Managing Brand Equity [David A. Aaker] on ronaldweinland.info *FREE* shipping on qualifying offers. In a fascinating and insightful examination of the phenomenon. Aug 12, Managing brand equity by Aaker, David A., , Free Press, Maxwell Macmillan Canada, Maxwell Macmillan International edition, in English. Tue, 04 Sep GMT managing brand equity david aaker pdf - In a fascinating and insightful examination of the phenomenon of brand equity, Aaker .
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Managing Brand Equity by David A. Aaker - In a fascinating and insightful examination of the phenomenon of brand equity, Aaker provides a clear and. provide a comprehensive framework for managing brand equity; and finally, we distinguish different . (Aaker , –; Keegan – Moriarty – Duncan. Read Managing Brand Equity by David A. Aaker for free with a 30 day free trial. Read unlimited* books and audiobooks on the web, iPad, iPhone and Android.
Published on Aug 3, This books Managing Brand Equity: Capitalizing on the Value of a Brand Name [FREE] Made by Aaker About Books The most important assets of any business are intangible: its company name, brands, symbols and slogans and their underlying association, perceived quality, name awareness, and customer base. These assets, which comprise brand equity, are a primary source of competitive advantage and future earnings, contends David Aaker, a national authority on branding. Yet, research shows that managers cannot identify with confidence their brand associations, level of consumer awareness, or degree of customer loyalty. Moreover, in the last decade, managers desperate for short-term financial results have often unwittingly damaged their brands through price promotions and unwise brand extensions, causing irreversible deterioration of the value of the brand name. In an examination of the phenomenon of brand equity, Aaker provides a structure of the relationship between a brand and its symbol and slogan, as well as each of the five underlying assets, which will clarify for managers exactly how brand equity does contribute value. The author opens each chapter with an historical analysis of either the success or failure of a particular company s attempt at building brand equity: the fascinating ivory soap story; the transformation of Datsun to Nissan; the decline of Schlitz beer; the making of the Ford Taurus; and others. Finally, with dozens of additional real company examples, Aaker shows how to avoid the temptation to place short-term performance before the health of the brand and, instead, to manage brands strategically by creating, developing, and exploiting each of the five assets in turn.
The name showed the consumer who the maker was and prevented the substitution of cheaper products. In a brand of Scotch called "Old Smuggler" was introduced in order to capitalize on the quality reputation developed by bootleggers who used a special distilling process. Although brands have long had a role in commerce, it was not until the twentieth century that branding and brand associations became so central to competitors. In fact, a distinguishing characteristic of modern marketing has been its focus upon the creation of differentiated brands.
Market research has been used to help identify and develop bases of brand differentiation. Unique brand associations have been established using product attributes, names, packages, distribution strategies, and advertising. The idea has been to move beyond commodities to branded products -- to reduce the primacy of price upon the download decision, and accentuate the bases of differentiation. The power of brands, and the difficulty and expense of establishing them, is indicated by what firms are willing to pay for them.
These values are far beyond the worth of any balance sheet item representing bricks and mortar. An even clearer example of the value of a brand name is licensing. The Fruit Corner tag line, "Real fruit and fun rolled up in one," was overshadowed by Sunkist Fun Fruits, a name that said it all.
The value of an established brand is in part due to the reality that it is more difficult to build brands today than it was only a few decades ago. First, the cost of advertising and distribution is much higher: One minute commercials and sometimes even half-minute commercials are now considered too expensive to be practical, for example.
Second, the number of brands is proliferating: Approximately 3, brands are introduced each year into supermarkets. There were at this writing nameplates of cars, over brands of lipstick, and 93 cat-food brands.
All this meant, and continues to mean, increased competition for the customer's mind as well as for access to the distribution channel. It also means that a brand often is relegated to a niche market, and so will lack the sales to support expensive marketing programs.
The accompanying insert suggests a series of indicators of a lack of attention to brands which most firms will find familiar. Further, there is little knowledge about how those associations differ across segments and through time. There is no feel for whether a recognition problem exists among any segment. Knowledge is lacking as to top-of-mind recall that the brand is getting, and how that has been changing. Those nominally in charge of the brand, perhaps termed brand managers or product marketing managers, are in fact evaluated on the basis of short-term measures.
There are no longer-term objectives that are meaningful. Further, the managers involved do not realistically expect to stay long enough to think strategically, nor does ultimate brand performance follow them. Sales promotions, for example, are selected without determining their associations and considering their impact upon the brand.
The following questions about the brand environment five or ten years into the future are unanswered, and may have not been addressed: What associations should the brand have? In what product classes should the brand be competing? What mental image should the brand stimulate in the future? There is evidence that loyalty levels for supermarket products have declined.
The ad agency BBDO found a surprising perception of brand parity among consumers throughout the world in 13 consumer product categories. They asked consumers whether they felt that the brands they had to choose from in a given product category were more or less the same. It was noticeably higher for such products as paper towels and dry soup, which emphasize performance benefits, than for products like cigarettes, coffee, and beer, for which imagery has been the norm.
One survey of department-store shoppers involving 11 product categories such as underwear, shoes, housewares, furniture, and appliances documented the erosion of price. Interestingly, the study found a high negative correlation between media advertising in a product category and category sales at full price. Advertising, of course, creates strong brands which can hold share in the face of discounting. The Use Of Sales Promotion It is tempting to "milk" brand equity by cutting back on brand-building activities, such as advertising, which have little impact upon short-term performance.
Further, declines in brand equity are not obvious. In contrast, sales promotions, whether they involve soda pop or automobiles, are effective -- they affect sales in an immediate and measurable way. Promotions provide a way to keep a third-or fourth-ranking brand on the shelf. They are also attractive to the Pepsis of the world that want to beat Coke and, not so incidentally, squeeze out the 7-Up's of the world.
There has been a dramatic increase in sales promotion during the past two decades or so, both customer-directed such as couponing and rebates and trade-directed such as wholesale case discounts. Coupon distributions grew at an annual rate of Even in categories such as automobiles, price promotions have been the norm. Unlike brand-building activities, most sales promotions are easily copied. In fact, competitors must retaliate or suffer unacceptable losses.
The inevitable result is a great increase in the role of price. There is pressure to reduce the quality, features, and services offered. At the extreme, the product class starts to resemble a commodity, since brand associations have less importance. At that point, promotions look even better with respect to short-term impact, but their value declines. The enhanced role of promotions is in part driven by measurement.
With the advent of the scanner-based databases in food and drug stores, the short-term measures of some marketing actions are better than ever. They show that price promotions affect sales. However, they are not well suited to measure long-term results, in part because such results are difficult to detect in a noisy marketplace, and also because experiments covering multiple years are very expensive to conduct. Because there are no easy, defensible ways to measure the long-term effects of marketing actions, short-term measures have added influence.
The situation is a bit like that of the drunk who looks for car keys under a street light because the light is better than where the keys were actually lost. The visibility of the short-term success of price promotions and other potentially brand-debilitating activities is fed by the short-term orientation of many marketing organizations. Brand managers and other key people often are rotated regularly so that they can expect to stay in any one position for only two to five years.
This then becomes their time horizon. Worse, during this time they are evaluated on the basis of short-term measures such as market share movements and short-term profitability. This is in part because such measures are available and reliable while indicators of long-term success are elusive, and, too, because the organization itself is concerned with short-term performance. Pressures For Short-Term Results Branding decisions take place in organizations experiencing extreme pressures to deliver short-term performance, particularly in the U.
A myriad of diverse spokes people, including the chairman of Sony, a political scientist from Harvard, and the authors of the MIT Commission on Productivity, have forcefully concluded that U. A prime reason why American managers might have a short-term focus is the prominence and acceptance of the maximization of stockholder value as the prime objective of U. The problem is that shareholders are inordinately influenced by quarterly earnings. Potentially more important is the fact that both perceived quality and brand associations can enhance customers' satisfaction with the use experience.
Knowing that a piece of jewelry came from Tiffany can affect the experience of wearing it: The user can actually feel different.
Providing Value to the Firm As part of its role in adding value for the customer, brand equity has the potential to add value for the firm by generating marginal cash flow in at least half a dozen ways. First, it can enhance programs to attract new customers or recapture old ones. A promotion, for example, which provides an incentive to try a new flavor or new use will be more effective if the brand is familiar, and if there is no need to combat a consumer skeptical of brand quality.
Second, the last four brand equity dimensions can enhance brand loyalty. The perceived quality, the associations, and the well-known name can provide reasons to download and can affect use satisfaction. Even when they are not pivotal to brand choice, they can reassure, reducing the incentive to try others.
Enhanced brand loyalty is especially important in downloading time to respond when competitors innovate and obtain product advantages. Note that brand loyalty is both one of the dimensions of brand equity and is affected by brand equity. The potential influence on loyalty from the other dimensions is significant enough that it is explicitly listed as one of the ways that brand equity provides value to the firm.
It should be noted that there exist similar interrelationships among the other brand equity dimensions. For example, perceived quality could be influenced by awareness a visible name is likely to be well made , by associations a visible spokesperson would only endorse a quality product , and by loyalty a loyal customer would not like a poor product.
In some circumstances it might be useful to explicitly include other; brand equity dimensions as outputs of brand equity as well as inputs, even though they do not appear in Figure Third, brand equity will usually allow higher margins by permitting both premium pricing and reduced reliance upon promotions. In many contexts the elements of brand equity serve to support premium pricing. Further, a brand with a disadvantage in brand equity will have to invest more in promotional activity, sometimes just to maintain its position in the distribution channel.
Fourth, brand equity can provide a platform for growth via brand extensions. Ivory, as we have seen, has been extended into several cleaning products, creating business areas that would have been much more expensive to enter without the Ivory name. Fifth, brand equity can provide leverage in the distribution channel. Like customers, the trade has less uncertainty dealing with a proven brand name that has already achieved recognition and associations.
A strong brand will have an edge in gaining both shelf facings and cooperation in implementing marketing programs. Finally, brand-equity assets provide a competitive advantage that often presents a real barrier to competitors. An association -- e. For example, another brand would find it difficult to compete with Tide for the "tough cleaning job" segment.
A strong perceived quality position, such as that of Acura, is a competitive advantage not easily overcome -- convincing customers that another brand has achieved quality superior to the Acura even if true will be hard. Achieving parity in name awareness can be extremely expensive for a brand with an awareness liability.
We now turn to the five categories of assets that underlie brand equity. As each is discussed, it will become clear that brand-equity assets require investment to create, and will dissipate over time unless maintained. Brand Loyalty For any business it is expensive to gain new customers and relatively inexpensive to keep existing ones, especially when the existing customers are satisfied with -- or even like -- the brand.
In fact, in many markets there is substantial inertia among customers even if there are very low switching costs and low customer commitment to the existing brand. Thus, an installed customer base has the customer acquisition investment largely in its past. Further, at least some existing customers provide brand exposure and reassurance to new customers. The loyalty of the customer base reduces the vulnerability to competitive action.
Competitors may be discouraged from spending resources to attract satisfied customers. Further, higher loyalty means greater trade leverage, since customers expect the brand to be always available. Awareness of the Brand Name and Symbols People will often download a familiar brand because they are comfortable with the familiar.
Or there may be an assumption that a brand that is familiar is probably reliable, in business to stay, and of reasonable quality.
A recognized brand will thus often be selected over an unknown brand. The awareness factor is particularly important in contexts in which the brand must first enter the consideration set -- it must be one of the brands that are evaluated. An unknown brand usually has little chance.
Perceived Quality A brand will have associated with it a perception of overall quality not necessarily based on a knowledge of detailed specifications. The quality perception may take on somewhat different forms for different types of industries.
However, it will always be a measureable, important brand characteristic. Perceived quality will directly influence download decisions and brand loyalty, especially when a downloader is not motivated or able to conduct a detailed analysis. It can also support a premium price which, in turn, can create gross margin that can be reinvested in brand equity. Further, perceived quality can be the basis for a brand extension.
If a brand is well-regarded in one context, the assumption will be that it will have high quality in a related context. A Set of Associations The underlying value of a brand name often is based upon specific associations linked to it. Associations such as Ronald McDonald can create a positive attitude or feeling that can become linked to a brand such as McDonald's. The link of Karl Malden to American Express provides credibility, and to some may stimulate confidence in the service.
The association of a "use context" such as aspirin and heart-attack prevention can provide a reason-to-download which can attract customers. A life-style or personality association may change the use experience: The Jaguar associations may make the experience of owning and driving one "different.
Hershey's chocolate milk provides the drink with a competitive advantage based upon Hershey's associations. Branding an Ingredient: Nutrasweet Perdue chickens and Chiquita bananas illustrate that a commodity product can be successfully branded.
Each has developed a formidable awareness level and quality reputation for a product that was thought not long ago to be a pure commodity. The Nutrasweet Company, a unit of Monsanto, faced an even more difficult task: The brand had to be strong enough to survive the expiration of the patent in the early s. Their strategy was to create a consumer-level brand name drawing upon the words "nutrition" and "sweet" and symbol the familiar swirl and establish it so firmly that consumers will prefer products with Nutrasweet over the same products from a low-cost competitor.
Although Nutrasweet has advertised extensively, the cornerstone of the brand-creation effort has been their insistence that each of the some 3, products that use Nutrasweet display the brand name and symbol. The brand has been extremely successful in the market: Some fascinating questions emerge: How strong will the Nutrasweet brand be in the face of cheap substitutes?
What will Nutrasweet do to help retain consumer loyalty? Can the firm repeat its success with its newest commodity, the fat substitute Simplesse?
Will a similar strategy work again? If a brand is well positioned upon a key attribute in the product class such as service backup or technological superiority , competitors will find it hard to attack.
If they attempt a frontal assault by claiming superiority via that dimension, there will be a credibility issue. It would be difficult for a competing department store to make credible a claim that it has surpassed Nordstrom on service. They may be forced to find another, perhaps inferior, basis for competition. Thus, an association can be a barrier to competitors. Other Proprietary Brand Assets The last three brand-equity categories we have just discussed represent customer perceptions and reactions to the brand; the first was the loyalty of the customer base.
The fifth category represents such other proprietary brand assets as patents, trademarks, and channel relationships. Brand assets will be most valuable if they inhibit or prevent competitors from eroding a customer base and loyalty.
These assets can take several forms. For example, a trademark will protect brand equity from competitors who might want to confuse customers by using a similar name, symbol, or package.
A patent, if strong and relevant to customer choice, can prevent direct competition. A distribution channel can be controlled by a brand because of a history of brand performance.
Assets, to be relevant, must be tied to the brand. The firm could not simply access the shelf space by replacing one brand with another. If the value of a patent could easily be transferred to another brand name, its contribution to brand equity would be low. Similarly, if a set of store locations could be exploited using another brand name, they would not contribute to brand equity.
Developing approaches to placing a value on a brand is important for several reasons. First, as a practical matter, since brands are bought and sold, a value must be assessed by both downloaders and sellers. Which approach makes the most sense? Second, investments in brands in order to enhance brand equity need to be justified, as there always are competing uses of funds. A bottom-line justification is that the investment will enhance the value of the brand.
Thus, some "feel" for how a brand should be valued may help managers address such decisions. Third, the valuation question provides additional insight into the brand-equity concept. What is the value of a brand name? What would happen to those firms if they lost a brand name but retained the other assets associated with the business?
What would it cost in terms of expenditures to avoid damage to their business if the name were lost? Would any expenditure be capable of avoiding an erosion, perhaps permanent, to the business?
After going through the effort to change the name, their conclusion was that they might have been better off simply to enter the business without downloading the GE line. Clearly, the GE name was an important part of the business.
At least five general approaches to assessing the value of brand equity have been proposed. One is based on the price premium that the name can support. The second is the impact of the name on customer preference. The third looks at the replacement value of the brand. The fourth is based on the stock price. The fifth focuses on the earning power of a brand.
We shall now consider these in the listed order. Price Premiums Generated by the Brand Name Brand equity assets such as name awareness, perceived quality, associations, and loyalty all have the potential to provide a brand with a price premium.
The resulting extra revenue can be used for example to enhance profits, or to reinvest in building more equity. One approach to the measurement of a price premium attached to a brand is simply to observe the price levels in the market. What are the differences, and how are they associated with different brands?
For example, what are the price levels of comparable automobiles? How much are the different brands depreciating each year? How responsive is the brand to a firm's own price changes, or to price changes of competitors? Price premiums can also be measured through customer research. Customers can be asked what they would pay for various features and characteristics of a product one characteristic would be the brand name.
Termed a dollarmetric scale, this survey device provides a direct measure of the value of the brand name. Using a variant of the dollarmetric measure, American Motors tested a car then called the Renault Premier by showing an "unbadged" unnamed model of it to customers and asking them what they would pay for it.
The same question was then asked with the car identified by various names. When Chrysler bought American Motors the car became the Chrysler Eagle Premier, and it was sold for a price close to the level suggested by the study. Additional insight is acquired by obtaining downloader-preference or download-likelihood measures for different price levels.
In such a study, the resistance of a downloader preference to price decreases of competition, and the responsiveness to a brand's own decrease in price, can be determined. A high-equity brand will lose little share to a competitor's lower price, and will gain share when its own relative price is decreased up to a point.
Trade-off conjoint analysis is still another approach. Here, respondents are asked to make trade-off judgments about brand attributes. For example, suppose that the attributes of a computer included on-site service supplied vs. A respondent would prefer on-site service, a low price, and an established brand name. To determine the relative value of each, the respondent would be asked to choose between: Circle with Service The output of trade-off analysis would be a dollar value associated with each attribute alternative.
The dollar value of the brand name would thus be created in the context of making judgments relative to other relevant attributes of the product class. Given that a price premium can be obtained, the value of the brand name in a given year would be that price differential multiplied by the unit sales volume. Discounting these cash flows over a reasonable time horizon would provide one approach to valuing the brand. Brand Name And Customer Preference Considering the price premium earned by a brand may not be the best way to quantify brand equity especially for product classes like cigarettes and air travel where prices are fairly similar.
An alternative is to consider the impact of the brand name upon the customer evaluation of the brand as measured by preference, attitude, or intent to download. What does the brand name do to the evaluation? And when Armstrong tested a line of tiles against comparable products, the Armstrong name resulted in the preference going from to The issue often is how much the brand name provides to market share and brand loyalty.
The value of the brand would then be the marginal value of the extra sales or market share that the brand name supports. The profits on the lost marginal sales would represent the value of the brand. The size of any price premium and the preference rating of a brand can both be measured and tracked over time using survey research. They can become one basis of tracking brand equity. However, this approach is static, in that it looks at the current power of the brand -- a view which does not necessarily take into account the future impact of changes such as improvements in quality.
Replacement Cost Another perspective is the cost of establishing a comparable name and business. Simon and Mary W.
Sullivan, is to use stock price as a basis to evaluate the value of the brand equities of a firm. The argument is that the stock market will adjust the price of a firm to reflect future prospects of its brands. The approach starts with the market value of the firm, which is a function of the stock price and the number of shares.
The replacement costs of the tangible assets such as plant and equipment, inventories and cash are subtracted. The balance, intangible assets, is apportioned into three components: Brand equity is assumed to be a function of the age of a brand and its order of entry into the market an older brand has more equity , the cumulative advertising advertising creates equity , and the current share of industry advertising current advertising share is related to positioning advantages.
To estimate the model, the stock-market valuation of firms less the value of their tangible assets was related to the indicators of the three types of intangible assets.
The resulting estimates allowed an estimate of the brand equities for each firm. The model operates at the level of a publically traded firm and thus will be most valid and useful for a firm with a dominant brand. However, it does have the attraction of being based upon the stock price, which reflects future rather than past earnings, and generates some interesting results.
Table shows the average brand equity as a percent of firm tangible asset value by industry, based upon data for firms. As expected, there is little in the way of brand-equity in industries such as metals and primary building products, whereas firms in the apparel and tobacco industries have substantial brand equities.
Applying the model to specific firms suggests that Dreyers Ice Cream which uses the Edy's name in Eastern markets and Smucker's have high levels of brand equity relative to their tangible assets and Pillsbury has a lower, but still very substantial, level.
An analysis of the soft drink industry using this model dramatically demonstrates how marketing actions can affect brand equity.
The problem is how to provide such an estimate. One approach is to use the long-range plan of the brand. Simply discount the profit stream that is projected. Such a plan should take into account brand strengths and their impact upon the competitive environment. One firm that uses the brand's plan to provide a value for brand equity adjusts the manufacturing costs to reflect the industry average rather than the actual costs.
The logic is that any above or below average efficiency should be credited to manufacturing and not to brand equity. Another approach that can be used even when a brand profit plan is unavailable or unsuitable is to estimate current earnings and apply an earnings multiplier. The earnings estimate could be current earnings with any extraordinary charges backed out.
If the current earnings are not representative because they reflect a down or up cycle, then some average of the past few years might be more appropriate. If the earnings are negative or low due to correctable problems, then an estimate based upon industry norms of profit as a percent of sales might be useful. The earnings multiplier provides a way to estimate and place a value upon future earnings. For example, a multiplier range for a brand might be 7 to 12 or 16 to 25 depending upon the industry.
To determine the actual multiplier value within that range, an estimate of the competitive advantage of the brand is needed. Will the brand earnings strengthen over time and generally be above the industry average, or will they weaken and be below average? The estimate should be based upon a weighted average of an appraisal of the brand on each of the five dimensions of brand equity.
Brand Loyalty. What are the brand-loyalty levels by segment? Are customers satisfied? What do "exit interviews" suggest? Why are customers leaving? What is causing dissatisfaction? What do customers say are their problems with downloading or using the brand? What are the marketshare and sales trends? How valuable an asset is brand awareness in this market? What brand awareness level exists as compared to that of competitors? What are the trends? Is the brand being considered? B7 A22 The Physical Object Pagination xiii, p.
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