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Strategic Brand ManagementStrategic Brand Management
Exeter MBA and MSc Exeter MBA and MSc –– Day 2Day 2
Lecture 1Lecture 1
Brand Equity Brand Equity –– Concepts and Concepts and
ApproachesApproaches
Jack Buckner
Brand Equity Brand Equity –– what is it?what is it?
�� The added value to the firm, the trade, or the The added value to the firm, the trade, or the
consumer which a given brand endows a product consumer which a given brand endows a product
(P.(P.FarquaharFarquahar))
�� The brandThe brand’’s source of value to the company and s source of value to the company and
the consumer (the consumer (KapfererKapferer))
�� A set of brand assets and liabilities linked to a A set of brand assets and liabilities linked to a
brand, its name and symbol, that add or subtract brand, its name and symbol, that add or subtract
from the value provided by a product or service to from the value provided by a product or service to
a firm and/or to that firma firm and/or to that firm’’s customers (s customers (AakerAaker))
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Jack Buckner
Brand EquityBrand Equity
Financial
“Goodwill”
P/E ratios
Managerial
Audit
Evaluate
Strategy
Jack Buckner
Brand EquityBrand Equity
�� ……is a relatively recent conceptis a relatively recent concept
�� ……combines finance with marketingcombines finance with marketing
�� ……may be more relevant in mature may be more relevant in mature
industriesindustries
�� ……may be more relevant in larger may be more relevant in larger
companiescompanies
�� ……will probably vary geographicallywill probably vary geographically
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Jack Buckner
Three Big Brand Equity StoriesThree Big Brand Equity Stories
Coke’s formula
change
Marlboro’s
price cutP&G’s value
pricing
Jack Buckner
Building a Brand in Building a Brand in MindspaceMindspace
Brand
Awareness
Brand Stage 1
Brand Stage 2
Brand
Stage 3
Risk Reduction
Differentiation
Relevance
Esteem
Relationship
Trust
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Jack Buckner
AakerAaker’’s s Sources of EquitySources of Equity
�� Brand name awarenessBrand name awareness
�� Brand loyaltyBrand loyalty
�� Perceived qualityPerceived quality
�� Brand associationsBrand associations
Jack Buckner
Brand AwarenessBrand Awareness
�� Recognition Recognition –– spontaneousspontaneous
�� Recognition Recognition –– promptedprompted
�� Recall Recall
�� SalienceSalience
–– AwareAware
–– In brand repertoireIn brand repertoire
–– In consideration setIn consideration set
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Jack Buckner
The Graveyard ModelThe Graveyard Model
Low
High
High
Recognition
Recall
Niche Brand
Graveyard
Source: Y & R
Jack Buckner
Out of the GraveyardOut of the Graveyard
Aga Foodservice
High brand recognition
Low brand salience
Identified younger
target market
Product range
refreshed
Brand/marketing
investment
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Jack Buckner
Graveyard ModelGraveyard Model
�� Illustrates the difference between Illustrates the difference between
recognition and saliencerecognition and salience
�� Works best for heritage brandsWorks best for heritage brands
�� Much harder for mass and discount brandsMuch harder for mass and discount brands
Jack Buckner
Brand LoyaltyBrand Loyalty
�� LoyaltyLoyalty
–– Purchase loyalty Purchase loyalty –– market sharemarket share
–– Attitude loyalty Attitude loyalty –– price premiumprice premium
�� Double Jeopardy (Double Jeopardy (EhrenbergEhrenberg))
–– Small brands have fewer buyers AND their Small brands have fewer buyers AND their
buyers buy less often (loyalty)buyers buy less often (loyalty)
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Jack Buckner
Double JeopardyDouble Jeopardy
2.02.017%17%9%9%BrimBrim
2.92.915%15%13%13%NescafeNescafe
2.72.713%13%18%18%FolgersFolgers
2.62.618%18%22%22%High PointHigh Point
2.82.824%24%22%22%TastersTasters
3.33.320%20%21%21%SankaSanka
3.63.620%20%24%24%MaxwellMaxwell
Volume per Volume per
BuyerBuyer
ExclusiveExclusive
BuyersBuyers
MarketMarket
PenetrationPenetration
BrandBrand
Source:Ehrenberg et al (1990) Journal of Marketing
Jack Buckner
Brand LoyaltyBrand Loyalty
�� Costs of attracting new customers much Costs of attracting new customers much
higher than retentionhigher than retention
�� MBNA (financial services) 5% increase in MBNA (financial services) 5% increase in
retention increased company profits by 60% retention increased company profits by 60%
over 5 yearsover 5 years
�� Stronger brands characterised by greater Stronger brands characterised by greater
loyaltyloyalty
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Jack Buckner
Loyalty GroupingsLoyalty Groupings
VulnerableVulnerableSwitchableSwitchable
LoyalLoyalFrustratedFrustrated
Satisfaction
Low High
High
Low
Perceived Risk
in switching
Source: Rossiter & Elliott (2001)
Jack Buckner
Perceived QualityPerceived Quality
�� The one measure to directly impact ROIThe one measure to directly impact ROI
�� Improve Improve ‘‘perceived qualityperceived quality’’ and ROI will and ROI will
improveimprove
�� Requires product frame of referenceRequires product frame of reference
�� More effective in mature industriesMore effective in mature industries
�� Harder to measure in Harder to measure in ““coolcool”” industriesindustries
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Jack Buckner
Brand AssociationsBrand Associations
Emotional and selfEmotional and self--expressive benefitsexpressive benefits
Brand as productBrand as product
Brand as organizationBrand as organization
Brand as personBrand as person
Brand as symbolBrand as symbol
BRAND IDENTITYBRAND IDENTITY
Jack Buckner
Brand Equity 10 (Brand Equity 10 (AakerAaker))
Loyalty Measures
1.Price Premium
2.Satisfaction/Loyalty
Perceived Quality/Leadership measures
3.Perceived quality
4.Leadership/popularity
Associations/Differentiation Measures
5.Perceived Value
6.Brand Personality
7.Organizational Associations
Awareness Measures
8.Brand Awareness
Market Behaviour Measures
9.Market Share
10.Market price and distribution coverage
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Jack Buckner
From Assets to EquityFrom Assets to EquityBrand Awareness
+ Image
+Perceived Quality
+Evocations
+Familiarity/liking
= Brand AssetsBrand added value,
perceived by consumers
-Cost of branding
- Cost of invested capital
= Brand Financial Value
(Brand Equity)Source:Kapferer
Jack Buckner
InterbrandInterbrand’’s s Top BrandsTop Brands
Leadership
Stability
Market
International
Trend
Support
Protection
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Jack Buckner
Interbrand in 1990Interbrand in 1990
1. Coca-Cola
2. Kellogg’s
3. McDonald’s
4. Kodak
5. Marlboro
6. IBM
7. American Express
8. Sony
9. Mercedes-Benz
10. Nescafe
Jack Buckner
Financial World 1996Financial World 1996
1. Marlboro
2. Coca-Cola
3. McDonalds
4. IBM
5. Disney
6. Kodak
7. Kellogg’s
8. Budweiser
9. Nescafe
10. Intel
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Jack Buckner
Interbrand in 2004Interbrand in 20041.Coca-Cola
2.Microsoft
3.IBM
4.GE
5.Intel
6.Disney
7.McDonalds
8.Nokia
9.Toyota
10.Marlboro
Jack Buckner
2004 Big Winners2004 Big Winners
Apple
Amazon.com
Yahoo
Samsung
HSBC
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Jack Buckner
2004 Big Losers2004 Big Losers
Kodak
Nintendo
Nokia
AOL
Ford
Brandchannel.com
Jack Buckner
Challenges to Brand Equity ModelsChallenges to Brand Equity Models
�� Increasing power of ownIncreasing power of own--labels and masslabels and mass--
merchandisingmerchandising
�� Brand proliferation and extensionsBrand proliferation and extensions
�� Increasing number of brand alliancesIncreasing number of brand alliances
�� Rapid growth and erosion of brand equityRapid growth and erosion of brand equity
�� NonNon--traditional marketing techniquestraditional marketing techniques
�� Regional variationsRegional variations
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Jack Buckner
Brand EquityBrand Equity
Financial
“Goodwill”
P/E ratios
Managerial
Audit
Evaluate
Strategy
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