Friday, June 21, 2013

Brand equity


There has been a great consideration of the various elements of the marketing mix and how it can lead to the creation of a positive brand equity and thus lead to the increase in the performance of the brands that are being offered by the firm in the market . The study of the brand performance arises from the realization of the importance of brand management. The brands must be recognized as the focal points for the differentiation between the different firms. The differentiation leads to the different firms having different competitive advantages in the firm where the firms operate. Brand performance and brand equity has been subject of research. Managers in the marketing boardrooms have had a desire for a greater clout, pressure from investors to be able to demonstrate the returns on the marketing and finally, the need for an increased accountability in the marketing . Although there is an explicit recognition of the role that the marketing mix does in creating the positive brand equity and thus an increase in performance, there is a lack of empirical study in the topic. This essay provides a theoretical analysis of brand equity and how it affects performance of a brand.


Brand equity is the value of having a brand name that is well-known. It is based on the assumption the a company with a well-known brand name is able to generate more sales from products with brand name as compared to other companies less known brand names . This is because consumers tend to believe that the product with a well-known brand name is much better than other products with less known names. Some researchers in the marketing field have come to a conclusion that a brand is the most valuable asset that a company can ever have. This is due to the fact that brand equity is one of the major factors that can increase a company`s financial value. Some of the elements included in valuation of brand equity are changing market share, recognition of logos and other visual elements by the customers, profit margins, customer`s perception of quality as well as brand language by the customers.

Brand performance refers to the evaluation of the markets shares and the sales levels that are recorded. It has been noted that the brand performance is related to the market behavior evaluation in terms of the prices, the market share and the distribution coverage. They also noted that brand equity, which refers to a set of liabilities, assets, the symbols and name that add or subtract to the value to the products of the firm provide to the customers of the firm, greatly affects the performance of the brand . The assets, referred to in the definition of the brand equity, include the brand loyalty, other proprietary brand assets, brand association, brand awareness and the perceived quality.

Brand identity
The establishment of brand identity is extremely important for the performance of the product in the market because it leads to the establishment of brand loyalty in the market. The establishment of brand loyalty calls for the establishment of brand salience which relates the aspect of customer awareness of the brand. Normally, the establishment of the brand is aimed at satisfying the needs of the customers and this leads to the establishment of customer awareness because the customers will tend to associate the product with specific factors that enhances product awareness and customer satisfaction. In reality, brand awareness does not necessitates satisfaction alone but it also considers the aspects of applicability of the brand name, logo, symbols and all the factors that reflect the memory of the customers about the specific brand . Ideal brand identity is created when the customers realize the needs and wants that are satisfied by the brand. In this regard, the development and the building of brand identify and brand awareness requires the establishment of the customer-based brand building capacities. The development of this perspective requires the establishment of breadth and depth.

Marketing of a particular brand is also governed by the knowledge that customers have about that product. A company is able to create brand equity through strategic investments in things such as market education and communication channels which appreciates through growth in profit margins, prestige value, critical associations and market share . These strategic investments normally appreciate over a period of time delivering good returns on investment. Brand equity can also increase without a strategic direction. Jerusalem is a good example of a city that has experienced commendable appreciation in brand equity over centuries through non-strategic means. This has enabled to be one of the leading tourist destinations in the world.

Although brand equity is a very important marketing tool, it is very difficult to quantify . Several experts around the world have invented tools for analyzing brand equity but there is still no single measurement that is accepted universally. The academicians and professionals in the field of marketing find it difficult to reconcile disconnect between qualitative and quantitative equity values when dealing with the concept of brand equity. Quantitative brand equity involves numerical values like market share and profit margins but does not capture other qualitative values such as associations of interest and prestige. Due to this challenge, most of the practitioners in the marketing field take a more qualitative approach when dealing with brand equity.

Measurement of a brand
The value of a brand can be measured through brand equity metrics. A brand normally consists of a name, image, logo and perceptions that are used to identify a service, product or even the provider in the customers` minds . A brand is developed through packaging, advertising as well as other marketing communications and it becomes the main focus of the company`s relationship with customers. A brand being advertised by a company should embody promises made to the customers about the products. These promises include performance, quality and other valuable factors that can influence customers to choose that product among the competitors. A good marketing campaign should be able to convince the potential customers to believe in the product. When consumers develop trust in a particular brand, they will prefer to choose any offerings that are associated with that brand over those that are offered by the competitors even if a premium price is charged. In case a brand promise goes beyond a specific product, the owner may leverage it by entering the new markets.
A brand can be measured either at the firm level, product level or the consumer level. When being measured at a firm level, the brand is viewed as a financial asset. Calculations are normally made based on how much a brand is worth in term of intangible assets. For instance, when the tangible assets and other measurable intangible assets are subtracted from the overall value of the firm, the remainder is brand equity. A brand can also be measured at a product level whereby the price of a private label product is compared with that of an equivalent branded product. Assuming that all other things are equal, any difference in price is due to that particular brand.
The revenue premium approach gain popularity in recent times.

Finally, the customer level measurement of brand seeks to map out the minds of consumers in order to find out the associations they have with the brand . The main aim of this approach is to measure the level of customer awareness and brand image. Projective techniques and association tests are used to measure the intangible as well as tangible attributes, intentions and attitudes about the brand. Brands that have high levels of customer awareness and unique, favorable and strong associations are normally high equity brands. All these ways of measurements are not mutually exclusive. Better results can be achieved when multiple measures are used. It is therefore important for an organization to integrate different methods in measurement of its brand equity.

Brand Dynamics model of measuring Consumer Brand Equity
The Brand Dynamics model is a methodology that is based on hierarchies and is used in the measurement of the opinions, attitudes, and the beliefs of the consumers regarding a given brand that is offered by a firm . The current consumers or the prospective consumers are asked a number of questions for instance whether the person was aware of the products or even if the products offered them any new offering. According to the model, there are five main levels of relationships that the people can establish with the brands. Each of the 5 levels is a depiction of strong connections between the brands and the consumers. The levels include the Relevance, Presence, Advantage, Performance and Bonding . Bonding is the most powerful relationship of all the 5 levels. The presence is the level where there is the least powerful connection between the customers and the brand. At this level, the customers can be considered to know something about the given brand.
The next level is the relevance where the given brand offers some form of functionality to the customers. Performance refers to the stage where the given product is viewed as having the ability to deliver. The forth level is the advantage where the products are considered to have an ability to be able to offer something that is better that is found in the current market. The strongest connection is found at the 5th level where the customers consider the product to be the best in the market.
The marketers can be able to measure the consumer attitudes through the monitoring of the relations hips between the brands and the products through the use of Brand Dynamics. The different changes can be traced through the usage of the different communication and the marketing channels that are used in the firm. The model is useful in that it can help the marketing executives in the firm to be able to measure whether the brand of the firm is declining or it was improving. The measure allows the marketing managers to make decisions regarding the where changes should be made, what should be adapted, ways of enhancing the positioning of the brand the marketing efforts that should be used in the firm.

Brand equity based on the assumption the a company with a well-known brand name is able to generate more sales from products with brand name as compared to other companies less known brand names. Marketing of a particular brand is also governed by the knowledge that customers have about that product. A company is able to create brand equity through strategic investments in things such as market education and communication channels which appreciates through growth in profit margins, prestige value, critical associations and market share. Brand building has been considered an important aspect in enhancing the establishment of brand equity. A strong brand name enhances organizational performance through customer loyalty.

Aggarwal, S. (2008). A Theoretical And Practical Approach . Brand Management: , 39. Ataman, Berk M., Heerde, Harald J. and Mela, Carl F., "The Long-Term Effect of Marketing Strategy on Brand Sales", Journal of Marketing Research, 47(October 2010): 866–882 Chirani, Ebrahim, Taleghani, Mohammad and Moghadam, Nasim E., "Brand Performance and Brand Equity", Interdisciplinary Journal of Contemporary Research in Business, 3, 9(2012): 1033-1036 Elliott, R. & Percy, L. (2007), Strategic brand management, Oxford: Oxford University Press Kotler, Philip, "From Sales Obsession to Marketing Effectiveness" Harvard Business Review, 55 (1977): 67-75 Malhotra, N. K. (2002), Basic Marketing Research: A Decision-Making Approach, Upper Saddle River, NJ: Prentice Hall Rik Riezebos, H. J. (2003). A Theoretical and Practical Approach. Brand Management: , 194. Ratneshwar, D. G. (2005). consumer motives, goals, and desires. Inside consumption: , 275. Sedaghat, Nafiseh, Sedaghat, Maedeh and Moakher, Amir K., "The Impact of Promotional Mix Elements on Brand Equity", American Journal of Scientific Research, 1450-223X, 43 (2012): 5-15 Temporal, P. (2011). Managing Brands in a Changing World. Advanced Brand Management: , 72. Wood, Lisa, "Brands and brand equity: definition and management", Management Decision, 38/9(2000): 662-669