Brand equity is the value added to a product or service by its brand name. It can provide value to both customers and firms. For customers, brand equity enhances the interpretation of information and confidence in purchase decisions. For firms, it enhances marketing program effectiveness, prices/margins, brand extensions, and competitive advantage. Brand equity is based on brand loyalty, name awareness, perceived quality, brand associations, and other proprietary brand assets. Creating strong brand equity requires achieving high levels of these components.

1. Difference Between Product and Brand
1.Product is made in
1. A brand is bought
a factory
2. A product can be
copied.
3. A product can be quickly
outdated.
by the customer .
2. A brand is unique.
3. A successful brand is
timeless

2. BRAND EQUITY
BRAND EQUITY : is a set of brand assets and
liabilities linked to a brand , its name and symbol ,
that add to or subtract from the value provided by
a product or service to a firm and /or to that firm’s
customers.
For assets or liabilities to underlie brand equity
they must be linked to the name and/or symbol of
the brand.

3. BRAND EQUITY
The assets and liabilities on which brand equity is
based can be grouped into 5 categories
1) Brand Loyalty
2) Name awareness
3) Perceived quality
4)Brand associations in addition
to perceived quality
5)other proprietary assets :
patents, trademarks,channel relationship etc.

4. BRAND EQUITY
Name Awareness
Brand Loyalty
Brand Equity
Provides value to customer by
enhancing customer’s
•Interpretation /Processing of
information.
•Confidence in the purchase
decision.
•Use satisfaction/delight
Perceived quality
Brand Associations
Other proprietary
brand assets
Provides value to firm by
enhancing:•Efficiency and effectiveness
of marketing programs
•Prices/Margins
•Brand Extensions
•Trade Leverage
•Competitive advantage

5. What is the value of a brand
Price premium generated by the name:
Impact of the name on customer preference
Replacement value of the brand
Stock price
earning power of a brand

6. Replacement value of the brand
Replacement cost: cost of establishing a comparable name
and business .
It is estimated that it costs $50 -100 million to develop
and launch a new consumer product and chances of
success is around 12-15%..
Thus on an average a firm will have to make 6 products
costing $ 300 million (taking the lower estimate)to ensure
atleast one winner.
A firm thus should be willing to pay $ 300 million to an
established brand in the category of interest.

7. Brand value based on stock price movements
Stock market adjusts the price of a firm to reflect future prospects of
its brands.
1) Find market value of firm --> function of stock price and number of
shares
2) Find the replacement cost of tangible assets (plant, machinery,
inventories, cash)
3) Subtract 2 from 1
4)The balance intangible assets is distribute into three components :
value of brand equity , value of nonbrand factors (R&D, PATENTS)
and value of industry factors (regulation and concentration)
5) Brand equity is presumed to be a function of age of the brand,
entry of the brand in the market (older brand has more equity),
cumulative advertising (advertising creates equity) and the current
share of industry advertising (current advertising share is related to
positioning advantages).

8. Perceived quality :
What drives perceived quality?
What is important to the customer
What signals quality
Is perceived quality valued- or is the market moving towards a
commodity business
Are prices and margins wear away
How do competitors stack up with respect to perceived quality.
Other brand assets:
Is there a patent or trademark that is important?
Are there channel relationships that provide barriers to
competitors?
Are sustainable competitive advantages attached tot he brand
name that are not reflected in the other four equity dimensions?

9. Brand Associations :
What mental image does the brand stimulate/evoke?
Is that image a competitive advantage
Is there a slogan/ punch line /tagline /symbol that is a
differentiating asset?
How are the brand/competitors positioned.
Evaluate each position with respect to its value/relevance to
consumers and how protected /vulnerable it is to competitors.Which
position is the most valuable and protected
What does the brand mean?
What are its strongest associations?

10. P& G- Believers in Brand Management
In 1879 , Harley Procter named his soap “IVORY”
The soap was promoted as “99 44/100 % pure” and that it floated.
The floatation property was created by production mistake which fed
air into the soap mixture.
Ivory was a remarkable product in a time when most soaps were
yellow or brown , irrated skin.
Also during those times the floatation value had practical value for
those who were frustrated trying to find their soap in water.
Well positioned soap----> pure, mild and floated.
The claims of purity and mildness were supported by white color,
name Ivory, the twin slogans and association with babies.
In 1941 , Lever Brothers launched “Swan “ to challenge “Ivory”, but
as there was no product difference , the brand failed.

11. P& G’S Product Portfolio - launched from
1940-1980
Tide- Detergent
Prell - Shampoo
Joy - dishwashing detergent
Crest - Toothpaste
Secret - cream deo
Jif - peanut spread
Ivory - Liquid soap
Pampers - disposable diapers
Folgers - coffee
Scope - Mouthwash
Bounty - paper towels
Pringles- potato chips
Bounce - fabric softeners
Duncan Hines - cookies

12. A striking aspect of P& G has been its willingness to
develop competing brands (multi brand concept) in order
to serve new segments , even if new brands threaten
existing brands.
P&G has 10 brands in laundry detergent category which
reach a variety of segment s and has given P&G a 40%+
market share .
1) Ivory Snow : “ ninety-nine and forty-four onehundredths percent pure,’, the mild gentle soap for diapers
and baby clothes”
2) Tide--- For extra-tough family laundry jobs-”Tide’s in ,
dirt’s out”

13. Cheer -works in cold, warm or hot water- “ All temperature Cheer”
Gain- detergent with fragrance - “ Bursting with freshness”.
Bold 3 - includes fabric softener -” Cleans , softens and controls static
Dash- concentrated power, less suds to avoid clogging washing
machines
Dreft- with “Borax, nature’s natural sweetener “ for baby’s clothes
Oxydol:- contains bleach-for sparkling whites -with color safe bleach.
Era- concentrated liquid detergent-with proteins to clean stains
Solo- heavy duty with fabric softener

14. Brand Loyalty
Brand Loyalty pyramid
Committed
buyer
Likes the brand, considers
brand as a friend
Satisfied buyer with switching
costs
Habitual buyer- no reason to change
Switchers /price sensitive- indifferent- no brand loyalty

15. Measuring Brand Loyalty
Behavior Measures:
Repurchase rates: What % of Maruti Zen owners purchase Zen on
their next purchase
% of Purchases: of the last five purchases made by a customer,
what % went to each brand purchased?
Number of Brands Purchased: What % of coffee buyers bought only a
single brand?, two brands?
Switching costs: If it is expensive or risky for a firm or consumer to
change suppliers, then the brand loyalty is on the higher side.
E.g : Investment in computer system or software like SAP

16. Strategic value of Brand Loyalty
Reduced Marketing Costs: It is much less costly to retain
customers then to attract new one ( COST RATIO IS 1:4)
Trade leverage: Strong pull (brand loyalty) from
consumers will ensure preferred shelf space because stores
know that customers will have such brands on their
shopping list.
Attracting new customers:
Time to respond to competitive threats:If a competitor
develops a superior product , a loyal following will allow
the firm time needed for the product improvements to be
matched and neutralized.

17. Creating & Maintaining Brand Loyalty
Treat the customer Right
Stay close to customer
Measure/Manage Customer Satisfaction
Create switching cost
Provide extras

18. Creating & Maintaining Brand Loyalty
Measure / Manage Customer Satisfaction :
Regular
surveys of customer satisfaction are useful in
understanding how customers feel and it also helps in
adjusting product and services.
Domino’s Pizza conducts weekly
phone surveys of customers measuring dimensions like
response time, lumpiness of dough, freshness of pepperoni
and attitude of delivery people.
A bonus pool is distributed based upon these
measures.
Create Switching costs: Reward loyalty directly. For e.g
The airlines frequent flyers program .

19. Brand Awareness
Ability of a potential buyer to recognize or recall that a
brand is a member of a certain product category.
Top of
Mind
Brand recall
Brand Recognition
Unaware of brand
The awareness Pyramid

20. Brand awareness creates value in the followingg ways :
1) Anchor to which
other associations can be attached : for e.g McDonalds:Golden arches, clean/efficient, kids , fun etc.
2) Familiarity/Liking: recognition provides the brand
with familiarity and people like the familiar.
3)Substance /commitment: The firm has been in
business for a long time. The firm is widely distributed and
the brand is successful.
4) Brands to consider ----- it enters the evoked or
consideration set.

21. How to achieve Awareness
Be different , Memorable:
Involve a slogan or jingle: e.g Lifebuoy hai jahan ,
tandorosti hai wahan.
Symbol exposure: colonel sanders --KFC, golden archesMcdonalds---> symbol should closely associate with the
brand.
Publicity--- advertisement.
Event Sponsorship --- Femina Miss India, Manikchand
Filmfare awards.
Consider brand Extensions : one way to gain brand recall
is to put the name on other products.

22. Perceived Quality
Defn : customer’s perception of the overall
quality or superiority of a product or service
with respect to its intended purpose, relative
to alternatives.

23. Perceived Quality
Quality dimensions :
1) Performance : How well does a washing machine wash
clothes---> primary operating characteristics of service
2) Features: secondary elements like on/off timer in washing
machine etc.
3) Conformance with specifications: --- absence of defects----trouble free .
4) Reliability--- will the vacuum cleaner work the same way each
time it is used.
5) Durability: How long will the washing machine 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.

24. Perceived Quality
Research has shown that in many product classes a key
dimension which is visible can be pivotable in affecting
perceptions.
1) Stereo Speakers: larger size means better sound
2) Tomato ketchup-- thickness means quality.
3) Supermarkets--- fresh products means overall
quality.
4) cars: a solid door-closure sound implies good
workmanship and a solid safe body.
5) lawn mover-- noise signals quality