David Aaker and Kelvin Lane Keller developed the brand equity models. Let us learn about both the models.
David Aaker defines brand equity as a set of assets and liabilities linked to a brand that add value to or subtract value from the product or service under that brand. He developed a brand equity model (also called Five Assets Model) in which he identifies five brand equity components −
The following factors depict the extent to which customers are loyal to a brand −
Reduced Costs − Maintaining loyal customers is cheaper than charming new ones.
Trade Leverage − The loyal customers generate steady source of revenue.
Bringing New Customers − Existing customers boost brand awareness and can bring new customers.
Competitive Threats Response Time − Loyal customers take time to switch to a new product or service offered by other brand. Hence this buys time for the company to respond to competitive threats.
The following measures depict the extent to which a brand is widely known among consumers −
Association Anchors − Depending upon the brand strength, associations can be attached to the brand which influence brand awareness.
Familiarity − The consumers familiar with a brand will speak more about it and thus, influence brand awareness.
Substantiality − Consumers’ review on brand brings substantial and strong commitment towards the brand.
Consumer’s Consideration − At the time of purchasing, consumer looks for a particular brand.
It is the extent to which a brand is believed to provide quality products. It can be measured on the following criteria −
Quality − The quality itself is the reason to buy.
Brand Position − This is a level of differentiation as compared to competing brands. Higher the position, higher is the perceived quality.
Price − When quality of the product is too complex to assess and consumer’s status comes into picture, the consumer takes price as a quality indicator.
Wide Availability − Consumers take widely available product as a reliable one.
Number of Brand Extensions − The consumers tend to take a brand with more extensions as a measure of product guarantee.
It is the degree to which a specific product/service is recognized within its product or service category. For example, a person asking for Xerox wants to actually make true copies of a paper document.
Information Retrieval − It is the extent to which the brand name is able to retrieve or process the associations from consumer’s memory.
Drive Purchasing − This is the extent to which brand associations drive consumers to purchase.
Attitude − This is the extent to which brand associations create positive attitude in the consumer’s mind.
Number of Brand Extensions − More the extensions, more the opportunity to add brand associations.
They are patents, copyrights, trademarks, trade secrets, and other intellectual property rights. More the number of proprietary assets a brand has, greater is the brand’s competency in the market.
This model is developed by Kelvin Lane Keller, a marketing professor at Dartmouth College. It is based on the idea that the power of a brand lies in what the consumer has heard, learnt, felt, and seen as a brand over time. Hence this model is also termed as Customer Based Brand Equity (CBBE) model.
According to CBBE model, it takes answers to four basic questions for building brand equity starting from the base of the pyramid shown above −
It is not only how often and easily the consumer can recall or recognize the brand but also where and when he thinks of the brand. The key is to create brand salience to acquiring correct brand identity.
According to Keller, to make the brand meaningful it is essential to create a brand image and characteristics. Brand meaning arises out of brand associations, which can be imagery-related or function-related.
The imagery-related associations depict how well the brand meets social and psychological needs of the consumer. The function-related association such as product or service performance is what the consumer looks for primarily.
Regardless of the type of product or service, developing and delivering the product that completely satisfies the customer’s needs and demands is the prime objective of making the brand meaningful. A brand with the right identity and meaning creates a sense of relevance in the consumer’s mind.
The companies must cater for the consumer’s response. Keller segregates these responses into consumer’s judgments and consumer’s feelings.
Consumer Judgments − They are consumer’s personal opinions regarding the brand and how he has put imagery-related and performance-related associations together. There are four types of judgments crucial for creating a strong brand −
Consumer Feelings − They are consumer’s emotional reactions to the brand. They can be mild, intense, positive, negative, driven from heart or head. There are six important feelings crucial in brand building −
It is the level of personal identification the consumer has with the brand. It is also called brand resonance, when a consumer has a deep psychological bonding with the brand. Brand resonance is the most difficult and highly desirable level to achieve. Keller categorizes this into four types −
Behavioral Loyalty − Consumers may purchase a brand repeatedly or in high volume.
Attitudinal Attachment − Some consumers may buy a brand because it is their favorite possession or out of some pleasure.
Sense of Community − Being identified with a brand community develops kinship in the consumer’s mind towards representatives, employees, or other people associated with the brand.
Active Engagement − Consumers invests time, money, energy, or other resources and participates actively in brand chat rooms, blogs, etc., beyond mere consumption of brand. Thus, the consumers strengthen the brand.
BrandZ is the world’s largest brand equity database created and updated by Millward Brown, a multinational company working in advertising, marketing communications, media, and brand equity research.
This database was created in 1998 and is being updated continuously since then. It lists top 100 global brands since 2006. To compile this database, the raw data is collected from about two million consumers and professionals across more than 30 countries. It lists around 23000 brands.
BrandZ is the only brand valuation tool that helps brand owners to find out how much brand alone can contribute to corporate value.
Brand asset valuation evaluates a brand’s value, strength, and performance as compared to other brands in the market. An agency named Young and Rubicam developed a metric called Brand Asset Valuator (BAV), which measures brand vitality, which is the brand’s potential in terms of its future growth and brand power.
The brand is analyzed in the following terms −
Differentiation − How different and better is the brand from its competitors?
Relevance − How closely the target audience can relate with the brand offer?
Esteem − Has the brand built its esteem by keeping all promises it made to the target audience?
Knowledge − How many of the target audience know the brand?
Brand equity, being the heart of brand management is very. Peter Farquhar, in a paper he published on Managing Brand Equity, suggests three stages in building strong brand identity −
Introduce − Introduce an innovative and quality product in the market. Use brand as a platform to launch future products. Customer’s positive recognition is very important.
Elaborate − Create brand awareness and associations so that the customers remember the brand and the positive opinions about it for a long time.
Fortify − Make the brand create a positive consistent image in the customer’s mind. Develop brand extensions and create customer-brand emotional relationship to fortify the brand.
In the contemporary market, three essential characteristics are required to manage the brand − brand identity, brand image, and brand positioning.
Brand identity is nothing but the belief fostered by the brand, its uniqueness and key values. A brand has an identity when it is driven by a goal different from competing brands and is resistant to changes.
A strong brand identity can be built when you have answers to these questions −
Brand image is the set of beliefs, real and imaginary shortcomings about the brand developed over a time and held in the consumer’s mind.
Brand image is built using communication media such as advertising, publicity by mouth, packaging, online marketing programs, social media, and other ways of promotions.