Customer Based Brand Equity ? A Pragmatic Approach

Customer Based Brand Equity – A Pragmatic Approach

Dr.K.Krishnakumar, Lecturer in Commerce, Periyar University, 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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