CHAPTER 9Creating Brand Equity

Presented By: Rose Bunn

October 14, 2009

ADDRESS THE FOLLOWING

1. What is a brand & how does branding work?2. What is brand equity?3. How is brand equity built, measured, &

managed?4. What are the important decisions in

developing a branding strategy?

WHAT IS BRAND EQUITY

Brand: “a name, term, sign, symbol, or design, or combination of them, intended to identify the goods or services of one seller or group of sellers & to differentiate them from those of competitors”

Thus, a product or service whose dimensions differentiate it in some way from other products or services designed to satisfy the same need. This need can be functional, rational, tangible,

symbolic, emotional or intangible.

ROLE OF BRANDS

P 237- 238 Identify the maker Simplify product handling Organize accounting Offer legal protection Signify quality Create barriers to entry Serve as a competitive advantage Secure price premium

SCOPE OF BRANDING

Branding: endowing products and services with the power of the brand.

Mktrs need to teach consumers “who” the product is – by giving it a name & other brand elements to identify it – as well as what the product does & why consumers should care

DEFINING BRAND EQUITY Brand equity is the added value endowed on products and

services, which may be reflected in the way consumers think, feel, and act with respect to the brand

Mktrs & researchers use diff. perspectives to study brand equity like customer- based brand equity: the differential effect that brand knowledge has on consumer response to the mkting of that brand

3 key ingredients of customer- based brand equity:1. Brand equity arises from differences in consumer response2. Differences in response are a result of consumer’s knowledge

about the brand. Brand knowledge: all the thoughts feelings, images, experiences, beliefs, etc. that become associated with the brand

3. The differential response by consumers that makes up brand equity is reflected in perceptions, preferences, & behavior related to all aspects of the mkting of a brand

BRAND EQUITY AS A BRIDGE

Brand promise: the marketer’s vision of what the brand must be and do for consumers

From the perspective of brand equity, mktrs should think of all the mkting dollars spent on products & services each year as an investment in consumer brand knowledge, which emphasizes the importance of quality, not quantity

BRAND EQUITY MODELS

Brand Asset Valuator Model (BAV): provides comparative measures of brand equity of thousands of brands across several diff. categories

5 key components Differentiation: measures the difference of a brand from others Energy: measures the brand’s sense of momentum Relevance: measures the breadth of a brand’s appeal Esteem: measures how well the brand is regarded & respected Knowledge: measures how familiar the brand is to consumers

These components combine to form a Power Grid pg 243

BRAND EQUITY MODELS

BRANDZ Model: shows under the BrandDynamics pyramid that brand building follows a sequential series of steps, each contingent upon successfully accomplishing the preceding one pg 244

Presence: Do I know about it Relevance: Does it offer me something Performance: Can it deliver Advantage: Does it offer something better

than others Bonding: Nothing else beats it

BRAND EQUITY MODELS

Aaker Model: brand equity viewed as the brand awareness, loyalty, &association that combine to add or subtract from the value provided by a product or service.

Brand identity: unique set of brand associations that rep what the brand stands for & promises to customers, an apparitional brand image

Important Elements: Core elements: drives brand- building programs Extended identity elements: add texture &

guidance Brand essence: communicates the brand identity in

a compact & inspiring way

BRAND EQUITY MODELS Brand Resonance Model: pg 245 Based on the Brand Resonance Pyramid which goes from bottom to top:1. Identify= Who are you?2. Meaning= What are you?3. Response= What about you?4. Relationships= What about you & me?

Must establish 6 “branding building blocks”1. Brand Salience: how often & how easily customer think of the brand under

various purchase or consumption situations2. Brand performance: how well the product or service meets customers’

functional needs3. Brand imagery: the extrinsic properties of the product or service, including the

ways in which the brand attempts to meet customers’ psychological or social needs.

4. Brand judgments: focus on customers’ own personal opinions & evaluations5. Brand feelings: customers’ emotional response & reactions with respect to to

the brand6. Brand resonance: the nature of the relationship customers have with the brand

and the extent to which they feel they’re “in sync” with it

BUILDING BRAND EQUITY

Mktrs build brand equity by creating the right brand knowledge structures with the right consumers

3 main brand quality drivers:1. The initial choices for the brand elements or

identities making up the brand (brand names, URLs, logos, symbols, characters, spokespeople, slogans, jingles, packages,& signage)

2. The product & service & all accompanying marketing activities & supporting programs

3. Other associations indirectly transferred to the brand by linking it to some other entity (a person, place, or thing)

CHOOSING BRAND ELEMENTS

Brand elements: those trademarkable devices that identify & differentiate the brand

Brand Element Choice Criteria:1. Memorable 2. Meaningful Brand building3. Likable4. Transferable5. Adaptable Defensive6. Protectable

DESIGNING HOLISTIC MARKETING ACTIVITIES

Brands are not built by advertising alone. Customers know a brand though a range of contacts & touch points

Brand contact: any info-.bearing experience, whether positive or negative, a customer or prospect has with the brand, the product category, or the mkt that relates to the mktr’s product or service

3 important new themes in designing brand- building mkting programs:

1. Personalizing : making sure the brand& its mkting are as relevant as possible to as many customers as possible, but no 2 customer are identical

Permission mkting: mkting to consumers only after gaining their permission because “interruption mkting” is no longer allowed via mass- media campaigns

2. Integration : mixing & matching mkting activities to maximize their individual & collective effects

3. Internalization: Internal branding are activities & processes that help to inform & inspire employees

Brand bonding: when customers experience the company as delivering on its brand promise. The brand promise will not be delivered unless everyone in the company lives the brand

INTERNAL BRANDING

When employees believe in the brand, they’re motivated to work harder & feel greater loyalty to the firm

Important principles for internal branding are:1. Choose the right moment2. Link internal and external marketing3. Bring the brand alive for employees

Leveraging Secondary Associations The third & final way to build brand equity is

to “borrow” it.

MEASURING BRAND EQUITY

2 approaches to measuring brand equity:1. Indirect: assesses potential sources of brand equity by

identifying & tracking consumer brand knowledge structures2. Direct: assesses the actual impact of brand knowledge on

consumer response to diff. aspects of mkting Brand audit: a consumer-focused series of procedures

to assess the health of the brand, uncover its sources of brand equity, & suggest ways to improve & leverage its equity

Brand- tracking studies: collect quantitative data from consumers on a routine basis over time to provide mktrs with consistent, baseline info about how their brands & mkting programs are performing on key dimensions

Brand valuation: the job of estimating the total financial value of the brand

INTERBRAND’S STEPS IN CALCULATING BRAND EQUITY

Brand Valuation Chain pg 252 Market segmentation Financial analysis Role of branding Brand strength Brand value calculation

MANAGING BRAND EQUITY

Brand Reinforcement: brand equity is reinforced by mkting action that consistently convey the meaning of the brand in terms of

1. What products the brand represents, what core benefits it supplies, what needs it satisfies, &

2. How the brand makes products superior, & which strong, favorable,unique brand associations should exist in the minds of consumers

BRAND REVITALIZATION

Often the first thing to do in revitalizing brand is to understand the sources of brand equity were to begin with.

Second, decide whether to retain the same positioning or create a new one, & it so, which new one.

DEVISING A BRANDING STRATEGY

Branding Strategy: reflects the number & nature of both common & distinctive brand elements it applies to the products it sells

3 main choices in introducing a new product:1. It can develop new brand elements for the

new product.2. It can apply some of its existing brand

elements3. It can use a combination of new & existing

brand elements

BRANDING DECISIONS

4 general strategies in choosing which brand names to use:

1. Individual names: company doesn’t tie its reputation to the product, Ex. General Mill’s Bisquick

2. Blanket family names: Corporate brands across their range of products, Ex. GE

3. Separate family names for all products: Ex. Sears uses Kenmore for appliances and Holmart for home installations

4. Corporate names combined with individual product names: Ex. Kellogg combine with Kellogg’s Rice Krispies

BRAND EXTENSIONS Most new products are extensions of the brand

company. Ex. Microsoft Xbox video games, Nabisco 100 Calorie Packs, etc.

Advantages of Brand Extensions1. Facilitate new- product acceptance2. Provide positive feedback to the parent brand & company

Disadvantages of Brand Extensions1. May cause the brand name to be less strongly identified

with any one product, called the “line extension trap”2. Brand dilution: when consumers no longer associate a

brand name with a specific product or highly similar product & start to think less of the brand

3. Brand extension revenues can be high from consumers switching from the parent brand and in effect cannibalizing the parent brand.

4. Often overlooked is when the firm forgoes the chance to create a new brand with its own unique image & equity.

BRAND PORTFOLIOS

Brand portfolio: the set of all brands & brand lines a particular firm offers for sale in a particular category or market segment

Reasons for multiple brands in a category: Increasing shelf presence and retailer

dependence in the store Attracting consumers seeking variety Increasing internal competition within the firm Yielding economies of scale in advertising, sales,

merchandising, and distribution

BRAND ROLES IN A PORTFOLIO

Flankers: fighter brands that are positioned with respect to competitors’ brands so that a more important flagship brand can retain their desired positioning

Cash cows: brands that are able to maintain their profitability with virtually no marketing support despite dwindling sales

Low-end, entry-level: a low- priced brand in the portfolio used to attract customers to the brand franchise

High-end prestige: a high-priced brand that add prestige & credibility to the entire portfolio

CUSTOMER EQUITY

Customer equity: the sum of lifetime values of all customers

Customer lifetime value is affected by considering cost & profits related to: Acquisition: affected by the number of prospects,

acquisition probability of a prospect, & acquisition spending per prospect

Retention: influenced by the retention rate & retention spending level

Add- on spending: a function of efficiency of add- on selling, the number of add- on selling offers given to existing customers, & the response rate to new offers

THE END QUESTIONS COMMENTS CONCERNS