BRAND EQUITY AVINA LECTURE UB AC ID Brand

BRAND EQUITY AVINA. LECTURE. UB. AC. ID

• Brand equity defines the “final” value of the brand • refer to two understandings of brand value : • a strategic, subjective understanding • a financial, objective expression. (helding, 2009: 11) three principal and distinct perspectives that have been taken by academics to study brand equity (keller 2003).

STAND POINT OF BRAND EQUITY Being able to account for how much the brand holds is extremely important Objective : Finance financial statements, mergers, acquisitions, and as a tool for brand managers Brand equity stand point Subjective : Consumer”s perception the value added to the functional product or service by associating it with the brand name’ (Aaker and Biel 1993 p. 2)

Objective : Brand as asset (finance) • As an asset, a brand is a symbol of the expected future profits of a company; • the problem is how to determine the earning power of a brand. Subjective (consumer feelings) • The differential effect of brand knowledge on consumer response to the marketing of the brand

Customer-based. • From the customer’s point of view, brand equity is part of the attraction to – or repulsion from – a particular product from a particular company generated by the "non-objective" part of the product offering, i. e. , not by the product attributes per se. While initially a brand may be synonymous with the product it makes, over time, through advertising, usage experience, and other activities and influences, it can develop a series of attachments and associations that exist over and beyond the objective product. Importantly, brand equity can be built on attributes that have no inherent value (Broniarczyk and Gershoff 2003; Brown and Carpenter 2000; and Carpenter et al. 1994), although Meyvis and Janiszewski (2002) show irrelevant information can be counterproductive in consumer decision-making.

Company-based. • From the company's point of view, a strong brand serves many purposes, including making advertising and promotion more effective, helping secure distribution, insulating a product from competition, and facilitating growth and expansion into other product categories (Hoeffler and Keller 2003). Brand equity from the company perspective is therefore the additional value (i. e. , discounted cash flow) that accrues to a firm because of the presence of the brand name that would not accrue to an equivalent unbranded product. In economic terms, brand equity can be seen as the degree of "market inefficiency" that the firm is able to capture with its brands.

Financial-based • From a financial market’s point of view, brands are assets that, like plant and equipment, can, and frequently are, bought and sold. The financial worth of a brand is therefore the price it brings or could bring in the financial market. Presumably this price reflects expectations about the discounted value of future cash flows. In the absence of a market transaction, it can be estimated, albeit with great difficulty (Ambler and Barwise 1998; Feldwick 1996), from the cost needed to establish a brand with equivalent strength or as a residual in the model of the value of a firm’s assets (Simon and Sullivan 1993)

SUBJECTIVE : BRAND EQUITY BASED ON CONSUMERS FEELING Brand Loyalty Name Awareness Perceived Quality Brand Associations Other Brand Assets Brand Equity Provides value to customers by enhancing customers’ * interpretation and processing of information * confidence in the purchase decision 8 * use satisfaction Provides value to firms by enhancing: * efficiency of marketing programs * brand loyalty * prices/margins * brand extensions * competitive advantage

UNDERSTANDING THE CUSTOMER-BASED VIEW • brand equity is determined by the customer • culmination of the customer’s assessment of • the product • the company • other variables that impact on the product • brand equity exclusively subjective (“in the eye of the beholder”) • brand equity can largely be influenced by marketing management ad libitum (and mainly through advertising)

Source: Millward Brown

BENEFIT OF BRAND EQUITY Higher Price Higher Profit Channel power extra retail shelf space Reduces customer switching Reduces erotion of market share –

SEVERAL APPROACH TO MEASURE BRAND EQUITY

BRAND METRIX Awarenesskesadaran Brand Metrix Attitudinal measuresukuran sikap Recall - ingatan Brand power index (BPI) Recognition pengenalan Most preferred brand (DSN Retailing) Revenue premium approachpendekatan preimium pendapatan

INTERBRAND’S SEVEN CORE CRITERIA Interbrand’s seven core criteria : is a set of criteria, chosen subjectively, includes the business prospects of the brand’s market environment, as well as consumer perceptions Leadership Stability Market International Trend Support protection

INTERBRAND’S SEVEN CORE CRITERIA. . (1) Leadership. • A brand that leads its market sector is more stable and powerful than other market entrants. This criterion reflects economies of scale for the first-place brand in communication and distribution, as well as the problems also-rans have in maintaining distribution and avoiding price erosion. Stability. • Long-lived brands with identities that have become part of the fabric of the market—and even of the culture—are particularly powerful and valuable.

INTERBRAND’S SEVEN CORE CRITERIA. . (2) Market. • Brands are more valuable when they are in markets with growing or stable sales levels and a price structure in which successful firms can be profitable. Some markets, such as consumer electronics, are so rife with debilitating price competition that the prospects of any brand being profitable are dim. International. • Brands that are international are more valuable than national or regional brands, in part because of economies of scale. More generally, the broader the scope of a brand, the more valuable it is.

INTERBRAND’S SEVEN CORE CRITERIA. . (3) Trend. • The overall long-term trend of the brand in terms of sales can be expected to reflect future prospects. A healthy, growing brand indicates that it remains contemporary and relevant to consumers. Support. • Brands that have received consistent investment and focused support are regarded as stronger than those that haven’t; however, the quality of the support should be considered along with the level of support. Protection. • The strength and breadth of a brand’s legal trademark protection is critical to the brand’s strength.

(-) • The subjectivity of both the criteria and assessment of the brands, however, makes the dimensions difficult to defend affects the reliability of the resulting measures. • Moreover, the Interbrand method treats different types of brands in the same way. For example, it treats Gillette as a single entity, even though it has many sub-brands and extensions, and treats Marlboro, which is a single brand, by the same rules. This flaw reinforces the need to develop more refined and rigorous methods of brand analysis.

YOUNG & RUBICAM’S BRAND ASSET VALUATOR : FOUR DISTINCT MEASURES Differentiation • Measures how distinctive the brand is in the marketplace. Relevancy • Measures whether a brand has personal relevance for the potential customer. Esteem • Measures whether a brand is held in high regard and considered best in its class. Closely related to perceived quality and the extent to which the brand is growing in popularity. Familiarity • Measures the degree to which potential customers understand what a brand stands for.

• According to this approach to brand equity, brand differentiation is the core of a successful brand proposition with a distinctive position in the marketplace that will promote long-term growth • Y&R defines BRAND EQUITY as the power of a brand to express its uniqueness and reach top-of-mind status with target consumers.

• Once consumers are aware of the brand, it needs to be relevant to their needs, satisfying and exceeding their expectations. • The way that the brand manager is able to express that relevancy in a language consumers appreciate will determine its success. • Once consumers understand what the brand can do for them, they need to aspire to own it, or have esteem for it. • Finally, when the brand has communicated its unique, relevant and aspirational message, it will be able to achieve familiarity through repurchase and re-use.

These four measures form the basis of two equations: • Differentiation x Relevance = Brand Strength (or vitality) • Esteem x Familiarity = Brand Stature

• The equations represent an attempt to overcome issues with other methods that assess brands solely in terms of present earning power. • They suggest that scores relating to brand differentiation and relevance indicate the potential for growth, while those relating to brand esteem and familiarity indicate its present stature. • The results, however, are dependent on subjective analyses of the four criteria in relation to the market, the consumer and the company; although there are market research techniques that can better ensure the necessary analyses accurate reflect the competitive milieu.

This grid allows for a quick and simple comparison among competitors along the two key dimensions identified by Y&R. • Brands that are high on both dimensions (the upper-right quadrant) have the greatest equity to protect and exploit. • The bottom-left quadrant is generally made up of brands that are just getting started; however, a brand that stays too long in this quadrant is not likely to be successful in the long run. • According to the Y&R hypothesis, the brands in the upper-left quadrant are either strong niche brands or brands with a significant opportunity to grow by increasing their stature (knowledge in particular). • The lower-right quadrant, in contrast, is populated by brands that are tired, but still retain some esteem and knowledge.

SOURCE Chiaravalle, B. & Schneck, B. F. (). Branding for Dummies. Hoboken: Wiley Publishing Davis, M. (2009). The fundamentals of branding. Lausanne: AVA Publishing Heding, T. , Knudzen, C. , & Bjerre, M. (2009). Brand management : Research, theory, and practices. New York: Routledge • http: //brandnbranding. blogspot. com/2007/10/interbrands-brandequity-model. html