brAND EQUITY

Brand equity

Definitions

“Brand equity is the set of brand assets and liabilities linked to the brand, its name, and symbol, that adds or subtracts value to a product or service for a firm/ or its customers” (David Aaker).

“Brand equity is the set of associations that permits the brand to earn greater volume than it would without the brand name” (Marketing Science Institute).

“Brand equity is everything the customer walks into the store with” (Peter Farquhar).

“A set of associations which are most strongly linked to a brand name” (Andrea Dunham).

(source: Franzen, 1999)

Overall…

Franzen (1999): 4 principle dimensions within brand equity definitions:

Presence of a brand in consumers mind Influence on their buying behaviour Effects on brands market position and financial result Financial value of the brand as a immaterial assets

of the company

The concept of brand equity

Brand Equity

Mental Brand Equity

Behavioural BrandEquity

Financial/EconomicalBrand Equity

(Franzen, 1999)

Mental Brand response

Brand behavioural response

Market response

Mental Brand Equity

1. Brand awareness

2. Defining brand meaning

3. Brand positioning

4. Price/ quality assessment

5. Overall evaluation/ attitudes

6. Buying behaviour tendency

7. Brand relationship

1. Brand awareness

“The strength of a brand’s presence in the consumer’s mind” (Aaker, 1996)

Broken down into 3 parts: First mentioned brand – as strong brands should be at the front of the

memory and come up spontaneously when thinking about a category TOMA (=top of mind awareness)

Spontaneous brand awareness -Expression of total presence of brand e.g. of a brand category “toothpaste” in consumers’ mind and behaviour. These brand were bought and will be bought in future part of the consideration set

Aided brand awareness – e.g. brand recognition from a list. Only marginal influence in choice behaviour. These brands are not part of consideration set.

(Franzen, 1999)

2. Brand meaning

Brand signals - visual, auditive, olfactory, taste and tactile characteristics

Origin – e.g. stereotypical associations to country or region Company/ maker ‘endorsement -’ vs ‘driver brands’ (Aaker,

1996) Functional meaning – functional vs. symbolic meaning Situational meanings – associations and moments of

consumption of a particular brand Symbolic meaning – allocation of human attributes to brands:

brand personality (Aaker 1997, later on) & brand values Price Quality Presentation & Advertising

Brand personality

Brand Personality Scale(BPS)

Variance Explained Traits Brand

Sincerity 26.5% Domestic, honest, genuine, cheerful

Campbell’s, Hallmark, Kodak

Excitement 25.1% Daring, spirited, imaginative, up-to-date

Porsche, Absolut, Benetton

Competence 17.5% Reliable, responsible, dependable, efficient

Amex, CNN, IBM

Sophistication 11.9% Glamorous, pretentious, charming, romantic

Lexus, Mercedes, Revlon

Ruggedness 8.8% Tough, strong, outdoorsy, rugged

Levi’s, Malboro, Nike

(Aaker, 1997)

3. Brand positioning

Brands and their relation towards competing brands are stored in unique position in consumers brain. (e.g. GAP is more expensive than H&M)

When evaluating and comparing brands consumers classify

them in groups or subgroups on the basis of the most common attributes or most characteristic differences (Franzen & Bouwman 2001).

Classical categorisation theories:Concepts are organised into hierarchies in long-term memory. Hierarchical structures have horizontal and vertical dimensions. Vertical dimension represents various levels from general to specific: from category to subcategory to sub-subcategory…Horizontal dimension represents characteristics differences between groups at the same level.Brands are placed in categories and subcategories on the basis of product or product or product variants.

…

Prototype Approach:This approach is widely accepted in psychology as alternative of a strict hierarchical structure of knowledge in long-term memory. For each category there is a Prototype entity – the most original and most representative example.

In many product fields there are such prototypical brandse.g. facial tissue: Kleenex (1924)

detergent: Persil (1909)

Therefore, brands within a category are arranged by the extend to which they are representative for the category in relation to the prototype.

Critique & Exploitations of Brand Positioning

A) Extensions and brand elasticity Launching brand extensions often means to exploit

the already existing brand position in the consumers brain, hence the market (e.g. Virgin)

However, extensions have their limits, often refereed to as brand elasticity (Howard & Matter, 1997).

Two key issues in brand elasticity which determine the ‘ consumers breaking point’ or trust in an extension were proximity and functionality.

…

B) Concept brands vs. product brands Lately it is discussed that brands no longer form the basis for brand

positioning. It is assumed that brands are no longer characterised on the basis of its products or product variants to which they are connected to, rather in terms of their concept.

“Concept brands distinguish themselves from classical ‘product brands’ because they do not claim any intrinsic qualities, improvements, apparent improvements or added value, but bring a body of thoughts, a vision, a world into the market” Rijkenberg (1998).

E.g. “Levi-like” the roots of Levi’s brand: denim, jeans, sex & rebellion were reintroduced after red figures in 1980s. From than on all products were tested against these core values.

4. Quality & Price assessment

Perceived quality: A relative concept that occurs mainly in a competitive setting.

perceived quality of Audi compared to Fiat. Category dependent, brand A might be better in one

subcategory but not in another. Situational variables: physical and social surrounding of usage Based on quality cues e.g. packaging Partly determined by “meeting users’ expectations” Relevance: strong correlation between perceived relative

quality and a) return on sales, b) return on investment. Thus, it is an important variable affecting companies’ profitability. (Buzzel & Gale 1987)

Price assessment Perception of relative prize affects consumer’s decisions about

including brands in their consideration set or not.

5. Brand attitudes/ Overall evaluation

The importance of brand attitudes is based on the predictive power of attitudes on intention and intention on behavior (Fishbein & Ajzen 1975, Van der Pilgt & De Vries 1991)

However, an important implication was that when measuring attitudes to predict behaviour these must conform the principle of correspondence (action, goal, context, time)

High correlations in many product categories between consideration scores (attitudes) and brand’s sales (Dyson et al. 1996, Millward Brown)

For this reason estimates of brand equity and its course could be obtained by segmenting its users according to their relative strength of attitudes towards alternative, hence competitive brands (see Conversion Model by Hofmeyr, 1990)

6. Buying behaviour tendency

When considering low involvement products many purchases are rather automated, habitual.

Once acquired and given a specific stimulus situation automatic, non-conscious processes will be performed (Bargh, 1997).

Thus, a clear distinction between intentional conscious decision making and automatically performed ‘acquired tendencies’. These acquired purchasing habits are fundamental components of brand networks in our memory.

Consequently, research must distinguish between prediction of brand purchasing behaviour by means of attitude & intention and past behaviour in form of acquired tendencies & habits.

7. Brand Relation

Definition:“Relationship between a person and a brand as a voluntary or imposed mutual dependency that is characterised by a unique history of interactions and the anticipation of common events in the future, which has its goals helping to reach the instrumental- and/or social–psychological goals of the partners, and which is characterised by a strengthening emotional bond” (Fournier, 1994).

Purpose for consumer (Langer, 1997): Practical role – habit & convenience Emotional role – identification & self-expression Social Role – communication of who you are

Conversion Model (Hofmeyer, 1990)

Segmentation of users within a category according to relative strength of their attitudes towards alternative brands.

Establishes strength of consumer preferences in each brand compared with brand use.

Uses 4 types of questions:1. Assessment – overall assessment of brand on 7-point scale

(‘cold’ – ‘hot’ corresponding emotional distance)2. Satisfaction of needs – satisfaction with the brand on 10 –

point scale (‘very dissatisfies’ – ‘perfectly satisfied in every respect’

3. Importance – measures of involvement with product category4. Movement – measurement of inclination to change, whether

reasons for brand loyalty prevail over reason for change brand

Conversion Model

Entrenched users

users who are not available for conversion, remain loyal

Available consumers

non-users who prefer the brand in question to their current choice

Average users

secure users who are not available for conversion, committed to the brand

Ambivalent consumers

non-users equally attracted to the brand in question and current choice

Shallow users

beginning to show sign of wavering, loyalty below average, starting to consider

other brands

Weakly unavailable consumers

non-users whose preference lies with their current brand, but not strongly

Convertible users

on the threshold for leaving the brand

Strongly unavailable consumers

non-users who have strong preference for their current brand

Secure users

Vulnerable users

Open non-users

Unavailable non-users

Millward Brown’s ‘Brand Dynamics Pyramid’

Using a consumer brand equity tool ‘Consumer Value Model’ in 35 countries, 175 product categories and 17.000 brands used to construct a hierarchy of brand equity – Brand Dynamics Pyramid.

Using this model a Market leader brand was described as:Bonded: 26%Advantage: 53%Performance: 57%Relevance: 61%Presence: 88%

Young & Rubicam’sBrand Asset Valuator

Procedure: Phone-Interview (brand awareness) + written questionnaire (32 items on current brand use, buying intentions, Cultural Consumer Characteristics Tool & socio-demographics)

From data on 8.500 brands in 24 countries developed brand equity hierarchy.

I. Differentiation: perceived distinctivenessII. Relevance: assessment of suitability by consumerIII. Appreciation: How popular is the brand? How high is its

quality?IV. Knowledge: brand awareness, knowledge of the brands core

meanings & feeling of knowing the brand very well.