POM; Session 16A Branding Strategy - Brand Equity

Brands or branding is the most fashionable term around. It equally fashionable, as well as challenging for a marketer to design something which is expected to give life to a non-living commodity. As you have learnt in positioning, the task of giving heart and soul to a product is the most creative aspect of product decisions. As defined by American Marketing association, a brand is a term, sign, symbol or design or a combination of them, intended to identify the goods or services of one seller or group of sellers and to differentiate them for those of competitors.

A brand is something that identifies the product performance in terms of functions, rational or tangible needs. For example Clean and Clear face wash suggests that the product is for cleaning and not for any other cosmetic benefit.

But brand may also represent symbolic, emotional or intangible benefits, like MasterCard emphasis on priceless occasions in life to create an emotional attachment to the brand.

The Role of Brands

For consumers, brands are the key to decision-making. In more complex buying situations, consumer trusts the brand name. For them, the brand name is the clear cut indication of product performance as promised by manufacturer or retailer. Brand also serves as the point of difference in the minds of consumers. Clearly, brand knowledge saves a lot of time and energy in decision making for consumers.

For marketers, basically brands are SKUs....the stock keeping and handling is less complex through brands. They get legal protection of their produce by giving it an identity in terms of brand. Again, for firms also it is the indicator of their quality and hence POD!

In the early times, around 950 A.D., the word brandr, was used for burning by Ancient Norse. They refer the word to burning torch made of wood. Later the word is branding is used for marking cattles using a burned metal for identification. These unique burnt marks were the sign of ownership of cows, goats, sheeps etc. In early eighteenth century, with the mass production and international trade, the goods are also being marked by manufacturer for identification. With time these marks have become the sign of quality as people were able to differentiate from  one seller to the other, which is very similar to what we use branding for.

The Scope of Branding

Everything that can be sold can be branded. Branding is endowing product and services with the power of brand. It makes the product or service come alive in the minds of consumers. Here are few examples:

Physical Goods: Coke brings life to the coca-cola brand with taste the feeling:

Lux is beauty soap of film stars:

Parachute coconut hair oil strengthen your hair:

Renault makes you drive the change:

Service: Air India is not just flying you to Vienna:

ICICI is much more than a bank for you:

DHL provides the things right and on time:

Store: Stores have their branding too:

Persons: Some are real big brands:

Places: Branded as beautiful, purposeful or just incredible:

Organizations: For the cause or the profit:

Idea: Some great ones here:

Defining Brand Equity

So we talked about the brands that give life to lifeless and if that life has a name it is brand equity. Brand equity is the added value endowed on products and services. It may reflect in the way consumers think, feel and act with respect to the brand. Brand equity also reflects market share, prices and profitability for a company.

Customer Based Brand Equity

Since positioning is in the minds of consumers, the firms aims at building a brand equity which is beneficial to the target consumer. Brand equity is stronger as the consumer have sufficient knowledge about the brand. Customer knowledge is outcome of all the feelings, beliefs, thoughts, images and experiences associated with the brand or the category, The marketing task here is to increase this knowledge (perception) and create a positive belief (attitude) about the brand.

Customer based brand equity is the differential effect brand knowledge has on a customer in response to the marketing of the brand. A very simple situation here lies in the answer of the question - "what brand of rice do you eat?"if the customers recall it easily and say "Kohinoor" then yes, the brand is able to create some equity. Otherwise it is just a commodity.

Here are some marketing advantages of customer based brand equity:

1. Strong customer based brand equity enjoys greater brand loyalty. These brands stays strong no matter how strong the competitors are. Bisleri is one brand that enjoys such positions in the minds of consumers. Being the pioneer in Indian packaged drinking water category, it is still a generic brand for Indians.

2. Demand for strong brands is inelastic in case of price increase. It may shoot up when price decreases. Thus they enjoy greater margins. Sony electronic products have always been expensive as compared to the market and you have never see offers or discount in Sony.

3. Strong brand equity envisages greater support from channel members. The referent power that the brand commands, allows itself to dictate their own term of trade. Honda is one such brand that is a proud association for dealers.

4.  A superbrand has greater acceptance for brand communications both for product sales and awareness as well as cause and social marketing. When Tata Tea came with "Jaago Re' campaign, it worked very well for spreading social awareness.

5. Strong brands can easily leverage the brand equity to the other products and product category, After the success of Maggi Noodles, Nestle used Maggi brand name for ketchups, masalas and other products as well. Virgin group of companies owned by Richard Branson has diversified into so many categories like airlines, mobile, music and so on.