Brand value: assets and liabilities

Brand equity has been defined as a set of brand assets and liabilities linked to a brand, its name and its symbol that are added to or subtracted from the value provided by a product or service to a company and / or customers of that company . If the brand or symbol were to change, some or all of the assets or liabilities could be affected and even lost, although some could change to a new name and symbol. The assets and liabilities on which brand equity is based, according to Aaker (1991), will differ depending on the context. However, they can be grouped into five categories:

1. Brand loyalty

2. Brand (knowledge)

3. Perceived quality

4. Brand associations

5. Other proprietary brand assets

Brand loyalty –

For any business, it is expensive to gain new customers and relatively inexpensive to retain existing ones, especially when existing customers are satisfied or happy with the brand. Competitors may even be discouraged from expending resources to attract already satisfied customers. Also, higher loyalty means higher business leverage; as customers expect the brand to be always available.

Brand name awareness –

People will often buy a family brand because they are comfortable with the familiarity or assume that a family brand is probably reliable and of reasonable quality. When consumers are uncomfortable with a product name, they will avoid the product, and that results in lost sales. Brand names should be easy for customers to see, and this involves pronunciation and spelling.

Perceived quality –

A brand will have an associated perception of general quality, which is not necessarily based on knowledge of detailed specifications. The perception of quality can take somewhat different forms for different types of industries. Perceived quality means something different for Compaq or IBM than it does for Coca-Cola or Pepsi. Perceived quality will directly influence purchasing decisions and brand loyalty, especially when a buyer is unmotivated or unable to perform detailed analysis. You can also bear a premium price, which, in turn, can create a gross margin that can be reinvested in brand equity. Also, perceived quality can be the basis for a brand extension. If a brand is well considered in one context, it will be assumed to be of high quality in a related context.

Brand associations –

The underlying value of a brand is often based on specific associations tied to it. Partnerships, for example, of the Jaguar car brand can make the experience of owning and driving one “different.” If a brand is well positioned on a key attribute in the product class (such as technological superiority), competitors will have a hard time attacking. If they attempt a frontal assault claiming superiority through that dimension, there will be a credibility problem. They may be forced to find another, perhaps lower, basis for competition. Therefore, a partnership can be a barrier to competitors.

Other proprietary brand assets –

This fifth category represents other proprietary brand assets such as patents, trademarks, and channel relationships. Brand assets will be more valuable if they inhibit or prevent competitors from eroding customer base and loyalty. These assets can take various forms. For example, a trademark will protect brand equity from competitors who want to mislead customers by using a similar name, symbol, or package. A patent, if it is strong and relevant to the customer’s choice, can prevent direct competition. A distribution channel can be controlled by a brand due to a history of brand performance.

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