Dr.

Tanmay Chattopadhyay

BRAND MANAGEMENT

What is a brand

It is important to understand how a product differs from a brand. As per Phillip Kotler, a product
is anything that can be offered to the market for attention, acquisition, usage or consumption to
satisfy a need or want. However, brand goes beyond the realms of product.

A brand is “a name, term, sign, symbol, or design, or a combination of these that identifies the
maker or seller of a product or service” (Kotler & Armstrong, 2001, p. 301). As per AMA, a
brand is a “name, term, design, symbol, or any other feature that identifies one seller's good or
service as distinct from those of other sellers.” These definitions highlight the belief that a brand
is what makes one product (or service) different from another product (or service).

Aaker (1997) asserts that brand is a complex symbol and presents six levels of meaning that
convey it: Attributes: A brand brings to mind certain attributes; Benefits: Attributes being
translated into emotional and functional benefits; Values: The brand also says something about
the producer’s values; Culture: The brand may represent a certain culture; Personality: The brand
can project a definite personality; User: The brand suggests the kind of consumer who buys or
who uses the product. Brands are considered much more than just a name or logo, more than an
attribute, even more than the product itself. Brands represent emotions, attitudes, values and
sometimes even complete lifestyles. “A brand is a person’s gut feeling about a product, service
or company” (Neumeier, 2003).

A brand is a promise of value to consumers (Raggio &Leone, 2005). A company makes

promises about the benefits and values of a product or service and the consumers decide whether
or not those promises are fulfilled. This evaluation contributes to building or destroying a brand.
Shelly Lazarus (1998) opined that ‘the brand’ is the totality of what its consumer’s experience.
She further stated that consumer experience are formed through various touch points with the
brand “from quality, to taste, to packaging, to the retail environment, to line extensions, to
ergonomics, design and color, to sales promotions, to price, to corporate reputations and public
relations, to the sales force and service experiences, to the delivery trucks, to word-of-mouth, to
telemarketing scripts and receptionists style, to the way you answer the telephone, to prejudices

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and attitudes, to collective and individual memories to its history. By this definition, brand is
essentially a subset of all departments of the company --- production, quality, maintenance, sales,
marketing, finance, after sales service (if any), legal, human resources and the like.

A brand is arguably a company’s most powerful asset, yet it is intangible. To the consumer, the
brand consists of images, perceptions, beliefs and such other attributes of what the product stands
for, what it does, what it feels like to own it or to use it. The brand’s intangible aspects are
essential constituents of the brand construct. These intangible elements are what connect the
brand to consumers. Good brands can make emotional bonds with its consumers. People fall in
love with brands. They trust them, develop strong loyalties, buy them, and believe in their
superiority. These consumer-brand relationships develop over time and must be cultivated by
both parties.

Branding is perhaps the most important facet of any business--beyond product, distribution,
pricing, or location. A company's brand is its definition in the world, the name that identifies it to
itself and the marketplace. A model may be beautiful, but without a name, she's just "that girl in
that picture." Where would Ramakant Achrekar be without Sachin Tendulkar, or who would
imagine Coca-Cola as just a soft-drink manufacturer? A brand provides a concrete descriptor to
customers and competitors alike, a name for a product or service to distinguish it from anything
else. Bob may run a hobby shop, but trying to advertise as "The hobby shop a guy named Bob
runs down the street a ways" is financial suicide. Each customer will have to describe the shop,
who Bob is, and what the shop does every time someone asks about it.

Brand Equity

The acquisition of Cadbury’s by Kraft in 2010 for 18.9 billion dollars illustrates the value of
brands for companies. Brand equity is a unified conceptual framework which is used as a tool to
interpret the potential effects of various brand strategies. Fundamentally, the concept of brand
equity relates to the fact that different outcomes result from the marketing of a product or service
because of its brand than if the product or service was not identified with the brand. Basically,
the concept stresses the importance of the role of brands in the marketing strategies. Marketing

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professionals believe that brands with higher equity provide a pride in ownership, are more
trustworthy, and provide relevant and distinctive promise to the consumers.

Numerous definitions of brand equity have been proposed by different authors. According to
David Aaker (1991), brand equity is the set of assets and liabilities linked to a brand that add to
or subtract from its value to the consumers and business, while Farquhar (1989) defines brand
equity as the monetary value added by the brand to the product. Swait et al (1993) define brand
equity as the consumer’s implicit valuation of the brand in a market with differentiated brands
relative to a market with no brand differentiation, whilst Srinivasan, Chan Su Park and Dae Ryun
Chang define brand equity as the incremental contribution (in $) per year obtained by the brand
in comparison to the underlying product or service with no brand building efforts (March 2005).
This incremental contribution, as conceptualized by Srinivasan et al (2005), is driven by the
individual customer’s incremental choice probability for the brand in comparison to his or her
choice probability for the product with no brand building efforts. The Marketing Science
Institute has defined brand equity as the set of associations or behaviors on the part of the
brand’s customers channel members and the parent corporation that permit the brand to earn
greater volume or greater margins than it could without the brand name. This is what gives the
brand a strong, sustainable and differentiated advantage over its competitors.

Therefore, from a behavioral view point, brand equity is critically important to make points of
differentiation leading to competitive advantages based on non price competition (Aaker, 1991).

Somewhat paradoxically, the phenomenon labeled as brand equity from the perspective of a
marketing manager corresponds closely to the state of affairs that economists concerned with
social welfare label as ‘market inefficiency’. Specifically, a brand is deemed to be inefficient to
the economists if it offers the same product characteristics at a higher price. Thus inefficiency
refers to “the extent to which a brand is overpriced relative to its close competitors” and involves
a “welfare loss” (Kamakura et al, 1988, p. 300).

Measurement of brand equity

According to Aaker (1991), brand equity is a multidimensional concept. It consists of brand

loyalty, brand awareness, perceived quality and brand associations along with other proprietary

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brand assets. Other researchers have also proposed similar dimensions. Shocker and Weitz
(1988) proposed brand loyalty and brand associations, while Keller (1993) suggested brand
knowledge, comprising brand awareness and brand image.

Perceived quality has been defined by Zeithamal (1988) as a consumer’s subjective judgment
about a product’s overall excellence or superiority. Brand loyalty, defined by Oliver (1997), is a
deeply held commitment to re buy a preferred product or service consistently in the future.
Grover and Srinivasan, (1992) found out that loyal customers show more favorable response to a
brand than non loyal customers. Aaker (1991) has defined brand association as anything linked
in the memory of the consumers to a brand, while Chandon (2003) has defined brand awareness
as accessibility of the brand in the customer’s memory.

Farquhar (1989) conceptualized brands having high equity as having three advantages:

Financial: This approach to conceptualizing Brand equity is based on determining the price
premium the brand commands over a generic product. Expenses like promotional costs are also
taken into account while using this method of measuring brand equity.

Consumer based: A strong brand increases the consumers’ attitudinal strength towards the
product associated with the brand. Of course attitudinal strength is built depending on the
experiences the consumers have about a product. Increased attitudinal strength, in turn, implies
that when a new brand is being launched, trial samples can be more effective than advertising.
The consumers’ awareness and associations lead to perceived quality, inferred attributes and
eventually brand loyalty.

Brand extensions: A successful brand can be used as a platform to launch related products. This
helps in leveraging the existing brand awareness, thus reducing the advertising expenses and a
lower risk from the perspective of the consumers. But this methodology is more difficult to
quantify.

The Value of Brand Equity

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A primary responsibility of the brand managers should be to build up the equity of a brand, since
a brand with a higher equity generates value to both the firm (e.g., via effectiveness of marketing
programs, brand loyalty, price premiums, favourable environment for brand extensions, and so
on) and to the customer (e.g., via enhanced information processing). Several researches have
shown that brand equity has various benefits for a firm. Strong brands enhance consumer
awareness, loyalty and the efficiency and effectiveness of marketing and advertising program
(Aaker, 1991; Aaker and Biel, 1993). In other words, brands with higher equity can command
higher prices, is susceptible to lower price elasticity, has greater competitiveness, and,
ultimately, enjoys higher profits and market value (Aaker and Biel, 1993; Agres and Dubitsky,
1996). According to Lane and Jacobson (1995), brand names are valuable because of their ability
to maintain and create earnings for the firm over and above those generated by tangible assets.
The financial value of brand equity stems not only from the additional earnings that is accrued to
a specific product in its traditional market but also because an established name can be used with
new and different products. Adler and Freedman (1990) have further suggested that brand equity
can provide short-term protection from competition (based on consumer loyalty and switching
costs) and can also be used to deflect competitive initiatives, such as through the judicious use of
trade leverage.

The dimensions of brand equity

The multidimensional concept of brand equity takes several forms, such as favorable
impressions, attitudinal dispositions, behavioral predilections (Rangaswamy et al., 1993), loyalty
and image (Shocker and Weitz, 1988). Aaker (1991, 1996) grouped it into five categories:
perceived quality, brand loyalty, brand awareness, brand association and other proprietary brand
assets such as patents, trademarks, and channel relationships. Other researchers identified similar
dimensions while Shocker and Weitz (1988) proposed brand loyalty and brand association.

According to Keller (2002), sources of brand equity come from brand knowledge, which can be
characterized in terms of two components: awareness and association. A high level of brand
awareness and a set of strong, favourable, and unique brand associations in consumer memory
lead to a high level of brand equity. Yoo et al. (2000) combined brand awareness and association
as one dimension - brand awareness. Collectively then, Yoo and Donthu (2000) grouped brand

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equity into three major dimensions: perceived quality of the brand, brand loyalty and brand
awareness. These dimensions were used to explore the findings of marketing and consumer
behaviour research in relation to brand equity in their study.

Effect of brand equity

The concept of brand equity refers to the basic idea that a product's value to the consumers, the
trade and the firm is somehow enhanced when the brand is associated or identified over time
with a set of unique elements that define the brand concept. Clearly, such equity endowments
come from current or potential consumer learning which influences how the product is encoded
and acted upon by consumers. It stands to reason that such learning is dynamic and influences
consumer choice processes and outcomes either directly or indirectly because of the
effectiveness of the branded product's marketing mix elements (Erdem et al., 1999).

The most frequently cited advantage for strong brands at choice stage is the notion of brand
recognition or familiarity as a choice heuristic (Dodds, Monroe and Grewal, 1991). Essentially
when the consumers have limited product knowledge about any category, the brand name is the
most recognizable cue available (Feldman and Lynch, 1988). In addition, using a familiar brand
name as a diagnostic cue is thought to be a consumer strategy for dealing with risks and
uncertainty (Dodds, Monroe and Grewal, 1991). Thus, one of the most effective mechanisms that
provide advantage to strong brands is their inherent familiarity.

Tellus (1988) have found that there are two segments of consumers --- advertising prone
segment, who are usually influenced by advertising and there is a coupon prone segment. For the
latter segment, advertising does not have any influence on sales. Hoyer and Brown (1990) found
that there is a positive relationship between advertising and sales, while some other researchers
have found that no relationship exists (Bogart, 1986). Guadagni and Little (1983) have found that
there exists a high statistical significance for consumer’s final brand choice with presence /
absence of store promotion, regular shelf price and presence and / or absence of price
promotions.

Brand choice, as a concept; shares the view that the value of a brand to a firm is created through
the brand's effect on consumers. Most brand equity conceptualizations are linked to consumers

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by emphasizing consumer-based concepts such as brand associations (Aaker 1991), brand

knowledge (Keller 1993), perceived quality and credibility of the brand information under
imperfect and asymmetric condition (Erdem and Swait 1998). Over the years, several researches
have proven that brand equity accrues over time via consumer learning and decision making
processes.

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