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

Mental Brand response

(Franzen, 1999)

Market response
Brand Equity

Mental Brand Equity

Behavioural Brand Equity

Financial/Economical Brand Equity

Brand behavioural response

Mental Brand Equity

1. 2. 3. 4. 5. 6. 7.

Brand awareness Defining brand meaning Brand positioning Price/ quality assessment Overall evaluation/ attitudes Buying behaviour tendency Brand relationship

1. Brand awareness
The strength of a brands presence in the consumers 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

(Aaker, 1997)

Traits

Brand

Sincerity Excitement

26.5% 25.1%

Domestic, honest, genuine, cheerful Daring, spirited, imaginative, up-to-date Reliable, responsible, dependable, efficient Glamorous, pretentious, charming, romantic Tough, strong, outdoorsy, rugged

Campbells, Hallmark, Kodak Porsche, Absolut, Benetton Amex, CNN, IBM

Competence

17.5%

Sophistication

11.9%

Lexus, Mercedes, Revlon Levis, Malboro, Nike

Ruggedness

8.8%

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 brands Kleenex (1924) e.g. facial tissue: 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 Levis 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 consumers 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 brands 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 socialpsychological 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)

   1. 2.

3. 4.

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: Assessment overall assessment of brand on 7-point scale (cold hot corresponding emotional distance) Satisfaction of needs satisfaction with the brand on 10 point scale (very dissatisfies perfectly satisfied in every respect Importance measures of involvement with product category Movement measurement of inclination to change, whether reasons for brand loyalty prevail over reason for change brand

Secure users

Open non-users

Conversion Model
Entrenched users users who are not available for conversion, remain loyal Average users secure users who are not available for conversion, committed to the brand Shallow users beginning to show sign of wavering, loyalty below average, starting to consider other brands Available consumers non-users who prefer the brand in question to their current choice Ambivalent consumers non-users equally attracted to the brand in question and current choice

Unavailable non-users

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

Convertible users on the threshold for leaving the brand

Vulnerable users

Strongly unavailable consumers non-users who have strong preference for their current brand

Millward Browns 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 & Rubicams Brand 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 distinctiveness II. Relevance: assessment of suitability by consumer III. 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.