Chapter 9ppt Creating Brand Equity

Chapter 9

Creating 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. 

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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 

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Scope of Branding 

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

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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 

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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

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3 key ingredients of customer- based brand equity: 1. Brand equity arises from differences in consumer response 2. 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 

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Brand Equity as a Bridge 

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

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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

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Brand Equity Models 

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

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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

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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 

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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

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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? 

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Must establish 6 “branding building blocks” 1. Brand Salience: how often & how easily customer think of the brand under various purchase or consumption situations 2. Brand performance: how well the product or service meets customers’ functional needs 3. 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 & evaluations 5. Brand feelings: customers’ emotional response & reactions with respect to to the brand 6. 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

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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) 

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Choosing Brand Elements 

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

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

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Brand building

Defensive

Designing Holistic Marketing Activities

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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 

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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 moment 2.Link internal and external marketing 3.Bring the brand alive for employees 

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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 structures 2. Direct: assesses the actual impact of brand knowledge on consumer response to diff. aspects of mkting

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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 

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Managing Brand Equity 

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

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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.

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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

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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 elements 3.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 

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Most new products are extensions of the brand company. Ex. Microsoft Xbox video games, Nabisco 100 Calorie Packs, etc. Advantages of Brand Extensions 1. Facilitate new- product acceptance 2. Provide positive feedback to the parent brand & company

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Disadvantages of Brand Extensions 1. 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

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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 

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Customer Equity 

Customer equity: the sum of lifetime values of all customers

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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

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