Building Brand
Equity
The importance of brand equity
Definition of brand equity: How consumers feel
about a brand relative to its competition. Brand equity
measures the "emotional attachment" consumers feel for a
product.
As brand equity grows, it becomes harder and
harder to persuade consumers to change brands.
Remember, habit and experience are powerful
determinants of product choice (and geography is often the most
determinant of habit and experience).
Many systems in place to measure brand equity.
Advertisers must stay finely tuned to the state of their
brands.
Brand equity determinants
Advertising is probably the biggest determinant
in creating brand equity. Brand equity is a result of:
• Differentiation-must be perceived as
different
• Relevance-must satisfy consumer needs
• Esteem-consumers must like it
• Knowledge-consumers must know about it
Factors related to brand equity:
• Brand vitality: combination of
differentiation and relevance
• Brand stature: combination of esteem and knowledge
Brand Awareness
Brand awareness measures the consumer's familiarity with a
product or service. Creating brand awareness is one of the most
important goals of advertising.
Consider, for instance, these three soft drinks.
- Coca Cola
- Pepsi Cola
- RC Cola
RC Cola has been on the market for decades, but has never even
come close to reaching the level of brand awareness that Coke
and Pepsi have achieved.
Higher brand awareness usually translates to
higher sales and profitability. It also helps shield the
product from competition. This results in a higher market
share.
Products with great brand awareness sometimes don’t even
have to sell themselves, but they have to be advertised to
maintain or “defend” their market share.
Market share, which is a result of branding and brand
awareness, is the primary contributor to ROI (return on
investment).
Brand Extensions
Brand extension is also sometimes known as "brand
stretching."
When a company already has a well known product and well
developed image, it may create a new product in a different
category. For instance, Jello-gelatin created a brand extension
when it created Jello pudding pops.
There are several benefits to brand extensions. The new
products increase awareness of the brand name and also create a
possible new profit center.
Other examples of brand extensions include:
-
When Ralph Lauren began producing home furnishings
in addition to clothing under its Polo brand.
-
When Arm and Hammer extended its brand to include
oral and laundry care products to its baking soda
line.
-
When the Virgin Group added game stores and
video stores to its existing transportation
group.
Next Page:
Integrated Brand Management
Related Pages: Branding Overview,
Target Marketing,
Brand Life Cycle
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