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Changing Concepts of Brand Equity

Tuesday, November 1st, 2011

A brand refers to a logo, symbol, or name given to a product. The impact that a brand has on consumer purchases or perceptions with regards to a product is known as brand equity. Brand equity is the value premium that a company derives from a product as compared to its generic equivalent. Brand equity can be created for products by a company, by making them more memorable, easily identifiable, and superior in quality and reliability.

The words ‘brand equity’ show that an asset has been generated which is intangible and is measured in terms of the value attributed to the product or service by a consumer or potential consumer. One way to make this happen is by concerted efforts such as mass marketing campaigns. If consumers are ready to pay for a generic product instead of a branded one, then the brand is said to have negative brand equity. This generally happens if a company makes a major product recall or was subject to some other negative publicity like an environmental disaster.

Consumers who are ready to shell out huge sums of money for the Apple iPhone are examples of high value brand equity creation. Brand equity becomes important when a company wants to expand its product line. When brand equity is positive, the company can rest assured that customers will accept a new product. This can be achieved by associating the new product with an already-existing successful brand.

For example, Samsung is leveraging the brand equity of its Galaxy brand name for mobile phones as well as the tablet devices it has launched, instead of using an entirely new brand name which may have become entirely unfamiliar to consumers.

Branding plays an important part of the price that customers will pay in a market which is already flooded with various competing brands. Brands add value to a basic product or service, resulting in a higher price or higher market share when compared to an equivalent unbranded product. It is like getting consumers to pay more for a Van Heusen shirt who might not be ready to do so for a lesser known brand, even if its quality was not questionable.

The term brand equity describes both the value of the brand and the brand’s component values. A brand’s value may be given in monetary terms or in market research measures like awareness or consideration. In practical terms brand equity translates into consumer goodwill and reference to buy a branded product or service.

Measuring this intangible quantity is not easy and involves ascertaining the brand value to arrive at brand equity.

How to Measure Brand Equity?

Brand equity can be viewed from several perspectives. The most common is the financial outcome which determines price premiums. It is a measure of how much more a consumer will pay for a product or service that is branded over a product or service that is generic.

Another perspective is that of brand extension, where a company studies the value that an existing brand can give to the introduction of other new products. The reverse dynamic is also studied as to the impact that the new product or service can have on the existing brand. The third important perspective is customer-based and was proposed by Kevin Lane Keller. Mr. Keller is the E. B. Osborn Professor of Marketing at the Tuck School of Business at Dartmouth College. Brand equity, according to Keller, is the effect that brand knowledge has on consumer response to the marketing of a brand, when the consumer possesses favorable, strong and unique brand associations.

A customer-based perspective takes into consideration the experiences that consumers have with a brand. On experiencing a product or service, customers assess overall brand quality and tend to infer certain brand attributes. If these experience measures are positive and endure over time, brand loyalty results. Customers communicate the strength of their brand attitude to others by word-of-mouth.

Brand equity components that can be measured include brand awareness, brand reach, and brand image association, which are the result of traditional advertising campaigns, and the influence of social or interactive media.

A strong brand equity created in the entertainment field is that of Zee TV. It is telecast in over 138 countries and gives access to more than 500 million viewers globally. Its strong brand equity makes it a large media franchise that serves the South Asian Diaspora. Zee TV has driven the growth of the satellite and cable industry in India. Its popularity stems from the fact that it caters to the Indian population across the globe with a good understanding of their culture and beliefs and the need for Indian entertainment outside of the country. The company launched Zee TV in the UK / Europe (1995), the USA (1998), Africa (1998) and is now available across five continents.

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