Brand Equity

Brands are more than just names and symbols. They are a key element in the company's relationships with consumers. Brands represent consumers' perceptions and feelings about a product and its performance—everything that the product or service means to consumers. In the final analysis, brands exist in the heads of consumers. As one well-respected marketer once said, "Products are created in the factory, but brands are created in the mind."19 A powerful brand has high brand equity. Brand equity is the differential effect that knowing the brand name has on customer response to the product and its marketing. It's a measure of the brand's ability to capture consumer preference and loyalty. A brand has positive brand equity when consumers react more favorably to it than to a generic or unbranded version of the same product. It has negative brand equity if consumers react less favorably than to an unbranded version.

Brands vary in the amount of power and value they hold in the marketplace. Some brands—such as Coca-Cola, Nike, Vivendi Universal, GE, McDonald's, Yamaha, and others-become larger-than-life icons that maintain their power in the market for years, even generations. Other brands create fresh consumer excitement and loyalty, brands such as Google, YouTube, Apple, eBay, and Wikipedia. These brands win in the marketplace not simply because they deliver unique benefits or reliable service. Rather, they succeed because they forge deep connections with customers.

Ad agency Young & Rubicam's Brand Asset Valuator measures brand strength along four consumer perception dimensions: differentiation (what makes the brand stand out), relevance (how consumers feel it meets their needs), knowledge (how much consumers know about the brand), and esteem (how highly consumers regard and respect the brand). Brands with strong brand equity rate high on all of these dimensions. A brand must be distinct, or consumers will have no reason to choose it over other brands. But the fact that a brand is highly differentiated doesn't necessarily mean that consumers will buy it. The brand must stand out in ways that are relevant to consumers' needs. But even a differentiated, relevant brand is far from a shoe-in. Before consumers will respond to the brand, they must first know about and understand it. And that familiarity must lead to a strong, positive consumer-brand connection (see Real Marketing 8.1).20

Thus, positive brand equity derives from consumer feelings about and connections with a brand. Consumers sometimes bond very closely with specific brands. AFor example, one Michigan couple had such a passion for Black & Decker's DeWalt power tool brand that they designed their entire wedding around it. They wore trademark DeWalt black-and-yellow T-shirts, made their way to a wooden chapel that they'd built with their DeWalt gear, exchanged vows and power tools, and even cut cake with a power saw. Joked the wife about her husband (a carpenter by trade), "He loves DeWalt nearly as much as he loves me."21

A brand with high brand equity is a very valuable asset. Brand valuation is the process of estimating the total financial value of a brand. Measuring such value is difficult. However, according to one estimate, the brand value of Google is a whopping $86 billion, with GE and Microsoft close behind at $71 billion and Coca-Cola at $58 billion. Other brands rating among the world's most valuable include China Mobile, Nokia, IBM, Apple, McDonald's, and Toyota.22

High brand equity provides a company with many competitive advantages. A powerful brand enjoys a high level of consumer brand

Consumers sometimes bond very closely with specific brands. Jokes the bride at this wedding: "He loves DeWalt nearly as much as he loves me."

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  • yvonne peters
    What represents consumers' perceptions and feelings about a product and its performance.?
    8 years ago

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