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Brand Equity

Definition Brand equity is the willingness for someone to continue to purchase your brand or not. Thus the measure of brand equity is strongly related to loyalty and measures segments on a continuum from entrenched user of the brand to convertible users. The measurable financial value in transactions that accrues to a product or service from successful program and activities.( J. Walker Smith)

Brand equity subsumes brand strength and brand value. Brand strength is the set of associations and behaviors on the part of a brands customers, channel members and Parent Corporation that permits the brand to enjoy sustainable and differentiated competitive advantages. Brand value is the financial outcome of managements ability to leverage brand strength via tactical and strategic actions in providing superior current and future profits and lowered risks. ( Raj Srivastava & Allan Shocker)
Brands with equity provide an own able, trustworthy, relevant, distinctive promise to consumers.

According to David Aaker, brands have equity because they have


High awareness Many Loyal Consumers High reputation for perceived quality Proprietary brand assets such as access to scare distribution channel or to patents; or the kind of brand associations such as personality associations.

Consumers prefer high-equity brands because:


They find it easier to interpret what benefits the brand offers Feel more confident to it. Get more satisfaction from using it.

Because of such consumer preference, the brand can charge a higher price and command more loyalty.

Benefits of Brand Equity


To Customers Use Satisfaction Confidence in the purchase decision Interpretation/ Processing of information. To Firm Brand Loyalty Prices/Margin Brand Extensions Trade Leverage Competitive advantage Efficiency and effectiveness of marketing programs.

Brands vary in the amount of power and value they have in market place. At one point there are brands that are not know by customers Then there are brands for which customers have high degree of brand awareness. These brands are having high degree of brand acceptability. These brands enjoy high degree of brand preference. There are brands that enjoy high degree of brand loyalty.
Five levels of customer attitude toward his or her brand from lowest to highest. Customer will change brands, especially for price reason. No brand loyalty. Customer is satisfied. No reason to change the brand. Customer is satisfied and would incur loss by changing brand. Customer values the brand and sees it as friend. Customer is devoted to the brand.
Brand equity is highly related to how many customers are there in classes 3,4 or 5. It is also related to the degree of brand-name recognition, perceived brand quality, strong mental and emotional associations and other assets such as patents, trademarks, and channel relationship.

High brand equity provides a number of competitive advantages: The company will enjoy reduced marketing costs because of consumer brand awareness & loyalty. The company will have more trade leverage in bargaining with distribution and retailers because customers expect them to carry the brand. The company can charge a higher price than its competitors because the brand has higher perceived quality. The company can more easily launch extension because the brand name carries high credibility. The brand offers the company some defense against price competition.

A brand name needs to be carefully managed so that its equity doesnt depreciate. This requires maintaining or improving brand awareness, perceived quality and functionally, and positive associations. These tasks require continuous R& D investment, skillful advertising and excellent trade and consumer service.

Best Global Brands 2008


Rank 2008 Rank 2007 Brand 2008 Brand Value in Million Dollars 2007 Brand Value in Million Dollars Percentage Change Country of Ownership

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

1 3 2 4 5 6 7 8 9 20 10 12 13 16 15 17 18

Coca Cola IBM Microsoft GE Nokia Toyota Intel McDonald's Disney Google Mercedes-Benz Hewlett-Packard BMW Gillette American Express Louis Vuitton Cisco

66,667 59,031 59,007 53,086 35,942 34,050 31,261 31,049 29,251 25,590 25,577 23,509 23,298 22,069 21,940 21,602 21,306

65,324 57,091 58,709 51,569 33,696 32,070 30,954 29,398 29,210 17,837 23,568 22,197 21,612 20,415 20,827 20,321 19,099

2 3 1 3 7 6 1 6 0 43 9 6 8 8 5 6 12

U.S. U.S. U.S. U.S. Finland Japan U.S. U.S. U.S. U.S. Germany U.S. Germany U.S. U.S. France U.S.

18
19 20 21 22 23 24

14
11 19 21 New 27 33

Marlboro
Citi Honda Samsung H&M Oracle Apple

21,300
20,174 19,079 17,689 13,840 13,831 13,724

21,283
23,443 17,998 16,853 New 12,448 11,037

0
-14 6 5 New 11 24

U.S.
U.S. Japan S. Korea Sweden U.S. U.S.

25

25

Sony

13,583

12,907

Japan

Best Nepali Brands 2008


Rank 2008 Rank 2007 Brand

1 2 3 4 5

1 2 3 7 4

Wai Wai Lifebuoy ( Uniever) Lux ( Unilever) Rumpus ( Asian Thai Food) Mayos ( Himalayan Snax)

6
7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

10
5 6 19 8 17 9 14 12 25 32 13 11 16 15 23 20 18 27 24

Coke ( Bottlers Nepal)


Sunsilk ( Unilever) Puja ( Mahashakti Soap) Fair & Lovely ( Unilever) Clinic Plus ( Unilever) Nokia Pepsodent ( unilever) Close Up ( Unilever) Ruchee ( Himalayan Snax) Pepsi ( Varun Beberages) Fanta ( Bottlers Nepal) Colgate Liril ( Unilever) Samsung TV ( Golcha) Wheel ( Unilever) Rara ( Gandaki Noodles) LG TV ( CG) Dabur Vatika ( Dabur) Wheel Detergent ( Uniliver) Dettol ( Reckitt Bensiker)

All urban Nepal ( TOM & SPONT)