Brand Equity

The concept of brand equity began to be used widely in the 1980s by advertising practitioners (Barwise, 1993), and was then popularized by Aaker (1991) though his bestselling book on the subject. Other important academic contributors throughout the 1990s were Srivastava and Shocker (1991), Kapferer (1992), and Keller (1993, 1998),

some dimensions of which have been empirically tested in the literature. David Aaker (1991) defined brand equity as a set of assets or liabilities that are linked to the brand and add or subtract value to the product or service being offered. Besides, he also identified five dimensions of brand equity which are brand loyalty, brand awareness, perceived quality, brand association other than quality and other proprietary brand assets.

(See Figure2.2) The definition of each dimension is described as below.

(a) Brand loyalty: Aaker (1991) defines brand loyalty as a situation which reflects how likely a customer will be to switch to another brand, especially when that brand makes a change, either in price or in product features.

(b) Brand awareness: Aaker( 1991) defines brand awareness as “the ability of the potential buyer to recognize and recall that a brand is a member of a certain product category”. According to Keller (2003), brand awareness plays an important role in consumer decision making by bringing three advantages which are learning advantages, consideration advantages, and choice advantages. Customer-based brand equity occurs when the consumer has a high level of awareness and familiarity with the brand and holds some strong, favorable, and unique brand associations in memory.

(c) Perceived quality: Perceived quality is defined as “the customer's perception of the overall quality or superiority of a product or service with respect to its intended purpose, relative to alternatives” (Aaker, 1991). Perceived quality is a perception by customers. It is a competitive necessity and many companies today have turned customer-driven quality into a strong strategic weapon.

(d) Brand association other than quality: A brand association is “anything linked in memory to a brand” (Aaker, 1991). Aaker has listed these benefits as follows:

helping to process/retrieve information, differentiating the brand, generating a reason to buy, creating positive attitudes/feelings, and providing a basis for

extensions.

(e) Other proprietary brand assets: That is, patents, trademarks, channel relationships, etc.

Figure 2.2 Brand Equity Model

(Aaker D. A., Managing Brand Equity, Free Press, pp17, 1991)

More recently, Keller (1998) has proposed customer based brand equity as “the differential effect that brand knowledge has on customer response to the marketing of that brand”. Brand-equity assets generally add or subtract value for customers. They can help customers interpret, process, and store huge quantities of information about

products and brands. They also can affect customers' confidence in the purchase decision due to either past-use experience or familiarity with the brand and its

characteristics. As being part of its role in adding value for the customer, brand equity

has the potential to add value for the firm, too. First, it can enhance marketing programs to attract new customers or recapture old ones. A promotion, for example, which

provides an incentive to try a new flavor or new use will be more effective if the brand is familiar, and if the consumer has no doubt of brand quality. Second, the four brand equity dimensions including brand awareness, perceived quality, brand associations, and other proprietary brand assets can enhance brand loyalty. These four dimensions can provide reasons to buy and affect use satisfaction also. Even when they are not critical to brand choice, they can reassure reducing the incentive to try others. Enhanced brand loyalty is especially important in buying time when competitors innovate and obtain product advantages. Brand loyalty is both one of the dimensions of brand equity and is affected by brand equity. Third, brand equity will usually allow higher margins by permitting both premium pricing and reducing reliance on promotions. In many cases, the elements of brand equity serve to support premium pricing. Further, a brand with a disadvantage in brand equity will have to invest more in promotional activity,

sometimes just to maintain its position in the distribution channel. Fourth, brand equity provides value to the firm. It should be noted that there exists similar interrelationships among the other brand equity dimensions. For example, perceived quality could be influenced by brand awareness, by brand associations, and by brand loyalty. Fifth, brand equity can provide leverage in the distribution channel. Like customers, the trade has less uncertainty dealing with a proven brand name that has already achieved recognition and associations. A strong brand will have an advantage in gaining both shelf facings and cooperation in implementing marketing programs. Finally, brand-equity assets provide a competitive advantage that often presents a real barrier to competitors.

Measuring Brand Equity

Since brand equity is important both to customers and firms, knowing how to measure sources of brand equity can guide marketing strategies and assess the value of

brand. To measure each dimension of brand equity, Aaker (1991) proposed 9 indicators and the measurement technique for each indicator (See Table2.1). Brand equity can be measured in terms of 9 indicators which are price premium, satisfaction and loyalty, perceived quality, brand leadership, brand awareness, perceived quality, brand

personality, company association, and differentiation. This method indeed incorporates both perceptual and behavioral dimensions. The advantage of combining both consumer perceptions and actions into a single marketing measure of brand equity is that attitudes alone are generally a poor predictor of marketplace behavior and consumer perceptions clearly underlie behavior and preferences of brand equity.

Table 2.1 Indicators of Brand Equity Measurement

Dimension Indicator Description Measurement Brand Loyalty Price premium A price which customers

are willing to pay extra for a certain brand

1. Willingness to pay extra for the brand 2. The probability of switching to another brand because of price Satisfaction and

loyalty

The reason why customers purchase the brand repeatedly

1. Satisfaction level of past experience 2. Willingness to recommend others 3. Likeliness to buy next time 4. The brand is the best, good or the

worst according to past experience Perceived

Quality

Perceived quality The overall evaluation of superiority of a product in terms of quality

Compared with other brands:

a. High/normal/low quality b. The best/the worst c. (In)Consistent quality Leadership Compared with other

brands, the brand has potential to grow/ be the leader brand

The brand…..

a. Is the leader brand b. Has potential to grow c. Emphasizes innovation than others

Brand Awareness

Brand awareness Level of awareness and familiarity with the brand

1. Do customers know the brand?

2. Level of familiarity

3. Ranking of the brand in its product category

Brand association

Perceived value Consumers' overall evaluation of the utility of a brand based on what is received and given

1. Does the brand deliver higher value (other than price)?

2. Compared to competitors, there’s no reason not to buy

Brand personality The set of human characteristics associated with a brand

1. Is the brand funny, exciting, etc?

2. Does the brand have good brand inheritance?

Company association

The image of the brand company

1. Is the brand company reliable?

2. The reputation of the brand company Differentiation Synthetic indicator of

brand association

Is the brand different from competitors?

Since brand equity can be used to describe both the value of the brand and the brand's component values depending on associations made by consumers, it is a good way to analyze relative positions of different brands on consumers’ minds. Therefore, my study will use the indicators of measuring brand equity proposed by David Aaker to map 8 brands by MDS which is introduced as following.