Brand Equity refers to the additional value that a consumer attaches to a brand that is unique from all the other brands available in the market. In other words, Brand Equity means the awareness, perception, and loyalty of a customer towards the brand.
E.g., The additional value a customer is willing to pay for Uncle Chips against any local chips brand available with the shopkeeper.
Brand Equity is the goodwill that a brand has gained over time.
Brand Equity can be seen in the way the customer thinks, feels, and perceives the product along with its price and market position and also the way the brand commands profit and market share for the organization as a whole.
Customer Brand Equity can be studied in 3 different ways:
The Different Responses of a customer towards the product or service help in determining brand equity. The way customer thinks about the brand and considers it to be different from the other brands will generate a positive response for that brand and will contribute to its goodwill.
g., Customers, has a positive response towards Mac laptops because of their anti-virus software.The responses can be generated only if customers have sufficient knowledge about the brand; thus, Brand Knowledge is essential to determine brand equity. Brand knowledge includes the thoughts, feelings, information, experiences, etc. that establish an association with the brand.
g., Brand Association reflects the knowledge about the product such as woodland is recognized for its rough and tough styling.The different customer response that adds to the brand value depends solely on the Marketing of a Brand. A strong brand results in substantial revenues for the organization and a better understanding of the product among the customers.
Thus, marketers basically study the Customer-Based Approach wherein they study the response of a customer towards the brand that can be reflected in their frequency of purchase. It focuses on customers’ perception i.e. what they have read, felt, thought, and seen about the brand and how it has helped them to satisfy their urge of needs.
Concept and Measure of Brand Equity
Brand Equity is the value and strength of the Brand that decides its worth. It can also be defined as the differential impact of brand knowledge on consumers' response to Brand Marketing.
Brand Equity exists as a function of consumer choice in the marketplace. The concept of Brand Equity comes into existence when a consumer makes a choice of a product or a service. It occurs when the consumer is familiar with the brand and holds some favourable positive strong and distinctive brand associations in the memory.
Brand Equity can be determined by measuring:
Returns to the Share Holders
Evaluating the brand image for various parameters
Evaluating the Brand’s earning potential in the Long run.
Helps in increasing brand sales potential created by the brand compared to the other brand of the same class.
The price premium charged by the brand over the non-branded product.
OR, An amalgamation of all the above method
Factors contributing to Brand Equity
1. Brand Awareness
People will often buy a familiar brand because they are comfortable with it. Or there may be an assumption that a familiar brand is probably reliable, in business to stay, and of reasonable quality. A recognized brand will thus often be selected over an unknown brand. The awareness factor is significant in contexts in which the brand must first enter the consideration set. It must be one of the brands that are evaluated.
2. Brand Associations
People will often buy a familiar brand because they are comfortable with it. Or there may be an assumption that a familiar brand is probably reliable, in business to stay, and of reasonable quality. A recognized brand will thus often be selected over an unknown brand. The awareness factor is significant in contexts in which the brand must first enter the consideration set. It must be one of the brands that are evaluated.
3. Brand Loyalty
Brand loyalty—a central construct in marketing, is a measure of the attachment that a customer has to a brand. It reflects how likely a customer will switch to another brand, especially when that brand makes a change, either in price or in product features. As brand loyalty increases, the vulnerability of the customer base to competitive action is reduced.
4. Perceived Quality: refers to the customer’s perception of the total quality of the brand. While evaluating quality the customer takes into account the brand's performance on factors that are significant to him and makes a relative analysis of the brand’s quality by evaluating the competitor's brands also. Thus quality is a perceptual factor and the consumer analysis of quality varies. Higher perceived quality might be used for brand positioning. Perceived quality affects the pricing decisions of the organizations. Superior quality products can be charged a price premium. Perceived quality gives the customers a reason to buy the product. It also captures the channel member’s interest. For instance – American Express.
5. Other Proprietary Brand Assets: Patents, Trademarks and Channel Inter-relations are proprietary assets. These assets prevent competitors'' attacks on the organization. They also help in maintaining customer loyalty as well as the organization’s competitive advantage.
Comments