li></ul>
  19. 20. Perceived quality <ul><li>Perceived quality is an intangible and overall feeling about a brand </li></ul><ul><li>Perceived quality cannot necessarily be objectively determined because it is a perception </li></ul><ul><li>Perceived quality could be different for the corner store versus the department store </li></ul><ul><ul><li>Both are judged by a different set of criteria </li></ul></ul><ul><li>Perceived quality differs from satisfaction </li></ul><ul><ul><li>A positive attitude could be generated because a product of inferior quality is very inexpensive </li></ul></ul>
  20. 21. Perceived quality <ul><li>Perceived quality is a brand association, elevated to the status of a brand asset: </li></ul><ul><ul><li>Among all brand associations, only perceived quality has been shown to drive financial performance </li></ul></ul><ul><ul><li>Perceived quality is often a major strategic thrust of a business </li></ul></ul><ul><ul><li>Perceived quality is linked to and often drives other aspects of how a brand is perceived </li></ul></ul>
  21. 22. Perceived vs. actual quality <ul><li>Consumers may be overly influenced by a previous image of poor quality </li></ul><ul><li>A company may be achieving quality on dimension that consumers do not consider important </li></ul><ul><li>Consumers rarely have all the info necessary to make rational or objective judgment on quality </li></ul><ul><li>Consumers may not know how best to judge quality </li></ul><ul><ul><li>Maybe looking at wrong cues </li></ul></ul><ul><ul><li>Ex., when buying tyres </li></ul></ul>
  22. 23. Value generated by perceived quality <ul><li>In many contexts, perceived quality provides the pivotal reason to buy </li></ul><ul><li>Could differentiate and be a principal positioning characteristic of a brand </li></ul><ul><li>Provides the option of charging a premium price </li></ul><ul><li>Could be meaningful to channel members and thus aid in gaining distribution </li></ul>
  23. 24. Brand loyalty <ul><li>Brand loyalty, a central construct in marketing, is a measure of attachment that a customer has to a brand </li></ul><ul><li>It reflects how likely a customer will be to switch to another brand </li></ul><ul><ul><li>Especially when that brand makes a change, either in price or in product features </li></ul></ul><ul><li>It is one indicator of brand equity which is demonstrably linked to future profits </li></ul><ul><ul><li>Brand loyalty directly translates into future sales </li></ul></ul>
  24. 25. Brand loyalty <ul><li>A brand has value only in its potential to create loyal customers </li></ul><ul><li>It is simply much less costly to retain customers than to attract new ones </li></ul><ul><ul><li>‘ The Hindu’ </li></ul></ul><ul><li>Considering loyalty as an asset encourages and justifies loyalty-building programmes </li></ul><ul><ul><li>Which helps create / enhance brand equity </li></ul></ul>
  25. 26. The loyalty pyramid <ul><li>Committed </li></ul><ul><li>Fence Sitters </li></ul><ul><li>Considers it a friend </li></ul><ul><li>Passively Loyal </li></ul><ul><li>With switching costs </li></ul><ul><li>Satisfied / Habitual Buyer </li></ul><ul><li>No reason to change </li></ul><ul><li>Switchers / Price Sensitive </li></ul><ul><li>No brand loyalty </li></ul>
  26. 27. Strategic value of brand loyalty <ul><li>Brand loyalty reduces the marketing costs of doing business </li></ul><ul><li>It provides trade leverage </li></ul><ul><li>Helps attract new customers </li></ul><ul><li>Brand loyalty provides a firm with time to respond to competitive threats </li></ul>
  27. 28. Brand associations <ul><li>Brand equity is supported by associations that consumers make with a brand </li></ul><ul><li>Brand association is anything linked in memory to a brand </li></ul><ul><ul><li>Associations include product attributes, celebrity spokesperson and symbol </li></ul></ul><ul><li>Association not only exists but has level of strength </li></ul><ul><ul><li>A link to a brand will be stronger when it is based on many experiences or exposures to communications, rather than few </li></ul></ul><ul><ul><li>Will also be stronger when supported by a network of other links </li></ul></ul>
  28. 29. Types of associations <ul><li>Product attributes </li></ul><ul><li>Intangibles </li></ul><ul><li>Customer benefits </li></ul><ul><li>Relative price </li></ul><ul><li>Use / application </li></ul><ul><li>User / Customer </li></ul><ul><li>Celebrity / person </li></ul><ul><li>Lifestyle / personality </li></ul><ul><li>Product class </li></ul><ul><li>Competitors </li></ul><ul><li>Country / geographic area </li></ul>
  29. 30. Value of brand associations <ul><li>Brand associations helps process / retrieve info </li></ul><ul><li>An association can provide an important basis for differentiation </li></ul><ul><li>Many brand associations involve product attributes or customer benefits that provide specific reason to buy </li></ul><ul><li>Some associations are liked and stimulate positive feelings that get transferred to the brand </li></ul>