Brand Equity is the value the consumer places on it and it is estimated through market research.
Brand equity is one of the most important concepts a brand manager or a marketing department needs to fully understand. It is an account of the unique strengths and weakness of a brand and indicates opportunities and risks. It is vital that market researchers use the right methods to capture it. The limitations of the methods you use in research will limit your knowledge of the value of the brand in the eyes of the consumer. Also important is the fact that market research measures the perceptions of the brand; so, for example, brand equity based on high quality, is actually perceived high quality – and this may have been influenced in several ways (marketing, personal recommendations, or direct experience).
According to academics in consumer research and practitioners in business, evaluating the strengths of a brand, service, or product can be best done through the concept of brand equity, especially consumer focussed brand equity.
Brand equity is the value of a brand from the consumer’s perspective.
Perhaps a firm’s most valuable asset for improving marketing productivity is the knowledge that has been created about the brand in consumers’ minds from the firm’s investment in previous marketing programs.
Kevin Keller, Stanford University (1993).
The more a company understands its brand from the consumer’s perspective, the more effective will be its ability to market its products. Companies can try to understand brand equity with relevant market research. Of course, accurate read outs from consumers is not easy and crucially dependent upon the method used.
According to theories of brand equity, three important measures are: brand awareness, brand loyalty and purchase intentions. The three are inextricably linked.
Brand loyalty is the tendency to repeatedly buy the same brand rather than buy or consider its competitors.
Brand loyalty is therefore actual purchasing behaviour based on a very strong and positive attitude towards the brand. One feature of brand loyalty is advocacy – customers often freely sing its praises and recommend it to others.
Brand loyalty may be determined by a combination of the following factors (note that these factors are broader than their labels imply).
The influence the social environment, community, culture, society in general, a person’s ‘role’, and significant others have on a person. Examples: what your peers consider as ‘trendy’, the norms and values of the culture you are in, news items, social expectations about the roles you have, your friends, partners, relatives, or social group. Brands that are perceived to be easy to access (e.g., an out of town supermarket or a brand that can be bought from multiple outlets), appear to be aimed at anyone, and seem to offer good value score high on socially inclusivity. Also, just as individuals are accountable to society (via the ‘social contract’), so too are brands expected to be accountable to its customers (e.g., by being environmentally friendly, by being socially responsible, by adhering to laws or to recommendations from ombudsman or quangos).
The quality of the product, service, or brand in terms of being able to deliver what is promised, and whether it is premium or standard contributes strongly to the value of the brand. For example: whether a brand has good functional properties (it does what it says on the tin) or whether it is seen as superior or a premium brand. Brands that appear to offer something different, are future facing, or the opposite (a long standing brand with a traditional production method) can appear high quality. Also if a brand has a strong USP (unique selling point) then this can add greatly to what is has to offer, and hence its brand equity.
The extent to which consumers trust and believe in the brand is another factor. Trust may be built on authenticity, credibility, and whether the company appears to care about its customers. One feature of trust is that consumers are highly receptive to new products or variants of the same brand (for example, you buy a new product from a brand you trust without trying it out or waiting to read reviews). Brands that are trusted tend to be highly responsive to customer feedback or their products and services are highly functional and reliable (they “do what it says on the tin”). When customers are asked for ‘reasons to buy’, trust often comes to mind.
Emotional and Evaluative Connections
Any emotional reaction towards the brand, either stated explicitly or implicitly (a response that is difficult to verbalise or difficult to recall explicitly). Emotional responses when exposed to brands (e.g., in store or in a marketing campaign) will be based on a person’s past experience, the experiences of significant others (relayed to them or directly observed by them), exposure in the media, associations and connections with other concepts and people in society, emotional associations with quality, recollections with good times in the past, emotional associations with brand credibility, and its responsiveness (or otherwise) to its customers. Hence other factors mentioned above such as Trust and Quality, can interact with our emotions. Social Forces are crucial here too: feelings towards the brand that connect with a person’s childhood, their family, their culture, their social network, are also very important here.
Evaluative Connections. Some see ‘evaluations’ (such as expressions of good or bad without the intensity usually associated with an emotion) as separate to emotions, but often they are seen as of the same origin (which is consistent with the more cognitive theories of emotion – that emotion serves to alert us to what is good for us and what is bad for us).
Emotion and the Unconscious. Emotional and evaluative connections with a brand may come to us through two routes: a conscious route through which we can verbally state how we feel and why we feel the way we do, or through an unconscious route, commonly referred to as intuition or gut reactions (also referred to as somatic markers in academic fields). In this case, because we are not always able to introspect very well, we can find it difficult to verbalise how we feel. Hence some of our feelings may have unknown origins yet when quizzed people often try to provide plausible reasons for their feelings (something which psychologists refer to as rationalisation). In addition, the difficulty in being able to explicate a feeling may come from the fact that we do not always have an accurate vocabulary with which to express it.
Problems with Explicit Measures of Emotion, Feelings, and Evaluations. Often, people are not prepared to express how they feel about something (a secretive strategy), or they wish to present themselves in the most favourable light (an image management strategy), or they wish to avoid embarrassment or be seen as odd or abnormal (social norm strategy), or they wish to get through an interview or survey as quickly as possible (incentive-only strategy) or they may over-state a particular attitude (as a cloak for other feelings).
Awareness of the brand and what it has to offer is critical. It is generally regarded that brand equity is directly modulated by awareness – while high awareness does not guarantee high brand equity, its absence will never achieve any brand equity at all. Brand awareness is measured by asking respondents to freely recall it or recognise it. In fact, one of the aims of marketing and advertising is to achieve brand awareness to (introduce it or to maintain it).
Category Specific Factors
While theoreticians are often tempted to develop a general model of brand equity to account for all of its aspects, different market categories can affect it in different ways. In other words, some factors are highly salient in some markets but not in others. For example, being strongly associated with ‘romance’ might be important for some brands (e.g., brands of chocolate, jewellery brands, and so on) but not others (e.g., brands of baked beans, sanitary pads, financial services, and so on). This being the case, it is important to identify those that are specific to a market category.
Explicit intention to purchase is simply gleaned by asking consumers to rate purchase likelihood on a specific scale. However, implicit purchase intent bypasses the need for an explicit response and measures the extent to which a consumer is strongly excited and engaged by a brand and therefore highly likely to make a purchase.