Brand Management

Chapter-1
What is Brand:
The word brand is derived from the Old Norse word brandr, which means “to burn.” According
to the American Marketing Association (AMA), a brand is a “name, term, sign, symbol, or
design, or a combination of them, intended to identify the goods and services of one seller or
group of sellers and to differentiate them from those of competition.”
A ‘Brand’ is a marketer’s promise to the customers. A ‘Brand’ is something that resides in the
minds of customers. A ‘Brand’ is an overall experience to customers.
Brand Management:
‘Brand Management’ involves the design and implementation of marketing programs to build,
measure, and grow brand equity.
Product:
Anything which we can offer to a market for attention, acquisition, use, or consumption that
might satisfy a need or want.
We can define five levels of meaning for a product:
1. The core benefit level is the fundamental need or want that consumers satisfy by
consuming the product or service.
2. The generic product level is a basic version of the product containing only those
attributes or characteristics absolutely necessary for its functioning but with no
distinguishing features. This is basically a stripped-down, no-frills version of the product
that adequately performs the product function.
3. The expected product level is a set of attributes or characteristics that buyers normally
expect and agree to when they purchase a product.
4. The augmented product level includes additional product attributes, benefits, or related
services that distinguish the product from competitors.
5. The potential product level includes all the augmentations and transformations that a
product might ultimately undergo in the future.
In many markets most competition takes place at the product augmentation level.
A brand is more than a product, because it can have dimensions that differentiate it in some way
from other products designed to satisfy the same need. These differences may be rational and
tangible—related to product performance of the brand—or more symbolic, emotional, and
intangible—related to what the brand represents. Brands, especially strong ones, carry a number
of different types of associations, and marketers must account for all of them in making
marketing decisions.

Branding can be applied virtually anywhere a consumer has a choice, like branding a physical
good, service, a store, a place, an organization, people, or an event.
Brand Elements:
Trademarkable devices that serve to identify and differentiate the brand such as brand names,
logos, URLs, symbols, characters, color, slogans, etc.
Why do brands matter?
For Consumers:
 Identification of source of product.
 Assignment of responsibility to product maker.
 Risk reducer (Financial Risk, Physical Risk, Social Risk, Psychological Risk, Time Risk).
 Search cost reducer.
 Promise, bond, or pact with the maker of product.
 Symbolic device (allowing consumers to project their self-image).
 Signal of quality.
For Manufacturers:
 Means of identification to simplifying handling or tracing.
 Means of legally protecting unique features (trademarks, patents, copyrights).
 Signal of quality level to satisfied customers.
 Means of endowing products with unique associations.
 Source of competitive advantage.
 Source of financial returns (premium price paid or sell more volume).
Researchers have classified products and their associated attributes or benefits into three major
categories: search goods, experience goods, and credence goods. For search goods like grocery
produce, consumers can evaluate product attributes like sturdiness, size, color, style, design,
weight, and ingredient composition by visual inspection. For experience goods like automobile
tires, consumers cannot assess product attributes like durability, service quality, safety, and ease
of handling or use so easily by inspection, and actual product trial and experience is necessary.
For credence goods like insurance coverage, consumers may rarely learn product attributes.
Disadvantages of Branding:
 It is difficult to establish a brand, and the expense of advertising in the initial stage is very
high, which raises the cost.
 Branding increases the price due to promotion costs.
 The brands price themselves keeping in view consumer’s perception of the brand value in
mind and not on the basis of cost of product.
  Brand names always do not assure good quality. Manufacturers sometimes place inferior
goods in the market under a glamorous brand name.
 The severe criticism leveled against branding is that it leads to some kind of monopoly
known as 'Brand Monopoly'.
 The ‘Brand Monopoly’ is created by gradually creating brand loyalty to the products in
the minds of the consumers.
No Branding Strategy:
“No-Brand" Branding: A number of companies have successfully pursued "No-Brand" strategies
e.g., Muji.
To Brand or Not to Brand?
The first branding strategy decision is whether to develop a brand name for a product. Today, the
branding is such a strong force that hardly anything goes unbranded; so ‘commodities/generics’
do not have to remain commodities/generic products. Over the years, a number of products that
at one time were seen as essentially commodities/generic have become strong brands, such as
coffee, tea, flour, sugar, salt, pineapple, etc.
Types of Brands:
National brands are products that are produced and marketed by a large, established company,
and are widely available across all retailers. They are typically considered more reliable and of
higher quality than private label brands, often backed by large advertising campaigns, and
consumers may be willing to pay a premium for them. Examples of national brands include
Coca-Cola, Nike, and Apple.
Private label / store brands are products that are produced and marketed by smaller, lesser-
known companies, and are distributed primarily through a single retailer. They are typically
priced lower than national brands and may have fewer features, but can offer a viable alternative
to more expensive brands. Examples of private label brands include Trader Joe’s, Target’s Up &
Up, and Aldi’s Simply Nature.
Generics: These are unbranded, plainly packaged, less expensive versions of common
household products or commodities (e.g., spices, pulses, sugar, etc.).
Branding Strategies:
House of Brands strategy is an approach to marketing and branding whereby a parent company
markets and sells several related brands under its own name. This allows the parent company to
leverage its resources and gain economies of scale while still offering a wide variety of products
and services to customers. Examples of House of Brands strategy include Procter & Gamble,
which produces a variety of household goods under its own name, as well as the brands Tide,
Febreze, and Olay. In this case, new brands are introduced for new products.
Branded house strategy is a marketing strategy where a company focuses on its core brand and
leverages it to create a portfolio of related products and services. This gives the company a
strong identity that is recognizable to customers, allowing it to create a cohesive experience
across all its products and services. Examples of successful branded house strategies include
Apple and Disney. Apple has leveraged its brand to create a large portfolio of products,
including the iPhone, iPad, Mac, Apple Watch, and more. In this case, the brand is firmly
established and plays the driver role across all product offerings.
Brand Line, Brand Mix:
Brand line is a group of products within the same product category that are marketed under the
same brand name. For example, Coca-Cola has several product lines such as Coca-Cola Classic,
Diet Coke, and Coke Zero.
Brand mix, on the other hand, is the combination of different product lines and/or product
categories marketed under the same brand name. For example, Adidas sells not only athletic
shoes, but also clothing and accessories. The combination of these product lines is Adidas' brand
mix.
Branded Variants:
Many companies are introducing ‘Branded Variants’, which are specific brand lines supplied to
specific retailers or distribution channels. They result from the pressure retailers put on
manufacturers to distinctive offerings. For example, a special variant of Colgate toothpaste is
only available in Carrefour.
Brand Portfolio:
Set of all brands and brand lines a particular firm offers for sale to buyers in a particular
category. Example: Brand Portfolio of Unilever in the soap category includes Lux, Dove,
Lifebuoy, and Pears.
Offering multiple brands in a product category can help a firm to attract a wider range of
customers and tap into different markets. While there is a risk of cannibalizing sales, this is often
outweighed by the potential for increased market share and total sales. For example, a company
may offer multiple brands in order to attract budget-conscious customers, as well as more
affluent customers who value quality. By doing so, the company can capture a larger portion of
the market and increase overall sales.
External vs. Internal Cannibalization:
External cannibalization occurs when a company launches a new product that competes with an
existing product within the same company. An example of external cannibalization would be
Apple introducing a new iPhone model that takes away sales from the previous model.
Internal cannibalization occurs when a company launches a new product that competes with an
existing product from a different company. An example of internal cannibalization would be
Nike launching a new running shoe that takes away sales from a competitor’s running shoe.
Flanker vs Fighter Brand:
A flanker brand is a spin-off brand from an existing brand. It is used to extend the reach of a
brand and create a new point of entry into a market. Such brands can vary in different attributes
but still remain an extension. Dove Intense Repair (a flanker of the Dove brand).
A Fighter Brand is a lower-priced offering launched by a company to take on, and ideally take
out, specific competitors that are attempting to underprice them. Fighter brand is a term used to
describe a type of product or service that stands out from the competition, offering superior
quality or value.
Branding Challenges Today:
 Savvy customers
 More complex brand families and portfolios
 Maturing markets
 More sophisticated and increasing competition
 Difficulty in differentiating
 Decreasing brand loyalty in many categories
 Growth of private labels
 Increasing trade power
 Fragmenting media coverage
 Eroding traditional media effectiveness
 Emerging new communication options
 Increasing promotional expenditures
 Decreasing advertising expenditures
 Increasing cost of product introduction and support
 Short-term performance orientation
 Increasing job turnover
 Pronounced economic cycles

Chapter-2
Brand Equity:
The added value a given brand name provides to a product. The psychological and financial
value of the brand.
Customer Based Brand Equity:
We formally define customer-based brand equity as the differential effect that brand knowledge
has on consumer response to the marketing of that brand. The CBBE concept approaches brand
equity from the perspective of the consumer—whether the consumer is an individual or an
organization or an existing or prospective customer. The basic premise of the CBBE Model is
that the power of a brand lies in the minds of the existing or potential customers and what they
have experienced directly and indirectly about the brand. In other words, the power of a brand
lies in what resides in the minds of customers.
Let’s look at the three key ingredients to this definition: (1) “differential effect,” (2) “brand
knowledge,” and (3) “consumer response to marketing.” First, brand equity arises from
differences in consumer response. If no differences occur, then the brand-name product can
essentially be classified as a commodity or a generic version of the product. Competition, most
likely, would then just be based on price. Second, these differences in response are a result of
consumers’ knowledge about the brand, that is, what they have learned, felt, seen, and heard
about the brand as a result of their experiences over time. Thus, although strongly influenced by
the marketing activity of the firm, brand equity ultimately depends on what resides in the minds
and hearts of consumers. Third, customers’ differential responses, which make up brand equity,
are reflected in perceptions, preferences, and behavior related to all aspects of brand marketing.
 The base of comparing Brand Equity is comparing the branded product with the
non-branded/generic one.
Positive vs. Negative CBBE:
A brand is said to have Positive Customer-Based Brand Equity when customers react more
favorably to a product when the brand is identified as compared to when it is not.
A brand is said to have Negative Customer-Based Brand Equity if consumers react less favorably
to a product when the brand is identified as compared to when it is not.
Brand Knowledge:
 ‘Brand Knowledge’ is the key to creating brand equity, because it creates the
differential effect that drives brand equity.
Brand knowledge, as defined by the CBBE (Customer-Based Brand Equity) model, is the
consumer's understanding and awareness of a brand's characteristics and attributes. It is the
extent to which a consumer can recall and recognize the brand, and is based on the cumulative
experience of a consumer's interaction with the brand over time. Brand knowledge is composed
of two primary components: brand awareness and brand image. It consists of all the thoughts,
feelings, images, experiences, beliefs that become associated with the brand.
Brand Awareness:
Consists of Brand Recognition and Recall.
Brand recognition is the extent to which customers are aware of a brand and can identify it
among its competitors. It is the first step in creating a strong and lasting relationship between the
brand and its customers. Brand recognition is achieved through successful marketing,
advertising, and branding initiatives that create a strong, memorable impression in the minds of
customers. It is used in unplanned buying.
Brand recall is the is a measure of how easily a customer can remember a brand. It is based on
the customer's ability to remember information about a brand, such as its name, logo, tagline, and
other related attributes. Brand recall is an important measure of brand success, as it indicates the
level of brand recognition and loyalty. It is used in planned buying.
 The research reveals that many consumer decisions (About 70%) are made at the
point of purchase. Therefore, Brand Recognition will be important.
Top of Mind Awareness (TOMA):
It refers to a brand being first in customers' minds when thinking of a particular industry or
category.
Highest Recognition + Highest Recall
Brand Image:
It is consumers’ perceptions about a brand, as reflected by the brand associations held in
consumer memory.
Brand Resonance Model:
The blocks up the left side of the pyramid represent a more ‘Rational Route’ to brand building.
The blocks up the right side of the pyramid represent a more ‘Emotional Route’ to brand
building. Most strong brands were built by going up both sides of the pyramid.
SalienceBrand Awareness (Brand Recognition test, Brand Recall test)
PerformanceProduct Features, Reliability, Durability Style, Design, Price.
ImageryCustomer Perceptions, Associations, Experiences.
Judgement‘Brand Judgments’ are customers’ personal opinions and overall evaluations of the
brand, which consumers form by putting together all the different brand performance and
imagery associations.
Feelings‘Brand Feelings’ are customers’ emotional responses and reactions to the brand.
Resonance‘Brand Resonance’ focuses on the ultimate relationship that the customer has with
the brand. ‘Brand Resonance’ describes the nature of this relationship and the extent to which
customers feel they are ‘in sync’ with the brand. For example: Behavioral Loyalty, Attitudinal
Attachment, Sense of Community, Active Engagement.
CBBE Model:
The CBBE model reinforces a number of important brandings tenets, four of which are
particularly noteworthy. 1. Customers Own Brands: The power of the brand and its
ultimate value to the firm resides with customers. 2. Don’t Take Shortcuts with Brands: The
CBBE model reinforces the fact that there are no shortcuts in building a brand. A great brand is
not built by accident but is the product of carefully accomplishing a series of logically linked
steps with consumers. 3. Brands Should Have a Duality: It appeals to both head (rational) and
heart (emotional). Rational concerns can satisfy utilitarian needs, whereas emotional concerns
can satisfy psychological or emotional needs. 4. Brand Resonance Provides Important Focus:
Brand Resonance is the pinnacle of the CBBE model and provides important focus and priority
for decision making about marketing.
Brand Funnel Model:
A brand funnel model is a marketing strategy that uses a sequence of steps to guide customers
through their journey from awareness to purchase. The model starts with brand awareness and
then works its way through increasingly targeted messages, such as consideration and
conversion, to encourage customers to take the desired action. The goal is to drive sales and
build customer loyalty by providing a consistent and engaging experience across each step of the
funnel. The Brand Funnel is a tool used to assess the purchase journey of your customers.
Brand Funnel is evaluated based on five simple steps:
AidedUnaidedConsideringPurchaseLoyal
Brand Valuation:
Brand Equity needs to be distinguished from Brand Valuation, which is the job of estimating the
total financial value of the brand. Brand valuation is the process of estimating the economic
value of a brand. It is used to determine the financial worth of a specific brand and is typically
conducted by marketing and financial professionals. For example, Google's brand value was
estimated at $133 billion in 2020, according to Brand Finance's annual report.
Customer Life-time Value:
It is the net present value of the stream of future profits expected over the customer’s lifetime
purchases.
Customer Equity:
‘Customer Equity’ is the sum of lifetime values of all customers of a brand.
Customer equity is the total combined value of a company’s relationship with all of its
customers. It is a measure of the total value that a company derives from its customers over time,
and is based on the amount of money a customer is likely to spend over the course of their
relationship with the company. It is calculated by multiplying the average customer lifetime
value by the total number of customers.
Brand Equity vs. Customer Equity:
Many of the actions that will increase brand equity will increase customer equity and vice versa.
In practice, customer equity and brand equity are complementary notions in that they tend to
emphasize different considerations. ‘Brand Equity’ tends to put more emphasis on the front-end
of marketing programs and intangible value created by marketing programs. ‘Customer Equity’
tends to put more emphasis on the back-end of marketing programs and the realized value of
marketing activities in terms of revenue.

Chapter-3
Brand Image and Brand Positioning:
Brand Image refers to the brand perceptions and associations in the minds of consumers, whereas
positioning is the act of designing that image in the minds of consumers.
Brand Positioning is the act of designing the company’s offer and image so that it occupies a
distinct and valued place in the target customer’s mind against competitors.
Consumers hire the products that they buy to solve their problems. Job to be done theory states
that “What job your brand does to your target consumers better than competitors?”
According to the CBBE model, deciding on a ‘Brand Positioning’ requires the following:
1. Identifying the target market.
2. Studying nature of the competition
3. Establishing the point of differentiation
 4. Establishing the point of Parity

Target Market (Identifying the target market is important because different consumers may
have different brand knowledge, thus different perceptions and preferences for the brand. This
step requires Market Segmentation and Targeting. Segmentation Bases Geographic,
Demographic, Psychographic, Behavioral).
Identifying Competitors (Using the market approach, competitors are companies that satisfy
the same customer need or solving the same problem. A company can focus its attack on one of
the following classes of competitors: Strong versus Weak: Most companies aim their shots at
weak competitors, because this requires fewer resources. Yet the firm should also compete with
stronger competitors to keep up with the best; as even strong competitors have some weaknesses.
Close versus Distant: Most companies compete with competitors who resemble them the most;
like Chevrolet competes with Ford, not with Ferrari. Yet companies should also recognize distant
competitors; like Coca-Cola states that its number-one competitor is tap water or tea, not Pepsi.
Also, US Steel worries more about plastic and aluminum than about Bethlehem Steel. ‘Good’
versus ‘Bad’: Good competitors play by the industry’s rules; they make realistic assumptions
about the industry’s growth potential; they set prices in reasonable relation to costs; they favor a
healthy industry etc. Bad competitors take large risks; they invest in overcapacity; and they upset
industrial equilibrium.)
In most industries, customers have choices and preferences in terms of the goods and services
they can purchase. Thus, when an organization defines the target markets it will serve, it
simultaneously selects a set of competing firms. Most firms face four basic types of competition:
1. Brand Competitors (That market products that are similar in features and benefits to the
same customers at similar prices. Like Pepsi.)
2. Product Competitors (That compete in the same product class but with products that are
different in features, benefits, and price. Like Iced Tea, Orange Juice, and Bottled Water.)
3. Generic Competitors (Different products that solve the same problem or satisfy the same
basic customer need. Like Tap Water.)
4. Total Budget Competitors (That compete for the limited financial resources of the same
customers. Like Candy, Gum, and Potato Chips.)
Though all types of competition are important, brand competitors rightfully receive the greatest
attention because consumers typically see the different brands as direct substitutes for each other.
Competitors with respect to market share:
1. Market Leader (Many industries contain one firm that is the acknowledged market leader.
This firm has the largest market share in the relevant product market; e.g., 40% share)
2. Market Challenger (The firm with the second highest market share holder after the
market leader, e.g., 30% share)
3. Market Follower (The firm with the third highest market share, e.g., 20% share)
 4. Market Nicher (Firms that serve small market segments not being served by the larger
firms; they possess a small market share, e.g., 10% share).
POD  (PODs are attributes or benefits that consumers strongly associate with a brand,
positively evaluate, and believe that they could not find to the same extent with a competitive
brand. The concept of POD is closely related to USP (Unique Selling Proposition) and SCA
(Sustainable Competitive Advantage). It maintains that a brand must have some strong,
favorable, and unique associations to differentiate itself from other brands.)
POP  (refers to the similarity between a brand or product and its competitors. It is a
characteristic or feature that a brand shares with other brands in the same category, and it helps
to establish the brand's credibility and relevance in the market. There are two types.

POPs are easier to achieve than PODs where the brand must demonstrate clear superiority. One
challenge for establishing PODs and POPs is that many of the attributes or benefits that make up
the PODs or POPs are negatively correlated. Some Negatively Correlated Attributes and Benefits
are: Low price versus high quality, Taste versus low calories, Nutritious versus good tasting,
Powerful versus safe, Ubiquitous versus exclusive, Varied versus simple. The best approach
clearly is to develop a product or service that performs well on both dimensions. BMW ‘s
positioning image of both luxury and performance car was due in large part due to its design and
the fact that the car was considered both luxurious and high performance.)
Positioning Statement: (A strategic document that communicates the unique value the brand
would offer to a particular target market segment. “For [target market], Brand X is the only
brand among all [competitive set] that [unique value claim] because [reasons to believe
(RTB)]”
Positioning Map: A two-dimensional or multidimensional graphical representation of how
consumers perceive the brands in a product category.
Positioning Strategies:
1. Horizontal Positioning
2. Vertical Positioning
3. Bundle Positioning
Horizontal Positioning: New attributes to attract customers. For example, Whole Foods Market
sells only organic groceries. Dove as a moisturizing cream Beauty Bar.
Vertical Positioning: Shared attributes with other brand, but stresses superiority, i.e., faster,
cheaper, smaller, etc. For example: PEL’s “Sab sey Thanda Fridge” is an example of vertical
positioning.
Bundle Positioning: Combining two or more existing attributes of other brands into one. For
example: Apple’s bundle positioning and OPPO “Camera Phone” bundle positioning.
Confused Positioning: Positioning error that leaves consumers with a confused image of a
company, its products, or brands. It may happen by claiming two or more benefits that contradict
each other or company is focusing on too many benefits which confuses consumers. For
example, Dentonic Toothpaste’s Confused-Positioning.
Employee-Based Brand Equity:
Internal Branding: Much of the branding literature has taken an ‘external’ perspective focusing
on strategies and tactics that firms should take to build and manage brand equity with customers.
Equally important is positioning the brand ‘internally’. Internal branding refers to the process of
developing and promoting a company's brand values, mission, and culture to its employees. It
involves ensuring that all employees understand the company's brand identity and its unique
value proposition so that they can effectively represent the brand in their work. Internal branding
is critical because employees are the face of the company and can have a significant impact on
customers' perceptions of the brand. By ensuring that employees are aligned with the company's
brand values, a company can create a more consistent brand experience for its customers. For
service companies especially, its critical that all employees have an up-to-date and deep
understanding of the brand.
Companies need to engage in continual open dialogue with their employees. It means branding
should be perceived as ‘participatory’. Some firms, like Disney and Ford, have adopted B2E
(Business-to-Employee) programs through corporate intranets and other means. In some cases,
‘Internal Branding’ can both motivate employees and attract external customers. Like ‘Intel’.
Brand Mantra: A ‘Brand Mantra’ is an articulation of the “heart and soul” of the brand. It is a
short, three to five words phrase that captures the essence and spirit of the brand positioning.
Brand Mantras point out the importance of “Internal Branding”. Its purpose is to ensure that all
employees and marketing partners (like ad agencies) understand what the brand most
fundamentally is to represent to consumers., so they can adjust their actions accordingly. For
example, McDonald’s Brand Mantra is “Food, Folks, and Fun”. Nike’s Brand Mantra is
“Authentic, Athletic, Performance.
Chapter 4
Measuring Brand Equity
Brand Equity:
The added value a given brand name provides to a product. The psychological and financial
value of the brand.
Customer-Based Brand Equity:
What difference brand knowledge makes to the customer response.
What is the base of comparing Brand Equity?
Generic/Unbranded Product OR Competitor’s product
Methods of Measuring Brand Equity:
1. Dollar metric Method (Brand Equity = Willingness to pay for a brand – willingness to
pay for a generic product) (Limitations: Suitable for higher-priced brands. Not suitable
for those following Cost Leadership strategy. In many cases, it is difficult to find a
generic option similar to a brand.)
2. By Measuring Brand Awareness (Brand Awareness consists of ‘Brand Recognition’
and ‘Brand Recall’ performance. Brand Recognition: It is consumers’ ability to confirm
prior exposure to the brand when given the brand as a cue. In other words, when they go
to the store, will they be able to recognize the brand they have already been exposed?
Brand Recall: It is consumers’ ability to retrieve the brand from memory when given the
product category, the needs fulfilled by the category, or a purchase or usage situation as a
cue. It could be ‘Unaided’ or ‘Aided’. Unaided Recall: It is the brand recall received
without any hints whatsoever. Usually, it is closely related to TOMA (top of mind
awareness). Aided Recall: It is the brand recall received after getting some hints. Top of
Mind Awareness (TOMA): It refers to a brand being first in customers' minds when
thinking of a particular industry or category (Highest Recognition-Highest Recall).
Limitations: High Brand Awareness may not mean a higher Brand Equity. As per
Keller’s CBBE model, Brand Salience is the initial level of Brand Equity.

3. By Measuring Brand Image: Differentiation (Brand is different, unique, distinctive

from competitors). Relevance (Brand is suitable and appropriate to target customer
needs). Esteem (Brand liked and regarded by the customers. Esteem is influenced by two
factors, perceptions of quality and popularity). Knowledge (Customers understand what
 the brands for).

4. By Measuring Brand Personality: ‘Brand Personality’ refers to human-like

characteristics attributed to a brand. Examples include the following: Nike and athlete,
BMW is performance driven, Levi’s 501 jeans are dependable and rugged. Such
personality-like images of brands reflect consumers’ visions of the inner core of many
strong brands of consumer products. Brand Personification: Some marketers find it useful
to create a Brand Personification, which tries to recast consumers’ perception of the
attributes of a good or service into a human-like character. Many consumers express their
inner feelings about brands in terms of their association with known personalities.
Identifying consumers’ current brand-personality links and creating personality links for
new products are important marketing tasks. Example: The M&M “people” are a current
“fun” example of brand personification. It is based on the line of questioning that could
ask the following: If M&M was a person, what kind of person would it be? Additional
questioning would be likely to explore how the color of the coating impacts consumers’
 perceived personality for the “M&M people”.

5. By Customer Attitude/Intentions: You ask customers questions about the overall brand
evaluation, their purchase intentions, and customer satisfaction with the brand. Overall
Brand Evaluation: It measures the customer attitude toward the brand. Purchase
Intentions: Likelihood of buying the brand or likelihood of switching from one brand to
another. Customer Satisfaction: It checks the frequency of purchase and loyalty levels.
Net Promoter Score (NPS): A Customer Loyalty Metric Ranges from +100 to -100, +ve
is Good, +50 is Excellent.
6. By Expert Opinion: Getting opinion from experts like Interbrand, Brand Finance,
BrandZ, Nielsen, etc.

7. By Brand Resonance Model:

8. By Brand Health Wheel: There are three main components to brand health and these we
describe as “The Brand Health Wheel”. 1. Awareness and Usage (If potential customers
have no awareness of your brand, they cannot consider it. Measuring levels of awareness
 and use is a critical component of brand health.) 2. Brand Positioning (Your brand has to
stand for something and that something should be what customers and potential
customers want.) 3. Brand Delivery (The brand must live up to its promise). These three
important components of brand health can be further broken down into other factors
which can be measured. These measurements lead to an overall brand health score. This
is illustrated in the diagram.

9. By Brand Valuation:
Cost-Based Approach: ‘Brand Equity’ is the amount of money required to reproduce or replace
the brand. Limitation: The historical costs are often poor indication of replacement costs.
Market-Based Approach: V = (Price x Volume of the brand) – (Price x volume of generic) –
(Branding Cost MKTG, R&D). Limitation: Generic product data is hard to find.
Market-to-Book Ratio = Market Value/Book Value. Market Value = Stock Price x Number of
Shares Outstanding. Book Value = Net Asset Value (Total Assets – Total Liabilities). Positive
Brand Equity if M/B or Tobin’s Q >1, Neutral if M/B or Tobin’s Q =1, Negative if M/B or
Tobin’s Q <1. Limitation: Only applicable to public limited companies.
Market Share: Market Share is a commonly used competitive metric to measure a brand’s
performance with respect to its competitors. It can be used as a proxy for a brand’s equity.
Market Share can be based on the number or amount of sales, number of customers, etc.
Limitation: A high market share may not mean high profitability.
Conclusion: There is no single method that is perfect. It is recommended to use more than one
method to estimate brand equity.

Chapter 5
Choosing Brand Elements/Assets to build Brand Equity.
How to Build Brand Equity?
Brand Equity can be built by several strategies. Four major ways to build Brand Equity are given
as follows:
1. By Choosing Brand Elements/Brand Assets
2. By Designing Marketing Programs (Product, Price, Place)
3. By Integrated Marketing Communications (Promotion)
4. By Leveraging Secondary Associations
5. By Cause-Related Marketing
Brand Elements/Assets: Trademarkable devices that serve to identify and differentiate the brand.
(A trademark is a brand that has been adopted by a seller and given legal protection). Brand
Elements/ Brand Assets are also called ‘Brand Identities’. They include brand names, URLs,
Logos, Spoke People, Characters, Slogans.
Most strong brands employ multiple brand elements. Like Brand Elements of McDonald’s are as
follows:
Name: McDonald’s
Logo: Golden Arches
Slogan: I’m lovein’ it!
Character: Ronald McDonald
Color: Yellow
Criteria for Choosing Brand Elements:
There are six criteria in choosing brand elements. First three are internal facing and brand
building and the last three are external facing and defensive against challenges.
1. Memorable (How easily is the brand element recognized and recalled? Short brand
names like Tide, Lux, Dove are memorable)
 2. Meaningful (To what extent is the brand element credible and suggestive of the
corresponding category? Tele : Telecommunication, Nor: Norway)
3. Likeability (How aesthetically appealing do consumers find the brand element? Is it
likable visually, verbally, and in other ways? ‘Comcast’, a cable TV and the Internet
giant, changed its name to ‘Xfinity’ in its revamp Strategy 2010.)
4. Transferable (Can the brand element be used to introduce new products in the same or
different categories? Or transferable to other geographic locations? Toys “R” Us A major
toy retailer in the US. Is this name transferable to other product categories?)
5. Adaptable (How adaptable and updatable is the brand element? The more adaptable and
flexible the brand element, the easier it is to update it. For example, logos and characters
can be given a new look or new design. Is the brand name “Generation 2022” updatable?)
6. Protectable (How legally and competitively protectable is the brand element? It is
important that names that become synonymous with product categories, like Dalda, Surf,
retain their trademark rights and not become generic.)
Challenges of Meeting the criteria:
Unfortunately, it is difficult to choose a brand name-or any brand element-that satisfies all these
criteria. The more meaningful the brand name, the more difficult it is to transfer or translate it to
other culture, so there is a trade-off. Trade-off between “Meaningfulness” and “Transferability”.
Brand Names:
‘Brand Names’ can be an extremely effective shorthand means of communication. Whereas an
ad lasts half a minute, customers can notice the brand name and register it meaning or activate it
in memory in just a few seconds. ‘Brand Name’ is also the most difficult element for marketers
to change. So, they systematically research them before making a choice. Each year, tens of
thousands of new brands are registered as legal trademarks. After realizing that most of the
desirable brand names are already legally registered, many frustrated executives have lamented
that “all the good ones are taken”.
Brand Architecture and Brand Hierarchy:
Sub-Brand & Parent Brand:
Parent Brand Name (An existing brand that gives birth to a brand extension is referred to as the
Parent Brand, e.g., Toyota). Sub-Brand Name (When a new brand is combined with an existing
brand, then brand extension can also be called Sub Brand, e.g., in Toyota Corolla, ‘Corolla’ is a
Sub-Brand). Example: Honda Civic (Honda is Parent Brand, Civic is Sub Brand). Similarly,
Nestle Milk Pak. ‘Brand Architecture’ is the ‘Brand Name Strategy’, it refers to structure of
brands offered by a company.
Brand Architecture Spectrum:
House-Blend: Using Multiple Naming Strategies at the same time. For example, Google uses
Sub-Brands and House of Brands Strategies simultaneously. Google has Google Earth, Google
Maps, Google Nexus, and at the same time YouTube.
Brand Hierarchy:
A ‘Brand Hierarchy’ is a useful means of graphically portraying a firm’s branding strategy by
displaying the number and nature of common and distinctive brand elements across the firm’s
products, revealing the explicit ordering of brand elements.
URLs:
URLs (Uniform Resource Locators) specify locations of pages on the Web and are also
commonly referred to as “Domain Names”. Anyone wishing to own a specific URL must
register and pay for the name with a service. In recent years, the number of registered URLs has
increased dramatically. The sheer volume of registered URLs often makes it necessary for
companies to use coined (new) words for new brands if they wish to have a website for the
brand. Like “Accenture”. Another issue is protecting the brand names online for unauthorized
use. A company can either sue the owner for copyright infringement, buy the name from the
owner, or register all conceivable variations of its brand. Like done by Caterpillar.
Logos and symbols:
Although the brand name typically is the central element of the brand, visual elements also play
a critical role in building brand equity and especially brand awareness. ‘Logos’ can be of the
following types:
 1. Corporate names (word-marks with text only) written in a distinctive form. The examples
of brands with strong “wordmarks” and no accompanying abstract logo include Coca
Cola, and Kit Kat.
2. The abstract designs that may be completely unrelated to the corporate name and
activities. The examples of ‘abstract logos’ include the Mercedes star, Nike swoosh, and
Olympic rings. These non-word mark logos are often called ‘Symbols’.
3. Logos and symbols are Pictorial representation of a brand name. Like Apple logo.
4. Concrete and pictorial. Like Ralph Lauren’s polo player.
5. Shortened version of the company name, like HBL, FedEx.
Many logos fall somewhere between those categories.
Benefits:
Logos and Symbols are often easily recognized. Logos are versatile as they are often nonverbal,
they transfer well across cultures and over a range of product categories. Unlike brand names,
logos can be easily adapted over time to achieve a more contemporary look. Regardless of the
reason for doing it, changing a logo is not cheap. According to Allen Adamson, MD of a brand
consultancy firm, creating a symbol or remaking an old one for a big brand “usually costs $1
million”.
Characters:
‘Character’ represents a special type of brand symbol-one that takes on human/animated or real-
life characteristics. Brand Characters typically are introduced through advertising and can play a
central role in ad campaigns and package designs. Some are animated, like ‘Tony the Tiger’.
Others are live action figures, like Ronald McDonald.
Benefits:
Characters often must be updated over time so that their image and personality remain relevant
to the target market. One advantage of fictitious or animated characters that their appeal can be
more enduring and timeless than the real people.
Slogans:
‘Slogans’ or ‘Taglines’ are short phrases that communicate descriptive or persuasive information
about the brand. They often appear in advertising that can play an important role on packaging
and other aspects of marketing program. For example, Snickers. The slogan of Snickers:
“Hungry? Grab a Snickers” slogan has appeared in ads and on the wrapper. Some slogans
become so strongly linked to the brand that it becomes difficult to introduce new ones. Like “Just
Do It” of Nike.
Jingles:
Jingles are musical messages written around the brand. These are typically composed by
professional song-writers and music directors. During the first half of 20th century, when
broadcast advertising was confined primarily to radio, Jingles were important branding devices.
Jingles are one of the most valuable ways of enhancing brand awareness. Often, they repeat the
brand name in clever ways. Consumers are also likely to mentally rehearse or repeat catchy
jingles after the ad is over.
Packaging:
All the activities of designing and producing the containers or wrappers for a product. Packages
might include up-to three levels of material.
1. Primary Package (e.g., a Perfume comes in a glass bottle).
2. Secondary Package (e.g., Perfume glass bottle is put in a cardboard box)
3. Shipping Package (e.g., when cardboard boxes of perfume are packed in a corrugated
box)
Aesthetic and Functional Components of Packaging:
To achieve the marketing objectives for the brand and satisfy the desires of the consumers, the
aesthetic and functional components of packaging must be chosen correctly. Aesthetics
Considerations relate to a package’s size and shape, material, color, text, and graphics.
Functional Considerations relate to packages becoming resealable, temper-proof, more
convenient to use etc.
Packaging as a Branding Tool:
Various factors have contributed to the growing use of packaging as a marketing tool; such as
1. Self-service in stores
2. Consumer affluence
3. Company and Brand Image
4. Innovation Opportunity
Tetra Pak is an innovative packaging solution which helped reduce distribution cost of perishable
items. Dalda’s innovative solution for oil pouches which are difficult to handle. Although
packaging changes are expensive, they can be cost-effective compared with other marketing
communication costs. The firms change their packaging for a number of reasons:
1. Package may be upgraded to signal a high price.
2. Package redesign may accompany a new product innovation to signal changes to
consumers with respect to convenience
3. Perhaps the most common reason for package redesign is that old package just looks
outdated.
Conclusion:
The entire set of brand elements makes up the Brand Identity, the contribution of all brand
elements to awareness and image. The cohesiveness of the brand identity depends on the extent
to which the brand elements are consistent.
Counterfeit Business:
From Callaway golf clubs to Louis Vuitton handbags, counterfeit versions of well-known brands
are everywhere, and they are getting tougher and tougher to distinguish from the real thing. The
fakes have long thrived in Hong Kong, Rio de Janeiro, and Moscow, but counterfeiting has
become increasingly sophisticated and pervasive. The World Customs Organization estimates
counterfeit products account for 5-7% of global merchandise trade, equivalent to lost sales of as
much as $512 billion. It’s not just luxury items and consumer electronics that are being copied.
The World Health Organization (WHO) says up to 10% of medicines worldwide are
counterfeited which pose a great risk to lives of millions of people. About two-thirds of
counterfeit goods are produced in China. Other counterfeit hot spots include Philippines,
Vietnam, Russia, Ukraine, Brazil, Pakistan, and Paraguay. Experts say China is the key to
stemming the counterfeiting tide. Producing counterfeit goods is as profitable as trading illegal
drugs but does not carry the same risk.

Chapter # 6
Designing Marketing Programs to Build Brand Equity
How to Build Brand Equity?
Brand Equity can be built by several strategies. Four major ways to build Brand Equity are given
as follows:
1. By choosing brand elements
2. By designing marketing programs
3. By integrated marketing communications
4. By leveraging secondary associations
Designing Marketing Activities from a Branding Perspective:
How do marketing activities in general—and product, pricing, and distribution strategies in
particular—build brand equity? How can marketers integrate these activities to enhance brand
awareness, improve the brand image, elicit positive brand responses, and increase brand
resonance?
New Perspectives on Marketing:
The strategy and tactics behind marketing programs have changed dramatically in recent years as
firms have dealt with enormous shifts in their external marketing environments, like:
1. Digitalization and Connectivity
2. Disintermediation and Reintermediation (via new middlemen of various aspects)
3. Customization and Customerization (through tailored products and ingredients provided
to customers to make products themselves).
Customization refers to the process of modifying a product or service to meet the specific needs
or preferences of an individual customer. This can involve changing the design, features, or
functionality of a product or service to match the customer's requirements. For example, a car
manufacturer might offer customization options for the color, interior, and features of a vehicle,
allowing customers to personalize their cars according to their preferences. On the other hand,
customerization is a more holistic approach to tailoring products or services to individual
customers. It involves understanding the unique needs and preferences of each customer and
using that information to provide a personalized experience. This can include everything from
personalized marketing messages to customized product recommendations and tailored customer
support. Customerization goes beyond just modifying a product or service to also include the
overall customer experience.
Implications for Brand Managers:
They have a number of implications for the practice of ‘Brand Management’. Marketers are
increasingly abandoning the mass-market strategies that built brand powerhouses in the 1950s,
1960s, and 1970s to implement new approaches. Even marketers in staid, traditional industries
are rethinking their practices and not doing business as usual.
Relationship Marketing to Build Brand Equity
Implications:
‘Relationship Marketing’ is based on the premise that current customers are the key to long-term
brand success. Some of its benefits are:
1. Acquiring new customers can cost 5 times more than retaining the current customers.
2. The average company loses 10% of its customers each year.
3. A 5% reduction in the customer defection rate can increase profits by 25% to 85%,
depending on the industry.
4. The customer profit rate tends to increase over the life of the retained customer.

Relationship Marketing Activities (Personalized Marketing)

The rapid expansion of the Internet and media fragmentation has brought the need for
‘Personalized Marketing’ into sharp focus. To adapt to the increased consumer desire for
personalization, marketers have embraced concepts such as:
1. Experiential Marketing
2. One-to-one Marketing/ Mass Customization
3. Permission Marketing
4. After marketing
5. Loyalty Programs
6. Nostalgia Marketing
Experiential Marketing:
‘Experiential Marketing’ promotes a product by not only communicating a product’s features
and benefits but also connecting it with unique and interesting experiences. For example:
Citibank’s experiential marketing strategy (Whether you are looking to skate before going to the
office, through the lunch hour, or with friends at a party, Citi Pond at Bryant Park NY, is the
perfect destination). Experiential marketing can take many forms, from pop-up shops and
interactive displays to branded events and live performances. The goal is to create a unique and
memorable experience that helps customers connect with the brand on a deeper level, and
ultimately, fosters brand loyalty and advocacy. Red bull’s events like Red bull doodle. Google
and Zappos Co-Branding strategy.
One-to One Marketing / Mass Customization:
‘One-to-One Marketing’ is based on several fundamental strategies.
1. Focus on individual consumers through consumer databases. “We single out consumers”.
2. Respond to consumer dialogue via interactivity. “The consumer talks to us”.
3. Customize products and services. “We make something unique for him/her”.

One-to-One Marketing can also be called “Mass Customization” which makes the products to fit
the customer’s exact specifications. For example, Subway offerings are customized relative to
McDonald’s. M&M’s Custom Candies. Build-A-Bear Workshop is a U.S. retailer
headquartered in St. Louis, Missouri that sells teddy bears and other stuffed animals. Customers
go through an interactive process in which the stuffed animal of their choice is assembled and
customized during their visit to the store. UBL’s Ad Campaign “Main Sirf Ek Number Nahin”
Focuses on Customer Relationships and One-to-One Marketing. KIA’s website Chatbot Kian
provides one-to-one marketing to customers.
Permission Marketing:
‘Permission Marketing’ is the practice of marketing to consumers only after gaining their express
permission. It is another tool with which companies can break through the clutter and build
customer loyalty. ‘Permission Marketing’ can be contrasted to ‘interruption marketing’. A
pioneer on the topic, Seth Godin, maintains that marketers can no longer employ ‘interruption
marketing’, like mass media campaigns featuring TV, newspapers, magazines, because
consumers not necessarily appreciate these interruptions. By contrast, Godin asserts, consumers
appreciate receiving marketing messages they give permission for. ‘Permission Marketing’ is
capturing marketers’ interest because of the powerful technology that now exists. With the help
of large databases and advanced software, companies can now store gigabytes of customer data
and process this information to send targeted, personalized marketing messages to customers.
For example, with customer permission, Amazon uses database software to track its customers’
purchase habits and send them personalized marketing messages. Email Marketing, you tube
Skippable Ads, etc.
After Marketing:
To achieve the desired brand image, product strategies should focus on both purchase and
consumption. Much marketing activity is devoted to finding ways to encourage trial and repeat
purchases by consumers. Perhaps the strongest and most favorable associations result from
actual product experience. Unfortunately, too little marketing attention is devoted to what
happens after the customer purchase. After marketing refers to those marketing activities that
occur after customer purchase. For example, ‘instruction manuals’ for many products are too
often an afterthought, put together by engineers who use overly technical terms and convoluted
language. As a result, consumers’ initial product experiences may be frustrating or unsuccessful.
To enhance consumers’ consumption experiences, marketers must develop user manuals that
clearly and comprehensively describe both what the product can do for consumers and how
consumers can realize these product benefits.
After marketing can include sale of complementary products (Upselling and cross-selling) that
enhance the value of the core product. Following ‘After marketing’ strategy or ‘Captive-Product
Pricing’ strategy, HP derive most of their revenue from high-margin post-purchase items such as
ink-jet cartridges, laser toner cartridges, and papers. Gillette makes more money by selling the
replacement blades at higher prices.
Loyalty Programs:
Loyalty or Frequency Programs have become one popular means by which marketers can create
stronger ties to customers. Firms in all kinds of industries-most notably airlines, hotels, banks,
and retailers-have established loyalty programs through different mixtures of specialized
services, newsletters, premiums, and incentives. Often, these programs include extensive co-
branding arrangements.
For example, Tesco has launched a highly successful loyalty card program in the U.K. Each
customer in the program has a unique “DNA profile” based on the product he or she buys.
Tracking customer purchases in the program helps to uncover price elasticities and set
promotional schedules, resulting in savings to Tesco of over ₤300 million. Air Miles: A
separately operated loyalty card. It has partnerships with major retailers, e.g., Metro.
Nostalgia Marketing:
Nostalgia Marketing is about connecting your brand with positive concepts or ideas from the
past. The goal is to associate your brand with the feelings of comfort and security that are
triggered by those ideas. While the concept is not new, it’s become more popular in recent times
and is used by companies of all sizes and across industries, from Netflix to McDonald’s. And
that’s because it works. A research study results show that consumers who had seen nostalgia-
themed ads rated the ad and the advertised brand more favorably compared to those who had
seen non-nostalgic ads. Another study found that nostalgic feelings made people willing to pay
more for objects of interest.
So, it’s no surprise that brands are leveraging old memories to build emotional connections with
their customers and ultimately boost sales. For example, Lipton’s “Chaye Chahiye” ad
campaign.
Product Strategy to Build Brand Equity
Designing and delivering a product or service that fully satisfies customer needs and wants is a
prerequisite for successful marketing. For brand loyalty to exist, consumers’ experiences with the
product must at least meet their expectations.
Product Perceived Quality:
Many researchers have tried to understand how consumers form their opinions about ‘product
quality’. The specific attributes of product quality can vary from category to category. From
consumers point of view and consistent with CBBE model, the research has identified the
following general dimensions of quality.
1. Form (Size, shape, or physical structure of a product).
2. Features (Most products can be offered with varying features that supplement its basic
function)
3. Performance Quality (is the level at which the product’s primary characteristics operate)
4. Conformance Quality (is the degree to which all produced units are identical and meet the
promised specifications)
5. Durability (is the measure of the product’s expected operating life under natural or
stressful conditions)
6. Reliability (is a measure of the probability that a product will not malfunction or fail
within a specified time period. Buyers normally will pay a premium for more reliable
products)
7. Repairability (is a measure of the ease of fixing a product when it malfunctions or fails)
8. Style and Design (Appearance and feel of quality).
Consumer beliefs about these characteristics often define quality and, in turn, influence attitudes
and behavior toward a brand.
Product Strategy Model:
Marketers must take a broad, holistic approach to building brand equity. Consistent with this
observation, McKinsey Consulting has put forth an approach to marketing that it has dubbed “3-
D Marketing”.
McKinsey argues that whereas traditional Marketing typically communicates functional benefits;
in an increasingly crowded marketplace, marketers must employ other two dimensions (Process
and Relationship Benefits) as well.
3-D Marketing Model:
3-D Marketing emphasizes three product/service benefit dimensions.
1. Functional Benefits: Product and performance attributes, value, and quality.
2. Process Benefits: Ease of access to product information, broad product selection,
convenient transactions, automatic product replenishment.
3. Relationship Benefits: Experiential Marketing, One-to-One Marketing, Permission
Marketing, After marketing, Loyalty Rewards, and Nostalgia Marketing.
Service:
“A Service is any act or performance that one party can offer to another that is essentially
intangible and does not result in the ownership of anything”. Service sector includes Airlines,
Banks, Insurance Firms, Hotels, Lawyers, Doctors, Museums, Charities, Real Estate,
Consultancy Firms, Universities etc.
Categories of Service Mix:
A company’s offerings often include some services. The service component can be a minor or
major part of the total offering. In the purchase of an air-conditioner, service (i.e., installation) is
a minor part. In a fine-dining restaurant, the food quality and service quality matter equally.
Types of Marketing in Service Industries:
Because service encounters are complex interactions affected by multiple elements, adopting a
holistic marketing perspective is especially important. Holistic Marketing for services requires:
1. External Marketing
2. Internal Marketing
3. Interactive Marketing
External Marketing: It describes the normal work of preparing, pricing, distributing, and
promoting the service to customers.
Internal Marketing: It describes the training and motivating employees to serve customers
well. Example: Singapore Airlines (SIA) is consistently recognized as the world’s best airline in
large part due to its stellar efforts at internal marketing. SIA puts a high emphasis on training.
Interactive Marketing: It describes the employees’ skill in serving the client. Clients judge a
service not only by its technical quality (e.g., Was the surgery successful?), but also by its
functional quality (e.g., Did the surgeon show concern and inspire confidence?).
Managing Product Support Services:
Physical Product-Based Industries must provide a service bundle as well. Manufacturers of
equipment, small appliances, office machines, tractors, mainframes, airplanes-all must provide
Product Support Services. These days, firms that provide high-quality service outperform their
less service-oriented competitors.
Summary:
Product’ is at the heart of Brand Equity.
Marketers/Brand Managers must keep holistic view in mind avoiding the marketing myopia (It
refers to a short-sighted focus on a company's products or services rather than on the needs and
wants of its customers).
Marketers must design, manufacture, market, sell, deliver, and service products in a way that
creates and positive brand image with strong, favorable, unique brand associations, elicits
favorable judgments and feelings about the brand, and fosters greater degrees of “Brand
Resonance”.
Pricing Strategy to Build Brand Equity
Price vs. Non-Price Competition:
In developing a marketing program, management has to decide whether to compete primarily on
the basis of price or non-price elements of the marketing mix.
Price Competition: A company engages in price competition by regularly offering products
priced as low as possible and accompanied by a minimum of services. For example: The world’s
largest low-cost carrier, Southwest Airlines, has almost exclusively operated Boeing 737 aircraft
to save on maintenance costs. Walmart’s Most Efficient and Cost-Effective Supply Chain Makes
it the Largest Retailer in the World.
Non-Price Competition: In non-price competition, sellers maintain stable prices and attempt to
improve their market positions by emphasizing other than price aspects of their marketing
programs; for example, Product Differentiation.
Selecting a Pricing Strategy:
The commonly followed price setting methods are as follows:
1. Cost-Plus Pricing or Mark-up Pricing
2. Competition-Based Pricing or Going-Rate Pricing
3. Perceived Value Pricing (Customer’s Perceived Value)
4. Value Pricing (EDLP, High-Low Pricing)
5. Target Costing
Cost-Plus Pricing or Mark-up Pricing: Adding a standard markup to the cost of the product.
Example: Unit cost of a product is Rs. 100/-. If the manufacturer wants to earn 20% mark-up on
sales, then Cost-Plus (mark-up) price will be Rs. 120.
Competition-Based Pricing or Going-Rate Pricing: Setting prices based on the prices that
competitors charge for similar products. The firm might opt for charging the same, more, or less
than major competitor(s).
Perceived Value Pricing: Setting price based on buyers’ perceptions of value rather than on the
seller’s cost. Example: Caterpillar uses perceived value to set prices on its construction
equipment. Although its tractors are more expensive than the competitors, however the customer
chooses the Caterpillar tractor because he/she is convinced that its lifetime operating costs will
be lower.
Value Pricing: Offering just the right combination of quality and good service at a fair price. An
important type of value pricing is “Everyday Low Pricing (EDLP)”, in which a manufacturer
or a retailer charges a constant low price with little or no price promotions and special sales.
EDLP can be contrasted to “High-Low Pricing” in which retailer charges higher prices on an
everyday basis but then runs frequent promotions to lower prices temporarily on selected items.
The king of EDLP is Wal-Mart. Wal-Mart promises everyday low prices on everything it sells.
Most Fashion Brands Follow High-Low Pricing Policy.
Target Costing: Pricing that starts with an ideal selling price, then targets costs that will ensure
that the price is met. This is the price which the customer wants to pay for a certain product.
Example: P&G usually prices its goods at a premium, but with Crest SpinBrush, P&G reversed
its usual thinking. It started with an attractive low market price and then found a way to make a
profit at that price. Target costing has made Crest SpinBrush one of P&G’s most successful new
products ever.
Adapting the Price/Price Differentiation:
Companies usually do not set a single price but rather a pricing structure that reflects variations
in geographical demands and costs, market-segment requirements, purchase timing, order levels,
delivery frequency, warrantees, service contracts, and other factors.
1. Geographical Pricing: In Geographical Pricing, the company decides how to price its
products for different customers in different regions and countries.
2. Loss-Leader Pricing: Supermarkets and department stores often drop the prices on well-
known brands to stimulate additional store traffic. This pays if the revenue on the
additional sales compensates for the lower margins on the loss-leader items
3. Special-Event Pricing: For example, on Eid, Christmas.
4. Customer-Segment Pricing: Different customer groups are charged different prices for
the same product or service. For example, museums often charge lower entrance fee to
students and higher to foreigners.
5. Channel Pricing: As done by Coca Cola and Pepsi. They carry a different price
depending on whether it is purchased in a fine restaurant, a fast-food restaurant, or a
vending machine.
 6. Location Pricing: The same product is priced differently at different locations even
though the cost of offering at each location is the same; like a theatre varies its seat prices
according to audience preferences for different locations.
7. Time Pricing: The prices vary by season, day or hour. For example, different rates
offered by telecommunication companies with respect to time.
Market Penetration vs. Market Skimming:
Market Penetration Pricing: By Following this strategy, the companies want to maximize their
market share. They believe that a higher sales volume will lead to lower unit costs and higher
long-run profit.
Market Skimming Pricing: Companies unveiling a new technology favor setting high prices to
maximize market skimming. Example: Electronic product firms are frequent practitioners of
Market-Skimming Pricing, where prices start high and are slowly lowered over time.
Yield Management Pricing:
Yield Management Pricing is a computerized, demand based, variable (dynamic) pricing
technique, whereby a reseller (typically a service firm) determines the combination of prices that
yields the greatest total revenues for a given period. It is widely used by airlines and hotels. Their
prices change by minute. ‘Yield Management Pricing’ may be too complex for small firms, and
it requires complex software.
Psychological Pricing:
High price is associated with high quality. Prices that end with “0” and “5” are also common in
the market as they are thought to be easier for consumers to process and retrieve from memory.
“Sales” sign next to prices has been shown to spur demand, but only if not overused.
Odd Pricing:
Many sellers believe that prices should end in an odd number. Like many consumers see a stereo
amplifier priced at PKR 299 instead of PKR 300 as a price in PKR 200 range instead of PKR
300 range. Research has shown that consumers tend to process prices in a “left-to-right” manner.
Also, another explanation for “9” endings is that they convey the notion of a discount or bargain.
Pricing Barometer:
EVC (Economic Value to the Customer): The maximum amount a customer is willing to pay,
assuming that he/she is fully aware of product benefits and competitor offerings. EVC refers to
the estimated value that a customer expects to receive from a product or service. This value is
determined by considering the benefits that the customer expects to receive from the product, as
well as any costs or risks associated with using the product. EVC is often used to determine
pricing strategies, as companies want to price their products or services so that they offer a good
value proposition to their customers.
WTP (Willingness to Pay): An amount a customer is willing to pay in normal circumstances.
Conclusion:
To build brand equity, brand managers must determine strategies for setting prices and adjusting
them over the short and long run. Increasingly these decisions will reflect consumer perceptions
of value. The benefits delivered by the product and its relative advantages with respect to
competitive offerings will determine what consumers see as a fair price.
Distribution (Place) Strategy to Build Brand Equity
The manner by which a product is sold or distributed can have a profound impact on the
resulting equity and ultimate sales success of a brand. Channel strategy includes the design and
management of intermediaries such as wholesalers, distributors, brokers, and retailers.
Retailing includes all the activities involved in selling goods or services directly to final
consumers for personal, non-business use. Wholesaling includes all the activities involved in
selling goods or services directly to those who buy for resale or business use. Wholesalers are
also called ‘Distributors’.
Channel Structure/Design:
Direct Marketing Channel: When there is no intermediary involved.
Manufacturer ----------------------------- > Consumer
Indirect Marketing Channel: When there is one or more intermediaries involved.
Manufacturer--------------------> Wholesaler--------------------> Retailer------------------>Consumer
Manufacturer -------------------- > Retailer -------------------- > Consumer.
Hybrid Channel or Multi-Channel Strategy:
It is rare that a manufacturer will use only a single type of channel. More likely, the firm will
choose a hybrid channel design with multiple channel types. Nike sells its products through wide
variety of direct and indirect channels.
1. Retail: Nike products are sold in retail locations such as sporting goods stores,
department stores, clothing stores.
2. Branded Nike Town Stores: Nike Town stores, located in prime shopping avenues in
metropolitan centers around the globe, offer a complete range of Nike products and serve
as showcases for the latest fashion.
3. Niketown.com: Nike’s ecommerce site allows consumers to place Internet orders.
4. Outlet Stores: Outlet stores feature discounted Nike merchandise.
5. Specialty Stores: Nike equipment from product lines such as Nike Golf and Nike
Hockey is often sold through specialty stores such as golf pro shops or hockey equipment
suppliers.
Omni-Channel Strategy:
Omni-Channel is a multi-channel approach to sales that integrates various channels and seeks to
provide the customer with a seamless shopping experience.
Single Transaction = Brick and Mortar Store (Brick) + Online (Click).

Push vs. Pull Strategy:

In managing its intermediaries, the firm must decide how much effort to devote to the Push vs.
Pull strategy.
Push Strategy: To target and induce intermediaries (wholesalers, retailers etc.) to carry, promote
and sell the product to end users. Push Strategy is appropriate where there is low brand loyalty,
brand choice is made in the store, and the product is an impulse item.
Pull Strategy: To target and persuade end users to ask and purchase products from
intermediaries. Pull Strategy is appropriate where there is high brand loyalty and high
involvement in the category, and when people choose the brand before they go to the store.
Top marketing companies such as Nike, Intel, and Coca Cola skillfully employ both Push and
Pull strategies. Example: Goodyear was able to sell 2 million Aquatred tires (for better traction
on wet roads) although it was priced 10% higher than other top-of-the-line tires of Goodyear.
Goodyear did it by combining strong merchandising support to dealers (push strategy), and a
persuasive advertising campaign directed to consumers (pull strategy).
Cooperative Advertising:
In Cooperative (Co-op) Advertising, a manufacturer pays for a portion of the advertising that a
retailer runs to promote the manufacturer’s product and its availability in the retailer’s place.
Manufacturers generally share the cost of advertising on a percentage basis (usually 50-50) up to
a certain limit.
Distribution Strategies with respect to Number of Intermediaries
Companies have to decide on the number of intermediaries to use at each channel level. Three
strategies are available:
1. Exclusive Distribution
2. Selective Distribution
3. Intensive Distribution

Exclusive Distribution: It means severely limiting the number of intermediaries. It is used when
the producer wants to maintain control over the service level and outputs offered by the resellers.
Exclusive Distribution is frequently used for consumer specialty goods like expensive cars, suits,
etc.
Selective Distribution: It involves the use of more than a few but less than all of the
intermediaries who are willing to carry a particular product. Selective Distribution is frequently
used for consumer shopping goods like clothing, appliances, etc.
Intensive Distribution: When manufacturer places the goods or services in as many outlets as
possible. This strategy is generally used for FMCG products, like soap, snack foods, candies,
gums etc. for which the consumer requires a great deal of location convenience.
Conclusion:
Channel strategy to build brand equity includes designing and managing direct and indirect
channels to build brand awareness and to improve the brand image. Direct and Indirect Channels
offer varying advantages and disadvantages that marketers must thoughtfully combine, both to
sell products in the short run, and maintain and enhance brand equity in the long run. As is often
the case with branding, the key is to mix and match channel options so that they collectively
realize these goals.