Customer Based Brand Equity – A
Pragmatic Approach
Dr.K.Krishnakumar, Lecturer in
Commerce, PeriyarUniversity,Salem
– 636 011
Introduction
In the new era of a globalized market place,
brands are key drivers of economic values of a corporation. In the new
emerging business scenario, brands offer the capacity to add value
which is perhaps unmatched by any of the assets which once enjoyed
honour. Brands are the basis of consumer relationship and brands are
becoming the most valuable assets that a business can possess. Markets,
which were earlier protected, are now being liberalized. Product
commonality is a major headache for marketers. Thus, marketers are left
with a challenge: how to achieve differentiation which is valued by the
customers. Brands in this context are new business warriors. They
connect corporations with customers. Brands are wealth generators of
the twenty-first century. As a result, brand management has long since
grown into a vital ingredient for success in corporate strategy.
From the marketer’s point of view the brand is a
value, the brand name of the product marketed by them should be leads
to attain brand equity. From the consumers point of view a brand which
comprises of benefits. It means benefits in the sense of utility and
service. A brand said to have equity when the consumers are prefer to
buy a branded one instead of unbranded commodity. When a consumer who
is able to recall the brand name and its attributes for the long period
where the brand is having a equity. From that point of view of brand
equity, it is the extension of brand loyalty and brand knowledge. So in
this critical situation the marketers are supposed to create a value
for their brand. But here some questions are raised, What is that
value? How can create a value and what are the parameters for creating
value to a particular brand? In recent years customer-based brand
equity (CBBE) has garnered considerable attention in both academic and
non-academic researches. Developing further insights into the
measurement of consumer based brand equity is important in the face of
prominence of branding. Hence the aim of this paper is to identify
various elements and parameters for identifying the value, that is
customer based brand equity.
Brand Equity
The concept brand equity has emerged as the
central concept in marketing over the past 20 years. Much attention has
been devoted recently to the concept of brand equity. The concept of
“brand equity” is generally considered to refer to that part of the
value of a product that is attributable to the brand name. From a
managerial point of view, Farquhar (1989) defines brand equity as the
“added value” with which a brand name endows a product. Aaker (1991)
defines brand equity is a set of brand assets and liabilities linked to
a brand, its name and symbol, that add to or subtract from the value
provided by a product or service to a firm and/or to that firm’s
customers. For assets or liabilities to underlie brand equity they must
be linked to the name and/or symbol of the brand. More generally, it
has suggested that brand equity be considered from the perspective of
three separate entities: firm, trade and consumer. From the firm
perspective, brand equity is incremental cash flow arising from use of
the brand name. From the trade perspective, brand equity is leverage
(in terms of acceptance and distribution) arising from using the brand
name. From the consumer perspective, brand equity is generally
considered to be something to do with “value”.
Customer Based Brand Equity
Customer-Based Brand Equity is formally defined
as the differential effect that brand knowledge has on consumer
response to the marketing of that brand. A brand is said to have
positive customer-based brand equity when consumers react more
favourably to a product and the way it is marketed when the brand is
identified than when it is not (e.g., when the product is attributed to
a fictitious name or is unnamed). (Kevin Lane Keller 2004).Thus,
a brand with positive CBBE equity might result in the consumers’
acceptance of a new brand extension, less sensitiveness to price
increases and withdrawal of advertising support, or willingness to seek
the brand in a new distribution channel. On the other hand, a brand is
said to have negative customer-based brand equity if consumers react
less favourably to marketing activity for the brand compared with an
unnamed or fictitiously named version of the product. The main
ingredients of consumer based brand equity are differential effect,
brand knowledge, consumer response in marketing.
The followings are the some of the important
building blocks identified as the crucial elements of customer based
brand equity.
Brand Loyalty
This is major
component of brand equity. Brand loyalty, a long a central construct in
marketing, is a measure of the attachment that a customer has to brand.
If the customer continue to purchase one particular brand even in the
face of competitors with superior features, price and convenience where
we can find the brand loyalty. It 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. It is one indicator of
brand equity which is demonstrably linked to future profits. Brand
loyalty is qualitatively different from the other major dimensions of
brand equity in that it is tied more closely to the use of experience.
Brand loyalty cannot exist without prior purchase and use experience.
It is a basis of brand equity that is created by many factors, chief
among them being the use experience. (Aaker 1991) defines loyalty as
“the attachment that a customer has to a brand” and consider it to be a
primary dimension of brand equity. In contrast, Keller (1993) views
loyalty as a consequence of brand equity, i.e. when favourable
attributes results in repeated purchase. (Yoo and Donthfu 2001) defines
brand loyalty from the attitudinal perspective that “the tendency to be
loyal to a focal brand, which is demonstrated by the intention to buy
the brand as a primary choice”
Brand Knowledge
From the perspective of the CBBE model, brand
knowledge is the key to creating brand equity, because it creates the
differential effect that drives brand equity. What marketers need,
then, is an insightful way to represent how brand knowledge exists in
consumer memory. In particular brand knowledge can be characterized in
terms of two components: brand awareness and brand image. Brand
awareness is related to the strength of the brand node or trace in
memory, as reflected by consumers’ ability to identify the brand under
different conditions (Rossiter, J.R, and Piercy.L (1987). Brand image
can be defined as perceptions about a brand as reflected by the brand
association held in consumer memory. A positive brand image is created
by marketing programmes that link strong, favourable, and unique
associations to the brand in memory. The brand knowledge effects
through brand awareness and brand association, the benefits of brand
are underlined as outcomes. Therefore brand knowledge entails
significant activities leading to brand loyalty and equity. In brief
brand knowledge encompasses the consumer’s ability relating to the
awareness of the product, product features, where the product is
available, company that makes the product, how the product is used and
for what purpose and the specific and distinctive features of the
product.
Brand Awareness
Brand awareness refers to the strength of the
brand presence in the consumer’s mind. It is the ability of a potential
buyer to recognize or recall that a brand is a member of a certain
product category. This refers to the strength of a brand’s presence in
consumers’ mind. Brand awareness is an important component of brand
equity (Aaker, 1991; Keller, 1993). It is believed that brand awareness
is improved to the extent to which brand names are chosen that are
simple and easy to pronounce or spell; familiar and meaningful; and
different, distinctive and unusual. Brand awareness consists of brand
recall and brand recognition. A brand can increase the demand for a
product in several ways. Brand awareness makes it easier for consumers
to identify products with the well-known brand names(Mary W.Sullivan 1998).
Therefore, brands provide information by increasing awareness and
serving as a proxy for quality. Brands can also appeal to a consumer’s
sense of individuality or make consumers feel as if they belong to a
particular social group. Brand awareness can be characterized according
the depth and breath. The depth of brand awareness concerns the
likelihood that a brand element will come to mind and the ease with
which it does so. The breath of brand awareness concerns the range of
purchase and usage situations in which the brand element comes to mind.
The breath of brand awareness depends to a large extent on the
organization of brand and product knowledge in memory.
Perceived Quality
Perceived quality
can be 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 (Valarie
A.Zeithaml 1988). Perceived quality is, first a perception by
customers. Perceived quality is defined relative to an intended purpose
and a set of alternatives. Perceived quality is an intangible, overall
feeling about a brand. However, it usually will be based on underlying
dimensions which included characteristics of the products to which the
brand is attached such as reliability and performance. To understand
perceived quality, the identification and measurement of the underlying
dimension will be useful. Perceived quality is a major determinant of
brand strength. Quality helps to increase market share, which results
in lower unit costs through scale economies. So it provides a
competitive edge over the rivals in securing potential market area by
inspiring the customers.
Brand Association
To create brand equity, it is important that the
brand have some strong, favourable and unique brand association.
Creating strong, favourable and unique associations is a real challenge
to marketers, but essential in terms of building customer-based brand
equity.The favourable brand associations are created by convincing
consumers that the brand possesses relevant attributes and benefits
that satisfy their needs and wants such that they from positive overall
brand judgments. Basically brand associations can be classified into
three major categories viz, attributes, benefits and attitudes.
Attributes are those descriptive features that characterize a product
or service. Attributes are further sub divided into product related and
non-product related. Benefits are the personal value consumers attach
to the product or service attributes can be further distinguished into
three categories i.e. functional benefits, experimental benefits and
symbolic benefits. Brand attitudes are consumers overall evaluations of
a brand, which is most important one because it is directly associated
with the consumers buying behaviour.
Purchase Decision
The core of marketing is exchange. It is the
actualization of a transaction between the seller and the seeker of
value. In this process the customer must make a choice or decisions
with regard to selection of a value provider. A decision involves a
choice between two or more alternative actions or behaviours (Henson,
Flemming 1976). The
customers essentially make two types of decision in the context of
marketing. The first type of decisions is directed at the choice of
product or service. These decisions are called assortment decisions.
The second type decisions concern the choice of specific brands and how
to obtain them. These are called market related decisions(Walters,GC 1974).
After
searching and evaluating the alternatives, the consumer must decide
whether to buy or not. Thus, the first outcome is the decision to
purchase or not to purchase. If the decision is to buy, various
decisions are to be taken regarding where and when to make the actual
transaction, how to take delivery or possession, the method of payment,
and other issues. The buying decision also highly influenced with
cultural, social, personal and psychological factors. For consumers,
brand equity is the value addition in the product of the brand. Brand
equity result in increase in sales through consumer’s acceptance.
Post Purchase Behaviour
After purchasing the product, the consumer will
experience some level of satisfaction or dissatisfaction. The consumer
will also engage in post purchase action and product uses of interest
to the marketer. The consumer’s satisfaction or dissatisfaction with
the product will influence subsequent behaviour, if the consumer is
satisfied, then he/she will exhibit a higher probability of purchasing
the product on the next occasion. The satisfied consumer will also tend
to say good thighs about the product and the company to others. The
post purchase behaviour is depending upon the extent of consumers’ set
of experience stored in memory, how well they select products and
stores and the type of feedback they received.
The post purchase evaluation involves comparison
between the expectations and actual performance of the product or
brand. There are three possibilities at this stage. First, there is no
discrepancy between expectations and actual performance. It leaves the
consumer with neutral feelings. Second, performance exceeds
expectations, in this situation consumer feels satisfied. Third,
performance falls below expectations, this leaves the consumer
dissatisfied (Cadotte,
Ernet R, Robert B Woodruff and Roger L Jenkins 1987).Post purchase behaviour indicates
to what extent these purpose have been met and motives achieved. Post
purchase activity gives an indication as to whether the customers are
going to again patronize a firm in future, and also whether they will
be in a mood to recommend a product to potential customers.
Conclusion
So it is concluded that the customer based brand
equity discussed by considering the perceptions of brand loyalty, brand
awareness, brand knowledge, perceived quality, brand association,
purchase decision and post purchase behaviour are the most essential
elements for forming customer based brand equity. As a result the
manufacturers and marketers should build brand loyalty among the
customers. The loyalty will be created by the through brand knowledge
which consists of brand image, brand recall etc. So the customers will
be aware about the brand what ever they are buying. The quality aspects
should be covered with all other kinds of association characteristics
which will leads the customers towards purchase decision. Finally the
post purchase behaviour of the customers after utilizing a product will
reflect the real brand equity of a brand.
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Article Source:
http://www.articlesbase.com/marketing-articles/
customer-based-brand-equity-a-pragmatic-approach-868384.html About the Author
Dr.K.Krishnakumar, Lecturer in Commerce, Periyar
University, Salem – 636 011
email: krishna30971@yahoo.co.in |
