Brand equity

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Lesson # 7
BRAND EQUITY
Subtitle
Subject:
BRAND BUILDING
Faculty Name:
Vishal Desai
Batch
(BMM class of 2015)
Year (TY)
India’s premier M-school
Deviprasad Goenka Management College of Media Studies (dgmcms.org.in)

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Concept:
 Brand equity is the value of the brand in the marketplace
 A brand with high equity - brand has the ability to create some sort of
positive differential responses in the marketplace
 This can mean that:
• A brand is easily recognizable when encountered in advertising or
seen on a yard sign
• A brand is one of the first ones recalled when a relevant prompt is
used
• Individuals would be willing to pay a premium price for a brand’s
offering
• When someone asks for referral, the brand is the first one that is
recommended

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Brand equity defined:
 Brands, if managed well, add value to the product
 The value, as perceived by the customers is important as it impacts
the customer’s evaluation of the brand
 Definitions
• (Marketing Science Institute 1988, cited in Chay 1991)
‘Brand equity is the set of associations and behaviors on the part of
a brand’s customers, channel members and the parent corporation
that permits the brand to earn greater volume or greater margins
than it could without the brand name, and that gives the brand a
strong, sustainable and differential advantage over competitors’

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• (Biel 1992)
‘Brand equity can be thought of as the additional cash flow achieved
by associating a brand with the underlying product or services’
• (Aaker 1991)
‘Brand equity is a set of brand assets and liabilities linked to a
brand, its name and symbol, that adds value to or subtracts from the
value provided by a product or service to a firm and /or to that
firm’s customers’
• (Keller 2004)
defines brand equity from the customer’s perspective as ‘the
differential effect the brand knowledge has on consumer response to
the marketing of that brand’

+ HOW BRAND EQUITY GENERATES VALUE:

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Providing value to the Customer:
 Brand equity assets generally add or subtract value for customers
 Help them interpret and store huge quantities of information about the
product and the brands
 Also affect customer’s confidence about the purchase decision
 Both perceived qualities and brand associations can enhance
customer’s satisfaction with the use experience
 For example:
Knowing a piece of work came from Rolex can affect the
experience of wearing it: the user can actually feel different

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Providing value to the firm:
 Brand equity has the potential to add value to the firm by generating
marginal cash flow in at least half dozen ways
 First
• It can enhance programs to attract new customers or recapture old
ones
 Second
• The perceived quality, the associations and a well-known name can
provide reasons to buy and can affect use satisfaction

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• Enhanced brand loyalty is especially important in buying time to
respond when competitors innovate and obtain product advantage
 Third
• Brand equity will usually allow higher margins by permitting both
premium pricing and reduced reliance upon promotions
• In many contexts, the element of brand equity serves to support
premium pricing
• A brand with a disadvantage in brand equity- invests more in
promotions just to maintain its position in distribution channel

+  Fourth
• Brand equity can provide a platform for growth via brand-extension
s.
• For example:
Park Avenue- (Shirts, Shaving cream, Jeans, Perfumes, Soap
& Razors). It would have been much more expensive to extend
into several products without Park Avenue name
 Fifth
• Brand equity can provide leverage in the distribution channel; the
trade has less uncertainty dealing with a proven brand name
• A strong brand name will have an edge in gaining both shelf facing
and cooperation in implementing marketing programs

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 Sixth
• Brand equity assets provide a competitive advantage that often
presents a real barrier to competitors
• For example:
Tide – detergent for tough family laundry jobs may preempt an
attribute that is important for a given segment. Another brand
would find it difficult to compete with Tide for the ‘tough
cleaning job’ segment

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MAJOR BRAND ASSET
CATEGORIES:
BRAND EQUITY
BRAND
AWARENESS
PERCEIVED
QUALITY
BRAND
ASSOCIATIONS
BRAND
LOYALTY

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BRAND AWARNESS:
 The Brand awareness is the 1st critical condition for achieving brand
success
It includes
 Brand recognition - it is the ability to confirm to prior exposures (Yes,
I have seen it earlier)
 Brand recall – it is the ability to remember the brand when the
product category is thought about
 Top of the mind recall

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The Brand Awareness Pyramid:
Dominant in the mind
(Colgate)
Top of the mind
(Pepsodent, Close up)
Brand Recall
(Babool, Sensodyne)
Brand Recognition
(Anchor, Meswak, Binaca)
Unaware of the brand
(Crest, Mentadent)

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Brand Recognition:
 It is at the bottom level of the pyramid
 When a person is able to confirm the prior exposure, the brand is said
to have been recognized
 It is particularly important under low involvement buying situations,
especially when decision is taken stores or at the point of purchase
 Recognition means some sense of familiarity which sometimes is
sufficient in choice decision
 In brand recognition test, ability of the consumers to identify the
brand elements is tested
 That is, upon seeing the brand elements like- name, packaging,
symbol, etc

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Brand Recall:
 A more rigorous test of brand awareness is brand recall
 Recall related to the ability of the customer or prospect to retrieve the
brand from memory
 Brand recall may be tested in two forms:
• Aided recall
• Unaided recall

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Brand Recall: A Hypothetical Exercise:
 Unaided Recall:
• What all brands names come to your mind when you think of
detergents?
---- Surf, Nirma, Ariel
 Aided Recall:
• Mention the detergent brands which come in blue color (product
attribute) ----
Surf, Rin, Henko, Fena
• Mention the detergent brands which are the soak and rinse type
(usage form)
---- Surf, Ariel

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• Mention the detergent brands which are bought in large quantities
(quantity of purchase)
---- Surf, Nirma, Fena, Wheel
• Mention the detergent brands which are to be given to the
servant/maid for washing purpose(usage situation)
---- Nirma, Fena, Wheel
• Mention the detergent brands which are effective in stain removal
(motivation) -
--- Surf, Ariel
• Mention the detergent brands which are good for washing woolens
(applications) ----
Ezee, Genteel

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 The above examples reveal that Surf, Nirma, and Ariel are the three
strongly entrenched brands (because of unaided recall)
 Surf enjoys the greatest breadth (on variety of situations it is recalled)

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Top of the Mind Recall:
 A higher level of awareness is Top of the mind recall
 It indicates the relative superiority a brand enjoys over others
 Sometimes a brand is able to achieve such a dominant position that it
becomes the only recalled brand in the product category
 For example:
• Toothpaste – Colgate
• Vanaspati – Dalda
• Adhesive bandage – Band Aid
• Liquid antiseptic – Dettol

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 Such brands are called the ‘Dominant Brands’ in that product
category
 A dominant position prevents other brands from getting into the
consumers mind and be considered while making a purchase

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Graveyard Model:

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 The relative power of recall versus recognition is shown in the figure
which depicts the “Graveyard Model”
 Developed by Young & Rubicam Europe under the guidance of Jim
William
 In this model, brands in a product class are plotted on recognition
versus recall graph
 One finding consistent across dozens of product classes – brand tends
to follow the “curved line”

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 There are two exceptions, each of which reveals the importance of
recall
1)Healthy Niche brands
• Falls below the line because they are not known to a substantial
group of consumers
• Therefore they have relatively low recognition
• But they do have a high recall among their respective loyal customers
• Thus their low recognition is not necessarily an indication of their
poor performance
• Healthy niche players sometimes have the potential to expand
recognition and thus the scope of their customer base

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2)Graveyard:
• An area in the upper left hand corner populated by brands with high
recognition but low recall
• Being in the graveyard can be deadly: Customers know about the
brand, but will not come to the mind when considering a purchase

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 One point of graveyard model is that high recognition is not
necessarily the mark of a strong brand – it is associated weak ones as
well
 The dynamics of the brands located in the upper-middle or upper-right
part of the figure can be important predictors of the future brand
health
 Moving toward the graveyard is associated with sliding sales and
market share
 Moving away from Graveyard indicates that brand’s sales and market
share may increase
 Thus Graveyard model provides evidence that recall is as important as
recognition

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PERCEIVED QUALITY:
 According to Aaker (1991), the quality of the brand as perceived by
the customers also leads to brand equity
 If the perceived quality is high, it will lead to ‘price premium, price
elasticity, and brand usage’ and it will be available across the product
classes though the importance may vary
 “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”
 Perceived quality cannot necessarily be objectively determined,
because it is a perception and also because judgments about what is
important to the customers are involved

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• Perceived quality is an intangible, overall feeling about a brand
• Perceived quality refers to the customer’s perception about the total
quality of the brand
• While evaluating quality the customer takes into account the brands
performance on factors that are significant to him and makes a
relative analysis about the brand’s quality by evaluating the
competitor’s brand also
• Perceived quality affects the pricing decisions of the organizations
• Superior quality products can be charged a price premium
• Perceived quality gives the customer a reason to buy the product
• It also captures the channel member’s interest

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 For example:
Starbucks can sell its coffee at a higher price than solid market
competitors because consumers associate the brand with quality
and value

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BRAND ASSSOCIATIONS:
 Brand association is anything which is deeply seated in the
customer’s mind about the brand
 Brand should be associated with something positive so that the
customer relate your brand to being positive
 Brand associations are the attributes of a brand which comes into the
consumers mind when the brand is talked about
 Brand association can also be defined as the degree to which a
specific product/service is recognized within its class or category

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 While choosing a brand name, it is essential that the name chosen
should reinforce an important attribute or benefit association that
forms its product positioning
 For example
Big Bazaar – associations like ‘value for money’, ‘variety of
products’, ‘fashion trends for the youth’,etc come to mind

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 Brand associations are formed on the following basis:
• Customers contact with the organization and its employees
• Advertisements
• Word of mouth publicity
• Price at which brand is sold
• Celebrity/big entity association
• Quality of the product
• Products and schemes offered by competitors
• Product class/category to which the brand belongs
• POP (point of purchase), display, etc

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 Brand associations are not benefits, but are images and symbols
associated with a brand or a brand benefit
 For example:
• Nike swoosh
• Nokia sound
• Lux – film stars
• Pepsi – blue color
• Britania – ting –ting-ta-ding

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 Associations are not “reasons –to – buy” but provide acquaintance
and differentiation that’s not replicable
For example:
• Hyatt hotel – luxury and comfort
• BMW – sophistication, fun driving, superior engineering
Most popular brand associations are with the owners of the brand
 For example:
• Bill Gates – Microsoft
• Reliance – Dhirubhai Ambani

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 Positive brand associations are developed if the product which the
brand depicts is durable, marketable, and desirable
 The customer must be persuaded that the brand possess the features
and attributes satisfying their needs
 A positive brand association helps an organization to gain goodwill,
and obstruct the competitors entry into the market

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BRAND LOYALTY:
 The importance of the brand loyalty as a construct of brand equity has
been delineated by Aaker (1991), who treated it as a behavioral
dimension
 However, brand loyalty as an attitudinal dimension has also been
identified and defined
As ‘the tendency to be loyal to a focal brand , which is demonstrated
by the intention to buy the brand as the primary choice’
 Thus, if the consumer has the tendency to buy the brand again and
again it will lead to brand equity

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 The advantages of the brand loyalist are that
• they ‘represent barriers to the entry for competitors
• are a basis for price premium
• time to respond to the competitors innovations
• and a barricade against deleterious price competition
 Loyalty is of sufficient importance than other measures

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 Three levels of loyalty have been identified (Gremler and Brown
1996)
• Behavioral loyalty
(purchase repeatedly)
• Attitudinal loyalty
(customer feels some devotion to the brand and prefers the brand)
• Cognitive loyalty
(brand name comes at top -of - mind recall and consumer’s first
choice whenever purchase decision arise)

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 Brand loyalty is a measure of the attachments that a customer has to a
brand
 It reflects how likely a customer will be to able switch to another
brand, especially when that brand makes change – in price or feature
 It is one indicator of brand equity, which demonstrably links to future
profit, since brand loyalty directly translates into future sales

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Loyalty pyramid:
Committed
Buyer
Likes the Brand-
Consider it a friend
Satisfied Buyer with Switching Costs
Satisfied/Habitual Buyer-No reason to change
Switchers/Price Sensitive Indifferent - No Brand Loyalty

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 The bottom level
• The non-loyal buyer who is completely indifferent to the brand
• Each brand is perceived to be adequate and the brand name plays little
role in the purchase decision
• Whatever is on sale or convenient is preferred
• These buyers might be termed as switcher or price buyers

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 The second level:
• Includes buyers who are satisfied with the product or at least not
dissatisfied
• These buyers might be termed as habitual buyers
• However, they can be difficult to reach since there is no reason for
them to be on the outlook for alternatives

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 The third level:
• Consist of those who are also satisfied and in addition, have switching
cost-cost in time, money, or performance risk associated with
switching
• Perhaps they have invested in learning a system associated with a
brand. Eg: Machinery,Tractors,Chemicals,etc
• Or perhaps there is a risk that another brand may not function well in
a particular use context
• To attract these buyers, competitors need to overcome the switching
cost by offering an inducement to switch or by offering a benefit large
enough to compensate
• This group may be called switching - cost loyal

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 The fourth level:
• Those who truly like the brand
• Their preferences may be based upon an association, a set of use
experience or a high perceived quality
• However, liking is often general feeling that cannot be closely traced
to anything specific; it has a life of its own
• The group might be termed as friends of the brand because there is an
emotional feeling attachment

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 The top level:
• Committed customers
• They have pride of discovering and/or being users of a brand
• The brand is very important to them either functionally or as an
expression of who they are
• Their confidence is such that they will recommend the brand to others

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 These five levels are stylized, they do not always appear in the pure
form and more levels could be conceptualized
 These five levels do, however signify the various forms that loyalty
can take and how it impacts upon brand equity

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BRAND EQUITY MEASUREMENT
SYSEMS:
 Every organization has to measure their brand strength from time to
time to judge their brand equity
 The four most used methods are:
• Brand Equity Ten
• The Young & Rubicam’s Brand Asset Evaluator (BAV)
• Total Research’s Equity Trend
• The Interbrand Model

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The Brand Equity Ten:
 The ten measures nominated are grouped into five categories
 The first four represent customer perception of the brand along with
four dimensions of brand equity
 The fifth includes two sets of market behavior measures that represent
market – based information rather than information directly from
customers

+  Loyalty Measures
- Price Premiun
- Satisfaction/Loyalty
 Perceived Quality / Leadership Measures
- Perceived Quality
- Leadership/Popularity
 Associations/Differentiation Measures
- Perceived Value
- Brand Personality
- Organisational Associations
 Awareness Measures
- Brand Awareness
 Market Behaviour Measures
- Market Share
- Market Prices and Distribution Coverage

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Loyalty Measures:
1)Price Premium
 A basic indicator of loyalty is the amount a customer will pay for the
brand in comparison with another brand offering similar or fewer
benefits
 In measuring price premium, or any brand equity measure, it is useful
to segment the market by loyalty
 The price premium measure is defined with respect to a competitor or
set of competitors , who must be clearly identified

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 The price premium can be determined by simply asking customers
how much more they would be willing to pay for the brand
 This is called a “dollar metric”. For Eg: How much more would you pay for
a Toyota Camry than for a Honda Accord?
 The price premium can be the best single measure of brand equity
available, because it directly captures the loyalty of the customers in a
most relevant way

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 Problems/Caution:
• It is defined only with respect to a competitor or set of competitors
• In a market with many brands several sets of price premium measures
will be needed, and even then an important emerging competitor
might be missed
• For example:
Compaq used IBM as its primary frame of reference when others, such
as Dell and Lenovo, were making larger inroads at much lower price
point. Thus Compaq’s price overtime reflected an increasingly inflated
valuation of its brand equity

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• An interpretation problem will exist when a brand has different
competitors in different markets
• For example:
In some regions Budweiser may face strong local brands that have little presence
elsewhere. To compare Budweiser’s strength in these regions, a composite
measure needs to created to arrive at the average price premium based on
regional brand and competitor. Eg: Surf v/s Ghadi Detergent and Surf v/s Ariel.
• There are markets in which price differences are not very relevant
because of legal restrictions or market forces make it difficult for such
differences to emerge. Eg: Price control of pharma drugs, or cap on price of
movie tickets in Tamil Nadu.
• In such context the price premium concept becomes less meaningful

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2)Customer Satisfaction/Loyalty:
 Satisfaction is a direct measure of how willing customers are to stick
to a brand
 Enormous progress has been made in the past decade in the
measurement of satisfaction
 A direct measure of satisfaction can be applied to existing customers-who
used the product/service in last year
 The reference can be the last use experience, or simply the use
experience from the customers view
• Are you satisfied?
• Are you delighted with your experience with this brand?
• Does the product or service meet the expectations?

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• Would you buy the brand on the next opportunity?
• Would you recommend the product or service to others?
• Were there problems and in inconveniences associated with the use of
the product/services?
 Satisfaction is an especially powerful measure in service business,
where loyalty is often the cumulative result of the user experiences
 Satisfaction can also be measured by asking directly questions about
loyalty
 It allows the market to be segmented into loyal users, price chasers
and those in-between

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 Another type of measure would be the level of loyalty in terms of
number of brands, where customers would be asked if they felt loyal
to one, two, three or more brands or if they see all brands as equal
 The percentage of the customers who are loyal to a given brand or
include it in a set of two or three preferred brands can be a relevant
statistic

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 Problems/Caution:
• An important limitation of satisfaction measure – they do not really
apply to the non-consumers. Eg: Even if a person cannot afford a Mercedes
Benz, he can still place a premium for the brand.
• Thus, there is really no measure of the extent of brand equity beyond
customer base

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Perceived Quality and Leadership Measures:
3) Perceived Quality:
 Perceived Quality is one of the key dimensions of brand equity
 It is highly associated with other key brand identity measures,
including specific functional benefit variables
 Perceived Quality also has the important attribute of being applicable
across product classes

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 Perceived Quality can be measured with scales such as:
• High quality v/s low quality
• Best in category v/s worst in category
• Consistent quality v/s inconsistent quality
• Finest quality v/s average quality v/s inferior quality

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 Problems/Cautions:
• Perceived Quality involves a product frame of reference
• There is also issue of loyalty segments
• The interpretation of the Perceived Quality for the loyalty segments
versus those loyal to another brand could be different . Eg: Perceived
Quality for Alto is the fuel efficiency where as a for high end car is the attention it
gets from others.

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4)Leadership and Popularity:
 Leadership has three dimensions
• It reflects in part the “number one” syndrome
 Leadership thus can be measured by scales that ask whether a brand is
the following:
• A category leader
• Growing more popular
• Respected for innovation

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• It has not been as well documented and researched
• Therefore there is little proof that it is important enough to merit
attention

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Association/Differentiation Measures:
5)Perceived Value:
 One role of brand identity is to create value proposition
 Value proposition usually involves a functional benefit, is basic to
brands in most product classes
 The value measure provides a summary indicator of the brand’s
success at creating that value proposition
 By focusing on value rather than functional benefits, a measure is
created that can apply across all product class
 Brand value thus can be measured by the following:
• Whether the brand proves good value for the money?
• Whether there is a reason to buy this brand over others?

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• This measure will be sensitive to the brand set that is used as a frame
of reference by the customers
• The relevant set can be cued by using phrases such as “among
comparable brands” or “among brands with which it competes”

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6)Brand Personality:
 For some brands, brand personality provides links to the brand’s
emotional and self-expressive benefits as well as a basis for brand-customer
relationship and differentiation
 This is especially the case for the brands that have only minor
physical differences and are consumed in a social setting where the
brand can make a visible statement about the consumer
 When considering brand personality across products, one option
would be to measure a personality spectrum such as the Big Five

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 Candidate scale might include:
• Does the brand have a personality?
• Is the brand interesting?
• I have a clear image of the type of person who would use the brand
• This brand has rich history
 The last two items reflect user imagery and brand heritage, two
drivers of brand personality that are often relevant dimensions of
brand identity

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• Not all brands are personality brands
• Using personality as a general indicator of the brand strength will be a
distortion for some brands
• Particularly those who position themselves primarily with respect to
functional advantages and value

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7)Organizational Association:
 Brand-as-organization, also can be a driver of differentiation
 It is particularly likely to be a factor when brands are similar with
respect to attributes, when the organization is visible or when a
corporate brand is involved
 To tap the brand-as-organization, scale such as these could be
considered:
 This brand is made by an organization I would trust
 I admire the brand X organization
 I would be proud (or plead) to do business with the brand X
organization

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• Brand-as-organization, is not relevant for all brands and an irrelevant
measure can be misinterpreted

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Awareness Measures
8)Brand Awareness:
 Awareness reflects the presence of the brand in the minds of the
customers
 It can be a driver in some categories and it usually has a key role to
play in brand equity
 Awareness measures can reflect the scope of the brand’s reach in
terms of segments
 Increasing awareness is one mechanism to expand market reach of the
brand
 Awareness can also affect perception and attitudes

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 Brand awareness reflects both the knowledge and the salience of the
brand in customer’s mind
 Awareness can be measured on different levels:
• Recognition
• Recall
• Graveyard statistics
• Top of mind
• Brand dominance
• Brand familiarity
• Brand knowledge or salience

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• There are varieties of awareness levels and the appropriate one to use
will differ across brands and product classes, making comparison
difficult

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Market Behavior Measures:
9) Market Share:
 The performance of the brand as measured by the market share often
provides valid and sensitive reflection of the brand’s standing with the
customer
 When the brand has relative advantage in the minds of the customers,
market share should increase or at least not decrease
 In contrast, when competitors improve their brand equity, their share
should respond
 In this sense, market share is good summary measure
 Market share data have the advantage of being both available and
accurate

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• The biggest problem is that market share indicators are responsive to
the short term strategies that often undermine brand equity
• Market share can be obtained by enticing price switchers with
promotions and price deals which compromise the long term value of
the brand
• Market share can also respond negatively even if a brand cuts its
brand-building activities or generates ineffective or negative brand
building efforts

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10) Market Price And Distribution Coverage:
 It is important to measure the relative market price at which the brand
is being sold
 To do so, the prices of various varieties of the brand weighted by their
relative sales volumes need to be obtained
 The relative market price could be defined as the average price at
which the brand was sold during the month, divided by the average
price at which all brands were sold
 It is important to distinguish the brand equity based on a change in
distribution coverage from that created by strengthening the brand’s
perceived quality or identity
 Another measure of brand strength, then, is distribution coverage,
which could be measured by either of the following

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 The percentage of stores carrying the brand
 The percentage of people who have access to the brand

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• Creating price-level statics is difficult in a messy market with
different channels, different variants of brand offerings and a complex
set of competitors. Eg: Chic/Nyle shampoo in sachet pack is market leader in
south India. OR Shampoo sachet sales are more in local retail stores and bottle
sales in large format stores.
• There are duties, taxes, and retail policies that could be the issue for
the products such as beer/wine/fuel/pharma drugs
• Distribution coverage will have similar data-gathering and
/interpretation problems

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Young & Rubicam’s Brand Asset Valuator:
 The most ambitious effort to measure brand equity across products
 Developed by Young & Rubicam (Y&R) - a major global advertising
agency
 It measured brand equity for 450 global brands and more than 8000
local brands in twenty-four countries
 Each brand was examined using thirty-two item questionnaire that
included – four sets of measures, in addition to a set of brand
personality scale
1. Differentiation:
2. Relevance:
3. Esteem:
4. Knowledge:

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The Young & Rubicam Model of Brand Dynamics:
Differentiation
Relevance
Esteem
Knowledge

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Differentiation:
 Measures how distinctive the brand is in the marketplace
 If there is no point of difference, a brand’s value will be low
 According to Y&R hypothesis – a new brand with ambitions to
become strong must start by developing a point of real difference
 For example:
Brands like Ferrari, Bacardi, etc stand apart from their
competitors

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Relevance:
 Measures whether a brand has personal relevance for the respondent
 Is it meaningful to him/her?
 Is it personally appropriate?
 Unless a brand is relevant to a significant segment, it will not attract a
large customer base
 For example:
Ferrari & Jaguar – very high differentiation but extremely low in
relevance ; few individuals consider that this cars are impractical
for daily use and also too expensive

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 There is a strong association between relevance and household
penetration
 For example:
In India Samsung has high relevance and also market
penetration, while its competitor Apple has low relevance and
penetration

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(Brand Strength = Differentiation X Penetration)
 Brand strength represents differentiation multiplied by relevance and
thus penetration
 The logic is that a brand must have both the characteristics in order to
be strong
 For example:
• Amazon and Disney tend to be high on brand strength

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Esteem:
 Measures whether a brand is held in high regards and considered the best in
class
 Closely related to perceived quality and the extent to which brand is growing
in popularity
 Esteem combines perceived quality with perception of a growth or decline in
popularity
 There are brands for which a decline or growth in popularity affects esteem.
Eg:Blackberry
 There are countries (such as Japan) , in which perceived popularity accounts
for greater variability in esteem than does perceived quality

+
 For example:
• Maruti, Pepsi, Amul, etc are esteemed in the consumer’s mind, based on
the popularity more than quality

+
Knowledge:
 A measure of understanding as to what a brand stands for
 It indicates that the consumer is not only aware of the brand but also
understands what the brand stands for
 According to Y&R hypothesis – the true understanding of the brand -
is the culmination of brand building effort
 It is not simply built on exposure; it is generated by real customer
intimacy with the brand
 For example:
• Cadbury & Nestle depicts true knowledge through brand
building

+
(Brand Stature = Esteem X Knowledge)
 Esteem and Knowledge complete the hierarchy and combine to form
the brand stature construct
 Comparing brand's esteem with its knowledge often provides some
important insights
 For instance, some brands rank high in esteem than in knowledge. Eg:
Truck from Tata, Harley Davidson
 Conversely a brand may have high knowledge but low esteem. Eg:
Lava, Karbonn mobile phones

+
Power Grid: Brand Strength vs. Brand Stature:
 Brand Strength: Brand must possess both Differentiation and
Relevance to be strong (VIP Bags).
 Brand Stature: It is a combination of Esteem and Knowledge and
reflects current brand performance(Toyota).

+
High
Brand Strength
(Knowledge and Esteem)
Low
Unrealized Potentials
Brand Stature
2
(LG, Renault)
Differentiation and Relevance
High
1
Weak Brands
(Babool, Lava)
3
Leadership
(Sony, Google, Disney)
4
Eroding Brands
(Motorola,Philips,
Nokia)

+  The Power Grid:
• It sets the strategic process by identifying the strength or weakness of
the brand
• On the vertical axis we plot brand strength, while on horizontal axis
the brand stature
• Quadrant 1:
Weak brands that could not leverage their strengths
• Quadrant 2:
The true potential of the brand is not being realized. The strategy
should be to build the stature of the brand

+
• Quadrant 3:
The challenge for the brand here would be to continue being a leader
• Quadrant 4:
It spells ‘danger’ for the brand, an indicator of eroding potential.
These brands have failed to maintain relevant Differentiation.
If unattended, their stature will also begin to fall.
Unless steps are taken, these brands will lose esteem and could
eventually fade from consumer’s consciousness

+
EquiTrend:
 Developed by Total Research
 It provides nice contrast to the Y&R Model
 EquiTrend is based on small set of simple yet powerful questions
 Although limited in scope compared to Y&R, it has developed data
overtime that greatly enhance its ability to make judgments about the
dynamics of brand equity and its effect
 Its annual survey of 2,000 respondents started with 133 U.S. brands,
and by 1995 covered over 700 brands in 100 categories

+
 EquiTrend is based on measures of three brand equity assets:
1)Salience:
• The percentage of respondents who have an opinion about the brand
• Thus, it goes beyond the more conventional concepts of awareness,
recognition, and recall by demanding that respondents hold opinions
2)Perceived Quality:
• It is at the heart of EquiTrend, because it has been found by Total
Research to be highly associated with brands liking, trust, pride, and
willingness to recommend
• It is essentially the average quality rating among those who had an
opinion about the brand

+
• Quality is measured using an 11-point scale ranges from
“outstanding” to “unacceptable”
3)User satisfaction:
• It is the average quality rating a brand receives among the consumers
who use the brand most often
• It provides look at the strength of brands within their user base
• One problem with measuring user satisfaction is that some brands,
such as Mercedes, have such a small incidence of usage that a
national sample becomes inadequate to estimate user satisfaction

+
Interbrand’s Top Brands:
 Interbrand, a UK based branding consulting company, used a very
different approach to identify the strongest brand in the world
 It is a set of criteria, chosen subjectively, included the business
prospects of the brand and the brand’s market environment, as well as
consumer perceptions
 500 brands were evaluated based on seven criteria

+
1)Leadership:
• A brand that leads its market sector is more stable and powerful than
the second, third, fourth
• This criterion reflects economies of scale for the first-place brand in
communication and distribution, as well as the problems that also
brands have in maintaining distribution and avoiding price erosion
2)Stability:
• Long-lived brands with identities that have become part of the fabric
of the market and even the culture are particularly powerful and
valuable

+
3)Market Conditions:
• Brand are more vulnerable when they are in the markets with growing
or stable sales levels and a price structure in which successful firms
can be profitable
4)International:
• Brands that are international are more valuable than national or
regional brands, in part because of the economies of sale
• The broader the market scope for the brand, the more valuable it is; a
national brand is worth more than a regional brand

+
5)Trend:
• The overall long-term trend of the brand in terms of sales can be
expected to reflect the future prospect
• A healthy growing brand indicates that it remains contemporary and
relevant to the customers
6) Support:
• Brands that have received consistent investment and focused support
are regarded as stronger than those that have not
• However, the quality of the support should be considered along with
the level of support
7)Protection:
• The strength and the breadth of a brand’s legal trademark protection is
critical to the brand’s strength

+
 Based upon the criteria, Interbrand determined that the top ten brands
in the world in 2013 were as follows:
1) Apple
2) Google
3) Coca-Cola
4) IBM
5) Microsoft
6) GE
7) McDonald’s
8) Samsung
9) Intel
10) Toyota

+  The business-oriented (versus consumer-oriented) view of Interbrand
criteria is useful in part because it is a step closer to putting financial
value on the board
 Interbrand uses its brand rating to determine a multiplier to apply to
earnings

+
Disadvantages of Interbrand Model
 Small niche brands may be more profitable than leadership brands
 Local regional brands may be more profitable than Local Brands due
to economies of scales and better consumer connect. Eg: Maruti v/s
General Motors
 Older brands may lose their brand strength. Eg: Kodak ,Nokia and Blackberry
lost their relevance in terms of new technology.
 The ability of a market to create or protect margins is difficult to project
 The Interbrand system does not consider the potential of the brand to support
extensions into another product classes
 Trademark it self does not create brand value

+
Why Measure Brand Equity Across Products And
Markets:
1)Benchmarking against the best:
• Too often managers believe that their positioning alternatives are
restricted to what has always been done in their category
• A consideration of brands in other categories, can suggest new
identity options
• When one value evaluates identity implementation programs, a useful
benchmark be other brands with similar identity goals

+
2) Insights into brand building:
• Brand equity measurements over product classes and markets
provides an opportunity to generate insights about and basic
principles for effective brand building and brand management.
• The identification of brands that follow or depart from patterns can
provide guidance to others facing similar contexts.
• A brand whose perceived quality is falling , while its awareness and
differentiation remain high can look to see how other brands in the
same situation handled the problem

+
3)Tools to manage a brand portfolio:
• Many organizations offer number of brands across variety of markets
and countries
• If these brands are managed separately and independently, or on ad
hoc basis, then overall resource allocation among the brands may not
be made appropriately

+
End

Brand equity

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