understanding brand equity

Question 1

long term objective of firms

Answer 1

Want to build a brand
How are these brands built over time– > have to understand what a brand is and look at how managers can build brands
Might be a set of common actions that brands do to become known
There are b2b and b2c brands
Ex: fake sugar nutrasweet that is sold to pepsi (consumers dont buy this pepsi does though)
What is a strong brand: a brand that makes a lot of money

Question 2

why is brand equity important

Answer 2

1) price premium over unbranded alternatives
2) Ability to extend brand within the same category
3) Barriers to competition
4) Leverage in distribution channels
5) value from licensing
6) high share price

Question 3

Price premium over unbranded alternatives

Answer 3

Ex: pharmpix has a store brand called life and aspirin. They are the same in terms of content but the differences that one is called life and one is called aspirin. Theres also a price difference (life is 9$ and aspirin is 11$)
Strong brand can charge a price premium → bc of brand names
On average the price premium is 22% from the brand name vs weaker brand name version
Is this a pharmaceutical thing or want to pay a price premium for other categories? Can see in grocery stores
Can look at it as an index of price strength
Ex: tesla→ strong brand compared to toher electric alternatives, can see this in the price they charge

Question 4

Ability to extend brand within the same category

Answer 4

Line extension vs brand extension
Brand extension: goes into a new brand category

Question 5

Barriers to competition

Answer 5

If your a strong brand, competitors wont come in so it ensures future profits
Once you have a strong band with dominant market share, consumers dont want to shift if they have a habit of using it
String brands will have deep pockets to acquire rivals ad keep competition low
Inventors wont back alternative brands due to high investment required and rick of loss
Consumers won’t try alternative brands due to habit/learning cost of switching from strong brand

Question 6

Leverage in distribution channels

Answer 6

Brick and mortar stores
Online stores
Most brands are distributed through distributors
retailers have limited shelf space, they want to make full use, want products to move quickly (can make up in volume what they lack in margins) need volume sales
they also dont want products sitting on the shelf for a long time because this leads to high inventory cost
We dont look at all options , retailers want to sell fast and whats sells fast are big brands
Visibility leads to sales (strong brands)

Strong brands gain an edge because of their established reputation and consumer recognition, leading to faster sales and minimal time spent on shelves. This prioritization helps retailers achieve higher turnover rates and meet volume-based revenue goals, since well-known brands generally face fewer barriers in capturing shopper attention and driving immediate sales.

Since many brands rely on distributors to reach store shelves, the choice of product placement reflects the store’s confidence in that brand’s ability to generate volume sales quickly. High visibility is crucial for strong brands, as it enhances accessibility and prompts consumers to make quick purchase decisions, aligning with the retailer’s objective of rapid inventory turnover.

Question 7

value from licensing

Answer 7

License brands → apple makes a lot of revenue from this
Disney makes a lot of revenue from this
They have created sub brands like frozen and they try and make money from it
They make most of their money through disney plus and the parks but most for merchandising (licensed merchandising)
Ex: marvel also has its own brands and can license them out and make money

Question 8

high share price

Answer 8

Investors know that strong brands make more money in the long run so they wanna buy the stocks of the brands which builds up the share price
This means easy money and people want to invest in these large companies

Question 9

brand equity

Answer 9

Definition of brand equity
Brand knowledge that influences consumer response to the brand
Two elements: knowledge and acting
Familiarity → expression of brand knowledge
Price premium→ consumer response that they are willing to pay more for a familiar brand
Familiar brands will charge price premiums
We see this in other categories

Question 10

two elements of brand equity

Answer 10

definition and elements

Question 11

elements of brand equity

Answer 11

The two elements are brand awareness and brand associations
Brands with high awareness are usually strong brands
Bandage → band aid
Tissue→ kleenex
Why does awareness matter? We think of product categories then brands, we also browse when we shop
Need to buy detergent→ internal search, if consumers remember certain brands they will buy those
Low effort mode→ i will skim the shelf and the brands that will jump out to me are brands i recognize
Brand awareness–> necessary but not sufficient
Brand associations →
If you can think of a brand and then a category, this is a good thing
Ex: How can Lucid differentiate from tesla? Better value for money (cheaper)
Ex: walmart has brand associations like cheap but also quality isnt good. Bigger the word is the stronger the association

HAVE TO BALANCE ASSOCIATIONS AND AWARNESS

Question 12

Brand personality (important brand association )

Answer 12

We think of people as having personality traits
Similarly, consumers may see brands as having personality traits
Big 5 brand personality traits

Question 13

big 5 personality traits

Answer 13

excitement, sincerity, sophistication, ruggedness, competence

with excitement→ we might think redbull, gopro, nike (active outdoor)
sincere→ down to earth, real brands, social connection, honesty
Sophisticated (important one)–> luxury products have the highest price premium. Style→ glamorous, international
Scarcity in luxury products, aspirational social class, social proof → you see others waiting in line so you want to follow and see what everyone is waiting for (wisdom of crowds waiting outside the luxury stores)
Competence→ technologically advanced
Can look at target market and see what can fit their personality or aspired personality
Luxury brands offer symbolic value, also hedonic emotional value

Question 14

Brand elements

Answer 14

How can brand managers convey this? → different brand elements like symbols, packaging, craftsmanship, this should convey the brand association to customers
Logo→ the way the brand name is written and visually represented

Question 15

logo (brand elements)

Answer 15

Ex: nokia switched their logo to fit the brand
The brand has changed
The logo has changed depending on the times and what was popular at the time
Some logos have not changed in a while
Logo has to fit to the brand name association, should be unique, can be multi sensory (sonic and visual), should be easily understood
Different logos can be tested with experiments
Some brands elements should be unique ie. differentiating products through unique features

Question 16

physical interface

Answer 16

product deisgn’
store design
experience design

Physical interface in a retail context involves designing elements like product, store, and experience to interact with customers effectively, shaping their impressions and driving satisfaction.

Question 17

Co branding

Answer 17

When two brands collaborate
*** Each brand should reinforce existing brand associations or add mew brand asocatioms
Common brand associations: creative, colourful
Can also add new brand associations
Ikea is swedish so they put a lot of swedish elements in their advertisements

Question 18

SFIU

Answer 18

As a manager, we want brand associations to be SFIU (strong, favourable, important unique)
Important: should be important for the target market
Walamrt or volkswagen have had negative associations (scandals)
Air transat (this is a cheaper brand)→ want associations like low price and safety
Singapore airlines ( more expensive brand)–> want associations like: comfort, convenient schedule
Unique→ differentiation, how to keep differentiating → you just need one or two different attributes that are unique, Rest of the attributes want to input parity (rest are equal to other airlines ex: airlines should be safe) . keep your eye on whats becoming a point of parity (competitive point or category point)
Brands should have both

Strong: The association should be easily and consistently recognized by the target audience.
Favourable: It should evoke a positive response; for example, associating Walmart with “low prices” is advantageous for cost-sensitive shoppers.
Important: The association must align with attributes valued by the target market. For example, Air Transat benefits from associations like “low price and safety” for budget-conscious travelers, while Singapore Airlines emphasizes “comfort” and “convenient schedules” to appeal to luxury and business travelers.
Unique: Differentiation is critical. A brand only needs one or two attributes that set it apart (points of differentiation), while other attributes can match competitors’ standards (points of parity). For instance, in the airline industry, “safety” is a parity point that’s expected across all airlines, but “luxury service” may be a unique attribute for Singapore Airlines

Question 19

WHY Does brand awareness matter

Answer 19

Mental Shortcuts: When consumers need a product, such as detergent, they’re more likely to recall and consider brands they’re already aware of, engaging in an internal search. This internal recall often leads to a purchase of familiar brands.
Low-Effort Shopping: In stores, consumers may not thoroughly evaluate each option. Instead, they may skim the shelves and be drawn to brands they recognize, making brand awareness a crucial factor in low-effort purchase decisions.

Question 20

Co branding may not work well when

Answer 20

dilution of stronger brand by weaker brand

Question 21

definition of brand equity

Answer 21

Brand knowledge that influences consumer response
to the brand”

Question 22

elements of brand equity

Answer 22

brand awareness
brand associations

Question 23

IF THERES high brand awanress

Answer 23

more attention
more consideration towards the brand

Question 24

brand assocations need to be

Answer 24

SFIU
strong: easy to recall
favourable:good for the brand
important: for consumers
unique: vs competition

Question 25

unique

Answer 25

being different but also points of parity
brands should have both

Question 26

brand associations can be expressed by

Answer 26

brands personality
logo

Question 27

logo

Answer 27

should be unique
association wit the brand
mutlisensory