Summary
Strategic brand management combines the design and implementation of marketing activities and programs to build, measure, and manage brands to maximize their value and strengthen brand loyalty. Marketers want consumers to recognize and be loyal to their brands. To help this process they choose trade marketable brand elements to apply to their products and on a brand extension, a firm puts an established brand on a new product. This may or not work and should be judged by how well they leverage existing brand equity.
A. What is Brand Equity?
1. Brand equity is the added value endowed on products and services by the brand. The brand is the name, term, sign, symbol or design that identifies a product.
2. A brand can be a good (Bic razor), a service (American Airlines), a store (Target), a person (singer Toby Keith), a place (the city of New York) an organization (United Way), or an idea (free trade).
3. Brands identify the source or maker of a product and allow consumers to assign responsibility for its performance to a particular manufacturer or distributor. They perform valuable functions for a company by allowing them to organize according to brands. A credible brand signals a level of quality to consumers so they will choose a particular brand again. Branding a product teaches consumers about the product by giving it features to identify it and to care about its brand equity. Three key ingredients of customer-based brand equity are: 1) brand equity arises from differences in consumer response; 2) differences in response are a result of consumer’s brand knowledge; 3) brand equity is reflected in perceptions, preferences, and behavior related to all aspects of the brand’s marketing. A brand promise is the marketer’s vision of what the brand must be and do for consumers.
B. Building Brand Equity
1. Marketers build brand equity by creating the right brand knowledge structures with the right consumers by using the right brand equity driver.
2. An example of this is the name Bing for Microsoft’s search engine which is supposed to convey the “aha” moment of finding something you’ve been searching for.
3. There are three brand equity drivers – Choosing brand elements, designing holistic marketing activities, and leveraging secondary associations. Marketers want to choose brand elements to identify and differentiate their products, such as the Nike “Swoosh” logo. This allows the consumer associate how they think or feel with the product. Marketers should use these six criteria when choosing their brand elements: memorable, meaningful, likable, transferable, adaptable, and protectable. Customers get to know and recognize a brand through brand contact. This is any experience with the brand, either positive or negative. A company must put a lot of effort into managing these contacts. The final way to build brand equity is to link the brand to other information in memory that conveys meaning to consumers. Marketers must also adopt an internal perspective to ensure employees are aware of how they can help, or hurt, brand equity. Some companies collaborate with consumers to create value through communities built around brands. Three characteristics identify brand communities: 1) a sense of connection to the brand, 2) shared rituals, stories, traditions, and 3) shared responsibility or duty.
C. Measuring and Measuring Brand Equity
1. Brand equity can be measured indirectly by assessing potential sources of brand equity by identifying and tracing consumer brand knowledge structures, or directly by assessing the actual impact of brand knowledge on consumer response to different marketing aspects.
2. The brand-management firm, Interbrand, has developed a model to estimate the dollar value of a brand.
3. Companies will want to measure brand equity, either directly or indirectly. Brand audits are good for helping marketers understand the sources of brand equity and how they affect outcomes of interest, and brand tracking is will help marketers understand how these sources and outcomes change over time. Brand equity should not be confused with brand valuation, which is the job of estimating the total financial value of the brand. Marketers can reinforce brand equity by constantly conveying the brands meaning to consumers. Old and tired brands that consumers have started to overlook can be revitalized by understanding the original sources of brand equity. Should the same sources be used again or new ones?
D. Devising a Brand Strategy
1. A branding strategy reflects the number and nature of both common and distinctive brand elements.
2. General Mills uses the strategy of naming its brands by using individual names for its product brands, such as Nature Valley or Wheaties.
3. A firm has three main choices when deciding how to brand new products: 1) develop new brand elements, 2) apply some of its existing brand elements, or 3) use a combination of new and existing brand elements. When a firm must choose which brand names to use, it can use the strategies to use individual or family brand names, to use a corporate umbrella or company brand name, or to use a sub-brand name. A brand portfolio is all the brands and brand lines a particular firm offers for sell in a category or market segment. Brands can play roles in a portfolio such as flanker (or fighter) brands, cash cows, low-end entry level or high-end prestige. Many new products are introduced as brand extensions under their strongest brand names, up to 80 or 90 percent per year. Consumers will form expectations based on what they know about the old brand. Extensions increase the ease of getting retailers to stock the new product, be less expensive to launch and they can provide feedback benefits. A disadvantage of extensions is brand dilutions – when consumers no longer associate a brand with a specific product.
E. Customer Equity
1. Customer equity is the sum of lifetime values of all customers.
2. Customer equity focuses on bottom-line financial value unlike brand equity, which emphasizes strategic issues in managing brands and brand awareness. They are both important to use in attracting customers to products.
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