Branding and Brand Equity

Question 1

Brand equity can be formally defined in the following ways, both of which allude to added value:

Answer 1

1. The market outcomes or effects that accrue to a product with its brand name compared with those that would accrue without it.
2. The differential effect that brand knowledge has on consumer response to the marketing of that brand.

Question 2

What is the marketing objective based on brand name?

Answer 2

Show financial outcomes (profit)

Question 3

From a financial perspective how is equity measured?

Answer 3

Dollars

Question 4

What are the two general approaches to making the financial assessment of brand equity?

Answer 4

1. Consumer Level: the difference in willingness to pay for a product when it possesses the brand name versus when it lacks a name. This approach is rare due to practical difficulty of obtaining accurate results.
2. Firm level: At the corporate level, the acquisition of another company reflects its tangible and intangible assets – including brand equity. (The acquisition value is often a large multiple of the hard assets.) The value of a well-positioned name will be greater in environments in which it is difficult to differentiate a new entry due to the levels of noise and competition in the market. Ex. Goodwill

Question 5

Brand equity can be viewed in terms of the consumer’s (antecedents of financial performance):

Answer 5

1. Brand Awareness
   2, Brand Attitude
2. Brand Knowledge
3. Brand Loyalty

Question 6

Brand awareness is a necessary precondition for purchase, as witnessed in what two decision contexts?

Answer 6

1. In-store: “Unseen is unsold.” When picking from an array, brands that are not noticed will be by-passed. Consumers do not inspect many brands in the shopping environment, and visual aspects of the display have a large influence on the brands that are noticed. Familiarity and personal significant can enhance visual “pop out”.
2. In-Memory: If the “consideration set” is constructed from memory, a brand cannot be chosen if it is not recalled.

Question 7

Brand equity can be operationalized in financial terms. From a marketing perspective, we expect positive returns with respect to:

Answer 7

1. Communication (the “noise” problem)
2. Assessment of Quality (the “ambiguity” issue)
3. Growth (brand extension)
4. Channel Power
5. Loyalty

Question 8

Describe the “potential value” of a brand to a firm.

Answer 8

Firms often try to leverage their name when extending their current lines or when entering new categories. In fact, the large majority of a new product introductions consist of some form of brand extension. The logic of brand extension is based on the antecedents (or brand assets) described on the previous slides.

Question 9

What are the (+) of brand extension?

Answer 9

+ Awareness & Liking
+ “Trustworthiness” Ex. pharma
+ Specific Associations Ex. Ivory-pure!, Dr. Scholl’s-comfy!

Question 10

What are the (-) of brand extension?

Answer 10

• Generalization of Failure Ex. Tylenol
• Dilution of Brand Meaning (vs. reinforcement) Ex. GE, Jeep
• Incompatibility of Extension Ex. Levi’s-men’s suits, Coors Water
• Differentiation (to capture multiple mkt positions) Ex. Honda/Accura

Question 11

The priority placed on brand investments vis-à-vis other investment options will vary as a function of:

Answer 11

1. Product Type (search, experience, credence)
2. Consumer Goals (prestige vs. utilitarian)
3. Risk-Aversion
4. Variation in functional attributes across brands
5. Consumer Expertise
6. Company Assets