Marketing Management: Creating Brand Equility - Literature review Example

CREATING BRAND EQUITY Introduction The pursuit of brand excellence can be likened to the Holy Grail of marketing. It is almost impossible to achieve, much less to maintain. The marketing landscape is littered with brands that failed, or are languishing in oblivion as more and more products and services enter the market each year, all vying for a piece of the proverbial consumer pie. Hence, Brand Equity as a strategic tool for maintaining competitive advantage and over-all brand soundness has never been more important today. However, in the fast paced world of the consumer goods, marketers are faced with an ever-changing and fast-moving target; here nothing is quite what it seemed. Not especially the nature of brands and how consumers perceive them. With the combined efforts of the academe and the corporate world, the art of creating Brand Equity has been greatly helped, almost to the point of evolving a specific science for marketing success, or so it seems. This report will attempt to summarize the points articulated on the Philip Kotler and Kevin Lane Keller’s definitive reference text “Marketing Management (13th edition)”, specifically on the chapter of Building Strong Brands. This discourse will venture into the basic elements of a brand from the perspective of the brand “owner or author”; the nature of the benefits which brands are supposed to provide; observations on how marketing outcomes are determined by the consumers perception of the brand (brand equity) and how they are arrived at; how a brand’s value can be assessed and quantified; an analysis of branding strategies through the cases provided in the text, and the role of different brands in an established brand “architecture” (brand portfolio) and how consumer responses can be similarly assessed so as to provide a measure of confidence that a brand can expect from its prospective patrons (consumer equity). So What’s Makes A Brand? We can do well to use the American Marketing Association’s definition of a brand as a jumping board for analyzing the concept of Brand Equity. AMA stipulates that brands consists of a “name, term, symbol or design, or a combination of them, intended to identify goods or services of one seller or group of sellers and to differentiate them from those of competitors.” (Kotler and Keller 276) Further, this system for identifying products (or services for that matter) maybe designed so as to represent a tangible, functional or rational attribute relating to a product’s performance or any intangible associations such as those that are implied symbolically or emotionally. This can be further be defined as the external attributes of a brand, the facade that is seen from the consumer’s point of view that hints to what a product promises to do. On a deeper level however, the scope of a brand transcends its physical or external attributes since a brand “ultimately resides in the mind of consumers” (278). A Working Definition of Brand Equity Seeing what a brand is, we can now proceed with the definition of Brand Equity as the added-value endowed on products and services in the consumer’s mind as characterized by how they feel, think and act towards the brand that impacts positively on the price, market share and profitability the brand produces for the firm (280). By this definition, we can ascertain that having brand equity actually means an additive increase in the actual value of the product due to its positive perception in the minds of its consumers. Adversely, if a brand has a negative perception, a proportionate decrease in the actual value of a product in the consumer’s mind is likewise observed. This concept forms the basis of Customer-based Brand Equity which in turn is dependent on the Brand Knowledge which precedes all perceptions from both the consumers and the manufacturers’ viewpoint. Brand Knowledge is that key body of both positive and negative imagery, impressions, experiences and beliefs that is associated with the brand. How Brands Work According to our basic definition, branding exist to identify and differentiate products from other competing products in the market (as in a Trademark). While this function of branding has been practiced since the middle ages, it has reached its fullest potential as a strategic tool that benefit both the consumers and the manufacturers in as recent as perhaps the latter part of the 19th century industrial revolution with the deluge of products of comparable quality and the rise of modern-day consumerism. Towards this end, the study of brand equity has a profound impact in the way products are viewed from the consumer’s perspective. Suddenly, how a brand presents itself to prospective consumers becomes a key deciding factor in the purchase of goods. As more and more people get pre-occupied with various day-to-day concerns to be bother with inspecting goods for quality or reliability, the need for a concise, consistent and reliable way of differentiating products became more important, and thus the art of branding was born. This function of simplifying choice and “signalling” quality on the part of the consumer, and simplifying the back-end processes of storing, handling and tracking of inventory on the part of the seller became a very important role of brands (277). From this function came the concept of Brand Loyalty which is defined as the measure of willingness that consumers will pay for a “differentiated” brand at a premium cost of about 20-25% more on average (277). This translates to a definitive advantage for favoured brands regardless of whether or not competitors may duplicate manufacturing processes and product design, due to the lasting impression a brand leaves in the minds of its patrons. In this manner, a brand’s perceived value comprises a definitive advantage. From the owner’s perspective, “brands represent enormously valuable pieces of legal property that can influence consumer behaviour, be bought and sold, and provide the security of sustained revenues to their owner.” (277). This is the reason why brands like Coca Cola or “Coke” are valued at far much more than the sum of its physical assets. The Long and Short of Branding The extent to which a brand is created follows a dichotomy: on the one hand, it is how the brand owner perceives it which is the intent of the author and lays solely on his domain; however and more importantly, it is also how the brand is perceived and consequently understood by consumers which remain in their domain alone. In the words of the Brand Gap author Marty Nuemier, “It’s not what we (marketers) say it is; it’s what the (consumers) say it is. In this sense, a brand ultimately fully exists in the minds of its consumers. This is not to say that brands are only one-sidedly consumer-centric. In fact the various elements of a brand, its aggregates like the visual identity, product attributes like price, packaging, promotions, etc., which contributes greatly in the over-all impression of a brand rests solely in the province of its creators. Here is where creators can and must be truly creative, in crafting the Brand Promise. Consumers by themselves cannot readily define what they want. They are more like experts at judging what they don’t want. So it is the brand owner’s job to position the brand appropriately by filling in the specific needs gap and creating an appealing image and/or experience for the product. This is enough reason why a superior brand strategy must be adopted at the onset of developing a product, long before taking it to market, for the brand promise serves as the foundation of Brand Equity. To Line Extend Or Not? Perhaps this is still an ongoing debate among marketers with a growing list of brands in its portfolio, but old marketing wisdom seems to favour the Law of Focus, that is to resist the urge to dabble in a seemingly attractive segment by leveraging on an existing brand name, thus risking confusion in the minds of established consumers. The proper qualification of brands when deciding when to line extend or not, is a key brand management skill which confounds even the seasoned brand manager, especially in the face of favourable consumer research that can be readily resorted to by most managers. This has certainly been enlightened by David Aaker and Erich Joachimstalher with their work Brand Leadership (298) in formulating the guidelines in deciding whether or not to line extend. The key decisions that are aimed to improve the odds of new product success lies on whether or not there is an additive appeal of a parent brand to lend its name to the new product under its portfolio or would it be better off alone if it creates channel conflicts or confusion among closely associated or cross-marketed goods which has a potential for cannibalization of established market shares from its own portfolio. Marketing gurus Jack Trout and Al Ries seem to confer in their seminal work “Positioning” with a whole chapter on “The Line Extension Trap”. In both works, a long term view is wisely advocated as brand equity can be greatly improved or diminished by these decisions. Achieving Marketing Breakthroughs through Superior Brand Strategy Among the more successful corporate brand strategists like Procter & Gamble, creating the winning brand or brands begins with a thorough knowledge of the target market, by identifying the gaps in the consumer’s needs and weighing in on the acceptability of its products among its trade partners. With billions of investors’ dollars at stake, it stands to reason that they should identify the market attractiveness of a certain planned product. Armed with this knowledge, P&G embarks on marketing with a long term view, making sure that products are thoroughly developed and accurately marketed keeping a keen eye on emerging opportunities for developing new product features and variants that appeal to specific market niches using a combination of carefully planned multi-brand and brand extension strategies that seeks to maximize use of company resources and economies of scale. Foremost among the company’s key result area is in the maintenance of positive brand image and recall among the categories where its brands operate. Achieving this meant optimal use of communications budgets which is simply unrivalled in the industry. This coupled with a sales force that is equally aggressive in the frontlines of retail marketing and a manufacturing arm that is focused in gaining optimal use of raw materials and technology to enable it to bring down costs of premium goods puts P&G ahead of the curve. And finally, and certainly not the least is the company’s brand management structure which now serves as the unofficial industry gold standard in managing a multiple brands. These functions, which encompasses branding and manufacturing is at the heart of Procter & Gamble’s continued success and longevity, which can also be said of the individual brands in its portfolio. Conclusion: Towards Creating Positive Brand Equity Looking back to the AMA definition of a brand which consists of “name, term, symbol or design, or a combination of them, intended to identify goods or services of one seller or group of sellers and to differentiate them from those of competitors.”, one can rightly argue that this is actually a very superficial definition from the perspective of a brand-owner as it merely predicated the creation of a system of identification for the purpose of identifying and differentiating a product, leaving out the more important concept of “consumer brand equity” which emanates from the consumers or users themselves. A more appropriate description for a brand could be the gestalt, to borrow a term from Psychology, which is a body (of knowledge) wherein the resultant entity is far greater than the sum of its components or parts. This is my personal view of what a brand is. As such, the brand’s needs ought to be outlined from its inception through the proper crafting of the brand promise expressed in a well-thought structure which takes into consideration the vital functions of how it will be seen and experienced by its core prospects. In effect, a brand ought to be guided to reflect the delicate balance of ownership from the prospect and the owner’s points of view. After all, a living brand is as much the property of its creator as well as of its consumers. How Can A Balanced Brand Be Achieved? Seeing that brands have a way of evolving throughout its lifetime, its brand support structure (both in marketing and manufacturing) should be rigid enough to serve its long-term vision guided by an emphasis on efficiency and unflinching focus on its key brand promise, but at the same time, it should be nimble enough to pro-actively position itself against emerging trends that tend to be dictated by market demand. Thus, it can ably stay on top of its game. But getting there is definitely not an easy feat. It takes a long term view and a commitment to continuous improvement; being receptive to feedback and relentless in pursuing an active relationship with core prospects through regular brand audits and industry benchmark research. As the great house of Procter & Gamble brands have exemplified, the Holy Grail of marketing is hardly impossible but it takes a disciplined approach that champions visionary brand leadership, creative management and pro-active stewardship of an increasingly scarce brand resource such as your customer’s hard-earned loyalty. Works Cited Kotler, Philip and Keller, Kevin Lane. Marketing Management. Prentice Hall; 13th ed., 2008. Ries, Al and Trout, Jack. Positioning The Battle for Your Mind. McGraw Hill, 2001. Numier, Marty. The Brand Gap. New Riders Press; 1st ed., 2003. Read More