Creating Brand Equity November 15, 2011 Dr. Richard Kao

What is Brand Equity? Building a strong brand requires careful planning and a great deal of long- term investment. At the heart of a successful brand is a great product or service, backed by creatively designed and executed marketing. Cont.

The Role of Brands Brands identify the source or maker of a product and allow consumes to assign responsibility to a particular manufacturer or distributor. Consumers may evaluate the identical product differently depending on how it is branded. Cont.

Brands also perform valuable functions for firms, by: 1. Simplify product handling or tracing. 2. Brands help to organize inventory and accounting records. (with the UPC codes) 3. A brand also offers the firm legal protection for unique features or aspects of the product.

The brand name can be protected thru. Registered trademarks, manufacturing processes thru patents; and packaging can be protected thru copyrights and designs. Brand loyalty provides predictability and security of demand for the firm. Branding can be seen as a powerful means to secure a competitive advantage.

The Scope of Branding Branding is endowing products and services with a brand name. Branding is all about creating differences. To brand a product, it is necessary to teach consumers “ who ” the product is, “ what ’ the product does, and “ why ” consumers should care.

Consumers must be convinced that there are meaningful differences among brands in the product category, for branding strategy to be successful. Brand differences often are related to attributes or benefits of the product itself.

Defining Brand Equity Brand equity is the added value endowed to products and services. This value may be reflected in how consumers think, feel, and act with respect to the brand, as well as the prices, market share, and profitability that the brand commands for the firm. cont.

The power of a brand lies in the minds of existing or potential customers and what they have experienced directly and indirectly about the brand. There three key ingredients: 1. Brand equity arises from the differences in consumer response. Cont.

2. These differences in response are the result of consumer ’ s knowledge about the brand. ( ex. Volvo(safety), Hallmark(caring), Harley Davidson( adventure). 3. The differential response by consumers is reflected in perceptions, preferences, and behavior related to all aspects of the marketing of a brand.

Brand Equity as a Bridge All the marketing dollars spent each year on products and services should be thought of as investments in consumer brand knowledge. (the quality of the investment in the brand building is a critical factor!! ) The brand knowledge created by these investments dictates appropriate future directions for the brand. Steve Jobs: Apple ’ s mission is “ To create great things that change people ’ s life. ”

Brand Equity Models Brand Asset Valuator (BAV) – By Y&R. BAV provides comparative measures of the brand equity of thousands of brands across hundreds of different categories. There are four key components of brand equity: 1. Differentiation- the degree of difference 2. Relevance- the breadth of a brand ’ s appeal.

3. Esteem – measures how well the brand is regarded and respected. 4. Knowledge – measures how familiar and intimate consumers are with the brand. Differentiation and relevance combine to determine Brand Strength. These two pillars point to the brand ’ s future value.

Esteem and Knowledge together creates Brand Stature, which is more of “ report card ” on the past performance. ( See Fig. 1 BAV Power Grid )

Building Brand Equity Marketers build brand equity by creating the right brand knowledge structure with the right customers. This process depends on all brand- related contacts – whether marketer- initiated or not.

Choice Brand Elements Brand elements are those trademarkable devices that serve to identify and differentiate the brand. Brand element can be chosen to build as much brand equity as possible.

Brand Element Choice Criteria 1. Memorable 2. Meaningful 3. Likeability 4. Transferable 5. Adaptable 6. Protectable

Designing Holistic Marketing Activities The primary input of brand building comes from the product or service and supporting marketing activities. Customer ’ s brand contacts are through a range of contact and touch points: personal observation and use, word of mouth, interactions with company personnel, online or phone experience, and payment transactions.

Marketers can create brand contacts and building brand equity through many avenues, such as fan clubs and consumer communities, trade shows, event marketing, sponsorship, factory visits, public relations and press releases, and social cause marketing. Cont.

Three Themes in Designing Brand-building Marketing Programs Personalization Integration Internalization

1. Personalization Marketers have embraced concepts such as experiential marketing, one on one marketing, and permission marketing. Getting consumers more actively involved with a brand by creating an intense, active relationship. Making sure that the brand and its mktg are as relevant as possible to as many customers as possible.

2. Integration Integrating marketing is about mixing and matching marketing activities to maximizing their individual and collective effects. The case in point is the Olive Garden “ the idealized Italian family meal ”, “ welcome by people who treat you like family. ”

Internalization Marketers must now “ walk the walk ” to deliver the brand promise. Internal branding is activities and processes that help to inform and inspire employees. Brand bonding occurs when customers experience the company employees as delivering its brand promise. Cont.

The brand promise will not be delivered unless everyone in the company lives the brand. One of the most potent influences on brand perception is the experience customers have with company personnel. Companies need to engage in continual open dialogue with employers “ B2E ”.

Measuring Brand Equity Brand audits – to fully understand the sources of brand equity and how they affect outcome of marketing. Brand tracking – collect information from consumers about brand equity on routine basis over time. Brand Valuation is to estimate the total financial value of the brand.