Concept of Brand Equity

Brand Equity
• Brand Equity is a qualitative measure of the brand’s positive
recognition or goodwill in the minds of the consumers
considering the brand as an independent entity.

• Brand Equity is the tangible and intangible worth of a brand.

• The degree of premium that a brand can charge on its offering is

a direct measure of the equity it possesses with its customers.

• Brand Equity is kind of power that the brand has over its
competitors or the generic brands and is developed over time.
Brand equity is the aggregate worth of the following
constituents in the minds of its consumers:
Brand Equity
• Consumers’ beliefs (view-point) described brand equity as the
value of having a well-known brand name, that can generate
more money than lesser known name.
What is Brand Equity? (term since 1980)
Three Perspectives:

1. Accounting Context – called it Brand Valuation or Brand

Value. It is a total value of a brand as a separable asset, when
evaluated for selling. It is quantifiable.

2. Marketing Context − It is the description of consumer’s

associations and beliefs about the brand. It is non-quantifiable.
Brand equity is tailored according to the needs and demands of
the consumer. (As per marketers, brand equity is measuring the
consumers level of attachment to a brand can be called brand
strength).

3. Consumer-based Context − It is a measure of consumers’

attachment to a brand. It is also called brand loyalty. It is
quantifiable.
Brand Equity
Brand equity is the heart of brand management.

• The brand managers (roles) are engaged in building strong brand

equity as it directly affects the consumer’s buying decisions,
defines market share of the product, and determines the brand
position in the market.

• Strong brand equity can not only make the brand strong but also
help the brand establish, survive, and perform well in the long
run.

• Let us understand, what brand equity is and why it matters.

Brand Equity – Brand Management
• For brand management, the brand equity is vital as it establishes
and cultivates the customer loyalty towards the brand, which
influences the business growth.

Two ways to study brand equity:

a) Finance-based − You can estimate the brand value more

precisely for accounting purposes, such as to evaluate the brand
as an asset for the purpose of reflecting in the balance sheet, or
in case of merging or acquiring a business.

b) Strategy-based − You can study brand equity to improve

productivity of marketing.
Brand Decay
• It is a progressive loss of brand integrity due to weakening of
essential brand elements. It also includes losing the respect of
consumers and consistency of the brand. It is a gradual process.
Example, Air India airlines faced brand decay since long.

Reasons of Air India Brand Decay:

• Air India failed to manage strategies, create new value, and
acquire new customers or new marketplaces.
• Air India treated the brand merely as a static asset than as a
medium to create customer value.
• Customer expectations were more than what the brand delivered.
• There were issues of building up of brand equity.
• Air India imposed / shifted brand-customer relationship on / to
customer service department.
• Air India halted innovations in products or services. The worst
part is, customers start suggesting innovations.
Elements To Build Your Brand
1. BRAND AWARENESS
Brand awareness is the extent to which people are familiar with
the distinctive qualities or image of your brand. Enhancing this
is critical to gaining valued traffic.
Brand Awareness
• Brand awareness is the ability of a potential buyer to recognise
or recall that a brand is a member of a certain product category.

Brand Awareness has two dimensions:

1. Brand recognition: when a consumer is able to confirm prior

exposure when given the brand as a cue.

Example: when they go to the store, will they be able to

recognize the brand as one to which they have already been
exposed?
Brand Awareness
2. Brand recall: consumers ability to retrieve the brand when
given the product category, the needs fulfilled by the category,
or some other type of probe as a cue.

Example: recall of Kellogg’s Corn Flakes will depend on their

ability to retrieve the brand when they think of the cereal
category.

The mind share (top-of-the-mind recall) often leads to market

share.
2. BRAND ATTRIBUTION / EXPERIENCE
The inclination to inculcate a brand with certain qualities based
on prior experiences. Brand attribution assumes that people
draw upon their past experiences with a brand and those prior
experiences will influence future purchasing decisions.
• Few special moments in our lives that we cherish (recall) stick
with us forever. It may be hugging Mickey at Disney World.
Brand Experience
• Brand Experience is a type of experiential marketing strategy
that includes a holistic set of conditions created by a company
which is used to influence the feeling of the consumer towards its
brand.
3. PERCEIVED QUALITY
This is customer’s opinions of services and ability to fulfill
expectations. It is may have little or nothing to do with the
actual excellence of the service but rather, can be based on
image and the influence of engagement. Customers however,
judge quality as a total brand experience. Elevating perceived
value will enhance the perceived experience, thus, increase sales.

At Aston Martin, they strive to create products that would be

beautiful, clean, confident, and just as appealing 20-30 years
after they were designed. The adage we tried to follow was
"Perfection is achieved not when there is nothing more to add,
but when there is nothing left to take away". It's a sound
philosophy to achieve a high quality, timeless, premium design.
Perceived Quality
• Perceived quality can be defined as the customer’s perception of
the overall quality or superiority of a product or service relative
to alternatives. Perceived quality is customer based.

Perceived quality has two dimensions:

1. Objective quality: means the actual superiority of product or

service.

2. Perceived quality: perception of superiority of a product or

service with respect to its intended function.
Perceived Quality
Benefits of perceived quality of a brand equity
• Firstly, perceived quality gives a powerful reason for the
customer to consider and buy a specific brand.
• Second, perceived quality allows a brand to acquire a position
or differentiation.

• Brands with higher quality perception can afford to charge price

premiums. The premium can be further deployed in brand-
building efforts.

• Brands with higher perceived quality find greater acceptance

from trade partners and they are willing to carry such brands.

• Finally, it can be the basis to leverage brands into launching

extensions.
4. BRAND LOYALTY
Brand loyalty is a result of all - brand awareness, brand
attribution, perceived quality, and previous experiences. Loyalty
is also affected by a person’s preferences. Loyal customers will
purchase services from preferred brands, regardless of
convenience or price. (Let’s repeat that again, regardless of
convenience or price! ) This is how you increase margins on the
products and services you provide!

Starbucks has one of the most

effective brand loyalty programs
where customers order through
their phone app to save time, get
discounts, and free refills on
filter coffee after accumulating ‘stars.’
Brand Loyalty
Brand loyalty represents a favourable attitude toward a brand
resulting in the consistent purchase of the brand over time. It
represents a future revenue stream.

Brand Loyalty has two dimensions:

1. Behavioural approach: have defined loyalty by the sequence of

purchases and/or the proportion of purchases.

2. Cognitive approach: underlines that behaviour alone does not

reflect brand loyalty. Customer loyalty is an asset. Brand loyalty
is the core of brand equity. It shows how likely a customer will
switch to another brand, especially when that brand undergoes a
change, be it in price or in product features.
 5. Brand Associations

• A brand association is any mental linkage to the brand.

• An association can affect the processing and recall of information,

provide a point of differentiation, provide a reason to buy, create
positive attitudes and feelings and serve as the basis of
extensions.
5. Brand Associations
Brand Association has three dimensions:

1. Attributes: those descriptive features that characterise a product

or service.
2. Benefits: are the personal value and meaning that consumers
attach to the product or service.
3. Attitudes: are defined in terms of consumers’ overall evaluations
of a brand.

Benefits of brand association of a brand equity

• Firstly, Brands are bought for what is associated with them.
• Secondly, associations create value, is by becoming the basis of
differentiation.
• Finally, associations provide a basis for extending the brand into
new product categories
5. Brand Associations
Examples of brand associations are:
• Downy is soft, Tesla is electric, Coca-Cola is classic, BMW is
driving performance, Apple is simple, ZARA is fashionable.

• When a stakeholder thinks about a brand, they also recall the:

• Logo, product, memories of past interactions, how those
memories made them feel, location you would find their products
and services, brand colors, influencers who have endorsed them..

For example, Nike:

• Activewear, the Nike swoosh, the Nike outlet store near my
house, Sport Chek (the retailer I would go to buy Nike), black and
white, sweat, athletics, the feeling of energy, excitement,
anticipation, the controversy around their latest advertisements,
my favorite pair of workout shorts
(One more to add to the key Elements…

OTHER PROPRIETARY

Assets like - patents and intellectual property rights, relations

with trade partners.

The more proprietary rights a brand has accumulated, the greater

the brands competitive edge in those fields.
Importance of Brand Equity
• Importance of Brand Equity is not only to capture market
share but it also provides value to the customer, and firm.
• The resulting customer value becomes a basis for providing value
to the firm.

Importance of Brand Equity are:

Value to Customers
 Information processing
 Customer confidence
 Customer satisfaction
Value to Marketers
 Marketing programmes
 Customer loyalty
 Price premium
 Market share and Brand extension
 Leverage distribution channels
Value to Customers
• Information processing
A brand is useful in aiding customers in interpreting,
processing, and storing information about products and
brands. It simplifies this process.

• Customer confidence
A brand’s assets enhance customer confidence in the purchase
decision. One feels more confident in purchasing a brand. A
brand’s assets in the purchase decision.

• Customer satisfaction
The final value to the customer comes in the form of usage
satisfaction.
Value to Marketer
• Marketing programs
The effectiveness and efficiency of marketing programs are
increased by brand equity assets. The expenditure associated
with a brand to achieve a goal generally tends to be less than an
unbranded product aiming to achieve the same goal.

• Customer Loyalty
Brand equity dimensions allow a firm to have greater customer
loyalty. The customers can exhibit preference and commitment
to a brand only.
Value to Marketer
• Price Premium
Brand equity allows a firm to charge a premium. That is, a
customer may willingly support a brand in spite of greater
sacrifice that needs to be made.

• Market Share and Brand Extension

Brand equity provides great opportunities for growth. In fact,
most firms now rely on brand extensions to achieve growth
rather than launch new brands.

• Leverage distribution channels

Brand equity is a good source of achieving leverage in
distribution channels. It is easier to get access to the
distribution chain when the brand has equity.
Examples of Brand Equity
• Starbucks Brand Equity
Starbucks is a US-based company has been operating in the
coffee shop industry since 1971 and have a global reach of
28,000 outlets. Starbucks distinguished itself from competitors
based on the coffee taste and ambience.

• Porsche Brand Equity

Porsche has strong brand equity in the automobile industry due
to its reliability image through the use of high quality, unique
material. It is viewed as a luxury brand and owner pay not only
for the product but for a great experience.

• Apple Brand Equity

Apple is known among the consumer for its strong brand equity
in the mobile industry. The design of the Apple brand is
associated with culturally and economically technology power
and has been implemented Total quality management.
Brand Equity Measurement
• Understanding of brand equity is an important task for an
organization, without it they will struggle to set metrics for
improvement.
• Brand equity measurement is certainly complex and involves
many variables, but it’s wholly possible.
• Different ways to brand equity measurement

Brand Awareness

• Customer knowledge about the product is an important part of

brand equity. “Conversion share” is a leading indicator for
consumer awareness about your company product.
Local Marketer Perception Metrics
• Local outlets are directly responsible for the way your customers
experience the brand. By monitoring local marketers’
sentiment, we can understand whether your brand equity is
increasing or decreasing and improve the quality of your support
to local representatives.

Measuring Local Marketer Perception for brand equity among

target customers can take many forms:

• Surveys
• Focus groups
• Software adoption rates
• Campaign deployment rates
Good Bye