Strategic Brand Management

Exeter MBA and MSc Day 2

Lecture 1
Brand Equity Concepts and
Approaches

Brand Equity what is it?

The added value to the firm, the trade, or the

consumer which a given brand endows a product
(P.Farquahar
(P.Farquahar))
The brand
brands source of value to the company and
the consumer (Kapferer
(Kapferer))
A set of brand assets and liabilities linked to a
brand, its name and symbol, that add or subtract
from the value provided by a product or service to
a firm and/or to that firm
firms customers (Aaker
(Aaker))
Jack Buckner

Brand Equity

Financial

Managerial

Goodwill

Audit

P/E ratios

Evaluate
Strategy

Jack Buckner

Brand Equity
is a relatively recent concept

combines finance with marketing

may be more relevant in mature
industries

may be more relevant in larger
companies

will probably vary geographically

Jack Buckner

Three Big Brand Equity Stories

Marlboros
price cut

Cokes formula
change

P&Gs value
pricing

Jack Buckner

Building a Brand in Mindspace

Relationship
Trust

Esteem

Brand
Stage 3

Relevance
Brand Stage 2
Differentiation
Risk Reduction
Brand
Awareness

Brand Stage 1

Jack Buckner

Aakers Sources of Equity

Brand name awareness

Brand loyalty

Perceived quality

Brand associations

Jack Buckner

Brand Awareness
Recognition spontaneous

Recognition prompted

Recall

Salience

Aware
In brand repertoire
In consideration set

Jack Buckner

The Graveyard Model

High
Graveyard
Recognition

Niche Brand

Low

High

Recall

Jack Buckner

Source: Y & R

Out of the Graveyard

Aga Foodservice
High brand recognition
Low brand salience

Identified younger
target market
Product range
refreshed
Brand/marketing
investment
Jack Buckner

Graveyard Model
Illustrates the difference between
recognition and salience

Works best for heritage brands

Much harder for mass and discount brands

Jack Buckner

Brand Loyalty

Loyalty
Purchase loyalty market share
Attitude loyalty price premium

Double Jeopardy (Ehrenberg)

Small brands have fewer buyers AND their
buyers buy less often (loyalty)

Jack Buckner

Double Jeopardy
Brand

Market
Penetration

Exclusive
Buyers

Volume per
Buyer

Maxwell

24%

20%

3.6

Sanka

21%

20%

3.3

Tasters

22%

24%

2.8

High Point

22%

18%

2.6

Folgers

18%

13%

2.7

Nescafe

13%

15%

2.9

Brim

9%

17%

2.0

Source:Ehrenberg et al (1990) Journal of Marketing

Jack Buckner

Brand Loyalty
Costs of attracting new customers much
higher than retention

MBNA (financial services) 5% increase in
retention increased company profits by 60%
over 5 years

Stronger brands characterised by greater
loyalty

Jack Buckner

Loyalty Groupings
Satisfaction
High

Low
High

Frustrated

Loyal

Switchable

Vulnerable

Perceived Risk
in switching

Low

Source: Rossiter & Elliott (2001)

Jack Buckner

Perceived Quality
The one measure to directly impact ROI

Improve perceived quality and ROI will
improve

Requires product frame of reference

More effective in mature industries

Harder to measure in cool industries

Jack Buckner

Brand Associations
Emotional and self-expressive benefits
Brand as product
Brand as organization
Brand as person
Brand as symbol
BRAND IDENTITY
Jack Buckner

Brand Equity 10 (Aaker)

Loyalty Measures
1.Price Premium
2.Satisfaction/Loyalty
Perceived Quality/Leadership measures
3.Perceived quality
4.Leadership/popularity
Associations/Differentiation Measures
5.Perceived Value
6.Brand Personality
7.Organizational Associations
Awareness Measures
8.Brand Awareness
Market Behaviour Measures
9.Market Share
10.Market price and distribution coverage

Jack Buckner

From Assets to Equity

Brand Awareness
+ Image
+Perceived Quality
+Evocations
+Familiarity/liking
= Brand Assets

Brand added value,

perceived by consumers
-Cost of branding
- Cost of invested capital
= Brand Financial Value
(Brand Equity)

Source:Kapferer
Jack Buckner

Interbrands Top Brands

Leadership
Stability
Market
International
Trend
Support
Protection

Jack Buckner

10

Interbrand in 1990
1. Coca-Cola
2. Kelloggs
3. McDonalds
4. Kodak
5. Marlboro
6. IBM
7. American Express
8. Sony
9. Mercedes-Benz
10. Nescafe

Jack Buckner

Financial World 1996

1. Marlboro
2. Coca-Cola
3. McDonalds
4. IBM
5. Disney
6. Kodak
7. Kelloggs
8. Budweiser
9. Nescafe
10. Intel
Jack Buckner

11

Interbrand in 2004
1.Coca-Cola
2.Microsoft
3.IBM
4.GE
5.Intel
6.Disney
7.McDonalds
8.Nokia
9.Toyota
10.Marlboro

Jack Buckner

2004 Big Winners

Apple
Amazon.com
Yahoo
Samsung
HSBC

Jack Buckner

12

2004 Big Losers

Kodak
Nintendo
Nokia
AOL
Ford
Brandchannel.com
Jack Buckner

Challenges to Brand Equity Models

Increasing power of own-labels and massmerchandising

Brand proliferation and extensions

Increasing number of brand alliances

Rapid growth and erosion of brand equity

Non-traditional marketing techniques

Regional variations

Jack Buckner

13

Brand Equity

Financial

Managerial

Goodwill

Audit

P/E ratios

Evaluate
Strategy

Jack Buckner

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