Brand Management - Equity

Brand equity is the heart of brand management. The brand managers are engaged in building strong brand equity as it directly affects the consumer’s buying decisions, defines market share of the product, and determines the brand position in the market. Strong brand equity can not only make the brand strong but also help the brand establish, survive, and perform well in the long run.

Let us understand, what brand equity is and why it matters.

What is Brand Equity?

This term came up in the marketing literature in 1980. This multidimensional concept has different meanings from the context of Accounts, Marketing, and Consumer.

  • Accounting Context − It is a total value of a brand as a separable asset, when evaluated for selling. It is also called Brand Value. It is quantifiable.

  • Marketing Context − It is the description of consumer’s associations and beliefs about the brand. It is non-quantifiable. Brand equity is tailored according to the needs and demands of the consumer.

  • Consumer-based Context − It is a measure of consumers’ attachment to a brand. It is also called brand strength or loyalty. It is quantifiable.

As per Amber and Styles (1996), Brand Equity is a store of profits which can be realized in future.

Why does Brand Equity Matter?

For brand management, the brand equity is vital as it establishes and fosters the customer loyalty towards the brand, and directly influences the business growth may it be a well-established or a new business.

There can be two motivations to study brand equity −

  • Finance-based motivation − You can estimate the brand value more precisely for accounting purposes, such as to evaluate the brand as an asset for the purpose of reflecting in the balance sheet, or in case of merging or acquiring a business.

  • Strategy-based motivation − You can study brand equity to improve productivity of marketing.

Brand Decay

It is a progressive loss of brand integrity due to weakening of essential brand elements. It also includes losing the respect of consumers and consistency of the brand. It is a gradual process. For example, a number of US airlines are facing brand decay since years.

Reasons of Brand Decay

Here are some most important reasons of brand decay −

  • Company fails to manage strategies, create new value, and acquire new customers or new marketplaces.

  • Company treats the brand merely as a static asset than as a medium to create customer value.

  • Customer expectations are more than what a brand can deliver.

  • Presence of issues in brand equity building.

  • Company palms off brand-customer relationship on customer service department.

  • Company halts innovations in products or services. The worst part is, customers start suggesting innovations.