Brand Equity: Valuation & Measurement
Product & Brand Management
Rohit Singh (MP12056) & Shakti Prakash Sharma (MP12064)
Tangible assets (manufacturing assets, land, buildings and financial assets) have always been regarded as the main source of business value. However, market conditions in the last quarter of the twentieth century showed that a company’s value is not made up of its tangibles alone. The importance of intangibles, primarily the brand, but also patents, technology and employees has been recognized in the market, which lead to a dramatic shift in the market value of some companies relative to their book value. In spite of the fact that a company’s market value (shareholder value) has increased, brand contribution and
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In the research literature, brand equity has been studied from two different perspectives: cognitive psychology and information economics. According to cognitive psychology, brand equity lies in consumer’s awareness of brand features and associations, which drive attribute perceptions. According to information economics, a strong brand name works as a credible signal of product quality for imperfectly informed buyers and generates price premiums as a form of return to branding investments. It has been empirically demonstrated that brand equity plays an important role in the determination of price structure and, in particular, firms are able to charge price premiums that derive from brand equity after controlling for observed product differentiation. …show more content…
It is the degree to which consumers precisely associate the brand with the specific product. It is measured as ratio of niche market that has former knowledge of brand. Brand awareness includes both brand recognition as well as brand recall. Brand recognition is the ability of consumer to recognize prior knowledge of brand when they are asked questions about that brand or when they are shown that specific brand, i.e., the consumers can clearly differentiate the brand as having being earlier noticed or heard. While brand recall is the potential of customer to recover a brand from his memory when given the product class/category, needs satisfied by that category or buying scenario as a signal. In other words, it refers that consumers should correctly recover brand from the memory when given a clue or he can recall the specific brand when the product category is mentioned. It is generally easier to recognize a brand rather than recall it from the
When the consistency of the information is built, the credibility of the brand becomes higher (Bengtsson, Bardhi and Venkatraman, 2010). It is suggested that asymmetric information leads to consumer uncertainty, which would therefore have a negative impact on brand image (Erdem and Swait, 1998, p. 138). Accordingly, consistency of the information has become a key factor that leads to the successfulness of a global brand since it reduces the uncertainty and the thinking process time of consumers (Lee et al., 2007). Several effects have been found regarding to standardization of a brand (Erdem and Swait, 1998, p. 138). Marketers will have a better control of the brand if the brand meaning has been consistent over the time (Erdem and Swait, 1998, p. 138). First of all, it increases brand equity, which would therefore improve consumer’s brand awareness (Erdem and Swait, 1998, p. 138). Second, it would reduce consumers’ uncertainty of the brand, which would thus increase the reliability of the brand and brand loyalty (Erdem and Swait, 1998, p. 138). Third, it greatly reduces the conflict of consumers’ cognitive structures, which would lead them to trust more on the brand (Erdem and Swait, 1998, p.
Kevin Keller’s brand equity model is known as the Customer Based Brand Equity Model (CBBE). This model was first introduced in his book, Strategic Brand Management. According to the model, a company must shape how customers think, feel, and act towards a product in order to build a strong brand. A consumer must have the right type of experience around the brand, which foster positive thoughts, opinions, perceptions, beliefs and feelings. By building strong brand equity, customers will recommend company products and will buy more of them. Moreover, this increases brand loyalty and decreases brand switching to competitors. One’s memory consists of a network of associations and connecting links, and any association ever processed about a brand
A brand audit is a detailed assessment of a brand’s current ranking in the market compared to other competitors. It provides information on how the business is performing in the market. A brand audit also aims at examining the image and reputation of the brand as perceived by customers. The two key elements of brand audit are brand inventory and brand exploratory. Brand inventory provides up to date itinerary of how a company markets and brands its products. On the other hand, a brand exploratory is an examination undertaken so as to comprehend what consumers feel about the brand. It seeks to conduct a consumer insight research in order to acquire consumers’ feelings and perceptions. This paper looks into the brand exploratory aspect of auditing under the customer-based brand equity (CBBE) model.
Companies use a collection of brand equities to represent their products in the market (Voolnes, 2012). Brand equity refers to the commercial value that is derived from the perception of consumers on any given brand name of particular products in the market as opposed to the product itself. Ataman (2003) notes that the effect to the consumer is in the brand name and not the product itself. Companies use logos, trademarks and a collection of other symbols to present this information to the customers. The use of these symbols is meant to try and capture the customer mindset so that they can be thinking about the company products at all times through the items they possess at home (Estes, Gibbert, Guest, & Mazursk, 2012). This can well be explained by use of the customer-based brand equity model that brings together the requirements for a publicly renowned brand in the market.
Definition; - “brand equity is the added value endowed on products and services. It may be reflected in the way consumer think, feel, and act with respect to the brand, as well as in the price, market share and profitability the brand commands.”(Kolter and Keller.2012, p265) according to the case study of Holland and Barrett, brand equity refers to high brand value, brand with high value equity means, H&B has the ability to create some sort of positiv...
A company’s brand is one of its most valuable assets (Green and Smith 2002). Brands owners invest millions of dollars every year in advertising and promotion to raise awareness and create demand for their brands.
The source of the brand features is in a connection between customers and companies that sell services or products. Consumers who choose a specific company fundamentally acknowledge to prefer that brand more than other brands rooted from the recognition of the brand’s worth.
The practice of brand management is a key component of marketing and performs an integral function by motivating the wants and needs of consumers. It is known that marketing can shape consumer needs and wants, however, consumers today appear to be more knowledgeable about the information regarding products. Consumers lead busy lives and have therefore gone to the internet as one of the many channels to learn about products in order to make informed decisions. This paper will discuss the argument that marketing should reflect the needs and wants of consumers rather than shaping these attributes. Due to the speed and ease of obtaining information, consumers do not take at face value strong marketing efforts that appear to be overly aggressive and push a brand rather than just being informative. Brand managers have to be aware of these changing dynamics and carefully craft brand management practices to meet the demands of consumers.
From an accountant's perspective, goodwill appears in accounts of a company only when the company has purchased some intangible and valuable economic source. Intangibles such as patents and copyrights are examples of identifiable intangible assets. On the other hand, intangibles such as favorable government regulations, outstanding credit ratings, superior management and good labor relations are examples of unidentifiable intangible assets (Tweedie, 27). Goodwill comprises the complete set of unidentifiable intangible assets held by the reporting entity. Generally, goodwill has appeared to be an umbrella concept embracing many features of a company's activities that could lead to superior earning power, such as excellent management, an outstanding workforce, effective advertising and market penetration.
Secondly, some light has been thrown on the previous researches by various authors on the similar topics by providing with a summarised form of the same. It helps in better understanding of the ongoing concepts and perceptions on the concept of brand and its importance.
Brand positioning refers to “target consumer’s” reason to buy your brand in preference to others. It involves identifying and determining points of similarity and difference to ascertain the right brand identity and to create a proper brand image. A significant differential advantage can lead customers to focus on product benefits other than price. Brand Positioning is the key of marketing strategy. A strong brand positioning directs marketing strategy by explaining the brand details, the uniqueness of brand and it’s similarity with the competitive brands, as well as the reasons for buying and using that specific brand. Positioning is the base for developing and increasing the required knowledge and perceptions of the customers. It is the single feature that sets your service apart from your competitors.
A brand audit is a detailed assessment of a brand’s current ranking in the market compared to other competitors. It provides information on how the business is performing in the market. A brand audit also aims at examining the image and reputation of the brand as perceived by customers. The two key elements of brand audit are brand inventory and brand exploratory. Brand inventory provides up to date itinerary of how a company markets and brands its products. On the other hand, a brand exploratory is an examination undertaken so as to comprehend what consumers feel about the brand. It seeks to conduct a consumer insight research in order to acquire consumers’ feelings and perceptions. This paper looks into the brand exploratory of Cadbury in terms of the customer-based brand equity (CBBE) model.
Nike is a very large brand, due to its size its target consumer is usually very broad. The brand motto is “Just Do It” which is meant to target ordinary people, showing that anyone can be an athlete and encourage health. This links it back to the Health Conscious City Dwellers as some of them do not necessarily exercise regularly but the NikeFuel bracelet makes exercise a part of the consumer’s everyday activities. Nike is usually associated with achievers, they endorse elite athletes in order to reinforce this ideal but also utilize the idea that it is possible for anyone to achieve greatness with the right amount of work. The NikeFuel’s slogan is “Motivation on your wrist”, sticking with Nike’s ideals of always encouraging
Brand equity is one of the terms marketers use. How much is a brand worth? Brand equity is the value of the brand it doesn’t develop instantly. A brand has to be nurtured and marketed so consumers trust the brand. Brand equity can also affect the buyout price of a company. There are three different meanings of brand equity. The first is the total of brand as a separate asset when it is sold. The second is how much a consumer is attached to the brand. And lastly to describe the beliefs and associations that consumers have about the brand. Marketers tend to define brand equity differently from accountants.
Branding on consumer purchase decisions. In order to comply with this a questionnaire was prepared and survey has been conducted among 100 respondents and data revealed that brands have strong influence on purchase decision.