PAPER CODE 4.3.

1 - STRATEGIC BRAND MANAGEMENT

MODULE 3
BRAND EQUITY

HIGHLIGHTS
Types of Brands - Strategic Brand Management Process – Brand Attribute Management & Architecture –
Brand Portfolio Strategy – Brand Extension and Stretching - Making A Brand Strong-Sources of Brand Equity-
The 4 Steps of Strong Brand Building- Aakers Brand Equity Model – Customer Based Brand Equity – Brand
Leveraging, Brand Loyalty.

Introduction
The commodity marketplace is flooded with various brands. The requirement of the seller’s brand to stand out
among other parallel brands is crucial. Hence, there is a fierce competition among the sellers to make their
products or services stand out in the market, thereby winning new consumers and retaining the existing ones.
At times, it even leads to diverting the consumers following other brands to the seller’s brand. To remain
competitive in the marketplace, strong brand management is required.

Basic Approaches of Branding

There are two basic approaches of brands according to ownership −
Manufacturer’s Brands Private / Store Brands
They are created and developed by retailers,
They are created and owned by the producers.
distributors, or wholesalers.
The retailer does not promote one single brand
Manufacturer promotes its own brand extensively. extensively. He can put the products of different
brands on the shelves.
There is very less budget allocated for ads.
Their budgets of research and development, ads,
Similarly, research and development, distribution
sales promotion, distribution channels depth etc.
channels depth are lower. Hence, these brands can
are huge. Hence, there can be less profit margin.
have higher profit margins.
They are more advanced and work innovatively on There is no manufacturing technology involved,
manufacturing technology. hence they can be less innovative.

They do not communicate with the consumers They work very closely with consumers, hence
directly. they have a better idea on what consumers demand.

The brands can be further categorized as:

Types of Brands
Some types of brands a customer might choose to establish are:
• Product brand: A product is a brand based on individual products a company offers to the customers.
Branding might establish the product's value and help set customers' expectations.
• Organisational brand: An organisational brand represents the image of a company. Often, a single
company might manage several organisational brands of various services and products, so they own a
parent company brand and various subsidiary brands.

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• Service brand: Like a product brand, a service brand depends on the services offered by the company.
As services are less tangible than products, brands associate with positive emotions to develop and
reach their customers.
• Global brand: Global brands are household names and extremely famous on a global level. The
business model of a global brand depends on familiarity, stability and availability.
• Personal brand: When a person or individual has a brand, it is a personal brand. Such a brand is
relevant if someone is a well-known and established person.
• Emotional brand: Often, a company might use an emotional brand to build a relationship with a
customer. For example, a jewellery brand relates its products to the feeling of love.
• Luxury brand: Luxury brands are designer brands whose products serve as status symbols. These
brands often use customer endorsements like stories and associations to connect with customers.
• Geographic brand: A geographic brand associates the brand identity within a specific region and
focuses on the people who live there. These brands primarily focus on local marketing tactics to reach
their customers.

Strategic Brand Management Process

Strategic brand management involves the design and implementation of marketing programs and activities to
build, measure, and manage brand equity.
The strategic brand management process include:
1. Identifying and developing brand plans
2. Designing and implementing brand marketing programs
3. Measuring and interpreting brand performance
4. Growing and sustaining brand equity

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1. Identifying and Developing Brand Plans.

The strategic brand management process starts with a clear understanding of what the brand is to represent
and how it should be positioned with respect to competitors. Brand planning, include the three interlocking
models.
• The brand positioning model describes how to guide integrated marketing to maximize competitive
advantages.
• The brand resonance model describes how to create intense, activity loyalty relationships with customers.
• The brand value chain is a means to trace the value creation process for brands, to better understand the
financial impact of brand marketing expenditures and investments.

2. Designing and Implementing Brand Marketing Programs.

Building brand equity requires properly positioning the brand in the minds of customers and achieving as
much brand resonance as possible. In general, this knowledge - building process will depend on three factors:
i. The initial choices of the brand elements making up the brand and how they are mixed and matched;
ii. The marketing activities and supporting marketing programs and the way the brand is integrated into
them; and
iii. Other associations indirectly transferred to or leveraged by the brand as a result of linking it to some
other entity (such as the company, country of origin, channel of distribution, or another brand).

3. Measuring and Interpreting Brand Performance

To manage their brands profitably, managers must successfully design and implement a brand equity
measurement system. A brand equity measurement system is a set of research procedures designed to provide
timely, accurate, and actionable information for marketers so that they can make the best possible tactical
decisions in the short run and the best strategic decisions in the long run. Implementing such a system involves
three key steps— conducting brand audits, designing brand tracking studies, and establishing a brand equity
management system.
The task of determining or evaluating a brand’s positioning often benefits from a brand audit. A brand audit
is a comprehensive examination of a brand to assess its health, uncover its sources of equity, and suggest ways
to improve and leverage that equity. A brand audit requires understanding sources of brand equity from the
perspective of both the firm and the consumer.
Once marketers have determined the brand positioning strategy, they are ready to put into place the actual
marketing program to create, strengthen, or maintain brand associations. Brand tracking studies collect
information from consumers on a routine basis over time, typically through quantitative measures of brand
performance on a number of key dimensions marketers can identify in the brand audit or other means.

A brand equity management system is a set of organizational processes designed to improve the
understanding and use of the brand equity concept within a firm. Three major steps help implement a brand
equity management system: creating brand equity charters, assembling brand equity reports, and defining
brand equity responsibilities.

4. Growing and Sustaining Brand Equity

Maintaining and expanding on brand equity can be quite challenging. Brand equity management activities
take a broader and more diverse perspective of the brand’s equity—understanding how branding strategies

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should reflect corporate concerns and be adjusted, if at all, over time or over geographical boundaries or
multiple market segments.
• Defining Brand Architecture: The firm’s brand architecture provides general guidelines about its
branding strategy and which brand elements to apply across all the different products sold by the firm.
Two key concepts in defining brand architecture are brand portfolios and the brand hierarchy. The
brand portfolio is the set of different brands that a particular firm offers for sale to buyers in a particular
category. The brand hierarchy displays the number and nature of common and distinctive brand
components across the firm’s set of brands.
• Managing Brand Equity over Time: Effective brand management also requires taking a long-term
view of marketing decisions. A long-term perspective of brand management recognizes that any
changes in the supporting marketing program for a brand may, by changing consumer knowledge, affect
the success of future marketing programs. A long-term view also produces proactive strategies designed
to maintain and enhance customer-based brand equity over time and reactive strategies to revitalize a
brand that encounters some difficulties or problems.
• Managing Brand Equity over Geographic Boundaries, Cultures, and Market Segments: Another
important consideration in managing brand equity is recognizing and accounting for different types of
consumers in developing branding and marketing programs. International factors and global branding
strategies are particularly important in these decisions. In expanding a brand overseas, managers need
to build equity by relying on specific knowledge about the experience and behaviors of those market
segments.

Brand Attribute Management & Architecture

Brand attribute management is the process of developing and maintaining a brand's attributes to create a
consistent brand identity and customer relationships
• Define and communicate attributes
Clearly define a brand's attributes and consistently communicate them across all brand touchpoints. This
involves identifying the key traits, values, or qualities that represent the brand. Attributes can include things
like reliability, innovation, luxury, or sustainability. After defining these, it’s crucial to communicate them
effectively across all touchpoints, from marketing campaigns to customer service interactions, ensuring that
customers associate these attributes with the brand.
• Be consistent
Consistently delivering on a brand's attributes builds a reputation for reliability and
trustworthiness. Consistency is essential for brand recognition. Every interaction a customer has with the
brand, whether it’s through advertising, social media, or in-store experiences, should reflect the same
attributes. Inconsistent messaging or brand behavior can confuse customers, weaken the brand image, and
erode trust.
• Align with core values
Ensure that brand attributes align with a brand's core values, mission, and vision. The brand’s attributes should
align with its core values. If a brand claims to value sustainability, for example, this should be reflected in its
product offerings, supply chain practices, and marketing efforts. Misalignment can lead to a loss of credibility
and customer loyalty.

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• Identify attributes
Use surveys, customer interviews, and competitive analysis to identify a brand's current and aspirational
attributes.
This step involves recognizing which specific attributes define the brand. For instance, is the brand innovative,
dependable, affordable, or exclusive? Identifying the right attributes involves understanding both the brand's
mission and the expectations of its target audience.
• Control strong attributes
Control strong attributes, like a brand's logo, name, slogan, and website, through marketing materials and a
business model. Not all attributes will be equally strong or relevant at all times. Some attributes may resonate
more with customers and provide a competitive edge. Effective brand management involves focusing on these
strong attributes and ensuring they remain at the forefront of the brand’s messaging. This also means avoiding
overextending the brand into areas that don’t align with its strongest attributes.

Brand Architecture
It is the structure of the brand in an organizational entity that defines how various brands and sub-brands in a
company’s portfolio are related to each other or are different from one another.
Brand architecture provides a hierarchy that depicts the roles and relationships within the products and services
that make a company’s portfolio and makes sure that the external stakeholders understand the value of what
the brands offer.

Types of Brand Architectures

They can be varied from pure to hybrid. However, generally brand architecture is distinguished into two
categories − House of brands and Branded house.
House of Brands Branded House

Product Brand
Range Brand
Source brand
Line Brand
Master brand
Endorsing Brand
Umbrella brand

Multiple brands or activities are brought

together under a single name. There is complete It is a family of brands with high degree of unity. Here,
freedom for the management of divisions, the master brand structures the child brands in such a
activities and the brands. manner that they are capable of expressing the value
For example, of a parent brand. Master brand is the single brand
Mitsubishi Motors division and Mitsubishi acting as a driving force.
Electricals division are completely unrelated For example, Google.
except the fact that they come under Mitsubishi Google books, Google maps, Google Translate,
business. Both divisions manage their own Google Mail, etc., all come under the master brand
advertising, and brand values, and obtain Google and only differentiate in their descriptions.
separate profits.

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Brand architecture strategies

1. Product Brand Architecture
The brand is a kind of product brand, if the corporate brand name is hidden and every product is assigned a
different name and one single positioning. Each new product is a new brand.

2. Line Brand Architecture

When a variant is added to the existing brand, it is called line extension. The variant can be anything from
color, packaging, nutritional value addition, or a new shape. Line brand targets a subset of the consumers.

For example, Cadbury Bournville comes in three flavors − Raisin & Nut, Rich Cocoa, and Cranberry. Likewise
Dairy Milk Silk comes in Orange Peel, Roast Almond, and Fruit & Nut variants.

3. Endorser Brand Architecture

Here, a parent brand consists of various operating units which are identified by their own brands. The parent
endorses the products or services under itself and has a clear market presence. There is a synergy between the
product name and the parent name. This architecture provides credibility, approval, and guarantee to another
brand.
For example, Marriot Residence Inn, Courtyard, and Fairfield Inn.

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4. Masterbrand or Monolithic or Umbrella Architecture

This is the simplest type, where all units and divisions of a business share the same brand. The brand name is
used for different but related products. It involves creating a brand equity for a single brand. It is also referred
to as Corporate, Umbrella, or Parent brand. In this type, the product or service benefits are less important
than brand promise. It drives purchase decisions and defines consumer experience.

5. Source Brand Architecture

In this type, the company name is well known and guarantees the quality of the products. For source brand,
the products are on the forefront, while the company name remains in the background.

6. Portfolio Brand Architecture

In this type, all or many brands are kept with separate identities, names, and life cycles of their own. They
often compete with each other. The parent does not provide any brand equity to benefit the sub-brands. This
structure is found in FMCG companies.

7. Ingredient Brand Architecture

In this architecture, a principle brand supports to qualify other brands. The idea is, if the ingredient is good, it
amplifies the brands better than they would have amplified independently without the ingredient. Thus, the
ingredient brands turn out as energizer.
For example, Intel Inc. Any computer brand’s ad says “Intel Inside”, depicting Intel processor enabled
motherboard that comes with high power and speed of execution.

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8. Hybrid Brand Architecture

It is a combination of monolithic, endorsement, and portfolio architectures. These are the most common
solutions.
Brand architecture needs to be revised when the companies change their strategies or the business has added
important features which are beyond the existing brand structure.

Brand Portfolio Strategy

Brand portfolio strategy involves the design, deployment, and management of multiple brands as a coordinated
portfolio of meaning-based assets that address the needs of diverse customers in a marketplace and maximize
return while minimizing risk.
It specifies the optimal portfolio of brands a company should maintain for comprehensive market coverage
with minimal overlap, determines the role and scope of each brand in the portfolio, and designs a strategic,
logical, and efficient brand architecture that knits the brands together into an interdependent system.
A brand portfolio strategy is a strategic plan outlining how a company’s collection of brands should be
organized and managed to achieve its business objectives.

There are six main types of brand portfolio strategies:

1. House of Brands
2. Branded House
3. Endorsed Brands
4. Sub-Brands
5. Hybrid Brands
6. Free-Standing Brands

1. House of Brands (P&G)

Imagine a large house with many rooms, each hosting a different party. This is the essence of a ‘House of
Brands’ strategy.
In this model, a parent company owns multiple brands, each operating independently, often targeting different
market segments.
The brands have their own identities and marketing strategies, and consumers may not even be aware of
the connection between them.
Take Procter & Gamble for instance. P&G creates more independence for brands within their portfolios with
many customers unaware of the associations.

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2. Branded House (Apple)

In contrast to the ‘House of Brands’, a ‘Branded House’ operates under a single, overarching brand. The
company uses its brand as the umbrella for various products or services, emphasizing the master brand’s
value.
This approach allows companies to leverage the strength and reputation of the master brand to promote
multiple products or services.
Apple has created various sub-brands for its products, including the iPhone and Apple TV+.
Each product is known well enough to stand apart as product brands.
However, they all incorporate Apple branding and leverage the brand visual identity and ethos of the master
brand.
In this way, Apple can insert new products into different markets with the weight of the overarching Apple
brand and its credibility.

3. Endorsed Brands (Marriot International)

Endorsed Brands is a hybrid strategy that features a parent endorsed brand endorsing sub-brands, combining
the strength of the parent brand with the individual identities of the sub-brands.
This strategy can provide consumers the assurance of the parent brand while enjoying the unique offering
of the sub-brands.
Marriott International, for example, features Marriott Hotels, Courtyard by Marriott, and Residence Inn by
Marriott, each targeting different segments with the Marriott endorsement.

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4. Sub-Brands

Sub-brands are a type of brand portfolio strategy where brands are connected to the parent brand but have
their own identity.
They target specific market niches and are able to leverage the parent brand’s reputation while also
establishing their own unique position.
A great example of this is Coca-Cola includes Coca-Cola, Diet Coke, and Coca-Cola Zero Sugar, catering to
different consumer preferences for the same product category.

5. Hybrid Brands (VF Corporation)

Blend elements of the existing brand with new, distinct brand features. Target specific but overlapping market
segments
Allow for flexibility in positioning while maintaining a connection to the parent brand
VF Corporation excels as a hybrid brand by managing a diverse portfolio of distinct lifestyle and apparel
brands like The North Face and Vans.
It leverages centralized innovation to enhance efficiency across its brands, while maintaining strong brand
equity through clear market positioning and customer loyalty. Strategic acquisitions expand its reach, and a
balanced global-local strategy ensures relevance worldwide.
This approach allows VF Corporation to meet diverse consumer needs while maintaining consistent brand
integrity and innovation.

6. Free-Standing Brands (L’Oreal,)

These brands operate independently without a visible connection to the parent company.
This strategy allows brands to target specific markets or niches without being tied to the parent brand’s
reputation or market position.
L’Oreal exemplifies the effective management of free-standing brands with its diverse portfolio, including
Lancôme (luxury beauty), Garnier (mass-market beauty), and Kiehl’s (premium skincare).

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Each brand operates with a distinct identity and tailored marketing strategies, allowing for targeted consumer
engagement and brand-specific innovation. This autonomy enhances operational efficiency and enables swift
market-specific decisions.
Moreover, the separate brand structure mitigates risks, as challenges within one brand do not directly impact
the others.
This approach allows L'Oréal to cover the entire beauty spectrum efficiently, ensuring brand loyalty,
extensive market reach, and overall resilience.

Brand Extension and Stretching

Brand Extension
Brand extension is a marketing strategy used by companies to expand their product range by using the same
brand. This method can be used both for a new product and for expanding an existing product line. It can also
be done to expand a company’s market presence, increase its revenues, and improve its brand image.
Brand extension is a marketing strategy where a company leverages its well-established brand name to
introduce new products or services in different categories. This strategy can be highly effective when done
well.

Types of Brand Extension

Unlike brand stretches that remain much nearer to the original product or service and thereby tend to involve
gentle evolutions that are specific to that brand, brand extensions typically follow one of the following four
strategies:

✓ Product Extension
The product extension is the closest cousin to the band stretch, but just goes one step further. An example of
this would be a successful toothpaste brand which takes a step away from being toothpaste or even mouthwash,
and begins to include toothbrushes, dental floss and other oral hygiene products under the same umbrella
brand.

✓ Expertise Extension
This strategy involves transplanting the same core expertise across many different categories. Honda, Sony
and Yamaha are excellent examples of this. Take Yamaha for example. Ask any biker what a Yamaha is and
they’ll that they make a wide range of on and off-road motorcycles.
Ask any musician what a Yamaha is and they’ll say that it’s one of the most commonly used ranges of
organ. Speak to anyone who lives near the sea, and they’ll reply that Yamaha manufacture power boats. The
company was founded by Mr. Yamaha to make musical instruments in the 1880s, and all their products remain
connected by a strong philosophy.

✓ Market Extension
This strategy involves transplanting the same product into completely different markets using the same overall
brand, but often positioned differently. These are often triggered by mergers and acquisitions in which two or
more companies with similar products but in different sectors come together to cross-fertilise their goods and
services to different sectors.

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✓ Geographic Extension
And last but not least, brands that have achieved success in any particular geography can seek to use their
learnings, momentum and the profits generated to ‘geo-clone’ in new territories or countries. This sounds
simple, right? It can be really tough!
Brands that are adored in Teutonic Germany may not suit the Latin temperament on the Mediterranean coast,
and vice versa. The same is true of B2B brands who have ambitions to expand, but fail to recognise the
nuances between different geographical markets.

Benefits of Brand Extension:

1. Leverages Existing Brand Equity
Consumers already familiar with the original brand are more likely to trust the new products, reducing the
need to establish credibility from scratch. Since the parent brand is recognized, consumers may accept the new
product more quickly, reducing the time and cost involved in marketing.

2. Reduces Launch Costs

By using an existing brand name, companies can save significantly on marketing costs, especially in terms of
advertising and brand positioning. There is a lower risk compared to launching a completely new brand, as
the consumer base is already partially developed.

3. Increases Brand Value

A successful extension can enhance the overall brand's value, as it expands the brand's presence in the market
and showcases its ability to innovate. It can increase the brand's range of offerings, leading to better revenue
streams and market reach.

4. Expands Customer Base

A brand extension can attract new customer segments who may not have been interested in the original
products but are drawn to the new offerings. It allows companies to cross-sell different products within the
same brand, increasing customer loyalty and long-term profitability.

5. Encourages Innovation
Brands can experiment and innovate more easily under the existing brand umbrella, knowing that the equity
and trust they've built will help support their innovations. Leveraging an existing brand can also allow a faster
product development cycle since the brand identity and messaging are already established.

6. Defends Against Competition

By expanding into new categories, companies can capture a larger market share, preventing competitors from
gaining an advantage. A well-executed brand extension strengthens consumer loyalty, making it harder for
competitors to draw away customers.

7. Optimizes Use of Resources

Companies can utilize their existing infrastructure (e.g., distribution channels, manufacturing processes) to
support the new product lines, reducing operational costs. By producing more products under one brand,
companies can achieve economies of scale, reducing the cost per unit of production.

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Brand Stretching
Brand stretching is a marketing strategy that involves expanding existing brand offerings — differentiating its
current offerings but maintaining the image and reputation of its main brand. In other words, it is the process
of developing the target group of a certain brand by introducing new products and services under the same
name. This is a way to use a well-known brand to enter new markets and compete with other brands.

It is possible to stretch a brand using any marketing technique, such as advertising or public relations. Some
companies prefer to keep the same brand image across all platforms to ensure a consistent customer
experience.
A significant goal of brand stretch is to increase brand awareness, sales, and market share by expanding
product lines. This is also used to reduce cannibalization between existing brands in the same category.

Types of Brand Stretching

1. Horizontal Stretching: This involves the brand moving into a new but related category. For instance, a
company that makes sports shoes may stretch into sports apparel or accessories.

2. Vertical Stretching: In this case, the brand expands into completely unrelated product categories. For
example, a luxury fashion brand offering perfumes, cosmetics, or even hotel services, such as Armani
expanding into hotels and home décor.

Examples of Brand Stretching

• Apple: Originally a computer company, Apple successfully stretched its brand into other electronics,
such as smartphones (iPhone), tablets (iPad), and wearables (Apple Watch).
• Honda: Known for its cars and motorcycles, Honda has stretched into the power equipment and
robotics sectors, leveraging its engineering expertise.

Advantages of Brand Stretching

Leverage Brand Equity: The main advantage of brand stretching is the ability to capitalize on the positive
brand associations, customer loyalty, and trust that have been built in the original product category. A
strong brand can stretch into new markets more easily than a new or unknown brand.

Reduced Marketing Costs: By using an existing brand name, companies can save on marketing and
branding costs. Customers are already familiar with the brand, so the company does not need to invest as
heavily in creating awareness or educating the market about the brand.

Increased Market Reach: Brand stretching allows companies to enter new markets, target new customer
segments, and increase revenue streams by offering products outside their traditional portfolio.

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Making a Brand Strong

Making a brand strong refers to building a brand that is widely recognized, trusted, and resonates deeply with
its target audience. A strong brand typically has clear values, a distinct identity, and emotional connections
with its customers.

1. Consistency
Consistency in messaging, visual identity, and customer experience is essential. A strong brand consistently
delivers the same promises, visuals (like logo, colors, fonts), and tone across all platforms (social media,
website, ads, packaging, etc.). This helps build recognition and trust.

2. Unique Value Proposition (UVP)

A UVP is what makes the brand stand out from competitors. A strong brand clearly communicates what it
offers that others don’t, focusing on the specific problem it solves or the unique benefits it provides.

3. Emotional Connection
Strong brands evoke emotions in their audience. Whether it’s trust, excitement, or comfort, the emotional
appeal helps create loyal customers. People remember how brands make them feel more than the product or
service itself.

4. Brand Storytelling
A strong brand tells a compelling story about its origins, values, or mission. This narrative helps humanize the
brand and fosters a deeper connection with the audience. Authenticity in storytelling is key to making a lasting
impression.

5. Customer Experience
Providing a seamless, positive customer experience (from browsing to purchase to after-sales service) is
crucial for brand strength. Satisfied customers are more likely to become repeat buyers and brand advocates,
strengthening the brand's reputation.

6. Visual Identity
Strong brands invest in memorable logos, color schemes, typography, and other visual elements. These visuals
create a cohesive image that sticks in consumers’ minds and can be instantly recognized.

7. Reputation and Trust

Trustworthiness is fundamental. Brands become strong when customers trust them to consistently deliver
quality products and services. A strong reputation is built over time through positive experiences and effective
communication.

8. Adaptability
Even strong brands must evolve. Being adaptable to market trends, technological advances, and consumer
preferences while staying true to the core values helps a brand maintain its relevance.

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9. Engagement and Community Building

A strong brand fosters a community of loyal customers and actively engages with them on various platforms
(social media, events, etc.). Encouraging feedback, sharing user-generated content, and fostering a sense of
belonging strengthens the brand-consumer relationship.

10. Innovation
Strong brands stay ahead by constantly innovating. Whether it’s through product improvement, expanding
services, or adopting new marketing strategies, innovation helps brands remain competitive and appealing.

Brand Equity
Brand equity is the heart of brand management. The brand managers are engaged in building strong brand
equity as it directly affects the consumer’s buying decisions, defines market share of the product, and
determines the brand position in the market. Strong brand equity can not only make the brand strong but also
help the brand establish, survive, and perform well in the long run.
This term came up in the marketing literature in 1980. This multidimensional concept has different meanings
from the context of Accounts, Marketing, and Consumer.
• Accounting Context − It is a total value of a brand as a separable asset, when evaluated for selling. It is
also called Brand Value. It is quantifiable.
• Marketing Context − It is the description of consumer’s associations and beliefs about the brand. It is
non-quantifiable. Brand equity is tailored according to the needs and demands of the consumer.
• Consumer-based Context − It is a measure of consumers’ attachment to a brand. It is also called brand
strength or loyalty. It is quantifiable.
As per Amber and Styles (1996), Brand Equity is a store of profits which can be realized in future.

Brand equity is the added value that a brand name brings to a product or service beyond the functional benefits
it provides. It is the result of a series of factors that influence consumer perceptions and preferences.
Understanding the sources of brand equity is essential to building a strong brand that resonates with
consumers.

Sources of Brand Equity

Brand equity is built on a number of different sources. These include:

1. Brand Loyalty
Brand loyalty is one of the most significant sources of brand equity. It is the degree to which consumers prefer
one brand over others and choose to buy it repeatedly. Loyal customers are more likely to recommend the
brand to others, which can lead to increased sales and brand awareness.

2. Brand Awareness
Brand awareness is the extent to which consumers are familiar with a brand and its products. It is a crucial
source of brand equity as it helps to differentiate the brand from its competitors and increases its perceived
value. A strong brand awareness can lead to increased sales and customer loyalty.

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3. Brand Association
Brand association is the mental link between a brand and its attributes or benefits. It is the set of characteristics
that consumers associate with a brand, such as quality, reliability, and innovation. Positive brand associations
can result in increased brand equity and customer loyalty.

4. Brand Image
Brand image is the perception that consumers have of a brand. It is the sum of all the brand associations and
experiences that consumers have with the brand. A strong brand image can create positive brand equity, while
a weak or negative brand image can damage the brand’s reputation.

5. Brand Identity
Brand identity is the visual and verbal representation of a brand. It includes the brand name, logo, tagline, and
other visual and verbal elements that create a unique brand identity. A consistent and memorable brand identity
can contribute to positive brand equity.

6. Brand Meaning
Brand meaning is the symbolic value that a brand holds for consumers. It is the emotional and psychological
benefits that consumers associate with the brand. A strong brand meaning can create positive brand equity and
customer loyalty.

7. Brand Personality
Brand personality is the set of human characteristics that a brand is associated with. It includes traits such as
friendliness, sophistication, and ruggedness. A strong brand personality can create positive brand equity and
customer loyalty.

8. Brand Extensions
Brand extensions are new products or services that are introduced under an existing brand name. They can
contribute to positive brand equity by leveraging the brand’s existing reputation and customer loyalty.

9. Brand Response
Brand response is the way that consumers react to a brand’s marketing efforts. It includes factors such as brand
recognition, brand recall, and brand preference. Positive brand responses can lead to increased brand equity
and customer loyalty.

10. Brand Relationships

Brand relationships are the emotional connections that consumers have with a brand. They can be built through
factors such as customer service, social media engagement, and brand storytelling. Strong brand relationships
can lead to increased brand equity and customer loyalty.

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Role of Customers in Building Brand Equity

Customers play a crucial role in building brand equity. They are the ones who interact with the brand and
experience its products or services. Their perception of the brand can make or break its image in the market.
Therefore, it is essential to understand the role of customers in building brand equity.
1. Customer Loyalty: Customer loyalty is one of the most important sources of brand equity. Loyal
customers not only purchase from the brand repeatedly but also recommend it to others. They become
brand advocates and help in building a positive image of the brand. Therefore, it is crucial to focus on
building customer loyalty to enhance brand equity.

2. Customer Experience: Customer experience is another critical factor that influences brand equity.
Customers remember their experience with the brand and share it with others. A positive experience can
lead to customer loyalty, while a negative experience can damage the brand’s reputation. Therefore, it is
essential to focus on creating a positive customer experience to enhance brand equity.

3. Existing Customers: Existing customers are valuable assets for a brand. They have already experienced
the brand and have developed a relationship with it. Therefore, it is essential to focus on retaining existing
customers. They can become loyal customers and brand advocates, which can help in building brand
equity.

4. Customer Retention: Customer retention is closely linked to customer loyalty. Retaining customers is
crucial for building brand equity. It is more cost-effective to retain existing customers than to acquire new
ones. Therefore, brands must focus on retaining customers to enhance brand equity.

5. Customer Service: Customer service is an essential aspect of building brand equity. It is the interaction
point between the brand and the customer. A positive customer service experience can lead to customer
loyalty and advocacy, while a negative experience can damage the brand’s reputation. Therefore, it is
crucial to focus on providing excellent customer service to enhance brand equity.

6. Purchasing Decisions: Customers’ purchasing decisions also influence brand equity. They choose to
purchase from a brand based on their perception of it. Therefore, it is essential to focus on creating a
positive image of the brand to influence customers’ purchasing decisions and enhance brand equity.

The 4 Steps of Strong Brand Building-

1. Identify and determine the target audience.

2. Position the product and business.
3. Define company’s personality.
4. Choose a logo and slogan.

1. Identifying and determining the target audience: This involves understanding the specific group of
people the brand seeks to engage. It includes analyzing demographics, behaviors, preferences, and pain
points to tailor messaging and offerings that resonate with the audience. To define the target audience,
consider factors like:

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• Demographics (age, gender, location, income)

• Psychographics (interests, values, lifestyle)
• Buying behavior (how and why they make purchases)
Example: A luxury watch brand might target affluent, career-driven individuals who value exclusivity and
quality.

2. Positioning the product and business: Positioning refers to how the product or service is presented in
the market, distinguishing it from competitors. This step focuses on highlighting the unique value
proposition and key benefits that make the brand stand out. It's about carving out a unique space in the
consumer's mind by highlighting your brand’s unique selling points (USPs), values, and what makes the
company different.
Example: Tesla positions itself as an innovative leader in electric vehicles, focusing on performance,
technology, and sustainability.

3. Defining the company’s personality: A brand's personality encompasses the characteristics and tone it
communicates to the public. Whether professional, playful, innovative, or traditional, this personality
shapes perceptions and fosters an emotional connection with the audience.
Example: Nike’s personality is bold, inspiring, and motivational, appealing to athletes and fitness enthusiasts
who strive for greatness.

4. Choosing a logo and slogan: Visual elements such as a logo and slogan serve as symbols of the brand. A
well-designed logo creates instant recognition, while a memorable slogan succinctly conveys the brand’s
core message or promise. These elements reinforce the brand’s identity across various platforms and
touchpoints.
• The logo should be visually appealing and represent the brand’s personality and values.
• The slogan (a short phrase) should communicate your key message or value proposition.
Example: Apple's minimalist logo with a bite taken out of it and the slogan "Think Different" conveys
innovation, simplicity, and creativity.

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Aaker’s Brand Equity Model

Aaker’s Brand Equity Model, developed by marketing expert David A. Aaker, outlines the key components
that contribute to the overall value of a brand, known as brand equity. This model identifies five key assets
that help create and sustain brand value, both for the company and the consumer. These assets build the brand's
strength and its ability to drive customer loyalty and business growth.

Aaker’s Brand Equity Model

5 components of brand equity in the Aaker model

1. Brand Loyalty
Brand Loyalty is the degree to which consumers are committed to the brand. Loyal customers tend to repeat
purchases, resist competitors’ offers, and provide positive word-of-mouth referrals, adding sustainable value
to the brand.
For example, a customer who only purchases groceries at one store has brand loyalty to that store. According
to the Aaker model, strong brand loyalty can allow a company to focus on maintaining its loyal customers,
which can help reduce marketing costs. It also gives companies an advantage over their competitors in the
market, who may be unable to convince loyal customers to switch brands.

2. Brand Awareness
Brand Awareness refers to how well consumers recognize and recall a brand. High awareness ensures a brand
remains top-of-mind for consumers, leading to better familiarity and trust. Brand awareness considers the
public's familiarity with a brand.
For example, a company has high brand awareness if a majority of people living in an area recognize the
company's name and know what they sell. The Aaker model suggests that companies with brand awareness
can use their visibility in a community to attract more customers, which can increase their revenue. This
awareness can also help customers feel more comfortable with their decision to purchase products or services
from a company.
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3. Perceived Quality
Perceived Quality relates to the consumer's perception of the overall quality and value of the product or service
compared to competitors. This perception is often based on both intrinsic factors, like product performance,
and extrinsic cues like brand reputation.
For example, a company that sells a higher-priced version of an item may have more perceived quality than
one that sells the same item at a lower price. A brand's perceived quality can lead customers to view the
company as reliable, which gives them a reason to purchase its products or services. Perceived quality can
also help companies differentiate themselves from their competitors.

4. Brand Associations
Brand Associations are the attributes, feelings, and experiences linked to the brand in consumers' minds. These
associations can be functional (product-related) or emotional, influencing how consumers perceive the brand’s
identity and meaning.
For example, if a customer feels happy after hearing a company's name, they have a positive association with
that brand. Brand associations can help create a positive attitude toward a company that can encourage
customers to buy its products or services.

5. Proprietary assets
Proprietary assets, the final component of brand equity in the Aaker model, refer to a brand's intangible assets.
These assets may include patents, trademarks, copyrights or intellectual property rights. While they have no
monetary value, these assets can improve a company's reputation. Developing proprietary assets can give
companies an advantage over their competitors by creating more brand equity, according to the Aaker model.

Customer Based Brand Equity

Customer-based brand equity (CBBE) is a model that measures how customers perceive a brand, and how
their attitudes towards the brand influence a business's success. CBBE is based on the idea that a brand's value
comes from what customers think and feel about it, rather than the product or service itself.

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The CBBE model has four stages:

• Identity: The brand establishes salience so that customers are aware of it.
• Meaning: The brand's performance and imagery are discussed.
• Response: Customers respond to the brand's existence.
• Relationships: Customers form a relationship with the brand.

Keller’s brand equity model, developed by Kevin Lane Keller, is a powerful tool that helps businesses
understand the value of their brand. It is a customer-based model that focuses on the perceptions and attitudes
of customers towards a brand.

At its core, the Keller model is based on the idea that a brand’s value is determined by the perceptions and
attitudes of consumers towards the brand. This value is known as brand equity, and it can be broken down into
four key components:
1. Brand Salience: This refers to how easily a brand comes to mind when a consumer thinks about a
particular product or category. It is influenced by factors such as brand awareness, brand recognition,
and brand recall.
2. Brand Performance: This refers to how well a brand meets the functional needs of consumers. It is
influenced by factors such as product quality, reliability, and durability.
3. Brand Imagery: This refers to the intangible aspects of a brand, such as its personality, values, and
associations. It is influenced by factors such as brand personality, brand culture, and brand heritage.
4. Brand Judgments: This refers to the overall attitudes and perceptions that consumers have towards a
brand. It is influenced by factors such as brand credibility, brand relevance, and brand consideration.

Components of Keller’s Brand Equity Model

Keller’s Brand Equity Model is a customer-based brand equity (CBBE) model that helps businesses to
understand how their brand is perceived by their customers. The model is divided into four components: Brand
Identity and Salience, Brand Meaning and Response, Brand Feelings and Relationships, and Brand Resonance
and Loyalty.

1. Brand Identity and Salience

Brand Identity and Salience refers to how well customers can identify and recognize a brand. This component
includes elements such as the logo, design, and brand name. A strong brand identity helps customers to easily
recognize and remember a brand. It also helps to create brand salience, which is the level of awareness a brand
has in the minds of customers.

2. Brand Meaning and Response

Brand Meaning and Response refers to the meaning that customers associate with a brand and how they
respond to it. This component includes brand associations, brand image, values, and style. It is important for
a brand to have a clear and consistent meaning that resonates with its target audience. This can help to create
positive brand responses, such as trust, loyalty, and purchase intention.

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3. Brand Feelings and Relationships

Brand Feelings and Relationships refer to the emotional connection that customers have with a brand. This
component includes empathy, sense of community, and other emotional factors. Positive feelings and strong
relationships with a brand can lead to increased loyalty and advocacy.

4. Brand Resonance and Loyalty

Brand Resonance and Loyalty refer to the extent to which customers feel connected to a brand and are loyal
to it. This component includes loyalty programs, customer-based brand equity, and other factors that encourage
repeat purchases and advocacy. A strong brand resonance can lead to long-term customer loyalty and increased
brand equity.

Brand Leveraging
Brand leveraging is broadening a company's product range by introducing additional forms or types of
products under a brand name which is already successful in another category. Also called Product Leveraging,
Brand Extension and Franchise Extension.
(OR)
Brand leveraging, also known as product leveraging, is a strategy that uses an existing brand to expand into
new product categories.

For example, the manufacturer of tea maker uses its brand name strength to launch tea vending machine. Here,
in spite of tea and tea-vending machine belonging to different product categories, there is a strong correlation
between the two items that the brand name has a mighty impact on consumers of both categories.

Importance of Brand Leveraging

Brand leveraging is an important form of new product introduction because:
• Strong brand leveraging provides consumers with a sense of familiarity.
• It carries positive brand characteristics and attitudes into a new product category.
• Strong leveraging perceives instant recognition to the brand. Consumers are more likely to try
leveraged product.
• As the products belong to the different categories, they do not compete for market share.
• More products mean greater shelf space for the brand and in turn more opportunities for sale.
• The cost of introducing a brand-leveraged product is less than introducing an independent new product.
• A full line permits coordination of product offerings, such as bagels and cream cheese, potato chips
and ranch dip, peanut butter and jelly, etc.
• A greater number of products increase efficiency of manufacturing facilities and raw materials.

Role of Brand Managers in Brand Leveraging

The brand managers can create a strong brand leveraging, by maintaining the quality of all products in different
categories under the brand.
The brand managers need to decide which products can be leveraged under a brand. It is very important for
them to leverage a brand only into related or associated categories of the original product.
In order to make the best decision for the brand, they need to find answers for the following questions: -

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• Is the new product related to the established product family?

• Does the established brand have characteristics that can be effectively carried on into new categories?
• What will be the appropriate leveraging strategy?
• What will be the impact on original brand name? Will it be strengthened or diluted?
• Does the company have essential facilities to manufacture and distribute a new and differentiated
product?
• Will sales of the new product cover the cost of product development and marketing?
• If leveraging fails, what are the policies to revert or to keep original brand’s reputation?
• A brand leveraging strategy can be extremely successful and profitable if it is correctly implemented
and provides new products with the right image.

Brand Loyalty
Brand loyalty is when customers continue to purchase from the same brand over and over again, despite
competitors offering similar products or services. Not only do customers continue engaging and purchasing
from the same brand, but they also associate positive feelings toward that brand.
For example, some customers will always buy Pepsi while others will buy Coke every time.
Brand loyalty is often based on perception. Customers will consistently buy the same product since they
perceive it as superior to other available products.

Types of Brand Loyalty

Businesses will typically use different marketing strategies to build loyal customers through incentives such
as gifts or loyalty programs.
Here are the different levels of brand loyalty:
1. Hard-Core Brand Loyalty
Hard-core brand loyal customers are enthusiastic about a particular brand and only associate with it positively.
That means the consumer had an exceptional experience, and they remember the brand fondly.
For example, Apple exhibits hard-core customer loyalty when it releases a new iPhone.
Since many people associate the brand with high-quality status, loyal customers can easily convince others to
buy the new iPhone.
If you’re fortunate to build brand loyalty like Apple, you should introduce a program to encourage your brand
ambassadors to continue spreading the word about your business and appreciate them for their support.

2. Split-Customer Brand Loyalty

Split customers are loyal to more than one brand but limit their options to two or three brands.
You can quickly turn these consumers into hard-core customers by nudging them a bit. But converting them
can be challenging since most of them are aware of other options.
An example of split loyals can include Delta Airlines, United Airlines, and American Airlines. Customer may
have the best experiences traveling with Delta Airlines, but they can also have positive experiences with
American Airlines and United Airlines. So, the customer will have no problems flying with any of the three
airlines.

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3. Shifting-Customer Brand Loyalty

Shifting loyal customers have a mix of hard-core and split loyalty.
Generally, such customers will buy their products from one brand for a certain period before switching their
loyalty to another. They’ll then remain loyal to the second brand.
One example of shifting loyal customers can be the case of yogurt. Consumers may prefer to take a specific
yogurt brand over an extended period, and they’ll be faithful to that yogurt taste. But after they’ve become
used to it, they may attempt other brands.

Brand Loyalty vs. Customer Loyalty

The primary difference between brand loyalty and customer loyalty is pricing.
Pricing has a significant impact on customer loyalty but not on brand loyalty. Customers loyal to a brand will
buy the company’s products regardless of the price.
Customer loyalty is all about what the company can offer consumers regarding regular prices and money-
saving offers. It relates to having lower prices than competitors or better discounts on specific products to
encourage customers to make repeat purchases.

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