BrandsBrands&&

Brand EquityBrand Equity

Consumers buy products;Consumers buy products;they choose brands!they choose brands!

What is a brand?What is a brand?

A brand is a name, term, sign, symbol, or design,A brand is a name, term, sign, symbol, or design,

or a combination of them,or a combination of them,

intended to identity the goods or servicesintended to identity the goods or services

of one seller or group of sellersof one seller or group of sellers

andand toto differentiate them from those of competitorsdifferentiate them from those of competitors

- American Marketing Association- American Marketing Association

What does a brand convey?What does a brand convey?

A brand can convey up to 6 levels of meaningsA brand can convey up to 6 levels of meanings::• Attributes

• Benefits

• Values

• Culture

• Personality

• User

Why brands?Why brands?

• Brand signals the source of the product

• Protects customer and producer from competitors who have identical products

• Consumers form relationships with brands, not products or companies

• Brand makes an emotional and trust-based connection with consumer and distinguishes it from competition

Why is branding critical?Why is branding critical?

• Brand loyalty is the foundation of business

• Every purchase opportunity presents itself an excuse to change brands and shift loyalties– Father buys cigarettes every day– Mother buys diapers every week– Family buys groceries every month

• Branding determines status quo vs. shift

Why is it hard to build brands?Why is it hard to build brands?

• Proliferation of competitors

• Pressure to compete on price

• Fragmenting markets and media

• Complex brand strategies and relationships

• Bias towards changing strategies

• Bias against innovation

• Pressure to invest elsewhere

• Short term pressures

Brand EquityBrand Equity

Brand equityBrand equity

• 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

• 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

Brand equity: Key aspectsBrand equity: Key aspects

• Brand equity is a set of assets– Management of brand equity involves investment to

create and enhance these assets

• Each brand equity asset creates value in a variety of very different ways– It is imperative to be sensitive to the ways in which

strong brands create value

• Brand equity creates value for customer and firm

• For assets or liabilities to underlie brand equity, they must be linked to name/symbol of the brand

Value to the customerValue to the customer

• Brand equity assets can help customers interpret, process and store huge quantities of info about products / brands

• It can affect customers’ confidence in purchase decision– Due to past-use experience or familiarity with brand

• Both perceived quality and brand associations can enhance customers’ satisfaction with use experience– Knowing brand is Arrow can can make user feel different

Value to the firmValue to the firm

• Brand equity can enhance programmes to attract new customers or recapture old ones

• Perceived quality, associations and known name provide reasons to buy & affect use satisfaction

• Usually allows higher margins by permitting both premium pricing and reduced promotions

• Can provide leverage in the distribution channel

• Brand equity assets provide a competitive advantage that present a barrier to competitors

TideTide : For extra-tough family laundry jobs

CheerCheer : Works in cold, warm or hot water

GainGain : A detergent with fragrance

BoldBold : Includes fabric softener

DashDash : Concentrated power

DreftDreft : For baby’s clothes

OxydolOxydol : For sparkling whites

EraEra : Concentrated liquid detergent

SoloSolo : Heavy duty, with a fabric softener

Major asset categoriesMajor asset categories

1. Brand name awareness

2. Perceived quality

3. Brand loyalty

4. Brand associations

Brand awarenessBrand awareness

• A known devil is better than an unknown angel

• Awareness refers to the strength of a brand’s presence in the consumer’s mind

• Consumers instinctively prefer a brand that they have previously seen to one that is new to them

• Familiar brand has an edge!

The awareness pyramidThe awareness pyramid

Dominant

Top of mind

Unaided awareness

Aided awareness

Unaware of the brand

Value of brand awarenessValue of brand awareness

• Anchor to which other associations can be attached

• Provides the brand a sense of familiarity– Customers like the familiar

• Awareness can be a signal of presence, commitment and substance

• Awareness gets brand into the consideration set – Giving it a chance to get purchased!

Perceived qualityPerceived quality

Perceived quality can be defined

as the customer’s perceptioncustomer’s perception of the overall quality

or superiority of a product or service

with respect to its intended purpose,with respect to its intended purpose,

relative to alternativesrelative to alternatives

Perceived qualityPerceived quality

• Perceived quality is an intangible and overall feeling about a brand

• Perceived quality cannot necessarily be objectively determined because it is a perception

• Perceived quality could be different for the corner store versus the department store• Both are judged by a different set of criteria

• Perceived quality differs from satisfaction– A positive attitude could be generated because a

product of inferior quality is very inexpensive

Perceived qualityPerceived quality

• Perceived quality is a brand association, elevated to the status of a brand asset:– Among all brand associations, only perceived quality

has been shown to drive financial performance

– Perceived quality is often a major strategic thrust of a business

– Perceived quality is linked to and often drives other aspects of how a brand is perceived

Perceived vs. actual qualityPerceived vs. actual quality

• Consumers may be overly influenced by a previous image of poor quality

• A company may be achieving quality on dimension that consumers do not consider important

• Consumers rarely have all the info necessary to make rational or objective judgment on quality

• Consumers may not know how best to judge quality– Maybe looking at wrong cues– Ex., when buying tyres

Value generated by perceived qualityValue generated by perceived quality

• In many contexts, perceived quality provides the pivotal reason to buy

• Could differentiate and be a principal positioning characteristic of a brand

• Provides the option of charging a premium price

• Could be meaningful to channel members and thus aid in gaining distribution

Brand loyaltyBrand loyalty

• Brand loyalty, a central construct in marketing, is a measure of attachment that a customer has to a brand

• It reflects how likely a customer will be to switch to another brand– Especially when that brand makes a change, either

in price or in product features

• It is one indicator of brand equity which is demonstrably linked to future profits– Brand loyalty directly translates into future sales

Brand loyaltyBrand loyalty

• A brand has value only in its potential to create loyal customers

• It is simply much less costly to retain customers than to attract new ones– ‘The Hindu’

• Considering loyalty as an asset encourages and justifies loyalty-building programmes– Which helps create / enhance brand equity

The loyalty pyramidThe loyalty pyramid

Committed

Fence SittersConsiders it a friend

Passively LoyalWith switching costs

Satisfied / Habitual BuyerNo reason to change

Switchers / Price SensitiveNo brand loyalty

Strategic value of brand loyaltyStrategic value of brand loyalty

• Brand loyalty reduces the marketing costs of doing business

• It provides trade leverage

• Helps attract new customers

• Brand loyalty provides a firm with time to respond to competitive threats

Brand associationsBrand associations

• Brand equity is supported by associations that consumers make with a brand

• Brand association is anything linked in memory to a brand– Associations include product attributes, celebrity spokesperson

and symbol

• Association not only exists but has level of strength– A link to a brand will be stronger when it is based on many

experiences or exposures to communications, rather than few– Will also be stronger when supported by a network of other links

Types of associationsTypes of associations

• Product attributes• Intangibles• Customer benefits• Relative price• Use / application• User / Customer• Celebrity / person• Lifestyle / personality• Product class• Competitors• Country / geographic area

Value of brand associationsValue of brand associations

• Brand associations helps process / retrieve info

• An association can provide an important basis for differentiation

• Many brand associations involve product attributes or customer benefits that provide specific reason to buy

• Some associations are liked and stimulate positive feelings that get transferred to the brand