Part 3: Building Strong Brands
Chapter 8 – Creating Brand Equity
I. Chapter Overview/Objectives/Outline
A. Overview
marketing activities and programs to build, measure, and manage brands to maximize
their value. This process involves:
1. Identifying and establishing brand positioning
2. Planning and implementing brand marketing
3. Measuring and interpreting brand performance
4. Growing and sustaining brand value
All investment dollars used to provide market offerings are actually an investment in
building an equity bridge with the consumer as the consumer acquires knowledge from
the respective offerings.
Marketers must choose the appropriate brand elements to identify and differentiate their
brand. These elements must be tested and developed, usually with the help of market
research firms. Brand elements should also capture the brand’s intangible characteristics
as “The rock of Gibraltar” symbol is used by Prudential Insurance. Organizations may
use “personalizing marketing” to ensure relevancy in the brand marketing efforts. This
can be accomplished via the Internet, experiential marketing, one-to-one marketing, and
permission marketing methods. Marketing activities throughout the organization as well
as the value chain should be integrated to ensure consistency with the brand strategy.
Internal branding can be used to inform and inspire employees of the organization’s
branding strategy. Another way for organizations to build brand equity is to create
secondary brand associations by linking associations to other entities and their respective
brand, often referred to as co-branding.
There are two major approaches to measuring brand equity. First is an indirect approach,
which is a quantitative method of identifying and tracking consumer brand knowledge.
The direct approach assesses the “actual” impact of brand knowledge on consumer
response to different aspects of marketing. Both methods are important for an
organization to understand how sources of brand equity and respective outcomes of
strategy change over time. Brand audits are customer-focused exercises that involve
series of procedures to assess the health of the brand, uncover its sources of brand equity,
and suggest ways to improve and leverage its equity. Brand audits enable the organization
to better understand the sources of brand equity and how they affect outcomes of interest.
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There must be a long-term brand management strategy as well. Brand reinforcement and
brand revitalization techniques help support longer term strategies. The former consists of
reinforcement and changes to marketing activities for current and new products. The
latter may include a major change to how a product is positioned in the market place, i.e.,
re-inventing itself.
When devising a brand strategy, the organization must first decide whether “to brand” or
“not to brand”? If the organization decides to brand, it must choose which brand names to
use, i.e., individual names, blanket family names, separate family names for all products,
corporate name combined with individual product names.
Co-branding is a joint effort whereby two or more established brands are linked together
in a marketing branding effort. Ingredient branding is a special case of co-branding in
which a component of the product also has a brand association. An example of this would
be a PC “with the Intel chip inside.”
Brand extending is the process of associating a new product with an existing brand,
thereby extending the brand to cover the product. This can increase the odds of success
for the new product. There is the risk with extensions of diluting the brand. This occurs
when consumers can no loner associate a brand with a specific product or similar set of
products and start thinking less of the brand.
Because different market segments look upon brands differently, it is important to
provide multiple brands in the same category. Other reasons for having multiple brands in
the same category include 1) increase shelf presence and retailer dependence in the store,
2) attract new customers seeking variety, 3) increase internal competition within the firm,
4) increase economies of scale in marketing mix activity. Multiple brands in the same
category can be referred to as being in a set called the brand portfolio.
Companies should develop brand policies for the individual product items in their lines.
They must decide on product attributes (quality, features, design), whether to brand at all,
whether to employ producer or distributor branding, whether to use family brand names
or individual brand names, whether to extend the brand name to new products, whether to
create multiple brands, and whether to reposition any of them.
B. Learning Objectives
Gain an appreciation of what branding means and the concepts of brand equity
Understand how a company can make better brand decisions.
Investigate different brand options and risks
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C. Chapter Outline
I. What Is Brand Equity? Brand defined – a name, term, sign, symbol, or design, or a
combination of them, intended to identify the goods or services of one seller or
group of sellers and to differentiate them from those of the competition. A brand
has six levels of meaning: attributes, benefits, values, culture, personality, and
user.
A. The Role of Brands
1. Identify source or maker of product or service
B. The Scope of Branding
should care
2. Brands must stress differentiation which leads to consumers building
process
C. Defining Brand Equity (also refer to Table 8.1)
1. Brand equity is the added value endowed on products and services,
commands for the firm.
2. Customer-based brand equity –
a. Arises from differences in consumer response.
knowledge.
c. Brand equity is reflected in perceptions, preferences and
behavior related to all aspects of the brand’s marketing.
must be and do for consumers.
D. Brand Equity Models
1. BrandAsset® Valuator is Ad Agency Young & Rubicam’s model of
Energized Differentiation, Relevance, Esteem, Knowledge
2. BrandZ model of brand strength developed by Millard Brown and WPP
identifies of series of steps leading from a weak to a strong brand
Pyramid. (Refer to Figure 8.2)
3. Brand resonance Model views brand building as a series of six
ascending steps or building blocks –Salience, Performance and Imagery,
Judgments and Feelings, Resonance. (Refer to Figure 8.3)
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differentiate the brand. Examples: brand names, URLs, logos, symbols,
characters, spokespeople, slogans, jingles, packages and signage
a. For building the brand (memorable, meaningful, likeable)
b. For defending the brand (transferable, adaptable, protectable)
2. Brand Element Choice (6) Criteria (Refer to Table 8.1)
a. Memorable – easily recalled
b. Meaningful – credible and suggestive
c. Likeable – appealing
effect over time
f. Protectable – legally and competitively protectable
3. Links to other entities
a. Use market research firms to test potential names via association,
memory, and preference tests
b. Create appropriate associations
c. Capture intangible characteristics
internalization
1. Personalization – brand and marketing activity in support of brand are
made relevant to respective customers
2. Integration – mix and match marketing activities to maximize their
individual and collective efforts
particular brand
3. Internalization – the art of internal branding whereby all members of the
organization understand the brand strategy and their role in supporting
the brand. This leads to brand bonding with the consumer as every touch
point reflects a respective brand supporting activity
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1. Channels of distribution (through channel strategy)
2. Company itself (through branding strategies)
3. Countries or other geographical regions (through identification of
product origin)
4. Other brands (via co-branding, licensing, endorsements, sponsorship,
awards or reviews by third parties)
D. Internal Branding – activities and processes that help inform and inspire
employees. Should also extend to value chain partners.
E. Brand Communities – Internet has enabled the growth of specialized communities
of consumers and employees whose identification and activities focus around
the brand. Good example of a brand community is the Harley Owners Group.
Three characteristics identify brand communities.
1. Sense of connection to the brand, firm or product or other community
members.
2. Shared rituals, stories and traditions that help convey meaning
3. Shared responsibility or duty to the community and individual members
III. Measuring and Managing Brand Equity – indirect approach assesses potential sources
of brand equity by identifying and tracking consumer brand knowledge
structures. direct approach assesses actual impact of brand knowledge on
consumer responses to different aspects of the marketing.
A. Brand Audits and Brand Tracking
1. Brand audit – Consumer-focused exercises intended to assess the health
of a brand, uncover its sources of brand equity, and suggest ways to
improve and leverage its equity. Brand audits used to understand the
sources of brand equity and how they affect outcomes of interest. Two
steps to a brand audit:
a. Brand inventory – current comprehensive profile of how the
organization’s offerings are being marketed including association
programs
b. Brand exploratory – research activity to understand what
consumers think and feel about the brand and its category
including how they shop for use the offerings
2. Brand tracking used to understand how the sources of brand equity
change, if at all, over time.
a. Tracking studies collect information from consumers over time.
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valuation model.
C. Managing Brand equity
1. Brand reinforcement requires innovation and relevance. Marketing
activity must be consistent and be moving the brand forward and in the
of:
a. What products it represents, core benefits and needs satisfied
b. How the brand makes products superior and how positive brand
associations should exist in consumer’s minds.
2. Brand revitalization
a. Restore fading brand
1) “Return to roots”
2) Establish new sources of brand equity
b. Refresh brand
Improving consumer recall and recognition
2) Improve strength, favorability, and uniqueness of brand image
c. Brand crisis
1) Prepared brands are able to withstand crippling brand crisis
2) Reaction to crisis must be quick and sincere
programs
IV. Devising a Brand Strategy . Refer to Table 8.2 for brand related definitions.
A. Branding Decision: to brand or not to brand? – commodities can be a target for
branding if appropriate differentiation can be applied
1. Three main choices when introducing a new product
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for different quality lines). Also referred to as as a “house of brands”
strategy.
b. Corporate umbrella or company brand name. Benefit examples include
Rice Krispies) .
B. Brand portfolios – set of brands and lines in a particular category
1. Reasons for placing brands in category
a. Increase shelf presence and retailer dependence in store
b. Attract consumers seeking variety
c. Increase internal competition within organization
and physical distribution
2. Roles within a portfolio
a. Flankers – also called fighter brands that are positioned close to
competitor to protect positioning of flagship brands
b. Cash cows
than that of the parent brand
1. Advantages of brand extensions
a. Setting up positive expectations in consumer mind reduces risk
b. Reduces barriers to channel acceptance
c. Allows consumers to switch products but stay in brand family
d. Reduces product launch cost
e. Provides feedback benefits
2. Disadvantages of brand extensions
a. May lose identity (Ries and Trout – “line-extension trap”
b. Brand dilution
c. Cannibalization
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3. Success characteristics
V. Customer Equity –
A. Definition – “sum of lifetime values of all customers”. Note that there
are many permutations of calculating Life Time Value, almost all of
which include NPV calculations.
B. Customer lifetime value affected by revenue and cost considerations
related to:
1. Acquisition
2. Retention
3. Add-on spending
C. Customer equity versus Brand equity
1. Both emphasize the importance of customer loyalty
practical guidance for specific marketing activities
4. Brands serve as the “bait” to attract customers from whom value is
extracted
V. Executive Summary
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