Brand Equity

brand equity

Brands are one of the most valuable assets of a company. It is both an art and a science to build a strong brand. It takes careful planning, long-term commitment, creative marketing, and careful planning to establish a strong brand and it needs continuous efforts of the entire company for making a successful brand. Strong brands command strong consumer loyalty. At its core, a great product/service is what makes them stand out.

Customer-based brand equity (CBBE), is a concept that views brand equity from the point of view of the customer. This applies to any consumer, whether they are an individual, an organization, or a prospective customer.

Marketing success is all about understanding the needs and wants of consumers and organizations, and designing products and programs that meet them. Marketers must ask two important questions. How does consumers’ brand knowledge affect marketing activities? and What do different brands mean to customers?

CBBE’s basic concept states that customers learn, feel, see, and hear about a brand through their experiences. The power of a brand is what customers think and feel about it. Marketers face the challenge of creating a strong brand by ensuring customers have the right kind of experience with products and services, as well as their marketing programs so that they associate the brand with the desired thoughts, feelings, and images.

Customer-based brand equity is defined as the difference in brand awareness of consumers in response to the marketing programs. Positive customer-based brand equity is when customers react positively to a brand’s product and how it is marketed. Customers might be more open to a new brand extension if the brand has positive customer-based brand equity.

They may also be less sensitive to price increases or withdrawals of advertising support and more likely to look for the brand in a different distribution channel. Negative customer-based brand equity is when consumers respond less favorably than to marketing activities for the brand, or an unnamed version of the product.

To create brand equity, you must reach the top of your brand pyramid. This is possible only when the right building blocks have been put in place.

  • Brand salience refers to how frequently and how easily customers think about the brand in various situations. It is the depth and breadth and breadth of brand recognition.
  • Brand performance refers to how well the product/service meets customers’ functional requirements.
  • Brand imagery describes extrinsic characteristics of the product or service. It also includes the ways the brand tries to satisfy customers’ psychological and social needs.
  • Brand judgments are based on the customers’ personal opinions and evaluations.
  • Brand feeling are customers’ emotional responses with respect to the brand and its marketing program.
  • Brand resonance refers to the relationship, brand has with customers and how close they feel with the brand.

Sources for Brand Equity

When a consumer is familiar with the brand and has strong and positive brand associations in their memory, it’s called customer-based brand equity. Sometimes, just brand awareness is sufficient to generate a positive consumer response.

This can be the case in low-involvement decisions where consumers will base their decisions on familiarity. However, in most cases, the brand association’s strength, favorability, and uniqueness play an important role in determining brand equity.

Customers will respond to the brand only if they perceive it as representative of the service or product category. Marketers must convince consumers that brands have distinct characteristics. Consumers should not assume that all brands within a category are alike.

To build customer-based brand equity, it is important to establish a positive brand image in consumers’ memories. This includes creating strong, positive, and unique brand associations. Let’s take a look at sources of brand equity.

Brand Awareness

Brand recognition and brand recall are two aspects of brand awareness.

Brand Recognition refers to consumers’ confirmation of prior exposure to a brand when presented with the brand as a cue. This means that they will be able to identify the brand when they visit the store.

Brand recall refers to consumers’ ability to retrieve the brand from their memory when they are given the product category, the requirements fulfilled by that category, or a purchase or usage scenario as a cue. This means that consumers’ recall of Kellogg’s Corn Flakes will be affected by their ability to find the brand in the category of cereal or when they consider what they should eat for breakfast, lunch, or dinner.

Research shows that most consumer decisions are made at the point of purchase. This is where brand names, logos, packaging, and so forth will be visible and easily identifiable. Brand recognition will be crucial.

The brand recall will be greater if consumer decisions are made away from the point where they were purchased. Brand recall is crucial for online and service brands. Consumers must actively search the brand to retrieve it from their memory whenever necessary.

However, brand recall is less important at the time of purchase. Consumers’ brand evaluations will often be influenced by what they remember about the brand. We are more able to recognize a brand than we recall it, as we store a lot of information in our memory, and retrieving the right information at a right time needs hard work. Normally, customers do not prefer hard work for buying behavior.

Creating Brand Awareness

Creating brand awareness is about increasing brand familiarity through repeated exposure. However, this is more effective for brand recall than brand recognition. This means that the more the consumer experiences the brand through seeing, hearing, and thinking about it, it is more likely that he or she will be able to recall it in their memory.

Any marketing or promotion that makes consumers experience a brand element, such as its name, logo, character, packaging, slogan, advertising, promotion, publicity, public relations, and outdoor advertising, can increase brand awareness.

The more elements that marketers can reinforce, the better. To increase awareness, Intel uses its “Intel Inside”, logo, distinctive symbol, and the famous four-note jingle in television ads.

While repetition increases brand recognition, it also helps to improve brand recall. This requires linking memory to the appropriate product categories and other consumption cues.

A slogan or jingle is a creative way to pair the brand with the appropriate cues and, ideally, the brand positioning. This helps build a positive brand image. Recall can also be helped by other brand elements such as logos, symbols, and characters.

Marketers use advertising slogans to pair the brand with its product category. This helps to determine how strong the product category links are. Brands with strong category associations like Ford cars may not need to distinguish between recall and brand recognition.

Consumers are more likely to associate the brand with the category. It is important to highlight category connections in marketing programs when there are new brands or competitive markets. If the product meaning of the brand changes due to brand extensions, mergers, or acquisitions, strong links between the brand, the category, and other relevant cues can become more important.

Marketers have tried to increase brand awareness using so-called shock advertising. They used bizarre themes. Outpost.com was an online retailer that used bizarre advertising to create brand awareness during the dot-com boom.

These approaches can also generate some ill will. They can often come across as desperate measures and rarely create a foundation for long-term brand equity. Outpost.com was an example of a company that most potential customers didn’t know much about.

Brand Image

Brand equity starts with creating brand awareness. This is done by increasing brand familiarity through repeated exposure. Marketers can now focus more on creating a brand image once they have established enough brand awareness.

Marketing programs that create positive brand associations require strong, positive, and unique associations with the brand in mind. Brand associations can be made up of brand attributes and benefits. These are the descriptive characteristics that define a product or service. Brand benefits refer to the personal meaning and value that consumers attach to the attributes of a product or service.

Consumers form opinions about brand attributes and benefits differently. However, the definition of customer-based brand equity does not consider the source or the way they were formed. All that matters is the strength, favorability, and uniqueness of the brand associations.

Consumers can create brand associations in many ways, including through direct experience, online surfing, information from commercial or nonpartisan sources like Consumer Reports, and word-of-mouth.

Marketers need to recognize the impact of these sources of information and manage them well. Take a look at how The Body Shop built its brand equity.

Marketers need to ensure that strong brand associations are unique and not shared by other brands in order to generate customer-based brand equity. Consumers will choose brands with unique associations.

Marketers carefully study the customer and compare the market to find the most favorable and unique associations for the brand. Let’s look at some of the factors that can influence the strength, favorability, and uniqueness of brand associations.

Strength of Brand Associations

The stronger brand associations will result if people think more deeply about product information and can relate it to their existing brand knowledge. Personal relevance and consistency are two factors that can strengthen an association with any piece of information provided in the market.

The strength of brand association is not only judged by its recall ability, but also by its retrieval from memory when presented brand cues or situation in which it is used.

Direct experiences are the best way to create brand attributes and benefit associations. They can be especially influential in consumers’ decision-making when they are accurately interpreted. Restaurants, entertainment, banking, and personal services are all likely to benefit from word-of-mouth.

However, information sources that are influenced by companies, such as advertisements, tend to have the strongest associations and can be easily modified.

Marketing communication programs employ creative communications to help consumers understand brand-related information and then relate it to their existing knowledge. They provide reminders and expose consumers to communication repeatedly.

Favorability for Brand Associations

Marketers can create positive brand associations by convincing consumers that the brand has relevant attributes and benefits that meet their needs and desires. This allows them to form positive brand judgments.

Consumers won’t view all brand associations equally, or regard them or value them equally in different situations. Brand associations can be context- or situation-dependent. They may vary depending on what the consumer wants to achieve with that purchase or consumption decision.

Uniqueness in Brand Associations

Brand positioning means that the brand has an unbeatable competitive advantage that consumers can use to their advantage. Or, they may make it implicitly. They may base it on performance-related or non-performance-related attributes or benefits.

While unique associations are crucial to a brand’s success, brands will likely share some associations with others if they don’t face any competition. Partially formed associations serve two purposes: they establish category membership and limit competition with other products.

A service or product category may also have a set association that includes specific beliefs and attitudes about each member of the category. These beliefs could include the performance-related attributes of brands in the category as well as descriptive attributes that are not directly related to service or product performance such as the color of a product like red for ketchup.

Frequently Asked Questions (FAQs)

What is brand equity?

The worth of a brand is determined by its brand equity. It is the monetary equivalent of what a person or company is willing to pay for a brand.

How to build brand equity?

Building brand equity takes time, and various things influence the brand equity of a corporation. Quality products or services, an easily recognizable name, and logo, and, most crucially, loyal customers are the three most critical factors in developing brand equity.

Why is brand equity important?

For businesses, brand equity can have real, measurable worth. Positive brand equity gives your business a significant competitive edge. Customers will not only prefer your brand over others, but they may also be willing to pay a higher price for it. It aids in the retention of personnel and the recruitment of qualified candidates from job markets.

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