ATING BRAND EQUITY
C H A P T E R
After reading this chapter, students should:
Know what a is brand and how branding works
Know what brand equity is
Know how brand equity is built, measured, and managed
Know the important decisions in developing a branding strategy
A brand is a name, term, sign, symbol, or design, or some combination of these elements,
intended to identify the goods and services of one seller or group of sellers and to
differentiate them from those of competitors. The different components of a brand—
brand names, logos, symbols, package designs, and so on—are brand elements.
Brands offer a number of benefits to customers and firms. Brands are valuable intangible
assets that need to be managed carefully. The key to branding is that consumers perceive
differences among brands in a product category.
Brand equity should be defined in terms of marketing effects uniquely attributable to a
brand. That is, brand equity relates to the fact that different outcomes result in the
marketing of a product or service because of its brand, as compared to the results if that
same product or service was not identified by that brand.
Building brand equity depends on three main factors: (1) The initial choices for the brand
elements or identities making up the brand; (2) the way the brand is integrated into the
supporting marketing program; and (3) the associations indirectly transferred to the brand
by linking the brand to some other entity (e.g., the company, country of origin, channel of
distribution, or another brand).
Brand equity needs to be measured in order to be managed well. Brand audits measure
“where the brand has been,” and tracking studies measure “where the brand is now” and
whether marketing programs are having the intended effects.
A branding strategy for a firm identifies which brand elements a firm chooses to apply
across the various products it sells. In a brand extension, a firm uses an established brand
name to introduce a new product. Potential extensions must be judged by how effectively
they leverage existing brand equity to a new product, as well as how effectively the
extension, in turn, contributes to the equity of the existing parent brand.
Brands can play a number of different roles within the brand portfolio. Brands may
expand coverage, provide protection, extend an image, or fulfill a variety of other roles
for the firm. Each brand name product must have a well-defined positioning. In that way,
brands can maximize coverage and minimize overlap and thus optimize the portfolio.