TB Chapter 2 – Enhancing Brand Equity and Accountability

Summary:

The basic issues addressed in this chapter are these: What can marketing communicators do to enhance the
equity of their brands and, beyond this, affect the behavior of their present and prospective customers? Also,
how can marketing communicators justify their investments in advertising, promotions, and other marcom
elements and demonstrate financial accountability?

The concept of brand equity is explained from both the company’s perspective and the consumer’s perspective.
The firm-based viewpoint of brand equity focuses on outcomes extending from efforts to enhance a brand’s
value to its various stakeholders and discusses various outcomes: (1) achieving a higher market share, (2)
increasing brand loyalty, (3) being able to charge premium prices, and (4) earning a revenue premium. From
the perspective of the customer, a brand possesses equity to the extent that they are familiar with the brand
and have stored in their memory favorable, strong, and unique brand associations. Brand equity from the
customer’s perspective consists of two forms of brand-related knowledge: (1) brand awareness and (2) brand
image. The chapter covers three ways by which brand equity is enhanced and labels these the (1) speak-for-
itself approach, (2) message-driven approach, and (3) leveraging approach. The chapter then discusses ten
traits shared by the world’s strongest brands.

The concept of ROMI, or return on marketing investments and several difficulties of measuring marcom
effectiveness are discussed: (1) choosing a metric, (2) gaining agreement, (3) collecting accurate data, and (4)
calibrating specific effects. It concludes with marketing-mix modeling (i.e., multivariate regression analysis)
and how it can assist managers in determining the effect of each marcom element on sales volume.

Introduction
The framework of marcom process included fundamental decisions, implementation decisions, two types of
outcomes, and an evaluation program. Here the focus will be on the desired outcomes of marcom efforts.

Brand Equity
A brand represents a name, term, sign, symbol, design, or a combination of them intended to identify the
goods or services of one seller or group of sellers and to differentiate them from those of competition. A brand
includes trade dress, which refers to the appearance and image of the product, including its packaging,
labeling, shape, color, sounds, design, lettering, and style. Brand equity is the goodwill (i.e., equity) that an
established brand has built up over its existence. It can be considered from both the vantage point of the
organization and the customer.

A Firm-Based Perspective on Brand Equity

The firm-based view of brand equity focuses on outcomes extending from efforts to enhance a brand’s value
to its various stakeholders. As the value, or equity, of a brand increases, various positive outcomes result
including achieving a higher market share, increasing brand loyalty, being able to charge premium prices, and
earning a revenue premium, which is defined as the revenue differential between a branded item and a
corresponding private labeled (store brand) item. In addition to the revenue premium, there may be a taste
premium, which is the differential between a customer’s preference for the branded versus private label item.

Brand Equity Models

There are several models of brand equity.
Brand Asset Valuator: Young & Rubicam (Y&R) developed a model of brand equity entitled the BrandAsset®
Valuator (BAV). It is composed of four components or pillars of brand equity. These include differentiation,
relevance, esteem, and knowledge.

Dimensions of Brand Knowledge: This brand equity model consists of two forms of brand-related knowledge:
brand awareness and brand image. Brand awareness is an issue of whether a brand name comes to mind
when consumers think about a particular product category and the ease with which the name is evoked. The
second dimension of consumer-based brand knowledge is a brand’s image. Brand image represents the
associations that are activated in memory when people think about a particular brand. These associations can
be conceptualized in terms of type, favorability, strength, and uniqueness.

The Brand-Awareness Pyramid: The progression of brand awareness is from unawareness to recognition, to
recall, and to TOMA (top-of-mind awareness).

Brand-Related Personality Dimensions: Brands can have personalities just like people. The five brand-related
personality dimensions include sincerity, excitement, competence, sophistication, and ruggedness.

Relationships among Brand Concepts, Brand Equity, and Brand Loyalty

Brand concept is the specific meaning that brand managers create and communicate to their target market.
Brand concept management represents the analysis, planning, implementation, and control of a brand
concept throughout the life of the brand. These are elaborated on in Chapter 5, but include functional needs,
symbolic needs, and experiential needs. Brand loyalty is a consumer’s commitment to continuing or
advocating a brand, as demonstrated not only by repeat purchases, but also by other positive brand behaviors
(e.g., word-of-mouth advocacy, brand identification).

Strategies to Enhance Brand Equity

There are three ways by which brand equity is enhanced: (1) speak-for-itself approach, (2) message-driven
approach, and (3) leveraging approach.

Enhancing Equity by Having Brand Speak for Itself: By trying and using brands, consumers learn how good
(or bad) they are and what benefits they are (in)capable of delivering. Marketers help the brand to speak for
itself through point-of-purchase materials and appealing sales promotions.

Enhancing Equity by Creating Appealing Messages: Marcom practitioners can build advantageous
associations via the power of repeated claims about the features a brand possesses and benefits it delivers.
This tack is effective if the marcom message is creative, attention getting, believable, and memorable.

Enhancing Equity via Leveraging: Brand associations can be shaped and equity enhanced by leveraging
positive associations with other brands, places, things, and people.
Leveraging Associations from Other Brands – Co-branding is a relationship that potentially serves to
enhance both brands’ equity and profitability. Ingredient branding is a special type of alliance
between branding partners, whereby one brand (ingredient) appears on or inside another brand (the
host).
Leveraging Associations from People – aligning a brand with people, such as employees or endorsers,
can be both advantageous and disastrous as the brand is linked with their reputation.
Leveraging Associations from Things – events and causes provide opportunities for linkages with
brands.
Leveraging Associations from Places – the channel through which a brand is carried (Walmart vs.
Nordstrom) or its country of origin both serve as possible associations through which a brand’s image
can be enhanced.

What Benefits Result from Enhancing Brand Equity?

Brand loyalty determines the long-term growth and profitability of a brand.

Characteristics of World-Class Brands

The biannual EquiTrend survey uses three main dimensions to determine highly successful brands: familiarity
with a brand, quality, and likelihood of purchasing a product. Combining the three dimensions gives a brand
equity score. The annual Interbrand ranking determines 100 top global brands by using (1) the percentage of
a company’s revenue that can be credited to a brand, (2) the strength of a brand in terms of influencing
customer demand at the point of purchase, and (3) the ability of the brand to secure continued customer
demand.

Affecting Behavior and Achieving Marcom Accountability

Marcom efforts should be directed, ultimately, at affecting behavior rather than enhancing equity. Marcom’s
objective is to ultimately affect sales volume and revenue and return on marketing investment (ROMI). The
idea of return on investment (ROI), which is well known in accounting, finance, and managerial economics
circles, is referred to in marketing circles as ROMI, or return on marketing investment.

Difficulty of Measuring Marcom Effectiveness

Several reasons account for the complexity of measuring marcom effectiveness including the difficulty in:
Choosing a Metric
Gaining Agreement
Collecting Accurate Data
Calibrating Specific Effects

Assessing Effects with Marketing Mix Modeling

Marketing mix modeling employs statistical techniques (e.g., multivariate regression analysis) to estimate the
effects that the various advertising and promotion elements have in driving sales volume.