Brand Equity Management System

2. Analyzing Brand Positioning and Brand Planning

Determining the desired brand knowledge structures involves positioning a brand in the minds of consumers. According to the customer-based brand equity model, deciding on a positioning requires determining a frame of reference — by identifying the target market and the nature of competition – and the ideal point-of-parity and point-of-difference brand associations. Deciding on these four ingredients will then determine the brand positioning and dictate the desired brand knowledge structures. Points-of-difference are those associations that are unique to the brand that are also strongly held and favorably evaluated by consumers. Points-of-parity, on the other hand, are those associations that are not necessarily unique to the brand but may in fact be shared with other brands. Category point-of-parity associations are those associations that consumers view as being necessary to be a legitimate and credible product offering within a certain category. Competitive point-of-parity associations are those associations designed to negate competitor’s points-of-differences.

Once the brand positioning is decided on as part of the brand audit or in some other way, a marketing program can be put into place to build the desired brand knowledge structures and maximize the potential benefits that may result. Brand planning involves designing marketing programs to create the desired brand knowledge structures and sources and outcomes of brand equity. Once marketers have a good understanding from the brand audit of current brand knowledge structures for their target consumers and have decided on the desired brand knowledge structures for optimal positioning, additional research still may be necessary to test out the viability of alternative tactical programs to achieve that positioning. As part of the brand planning process, there may be a number of different possible marketing programs that, at least on the surface, may be able to achieve the same goals, and additional research may be useful to assess their relative effectiveness and efficiency. Employing brand tracking studies. To check the success of the marketing program that emerges from the brand plan, tracking studies are often conducted. Whereas the brand audit is done on a non-recurring basis to help sharpen or change the brand positioning, tracking studies involve information collected from consumers on a routine basis over time. Tracking studies can achieve three major objectives. First, tracking studies can monitor consumer brand knowledge and brand awareness and the strength, favorability, and uniqueness of brand associations that represent key sources of brand equity. Second, tracking studies can also measure relevant outcomes of brand equity such as overall attitudes or preference for the brand, reported past usage and intended future usage, and price sensitivity. Finally, tracking studies can also analyze the marketing program with respect to its effects on the current brand image and how it can help to achieve the desired brand image. In summary, tracking studies can provide useful information as to how a brand is doing as well as why. Creating a brand equity management system. To fully benefit from the research findings that emerge from brand audits and brand tracking studies and to provide proper control and direction, a brand equity management system needs to be implemented within the firm. Such a system would include minimally the following three ingredients:

 1) Brand Equity Charter, 2) Brand Equity Report, and 3) Brand Overseers.

  1. Brand Equity Charter:The company view of brand equity should be formalized into a document, the Brand Equity Charter that provides relevant guidelines to marketing managers. This document should: 1) Define the brand equity concept and explain its importance; 2) specify what the assumed equity is for all relevant brands (e.g., in terms of key associations); 3) explain how brand equity is measured by the firm in terms of the content and structure of tracking studies and the resulting Brand Equity Reports (described below); and 4) suggest how brand equity should be managed in terms of general principles. The Charter should be updated annually to identify new opportunities and risks and to fully reflect information gathered by the brand inventory and brand exploratory as part of any brand audits.
  2. Brand Equity Report: The results of the tracking survey and other relevant outcome measures for the brand should be assembled into Brand Equity Reports that are distributed to management on a regular basis (monthly, quarterly, or annually). The report ideally would combine relevant tracking information with other internal information and effectively integrate all these different measures into an interpretable and actionable form. In this way, the Brand Equity Report would provide descriptive information as to what is happening within a brand as well as diagnostic information as to why it is happening. With advances in computer technology, it will be increasingly easy for firms to place the information that makes up the Brand Equity Report “on-line” so that it can be accessible to managers through the firm’s intranet or some other means. Brand Overseers. Finally, a group headed by Director(s) or Vice-President(s) of Brand Management or Brand Equity should be appointed within the organization. This group would be responsible for overseeing the implementation of the Brand Equity Charter and Brand Equity Reports. Their task would be to make sure that, as much as possible, product and marketing actions across divisions and geographical boundaries are done in a way that reflected the spirit of the Brand Equity Charter and the substance of the Brand Equity Report to maximize the short-term performance and long-term equity of brands
  3. Brand-product matrix: The brand-product matrix is a graphical representation of all the brands and products sold by the firm. The matrix or grid has the brands for a firm as rows and the corresponding products as columns: The rows of the matrix represent brand-product relationships and capture the brand extension strategy of the firm with respect to a brand; the columns of the matrix represent product-brand relationships and capture the brand portfolio strategy in terms of the number and nature of brands to be marketed in each category.

Brand-product relationships capture the brand extension strategy of the firm. Brand extensions are when firms use existing brand names to enter new categories (e.g., Diet Coke, Swiss Army watches, and Ivory Shampoo). Potential extensions must be judged by how effectively they leverage the existing brand equity to the new product, as well as how well they, in turn, contribute to the equity of the existing brand. In other words, what is the level of awareness likely to be and what is the expected strength, favorability, and uniqueness of brand associations of the particular extension product? At the same time, how does the introduction of the extension affect the prevailing levels of awareness and strength, favorability, and uniqueness of brand associations of the existing products associated with the brands? In general, the closer the “fit” or similarity of an extension, the more likely it is that parent brand associations “transfer” to an extension but, at the same time, the more likely it is that any unfavorable reactions to the extension will produce negative feedback effects to the parent brand.

Product-brand relationships capture the brand portfolio strategy in terms of the number and nature of brands to be marketed in each category. A firm may offer multiple brands in a category to attract different — and potentially mutually exclusive — market segments. Brands can also take on very specialized roles in the portfolio — as flanker brands to protect more valuable brands, as low-end entry level brands to expand the customer franchise, as high-end prestige brands to enhance the worth of the entire brand line, or as cash cows to milk all potentially realizable profits. As part of the long-term perspective in managing a brand portfolio, it is necessary that the role of different brands and the relationships among different brands in the portfolio be carefully considered over time. In particular, a brand migration strategy needs to be designed and implemented so that consumers understand how various brands in the portfolio can satisfy their needs as they potentially change over time or as the products and brands themselves change over time (e.g., BMW’s 3, 5, and 7 series). Brand hierarchy. The brand hierarchy reveals an explicit ordering of brands by displaying the number and nature of common and distinctive brand components across the firm’s products. By capturing the potential branding relationships among the different products sold by the firm, a brand hierarchy is a useful means to graphically portray a firm’s branding strategy. One simple representation of possible brand components and levels of a brand hierarchy, from top to bottom, are:

  1. Corporate or company brand,
  2. Family brand,
  3. Individual brand,
  4. Individual item or model modifier,
  5. Product descriptor.

Brand elements at each level of the hierarchy may contribute to brand equity through their ability to create awareness and foster strong, favorable, and unique brand associations. The challenge in setting up the brand hierarchy and arriving at a branding strategy is: 1) To design the proper brand hierarchy in terms of the number and nature of brand elements to use, if at all, at each level and 2) to design the optimal supporting marketing program in terms of creating the desired amount of brand awareness and type of brand associations at each level.

In terms of designing a brand hierarchy, the number of different levels of brands that will be employed and the relative emphasis or prominence that brands at different levels will receive when combined to brand any one product must be defined. In general, the number of levels employed typically is at least two or even three. For example, sub-brand strategies combine brands from two different levels. One particularly useful sub-branding strategy is where an existing brand name (either the company or family brand name) is combined with a new brand name (e.g., Levi’s Dockers). Such a strategy offers two potential benefits in that it can both: 1) allow for leverage of secondary associations by facilitating access to perceptions and preferences toward the existing brands (e.g., the quality and credibility perceptions of Levi’s), and 2) allow for the creation of specific brand beliefs (e.g., that Dockers are psychologically and physically comfortable 100% cotton pants). When multiple brand names are used, as with a sub-brand, the relative prominence of a brand name as compared to other brand names determines its strength of association to the product. Brand visibility and prominence will depend on factors such as the order, size, color, and other aspects of physical appearance of the brand name.

In terms of designing the supporting marketing program in the context of a brand hierarchy and sub-branding situation, the desired awareness of a brand at any level will dictate the relative prominence of the brand and the extent to which associations linked to the brand will transfer to the product. In terms of building brand equity, determining which associations to link at any one level should be based on principles of relevance and differentiation: Associations should be created that are relevant to as many brands nested at the level below (e.g., Sony, 3M, and Microsoft with “innovation”) and any brands at the same level should be clearly distinguished. Corporate or family brands can establish a number of valuable associations that can help to differentiate the brand such as common product attributes, benefits, or attitudes; people and relationships; programs and values; and corporate credibility (i.e., perceived expertise, trustworthiness, and likability). A corporate image will depend on a number of factors, such as: 1) the products a company makes, 2) the actions it takes, and 3) the manner with which it communicates to consumers. Communications may focus on the corporate brand in the abstract or on the different products making up the brand line.

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