• January 24, 2023

Brand Equity – Assets and Liabilities

Brand equity has been defined as a set of brand assets and liabilities linked to a brand, its name and its symbol that add to or subtract from the value provided by a product or service to a company and/or to that company’s customers. company. If the brand name or symbol changes, some or all of the assets or liabilities may be affected or even lost, although some may be changed to a new name and symbol. The assets and liabilities on which brand equity is based, according to Aaker (1991), differ depending on the context. However, they can be grouped into five categories:

1. Brand loyalty

2. Brand name (Knowledge)

3. Perceived quality

4. Brand associations

5.Other proprietary brand assets

Brand loyalty –

For any business, it is expensive to gain new customers and relatively inexpensive to retain existing ones, especially when existing customers are satisfied or happy with the brand. Competitors may even be discouraged from spending resources to attract already satisfied customers. Also, higher loyalty means higher business leverage; as customers expect the brand to be always available.

Brand awareness –

People will often buy a familiar brand because they are comfortable with the familiarity or assume that a familiar brand is likely to be reliable and of reasonable quality. When consumers are uncomfortable with a product name, they will avoid it, and that translates to lost sales. Brand names need to be easy for customers to see, and this involves pronunciation and spelling.

Perceived quality –

A brand will have a perception of general quality associated with it, which is not necessarily based on knowledge of detailed specifications. The perception of quality can take somewhat different forms for different types of industries. Perceived quality means something different to Compaq or IBM than it does to Coke or Pepsi. Perceived quality will directly influence purchasing decisions and brand loyalty, especially when a buyer is not motivated or capable of detailed analysis. It can also support a premium price which, in turn, can generate gross margin that can be reinvested in brand equity. Also, perceived quality can be the basis for a brand extension. If a brand is well regarded in one context, it will be assumed to be of high quality in a related context.

Brand associations –

The underlying value of a brand name is often based on specific associations attached to it. Associations, for example, of the car brand Jaguar can make the experience of owning and driving one “different.” If a brand is well positioned on a key attribute in the product class (such as technological superiority), it will be difficult to attack competitors. If they attempt a frontal attack claiming superiority across that dimension, there will be a credibility issue. They may be forced to find another, perhaps inferior, basis for competition. Thus, an association can be a barrier to competitors.

Other own brand assets –

This fifth category represents other proprietary brand assets such as patents, trademarks, and channel relationships. Brand assets will be more valuable if they inhibit or prevent competitors from eroding the customer base and loyalty. These assets can take various forms. For example, a registered trademark will protect the brand equity from competitors who might want to confuse customers by using a similar name, symbol, or package. A patent, if it is strong and relevant to the customer’s choice, can prevent direct competition. A distribution channel may be controlled by a brand due to a track record of brand performance.

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