Essay on Brand Equity

                        Essay on Brand Equity

Brand equity is a marketing term used to describe the value of having a well-known brand name and brand image. It is based on the notion that, a famous brand name is capable of generating more revenues with the brand name as compared to a similar product produced by a little-known brand name since consumers often believe that, a product from a well-known brand is better than a product with little-known brand names.

Brand equity is the value of the brand in the marketplace that lies in the consumer's awareness of the brand features, thus, driving attribute perceptions. A high equity brand increases the financial value of a brand to the brand owner. This means that the brand can create a positive differential response in the marketing environment that includes increased market share, increases profit margins derived from increased sales and consumer's perception of quality.

The phrase ‘brand equity' emerged in the early 1990s. The term had no precise definition, but practically, it pointed out brands as financial assets that are capable of transforming financial markets. Brand equity is not only limited to the brand name but also encompasses other values such as patents, proprietary technologies, trademarks and the manufacturing know-how. In a broad sense, brand equity is bound by the marketing effects uniquely attributed to the brand.

Brand equity is of benefits to companies especially in venturing into line extension. When a saleable commodity or service has entered a decline stage in its life cycle, strong brand equity will enable it to last for a longer time than its competitors. During an economic downturn, brand equity lays a platform for the brand to remain afloat at a profit for a long time after competing products flounders. Brands with an international presence and visibility have got high equity, thus, making business expansion much easier for them (Marketing Science Institute).

                                        Customer-Based Brand Equity

Having a robust and vibrant brand has been proven to give firms an upper edge in business competition and other related dynamics. Building a strong brand equity is, therefore, a necessary act for many firms and organizations (Keller, 2002). Developing a strong brand equity necessitates the establishment of the brands identity, creating an appropriate meaning to the brand via brand associations, eliciting brand responses and finally integrating the brand with the customers. According to the customer-based brand equity model, building an equity brand is established in a sequence of four steps, with each step in the sequence relying on the successful completion of the previous step (Marketing Science organization).

There are four fundamental questions that consumers commonly ask about brands. These issues are:

v  Who are you? (The customer asks for the identity of the brand)

v  What to you stand for? (Consumer asks for the meaning of the brand name)

v  What is it about you? (Brand responses)

v  What concerns you and me? (Connection between the consumer and firm)

Brand Identity

In achieving the true brand identity, the firm needs to create brand salience. Brand salience relates to the consumer awareness of the existence of the brand name. The ease to which consumers evoke the name under any given circumstance needs to be evaluated. Also, the magnitude to which the brand is recognized and given priority by the customer needs to be checked and considered in building the identity of the brand.

Brand awareness refers to the customers' ability to recognize and like the brand. The customer should be in a position to link the brand name, logo, and symbol and so forth to the services of the association in memory. The customers should also know the needs which the brand is meant to satisfy, that is, the customers should know the important functions that the brand equity provide.

Salience is the foundational building block of a brand equity and serves to provide three basic functions. First, salience gives the brand meaning by influencing the formation of brand associations that stands for the brand image. Secondly, salience is of significant importance in the purchase or consumption opportunities which prevails upon the consumer. Lastly, salience provides a possible use setting, therefore, maximizes potential usage.

Brand awareness can be defined regarding two key parameters, that is, depth and breadth (Kotler, 2003). Brand depth refers to the ease to which customers recalls or recognizes the brand while breadth refers to the purchase situations that bring the brand to considerations. Thus, brand depth and breadth is necessary for the creation of brand salience.

Brand Meaning

For most customers, the meaning of the brand's image is all that it takes to decide on product consumption. Brand essence consists of the brand image or what the consumers perceive in their minds concerning the brand. Brand meanings are made up of the customer's associations between the brand performance and imagery, which are formed through the client's experiences when consuming the said brand or through the depiction of the brand by others.

The performance of the product in itself is significant in the development of brand equity. It serves as the primary influencing factor of the customer's experience with the brand. A product that fully satisfies customer's needs is essential for marketing, therefore, in the creation of brand loyalty, consumer's needs must be sufficiently met, or beyond their expectations.

The product should be durable and of high quality. Style and design of the product should also go beyond the stated functional aspects to a more robust aesthetic considerations such as the product shape and colour. The pricing strategy employed by the brand should also create an association in the consumer's mind relating the level of the brand. Thus, the brand associations can be evaluated according to their strength of association, favourability to consumers and its uniqueness (Marketing Science Organisation).

Brand Responses

These refer to the magnitude to which the consumers respond to the brand. It is the feeling to which consumers have towards the brand. Brand responses can be differentiated according to individual brand judgments and feelings.

Brand Relationships

This focuses on the personal identification to which the customer has with the brand. Brand resonance should be developed between the client and the brand, that is, the customer should feel that they are in an excellent working terms with the brand. Brand resonance leads to brand loyalty, attitudinal attachment, sense of community and active engagement where customers are willing to time, energy and money into the brand.

A brand is said to be a positive customer-based brand equity when customers react more favourably to a product or service during marketing as compared to when it is not. A high brand product, therefore, favours an extension of new brands to the consumers, and the consumers are also less sensitive to the price increase. The fundamental pillar in creating a customer-based brand equity is the brand knowledge. Brand knowledge is made up of the consumer's ability to identify and recall a brand (brand awareness) and the consumer's perception towards the brand (brand image). Building brand awareness requires an exposure of the brand to the consumers as well providing a link between the product categories to the brand in the consumer's memory.

Brand image sums up the impressions that influence how consumers perceive a brand, including the personality the brand acquires and its expected benefits. It is widely subjective phenomenon formed via consumer's reasoned or emotional interpretations (Keller Centre Research). High brand images can be used to enhance individual's self-image.

In managing a brand equity, critical marketing decisions needs to be taken. First, the marketer should adopt a comprehensive view of marketing decisions. This is made so as to create value for the brand through improving customer's ability to recall and identify the brand and also to maintain the uniqueness of the brand associations.

The marketers should also define the type of knowledge structures that they would like to impart to the consumers through specifying product unique features and significant benefits. Additional marketing alternatives should be sought especially in communication options available (Keller Centre research). The entire marketing plan should be organized to create a congruent and strong brand. Different tactics with similar strategic goals need to be employed and integrated together to achieve a consistent and cohesive brand image (Keller, 1998).

                          Managing Brand Equity

Brand equity is made up of five different intangible asset dimensions. These assets are brand loyalty, brand awareness, perceived quality, brand associations and proprietary assets.

                            Brand Loyalty

Brand loyalty is the attitude of the consumer towards a particular brand that results in repeated purchase of the same brand over time. It occurs when a consumer develops a special liking for a given product or service due to its ability to meet the consumer's needs and expectations. Loyalty implies a commitment to a brand. Brand loyalty generates value mainly through reduction of marketing costs, that is, it is cheaper to maintain existing customers of a given brand than to attract new ones (Moore, 2004).

Brand loyalty of the client is vital for the brand equity. It indicates how likely the customer can switch from one brand to another when product or service fluctuations occur. High brand loyalty leads to reduced vulnerability of the customers to competitive action. Brand loyalty provides value by reducing marketing costs and also provide trade leverages over other competitors in the distribution channels. Loyal consumers can give the company enough time to respond to competitive threats. Consumer's loyalty should, therefore, be adequately managed at to maintain and increase the brand's loyalty.

Brand Awareness

Brand awareness includes brand recognition and brand recall. The consumer should be able to confirm a particular brand through a prior exposure to the brand and should be able to differentiate the brand from many others of similar kind.  Breadth and depth characterize brand awareness. A brand that can be easily recalled is said to have a deeper level of brand awareness (Keller, 1998). The breadth of a brand awareness defines the extents to which the usage situations comes to mind. Brand awareness is critical to consumer decision-making process. Consumers often think of the brand when thinking of a given product category. Therefore, a raised brand awareness increases the chances of the product being considered.

Perceived Quality

The perceived quality of a brand relates to the consumers perception of the overall superiority of the commodity or service in relation to the available alternatives. A perceived quality of a brand gives it an upper hand during its purchase. It provides an option to charge an extra premium price thus, increasing revenues gained from the brand. The additional profits collected provides enough resources and capital to reinvest in the brand and also expanding the line (Moore, 2003).

Brand Associations

Brand associations refer to mental linkages to the brand. Brand positions can be evaluated using associations between the brand and consumer and how different it is from competitor's association. Brand associations can be classified into attributes, benefits and attitudes.

Attributes are the specific features that characterize a product. They can be further differentiated about how they impact the product or service performance. Product related attributes are essential for the underlying execution of the product or service needed by the consumers. Non-product-related attributes are those aspects that relate to the product consumption or purchase and do not directly affect the product performance (Kotler, 2004).

Brand benefits also come with brand associations. This benefit provides value and meaning to the consumer when they consume the product. The consumer may put value onto the prestige acquired from consuming a given product or fashionability of a brand due to their self-concepts. The secondary brand association may occur when the brand is linked to other memorized data that is not related to the product or service. Consumers may deduce that the brand shares association with a given entity, therefore, linking it indirectly to the brand.

Borrowing Brand Equity

Most firms borrow brand equity from their existing brand names through extending the names to other products. Two types of extensions exist: line extension and category extension (Keller, 1998). Line extension occurs when a current brand name is used to venture into a new market segment in the existing product class while category extension (brand extension) is when the current brand name is borrowed and used to venture into a different product class. Often, category extension occurs when a firm chooses to use an already existing brand name to introduce a product or service in a new class of products.

               The Importance of Brand Equity

Brand equity provides value to a company in various ways. First, brand equity enhances the efficiency and the effectiveness of marketing plans. A consumer with a high preference for a given brand will respond to an advertisement of a new product from the same brand.

Secondly, brand awareness, brand associations and perceive quality serves to strengthen brand loyalty by raising consumer satisfaction and providing enough reasons to purchase the product or service. Enhanced brand loyalty allows the company buy time when responding to competitor's innovations and threats.

Third, brand equity permits premium pricing, therefore reducing reliance on promotions. Premium pricing also ensures that increased revenues are collected and subsequently yielding profits to the firm. A brand with a negative brand equity will invest much in promotional activities leading to losses or low-profit margins (Jennifer, 1997).

Fourth, brand equity provides a platform for enhancing growth through brand extensions. Additionally, it offers a leverage in the product or service distribution channel through reducing uncertainties by dealing with a proven brand name.

Finally, positive brand equity provides the company with a critical advantage of preventing customers from switching to a competitor.

                                                  

                                       References

Jennifer, A., Dimensions of brand personality, Journal of Marketing Research 34 (August 1997), 347-57.

Keller, K., Strategic Brand Management: Building, Measuring and Managing Brand Equity, Prentice Hall: Upper Saddle River, 1998.

Kotler, P., Marketing Management: Analysis, Planning, Implementation and Control, Prentice Hall: Eaglewood Cliffs, 2004.

Moore, J., Building Brands across Markets: Brand Equity and Advertising, Lawrence Erlbaum Associates, 2003.