LT N G N G B P . 6 E Q U I 0 M A A A1 /I 9 9 • R A N D 5 – 1 0 T Y
Managing Brand Equity
The purpose of this study is to discuss and elaborate the main issues encountered in managing brand equity. In order to achieve this purpose, we first analyse the concept of brand equity; second, we provide a comprehensive framework for managing brand equity; and finally, we distinguish different ways to leverage and measure brand equity. The concept of brand equity emerged in the early 1990s. Brand equity can be regarded as a managerial concept, as a financial intangible asset, as a relationship concept or as a customer-based concept from the perspective of the individual consumer. The main asset dimensions of brand equity can be grouped into brand loyalty, brand awareness, perceived quality and brand associations. There are three alternative ways to leverage brand equity: first building it, second borrowing it, or third buying it. Brand equity can create advantages and benefits for the firm, the trade or the consumer. Key Words: Brands, Brand Equity, Brand Management
The historical evolution of brands has shown that brands initially have served the roles of differentiating between competing items, representing consistency of quality and providing legal protection from copying. Apart from providing the offering with the badge of its maker, thereby indicating legal ownership of all the special technical and other relevant features that the offering may possess, the brand can have a powerful symbolic significance. The brand can in itself imply status, enhance image and project or augment lifestyle so that the ownership of the
PEKKA TUOMINEN, Ph.D. (Econ. & Bus. Adm.) Turku School of Economics and Business Administration • e-mail: pekka.tuominen.tukkk.fi
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brand becomes of value in its own right. Its accepted qualities can simplify the decision making process by reducing perceived risk while from the supplier’s perspective, it can not only assist in differentiating the offering, but also lead to brand loyalty, deter market entry and, well deployed, enable its owners to command higher prices and profit margins. (Bradley 1995, 522– 524; Egan – Guilding 1994, 450–453)
1.1 Different characteristics of brands
A brand is a name, term, sign, symbol, or design, or a combination of them intended to identify the goods or services of one seller from among a group of sellers and to differentiate them from those of the competitors. Thus, a brand identifies the seller or manufacturer. Under trademark law the seller is granted exclusive rights to the use of the brand name in perpetuity. This differs from other assets such as patents and copyrights that have expiration dates. If a company treats a brand only as a name, it misses the point of branding. The challenge in branding is to develop a deep set of meanings for the brand. Perhaps the most distinctive skill of professional marketers is their ability to create, maintain, protect, and enhance brands. (Kotler 1994, 444–445) Two principal approaches to branding can be identified: 1) manufacturer brands and 2) private label brands which are also called own label, distributor, retailer, dealer or store brands. Manufacturer brands usually contain the name of the manufacturer. These brands appeal to a wide range of consumers who desire good quality and a low risk of poor product performance. Manufacturers, which brand their products, face a decision of whether to use individual or family brands or a combination. Manufacturers sell their brands in many competing retail outlets, spend large sums on promoting them and frequently run co-operative advertisements with retailers so that costs can be shared. Recently, there has been considerable growth in private label brands, whereby channel members such as retailers are able to sell products using their own brand name or label. By doing so these retailers do not incur the...
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