Week 6 Flashcards
What is Brand Equity?
Brand equity represents the added value to a product as a result of past investments in the marketing for the brand.
E.g., UK taste test: Coke vs. Pepsi
Blind taste test → Preferences: Pepsi 51%, Coke 44%
Test with brand revealed → Preferences: Coke 65%, Pepsi 23%
What is Customer-based brand equity (CBBE)?
CBBE:
- A marketing concept that focuses on the reactions and responses of customers towards a brand.
- It emphasizes the importance of understanding how customers perceive and engage with a brand.
“Where it Resides”:
Customer brand knowledge - the associations that consumers have with a brand. These associations include thoughts, feelings, perceptions, and experiences linked to the brand.
E.g., For Google, associations may include terms like “search engine,” “innovative,” “user-friendly,” and “reliable.” These associations collectively contribute to the brand image.
“Why it Matters”:
Differential Effect - the unique and distinct impact a brand has on consumer behaviour compared to other brands in the market. Brands aim to stand out from competitors, making their offerings more appealing and valuable to consumers.
E.g., Google and Yahoo both operate as search engines, but the differential effect lies in the distinct associations consumers have with each. Google may be perceived as more efficient, accurate, and cutting-edge compared to Yahoo.
Why do brands matter to consumers?
- Identify Source of Product:
Consumers use brands to quickly recognize and associate products with specific companies. - Signal of Quality:
Consumers often associate certain brands with consistent quality standards, and they use this information to make judgments about the expected performance of a product. - Symbolic Device (Independent Source of Quality):
Consumers perceive well-established brands as independent sources of quality and reliability. - Search Cost Reducer:
In a crowded marketplace with numerous options, brands serve as efficient markers, enabling consumers to quickly narrow down their choices based on their preferences. - Risk Reducer:
- For search products, where attributes can be assessed before purchase (e.g., clothing), brands provide a known quality standard.
- For experience products, where quality is evaluated after use (e.g., restaurant meals), a brand’s reputation influences expectations.
- For credence products, where quality is challenging to assess even after purchase (e.g., vitamins), a trusted brand provides assurance.
Why do brands matter to manufacturers?
- Source of competitive advantage:
A strong brand differentiates a manufacturer’s products from competitors, attracting and retaining customers. - Build loyal customers:
Loyal customers are more likely to choose a familiar brand, reducing the need for manufacturers to constantly attract new customers. - Larger Margins:
Strong brands command higher prices, allowing manufacturers to charge premium rates for their products. Consumers are often willing to pay more for a brand they trust and perceive as offering superior quality. - Less elastic consumer responses to price increases, more elastic to price decreases:
Established brands create a degree of price insensitivity among consumers. They may be less likely to switch to alternative products in response to price increases, while price decreases can attract more consumers. - Leverage via brand extensions:
Manufacturers can leverage the equity of a well-known brand to introduce new products or expand into different product categories. - Greater trade cooperation and support:
Retailers and distributors are often more willing to cooperate with manufacturers of well-known brands. This can lead to better shelf placement, promotional opportunities, and increased visibility in stores. - Licensing opportunities:
Brands can be licensed for use in various product categories or by other businesses. - Means of legal protection:
Brands serve as intellectual property assets and can be legally protected through trademarks. This protection prevents competitors from using similar brand elements, preserving the brand’s uniqueness. - Source of financial returns:
The brand’s value is often reflected in financial metrics, including the company’s market capitalization and brand valuation.
What is the Brand Value Chain?
Marketing Program (Product, Communication, Trade) → Customer Mindset (Awareness, Attitudes, Attachment, Activity) → Product Market Performance (Price Premiums, Price Elasticity, Cost Savings, Expansion Success, Market Share, Profitability) → Shareholder Value (Stock Price, P/E Ratio, Enterprise Value, Market Capitalization)
What is the Millward Brown’s Stages of Commitment Approach?
★ Outlines the progressive stages consumers go through in their relationship with a brand. This model identifies four distinct stages that reflect the level of commitment or loyalty a consumer has toward a particular brand:
Switchers → Habitual → Committed → Loyal
- Switchers:
Characteristics:
- Consumers in this stage are not committed to any particular brand.
- They are open to trying different brands and frequently switch between alternatives. - Habitual:
Characteristics:
- Consumers in this stage have developed a habit of purchasing a specific brand regularly.
- Brand choice becomes somewhat automatic, and consumers may not actively consider alternatives. - Committed:
Characteristics:
- Consumers in this stage have a higher level of commitment to a particular brand.
- They actively choose the brand based on specific attributes, features, or values. - Loyal:
Characteristics:
- Consumers in this stage exhibit the highest level of commitment and loyalty to a brand.
- They not only consistently choose the brand but also advocate for it and may actively seek out opportunities to engage with the brand.
What is Young & Rubicam’s Brand Asset Valuator (BAV)?
★ A model designed to assess the strength and value of a brand by examining its perceived characteristics.
- Brand Stature: measure of a brand’s past performance.
Esteem - measures how well the brand is regarded and respected.
Knowledge - measures how familiar and intimate consumers are with the brand. - Brand Strength: measure of a brand’s future potential.
Differentiation - measures the degree to which a brand is seen as different from others.
Relevance - measures the breadth of a brand’s appeal.
What is David Aaker’s Brand Equity Model?
★ The model is based on the premise that brand equity is built through a combination of customer perceptions, associations, and strategic brand management.
- Brand Loyalty (Satisfaction)
- Perceived Quality (Differentiation, Price)
- Associations (Feelings, Perceived Value, Brand Personality)
- Brand Awareness (Considered, Familiar)
- Other (Proprietary Assets, Competitive Advantage)
What are the 4 brand strategies?
Line extension:
Involves introducing additional products or variations within an existing product line or brand family.
E.g., If a brand already offers a range of flavored soft drinks, a line extension might involve introducing new flavours under the same brand.
Brand extension:
Involves using an existing brand to introduce a new product or product category that is different from the brand’s core offering.
E.g., If a well-known sportswear brand introduces a line of athletic accessories, it would be a brand extension.
Multi-brands:
Involve introducing new brands within the same product category or market.
E.g., A company that produces different brands of laundry detergents, each targeting a specific consumer segment or need, is employing a multi-brand strategy.
New brands:
Involves developing a new brand identity for a new product or category.
E.g., A company entering the market with a completely new line of organic snacks and introducing a new brand for this product range.
What are the Dual Brand Strategy Options?
House of Brands:
- The parent company operates multiple independent brands, each with its own unique identity.
- Consumers may not be aware of the common ownership.
E.g., Procter & Gamble (P&G) is a classic example of a house of brands with individual brands like Tide, Pampers, and Gillette.
Endorser Brands:
- The corporate parent brand endorses or supports individual sub-brands.
- The connection between the parent and sub-brands is communicated to consumers.
E.g., Nestlé endorses various sub-brands like Nestlé Crunch, Nestlé Pure Life, etc.
Sub Branding:
- A parent brand creates sub-brands that are clearly connected but have their own unique identities.
- The relationship between the parent and sub-brands is communicated.
E.g., Sony’s PlayStation is a sub-brand under the Sony corporate umbrella.
Branded House:
- The parent brand is the primary identifier, and sub-brands are clearly associated with the parent.
- Sub-brands often share a consistent visual identity.
E.g., Google is a branded house where various products and services, such as Google Search, Google Maps, and YouTube, are all clearly associated with the Google brand.
