Customer knowledge about the brand, the perceived differences and its effects on purchase behavior and decisions lies at the heart of brand equity. Brand equity is the combined measure of brand strength and consists of three sets of metrics:
Aaker Model David Aakera marketing professor and brand consultant, highlights ten attributes of a brand that can be used to assess its strength. Aaker doesn't weight the attributes or combine them in an overall score, as he believes any weighting would be arbitrary and would vary among brands and categories.
Rather he recommends tracking each attribute separately. Effective Market Share is a weighted average. It represents the sum of a brand's market shares in all segments in which it competes, weighted by each segment's proportion of that brand's total sales. Relative Price is a ratio.
It represents the price of goods sold under a given brand, divided by the average price of comparable goods in the market. Durability is a measure of customer retention or loyalty. It represents the percentage of a brand's customers who will continue to buy goods under that brand in the following year.
In using it, the agency surveys consumers' perspectives along four dimensions: The defining characteristics of the brand and its distinctiveness relative to competitors. The appropriateness and connection of the brand to a given consumer.
Consumers' respect for and attraction to the brand. Consumers' awareness of the brand and understanding of what it represents. It reviews a company's financial statements, analyzes its market dynamics and the role of brand in income generation, and separates those earnings attributable to tangible assets capital, product, packaging, and so on from the residual that can be ascribed to a brand.
It then forecasts future earnings and discounts these on the basis of brand strength and risk. The agency estimates brand value on this basis and tabulates a yearly list of the most valuable global brands.
The royalty relief method involves estimating likely future sales, applying an appropriate royalty rate to them and then discounting estimated future, post-tax royalties, to arrive at a Net Present Value NPV.
This is held to represent the brand value. Utilizing a statistical regression analysis of the factors driving the cash flow multiple and thus share price, the variance in Familiarity and Favorability above or below the base expected level is analyzed.
As a point in time analysis, this method is used for brand equity valuation of a company based on its current Familiarity and Favorability, Revenue and Market Cap.
The output of the analysis provides the end user with two pieces of data: The percentage of market cap that is attributable directly to its corporate brand i.
By including brand and price as two of the attributes under consideration, they can gain insight into consumers' valuation of a brand—that is, their willingness to pay a premium for it. Event method is applied to determine the stakeholder interest or value assessed in a brand before, during or after an event.
The result was that the stock market response was favorable to brand announcements when consumers were familiar with the brand and held the brand in high esteem. The same applied to low familiarity and low esteem brands, which as Keller explains, was "because there was little to risk and much to gain…" p.
This approach determined that lesser known brands may benefit from event sponsorships as a brand-building exercise but customers may have associations with the event sponsors or brand associations that could determine affective attitudes.
Ultimately, high equity counterparts will yield stronger results due to their market familiarity. In the restaurant sector, for example, returns of branding are contemporaneous.
The high-tech sector showed no contemporaneous effects and brand equity is realized in the future with significant delay. Managing Brand Equity[ edit ] One of the challenges in managing brands is the many changes that occur in the marketing environment.
The marketing environment evolves and changes, often in very significant ways. Shifts in consumer behavior, competitive strategies, government regulations, and other aspects of the marketing environment can profoundly affect the fortunes of a brand.
Besides these external forces, the firm itself may engage in a variety of activities and changes in strategic focus or direction that may necessitate adjustments in the way that its brands are being marketed. Consequently, effective brand management requires proactive strategies designed to at least maintain - if not actually enhance - brand equity in the face of these different forces.
Brand Reinforcement[ edit ] As a company's major enduring asset, a brand needs to be carefully managed so its value does not depreciate. Marketers can reinforce brand equity by consistently conveying the brand's meaning in terms of 1 what product it represents, what core benefits it supplies, and what needs it satisfies 2 how the brand makes product superior and which strong, favorable, and unique brand associations should exist in consumers' minds.
Both of these issues - brand meaning in terms of products, benefits, and needs as well as brand meaning in terms of product differentiation - depend on the firm's general approach to product development, branding strategies, and other strategic concerns.There are several stakeholders concerned with brand equity, such as the firm, the customer, the distribution channels, media and other stakeholders like the financial markets and analysts, depending on the type of company ownership.
Measuring Customer Based 1 Measuring Customer Based Brand Equity: Empirical Evidence from the Sportswear Market in China. Xiao . Strong brand equity is significantly correlated with revenues for quick-service restaurants. In a study respondents gauged the strength of seven quick service restaurant brands doing business in Seoul, Korea.
The study tested four elements of brand equity, namely, brand awareness, brand image, brand loyalty, and perceived quality. Of those . The scarcity of systematic scholarly research on the customer experience construct and customer experience management calls for a theory-based conceptual framework that can serve as a stimulus and foundation for such research.
'Brand equity' is a phrase used in the marketing industry which describes the value of having a well-known brand name, based on the idea that the owner of a well-known brand name can generate more revenue simply from brand recognition; that is from products with that brand name than from products with a less well known name, as consumers believe that a.
The most common model for customer-based brand equity is the one created by marketing professor Kevin Lane Keller in his book, Strategic Brand Management. Keller puts the model in a four-level pyramid, with the middle two layers being divided equally between two factors.