Brand Equity

Brand equity refers to the marketing effects and outcomes

that accrue to a product with its brand name compared with those that would accrue if the same product did not have the brand name.

The most important assets of any business are intangible including its base of loyal customers, brands, symbols & slogans and the brands underlying image, personality, identity, attitudes, familiarity, associations and name awareness. These assets along with patents, trademarks, and channel relationships comprise brand equity, and are a primary source of competitive advantage and future earnings

Brand Equity

Brand equity is initially built by laying a foundation of brand awareness eventually forming positive brand images and is ultimately maximized by high levels of brand loyalty.

Brand Equity
Factors that Influences Brand Equity The following are the five major factors said by Aaker to influence the Brand Equity as Brand Equity (like company equity) is the set of brand assets and liabilities linked to a brand that adds or subtract from the brand value.

Aaker originally outlined five components of brand equity: 1. Name Awareness: Share of mind

Brand Equity
2. Perceived Quality: Seen as better / best fit for me (functionality, trust, long lasting) 3. Brand Loyalty: Enduring preference 4. Positive Associations: Sponsorships, admired people using the product, corporate citizenship. 5. Other Assets: Trade marks, exclusive channels, merchandising systems

Brand Equity

Brand Equity
Brand Awareness

Brand awareness refers to the strength of a brands presence in the consumers mind It is a measure of the percentage of the target market that is aware of a brand name. Marketers can create awareness among their target audience through repetitive advertising and publicity. Brand awareness can provide a host of competitive advantages for the marketer. These include the following Brand awareness renders the brand with a sense of familiarity. Name awareness can be a sign of presence, commitment and substance. The salience of a brand will decide if it is recalled at a key time in the purchasing process.

Brand Equity
Brand Awareness

Brand recognition: It related to consumers ability to confirm prior exposure to that brand when given the brand a cue. It requires that consumers can correctly discriminate the brand as having been previously seen or heard. Brand recall: Brand recall relates to consumers aptitude to retrieve the brand from memory given the product category, the needs fulfilled by the category or a purchase or usage situation as a cue. It requires consumers to correctly generate the brand from memory when given a relevant cue. Top-of-mind brand: This is the brand name that first comes to mind when a consumer is presented with the name of a product classification. Dominant Brand: The ultimate awareness level is brand name dominance, where in a recall task; most consumers can only provide the name of a single brand..

Brand Equity

Brand Loyalty
The Types of Loyalties are: Passive Loyal : buying out of habit Fence Sitters: Indifferent to two or more brands Committed: truly loyal to a brand

4.13

How to develop Brand equity

4.14

How to develop Brand equity

4.15

Why Brand Equity Matters

Brand equity is the essential lever of profitability because it represents the value of the brand in the marketplace, independent of added features and lower price (both of which cost the company money). Brands with strong brand equity can: Command premium prices Capture and maintain market share Support new line extensions Attract investors Fend off new competitors

4.16

Measuring Brand Equity

There are many ways to measure a brand. Some measurements approaches are at the firm level, some at the product level, and still others are at the consumer level.

Firm Level: Firm level approaches measure the brand as a financial

asset. In short, a calculation is made regarding how much the brand is worth as an intangible asset. For example, if you were to take the value of the firm, as derived by its market capitalization - and then subtract tangible assets and "measurable" intangible assets- the residual would be the brand equity

4.17

Measuring Brand Equity

Product Level: The classic product level brand measurement example

is to compare the price of a no-name or private label product to an "equivalent" branded product. The difference in price, assuming all things equal, is due to the brand. More recently a revenue premium approach has been advocated . Consumer Level: This approach seeks to map the mind of the consumer to find out what associations with the brand the consumer has. This approach seeks to measure the awareness (recall and recognition) and brand image (the overall associations that the brand has). Free association tests and projective techniques are commonly used to uncover the tangible and intangible attributes, attitudes, and intentions about a brand. Brands with high levels of awareness and strong, favorable and unique associations are high equity brand].
4.18

All of these calculations are, at best, approximations.

Measuring Brand Equity

4.19

Measuring Brand Equity

Possibly the best example of the value contained within a company's brand is the Coca-Cola company, which in the first quarter of 2006 had a 21 percent brand equity as a percentage of market capital. In dollar value, this amounted to $20bn. PepsiCo is not far behind, with a 19 percent brand equity, amounting to $19bn of its market capital The Chairman of Sony put it well when he said : Our biggest assets is four letters: SONY
4.20

Brand Equity Strategy

PROTECTING core equity elements- those that are driving Market Share FIXING negative equity elements- which represent lost share ATTACKING competitors positive equity elementthat is neutralizing their Brand Advantages LEVERAGING competitors negative equity elementtaking full advantage of their weaknesses.

4.21

Brand Equity Strategy

If an equity element affects consumer perception of the product/ service, then customers belief should be altered by new product advertising or change in product design. If it is company perception affecting the customer, then corporate communication and improvement in service should impact the change.

Consumers feeling about themselves can be altered thro image advertising or product repositioning.

Brand Equity Valuation Approaches

Some of the more common valuation approaches can be classified into five categories:

Cost-based approaches Market-based approaches Economic use or income-based approaches Formulary approaches Special situation approaches

Brand Equity Valuation Approaches

Cost-based approach It consider the costs associated with creating the brand or replacing the brand, including research and development of the product concept, market testing, promotion, and product improvement.

The accumulated cost approach will determine the value of the brand as the sum of accumulated costs expended on the brand to date.

Brand Equity Valuation Approaches

Market -based approach It is based on the amount for which a brand can be sold. The open market valuation is the highest value that a willing buyer and willing seller is prepared to pay for the asset. It is suggested that the market value of an asset should reflect the possible alternative uses; the value of future options as well as its value in existing activities; and realism rather than conservatism.

Brand Equity Valuation Approaches

Economic use approach/ Income based approach It considers the valuation of future net earnings directly attributable to the brand to determine the value of the brand in its current use . This method reflects the future potential of a brand that the owner currently enjoys.

Brand Equity Valuation Approaches

Formulary approach

Formulary approaches consider multiple criteria to determine the value of a brand. While similar in certain respects to income-based or economic use approaches, they are included as a separate category due to their extensive commercial usage by consulting and other organizations.

Brand Equity Valuation Approaches

Special situation approach

Special situation approaches recognize that brand valuation can be related to particular circumstances that are not necessarily consistent with external or internal valuations. A strategic buyer is often willing to pay a premium above the market value . This may be a result of synergies that they are able to develop which other buyers may not be able to achieve. Each case has to be evaluated on individual merit, based on how much value the strategic buyer can extract from the market as a result of this purchase, and how much of this value the seller will be able to obtain from this strategic buyer.

Brand Equity Valuation Approaches

Liquidation value approach It is the value that the asset would fetch in a distress sale. The value under a liquidation sale is normally substantially lower than in a willing buyer and seller arrangement. The costs of liquidating the asset should normally be deducted in determining the value of the asset.

Brand equity
you can measure performance in three core brand equity drivers: financial, strength, and consumer. Financial Brand Equity Metrics While financial metrics are always the first thing that executives want to see to confirm that a brand is profitable and should live to see another day, financial metrics should actually be the last part of the brand equity measurement process.
4.30

Brand Equity

Thats because financial metrics result from the brand strength and consumer metrics described below. With that said, your financial brand equity metrics should gather the following data: Market share Price sensitivity Profitability Revenues Marketing investments Growth rate Cost to acquire new customers Cost to retain customers

Brand equity
Measuring brand strength should also be done on an ongoing basis. Following are some of the factors to track: Accessibility Awareness and knowledge of the brand Loyalty Licensing potential Retention Aided and unaided recall
4.32

Brand Equity
Consumer Brand Equity Metrics Consumers build brands, not Companies. Therefore, its essential that you track consumer sentiment and behaviors related to your brand to get a complete understanding of brand equity. If consumers believe in a brand, it has far more equity than a brand that consumers dont care about or believe in. Use the following factors to track and measure consumer sentiment and behavior related to your brand: Relevance Emotional connections Differentiators Value Perceptions
4.33

Brand Equity Valuation Approaches

Interbrand approach

Interbrand determines the earnings from the brand and capitalizes them after making suitable adjustments. Interbrand takes the forcast profit and deducts a capital charge in order to determine the economic profit (EVA). Interbrand then attempts to determine the brands earnings by using the brand index. The brand index is based on seven factors. The factors as well as their weights are:

Brand Equity Valuation Approaches

Market (10%) Whether the market is stable, growing and has strong barriers to entry. Stability (15%) Brands that have been established for a long time that constantly command customer loyalty. Leadership (25%) A brand that leads the sector that it competes in. Trend (10%) Gives an indication where the brand is moving. Support (10%) The support that the brand has received. Internationalization/Geography (25%) The strength of the brand in the international arena . Protection (5%) The ability of the company to protect the brand.

Young And Rubicam Brand Valuator

Differentiation (Point of difference , How is the brand different from the rest of the world, What does it offer which others are not offering) Relevance (Is it relevant to significant segment, does it attract a large customer base , house hold penetration,is it personally appropriate) Esteem (Quality perception, is it held in high regard ) Knowledge (What brand stands for, awareness , recognition , recall) Differentiator x relevance = brand strength Esteem x knowledge = brand stature

Brand Architecture

The brand architecture is the process of devising a plan that optimally accommodates all product brands within an organization. It is a way in which various products or sub brands in a company's portfolio can be differentiated and/or related to support one and other. Through the architecture, you can ensure that diverse products reflect the core brand image of the business or company. Example: The company Virgin, offers several services from transportation to cellular network all under the umbrella of the company brand name. In the above virgin example one of the core brand traits is reliability whether you are taking a Virgin train or using their cellular network.

Brand Architecture

Brand Architecture

Brand Architecture

Brand Architecture

Brand Architecture

Brand Architecture

Brand Architecture
There are 3 types of brand architecture:

Unitary/ Corporate: All the brands are marketed by the parent company bearing its corporate name Hybrid/endorsed: where all the brands are linked to the parent company thro visual or verbal endorsements

Diversified/Individual: Each brand is marketed individually with no reference to its parent company

Brand Architecture-strategic considerations

Audience Diversity What are the target segments for your brand? Is the brand focused on just one audience or must it appeal to many? Brand Elasticity How far can each of the brands stretch to cover different products and markets? Harley Davidson made a classic blunder applying their brand to wine coolers. Product/Service Offerings How are other brands in the portfolio positioned and targeted? Are some of your brands complementary, competitive or incongruent? Competitive Context What are competitive branding practices? How do customers view the marketplace? Do your brands help you stand out and grab market share? Brand Equities Do you have brands with a particular following or a unique heritage or equity must be carried forward? Geographic Needs How consistent are needs/preferences across cultures and markets? Strong local brands might not work in other countries. Not every brand can travel.

Brand Architecture-strategic considerations

Organizational Structures Who is accountable for branding practices and standards? What are the political realities behind brands in your portfolio? Ownership Does the organization have legal control over its brand? Youll have less leeway with licensed brands. Sources of Growth What businesses and brands are expected to drive future growth for your company? Are they helping you pursue your strategy? Purchase Criteria How do people buy your products? Do they ask for products by brand name or do they ask for a generic name or your company brand name? Do your brands make buying easier? How much do people want or need your brands? Brand Performance How do brands perform against desired attributes? Is their positioning clear and effective? Brand Role What is role of brand in fulfilling the business model? How important is the brand in driving awareness or creating loyalty? Channels What channels and distribution methods are available and how are they used across the brand portfolio?

Building Brand Architecture

TEAM : Openers ( 2 batsmen) 1-Down 2-Down 3-Down 4-Down Specialist all-rounder Wicket-keeper/ Batsman Spinners ( 3 numbers) Fast Bowlers ( 4 Numbers) Total Team Size = 15

Incorporating Brand Architecture into Business strategy

Key to a successful Brand architecture is to understand the target market so that you can devise a systematic positioning strategy . The Sub brands should be developed based on a study of the different segments of the market while the parent brand should help tie these strategies together. Benefits: It provides leverage to the existing brands and helps future extensions thro marketing efficiencies Helps to build the visual identity of the company As the company grows, it will help determine future investment priorities . It is vital for competitive advantage because it provides optimum market coverage based on thorough market analysis of the segments It also helps to identify gaps and clarify brand strategies

Corporate Branding

Corporate branding is the practice of using a company's name as a product brand name. It is an attempt to use corporate brand equity to create product brand recognition. It is a type of family branding or umbrella brand. Corporate branding can result in significant economies of scope since one advertising campaign can be used for several products. It also facilitates new product acceptance because potential buyers are already familiar with the name. New products share the awareness of the established brand identity. However, this strategy may hinder the creation of distinct brand images or identities for different products: an overarching corporate brand reduces the ability to position a brand with an individual identity, and may conceal different products' unique characteristics.

Corporate Branding

Thanks to the digital revolution , as never before, people care about the corporation behind the product. They do not separate their opinions about the company from their opinions of that company's products or services. This blending of corporate and product/service opinions is due to increasing corporate transparency, which gives stakeholders a deeper, clearer view into a corporation's actual behavior and actual performance. EXAMPLES:BMW precedes the model number of each car to build every name (BMW X3, BMW Z4, BMW M5). The Virgin Group companies have Virgin at the beginning of every name (Virgin Atlantic, Virgin Balloon Flights, Virgin Megastore USA). SONY

Corporate Branding

Thanks to the digital revolution , as never before, people care about the corporation behind the product. They do not separate their opinions about the company from their opinions of that company's products or services. This blending of corporate and product/service opinions is due to increasing corporate transparency, which gives stakeholders a deeper, clearer view into a corporation's actual behavior and actual performance. EXAMPLES:BMW precedes the model number of each car to build every name (BMW X3, BMW Z4, BMW M5). The Virgin Group companies have Virgin at the beginning of every name (Virgin Atlantic, Virgin Balloon Flights, Virgin Megastore USA). SONY, PHILLIPS, SAMSUNG, LG

Corporate Branding

Corporate branding can be summed up as being driven by the organization of the fact that the organization itself, rather than its products, was playing an ever increasing role in the organisations differentiation and its relationship with its various stakeholders. Corporate branding : Louis vuitton, IBM , FEDEX express ( orange), FEDEX ground ( green), FEDEX freight ( red),, Disney, coca-cola, McDonalds,Nike , Bang n Olufsen

4.52

CENTRAL DIMENSIONS OF CORPORATE BRANDING:

The construction of names symbols and experiences which are perceived as unique o the organization and facilitate recognition and repetition. Central ideas belonging to the organization that reach out to all stakeholders- internal and external. One organization that stands for all products, services and other behaviours. The expression of promises of distinct quality,substance, emotion, style or experience which follow from interaction with the organization. The creation and re-creation of meaningful distinction towards OTHERS in the eye of the stakeholders.
4.53