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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
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