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1. Explain the concept of brand equity from both the company’s and the customer’s
2. Describe the positive outcomes that result from enhancing brand equity.
3. Describe the different models of brand equity from the customer’s perspective.
4. Understand how marcom efforts must influence behavior and achieve financial
The basic issues addressed in this chapter are these: What can marketing communicators do to
enhance the equity of their brands and, beyond this, affect the behavior of their present and
prospective customers? Also, how can marketing communicators justify their investments in
advertising, promotions, and other marcom elements and demonstrate financial accountability?
The concept of brand equity is explained from both the company’s perspective and the
consumer’s perspective. The firm-based viewpoint of brand equity focuses on outcomes
extending from efforts to enhance a brand’s value to its various stakeholders and discusses
various outcomes: (1) achieving a higher market share, (2) increasing brand loyalty, (3) being
able to charge premium prices, and (4) earning a revenue premium. From the perspective of the
customer, a brand possesses equity to the extent that they are familiar with the brand and have
stored in their memory favorable, strong, and unique brand associations. Brand equity from the
customer’s perspective consists of two forms of brand-related knowledge: (1) brand awareness
and (2) brand image. The chapter covers three ways by which brand equity is enhanced and
labels these the (1) speak-for-itself approach, (2) message-driven approach, and (3) leveraging
approach. The chapter then discusses ten traits shared by the world’s strongest brands.
The latter portion of the chapter covers the concept of ROMI, or return on marketing
investments. Several difficulties of measuring marcom effectiveness are discussed: (1) choosing
a metric, (2) gaining agreement, (3) collecting accurate data, and (4) calibrating specific effects.
The chapter then discusses marketing-mix modeling (i.e., multivariate regression analysis) and
how it can assist managers in determining the effect of each marcom element on sales volume.
Recall from Chapter 1 the framework for thinking about all aspects of the marcom
process (see Figure 1.3). The framework included fundamental decisions, implementation
decisions, two types of outcomes and an evaluation program. This chapter focuses on the
desired outcomes of marcom efforts.
II. Brand Equity
A brand represents a ―name, term, sign, symbol, or design, or a combination of them
intended to identify the goods and services of one seller or group of sellers and to
differentiate them from those of competition.‖ A brand includes what is known as trade
dress, which refers to the appearance and image of the product, including its packaging,
labeling, shape, color, sounds, design, lettering, and style. Brand equity is the goodwill
that an established brand has built up over its existence. It can be considered from both
the vantage point of the organization and the customer.
A. A Firm-Based Perspective on Brand Equity
The firm-based view of brand equity focuses on outcomes extending from efforts to
enhance a brand’s value to its various stakeholders. As the value, or equity, of a brand
increases, various positive outcomes result including achieving a higher market share,
increasing brand loyalty, being able to charge premium prices, and earning a revenue
premium, which is defined as the revenue differential between a branded item and a
corresponding private labeled item. In addition to the revenue premium, there may
also be a taste premium, which is the differential between a customer’s preference for
the branded versus private label item. Table 2.1 presents the results of a study of
B. Brand Equity Models
There are several models of brand equity.
1. Brand Asset Valuator
Young & Rubicam (Y&R) developed a model of brand equity entitled the
BrandAsset® Valuator (BAV). It is composed of four components or pillars of
brand equity. These include differentiation, relevance, esteem, and knowledge.
Figure 2.1 illustrates the BAV Power Grid.
2. Dimensions of Brand Knowledge
This brand equity model consists of two forms of brand-related knowledge: brand
awareness and brand image, as shown in Figure 2.2. Brand awareness is an issue
of whether a brand name comes to mind when consumers think about a particular
product category and the ease with which the name is evoked. Figure 2.2 shows
two levels of awareness: brand recognition and brand recall. The second
dimension of consumer-based brand knowledge is a brand’s image. Brand image
represents the associations that are activated in memory when people think about
a particular brand. These associations can be conceptualized in terms of type,
favorability, strength, and uniqueness.
3. The Brand-Awareness Pyramid
The progression of brand awareness is from first awareness to recognition, to
recall, and to TOMA (top-of-mind awareness).
4. Brand-Related Personality Dimensions
Brands can have personalities just like people. The five brand-related personality
dimensions include sincerity, excitement, competence, sophistication, and
C. Relationships among Brand Concepts, Brand Equity, and Brand Loyalty
Brand concept is the specific meaning that brand managers create and communicate
to their target market. Brand concept management represents the analysis, planning,
implementation, and control of a brand concept throughout the life of a brand. These
are elaborated on in Chapter 5, but include functional needs, symbolic needs, and
experiential needs. Figure 2.3 illustrates brands and their management.
D. Strategies to Enhance Brand Equity
There are three ways by which brand equity is enhanced: (1) speak-for-itself
approach, (2) message-driven approach, and (3) leveraging approach.
1. Enhancing Equity by Having Brand Speak for Itself
By trying and using brands, consumers learn how good (or bad) they are and what
benefits they are (in)capable of delivering. Marketers help the brand to speak for
itself through point-of-purchase materials and appealing sales promotions.
2. Enhancing Equity by Creating Appealing Messages
Marcom practitioners can build advantageous associations via the dint of repeated
claims about the features a brand possesses and/or benefits it delivers. This tack is
effective if the marcom message is creative, attention getting, and believable.
3. Enhancing Equity via Leveraging
Brand associations can be shaped and equity enhanced by leveraging positive
associations already contained in the world of people, places, and ―things‖ that are
available to consumers.
a. Leveraging Associations from other Brands – alliances between two brands
can enhance both brands’ equity and profitability. This is called co-branding.
b. Leveraging Associations from People – aligning a brand with people, such as
employees or endorsers, can be both advantageous and disastrous as the brand
is linked with their reputation.
c. Leveraging Associations from Things – events and causes provide
opportunities for linkages with brands.
d. Leveraging Associations from Places – the channel through which a brand is
carried (Walmart vs. Nordstrom) or country-of-origin both serve as possible
associations through which a brand can enhance their image.
E. What Benefits Result from Enhancing Brand Equity?
Brand loyalty determines the long-term growth and profitability of a brand.
F. Characteristics of World-Class Brands
The biannual EquiTrend survey uses three main dimensions to determine highly
successful brands: familiarity with a brand, quality and likelihood of purchasing a
product. Combining the three dimensions gives a brand equity score. The 10 world
class brands identified in Table 2.2 include M&M’s, Hershey’s Kisses, Arm &
Hammer Baking Soda, Reese’s Peanut Butter Cups, Hershey’s Milk Chocolate,
Kleenex Facial Tissues, Campbell’s Soups, Google, and Crayola Crayons. The annual
Interbrand ranking determines 100 top global brands by using (1) the percentage of a
company’s revenue that can be credited to a brand, (2) the strength of a brand in
terms of influencing customer demand at the point of purchase, and (3) the ability of
the brand to secure continued customer demand. Top brands identified in Table 2.3
include Coca-Cola, IBM, Microsoft, Google, GE, McDonald’s, Intel, Nokia, and
III. Affecting Behavior and Achieving Marcom Accountability
Marcom efforts should be directed, ultimately, at affecting behavior rather than stopping
with enhancing equity. Marcom’s objective is to ultimately affect sales volume and
revenue and return on marketing investment (ROMI).
A. Difficulty of Measuring Marcom Effectiveness
Several reasons account for the complexity of measuring marcom effectiveness
including the difficulty in:
1. Choosing a Metric
2. Gaining Agreement
3. Collecting Accurate Data
4. Calibrating Specific Effects
B. Assessing Effects with Marketing Mix Modeling
Marketing mix modeling employs statistical techniques (e.g., multivariate regression
analysis) to estimate the effects that the various advertising and promotion elements
have in driving sales volume. An example is presented.
Are There Too Many Social Media Brands?
Trying to keep up with the latest social media brands and content can be overwhelming. Many
social media brands are vying to be the ―owners‖ of different social media spaces. Brands and
people can create lifestreams from the content they share in social spaces. It’s difficult for brands
to stand out in social spaces just as it is in traditional media. This chapter illustrates how
challenging building brand equity can be.
Harley-Davidson—An Iron Horse for Rugged Individualists, Including Females!
Past Harley-Davidson ads have depicted a driverless Harley-Davidson motorcycle on an open
road in the American West. The message suggested freedom and independence. The Harley-
Davidson brand is a strong one with a deep emotional bond to its customers. Females are rapidly
joining the Harley-Davidson community.
Neuromarketing and the Case of Why Coca-Cola Outsells Pepsi
The infamous ―Pepsi Challenge‖ was conducted with the use of neuromarketing, which is a
specific application of the field of brand research called neuroscience. Functional magnetic
resonance images (fMRIs) can scan the brains of individuals employing their various senses
upon exposure to stimuli. Brain scans reveal which areas of the brain are most activated in
response to external stimuli. In the new-fangled Pepsi Challenge, the reward center of the brain
revealed a much stronger preference for Pepsi versus Coke when study participants were
unaware of which brand they had tasted. However, the result was opposite when participants
knew the name of the brand they were about to taste. In the non-blind taste test, a different region
of the brain was more activated and Coca-Cola was the winner. Activation of the area of the
brain associated with cognitive functions revealed that participants now preferred Coke. The
inferred explanation is a difference in brand images, with Coke possessing the more attractive
image earned through years of effective marketing and advertising effort.
The World’s Perception of America
Nations can be thought of as brands. Firms that use ―country of origin‖ labels are affected by the
positive or negative image of that country. Many countries actively market themselves with the
goal of forging favorable and strong associations in the minds of people around the world. The
Nations Brand Index (NBI) is a barometer of global opinion toward over 35 countries. Each
quarter, 25,000 people are surveyed on their perceptions of these countries. Respondents are
asked questions about each country in six areas:
1. Exports—satisfaction with products and services produced
2. People—thoughts and feelings about the people
3. Governance—perceptions of whether the country can be trusted to make responsible
decisions and to uphold international peace and security.
4. Tourism— perceptions of a country’s natural beauty and historical heritage
5. Culture and Heritage—perceptions and feelings of a country’s heritage and its culture
6. Immigration and Investment—willingness to live, work, and/or pursue education.
A nation’s ―brand‖ image is the sum of its scores on these six dimensions. A country’s image,
like any brand image, can be changed. It is important as a matter of international relations and
economics that a country has a positive image.
Answers to Discussion Questions
1. With reference to the Marcom Insight segment that opened the chapter and in view of the
detailed section on brand equity later in the chapter, explain why brand awareness is a
necessary but insufficient indicator of brand equity.
Brand equity consists of two forms of brand-related knowledge: brand awareness and brand
image. Without awareness consumer cannot form opinions about a brand. The opinion, or
brand image is based upon the favorability, the strengths, and the uniqueness of the
associations consumers have of a brand. Those associations maybe based on the actual
attributes of the brand, the benefits they receive from it, and their overall evaluation or
attitude toward the brand.
2. Using the framework in Figure 2.2, describe all personal associations that the following
brands hold for you: (a) Harley-Davidson motorcycles, (b) Groupon couponing service, (c)
Burton snowboards, (d) The Onion newspaper, (e) basketball player LeBron James, and (f)
the MINI Cooper automobile
Brand image can be thought of in terms of the types of associations that come to the
consumer’s mind when contemplating a particular brand. An association is simply the
particular thoughts and feelings that a consumer has about a brand, and students’ answers
will vary for this question. These associations can be conceptualized in terms of type,
favorability, strength, and uniqueness. The type of brand associations can be based on the
brand’s attributes, both product-related (e.g., color, size, design features) and non-product-
related (e.g., price, packaging, user and usage imagery), the brand’s benefits (e.g., functional,
symbolic, experiential), and consumers’ overall evaluation, or attitude, toward the brand.
3. An ex-CEO of PepsiCo, was quoted in the text as saying, ―In my mind the best thing a person
can say about a brand is that it’s their favorite.‖ Identify two brands that you regard as your
favorites. Describe the specific associations that each of these brands holds for you and thus
why they are two of your favorites.
Students should realize that associations are not just with immediate obvious product benefits
(most will probably name some snack food as one) such as taste, but also with other product
benefits such as packaging (a water bottle with a sports cap), accessibility or convenience
(e.g., a candy machine near their dorm room or class), price (e.g., they can afford it), and
usage context (e.g., coffee with friends). The ability of products to make the consumer an
“expert” is also an interesting benefit for students who name some health and beauty aid,
such as a hair shampoo, and give a very specific benefit of how the product works for them
(e.g., helps relax tangled hair).
4. Provide examples of brands that in your opinion are positioned in such a way as to reflect the
five personality dimensions: sincerity, excitement, competence, sophistication, and
Sincerity: Hallmark Greeting Cards
Excitement: Victoria’s Secret
Competence: Norton Anti Virus
Ruggedness: Timberland boots
5. Provide several examples of co-branding or ingredient branding other than those presented in
Some examples of co-branding include: Hershey Foods and General Mills making the
breakfast cereal ―Reese’s Peanut Butter Puffs,‖ MicroSoft and NBC (MSNBC), Visa and the
United Airlines Mileage Plus Program. Some examples of ingredient branding include:
Gore-Tex material in sport and outdoor clothing, Splenda in the new Coke Zero, Teflon in
cookware, Thinsulate in clothing, Kevlar in clothing, and NutraSweet in soft drinks.
6. When discussing brand equity from the firm’s perspective, it was explained that as the equity
of a brand increases, various positive outcomes result: (1) a higher market share, (2)
increased brand loyalty, (3) ability to charge premium prices, and (4) capacity to earn a
revenue premium. Select a brand you are particularly fond of and explain how its relatively
greater equity compared to a lesser brand in the same product category is manifest in terms of
each of these four outcomes.
Students can select any number of brands to answer this question, and one they might select
is Coca-Cola soft drink. Coke has the highest market share in the cola category, some
consumers will only purchase Coke instead of other brands of cola, even if they are on sale,
Coke is more expensive than lesser brands, such as RC Cola and store brands, and thus, Coke
enjoys a revenue premium. Revenue premium is defined as the revenue differential between
a branded item and a corresponding private labeled item, so students should discuss the brand
they selected with respect to private label, or store, brands. With revenue equaling the
product of a brand’s net price x volume, a branded good enjoys a revenue premium over a
corresponding private labeled item to the degree it can charge a higher price and/or generate
7. Compare and contrast the speak-for-itself and message-driven approaches to enhancing brand
With the speak-for-itself approach, consumers form brand-related associations (positive or
negative) merely by consuming a brand absent any significant brand knowledge prior to the
usage experience. Thus through the consumption experience, the brand informs consumers of
its quality, desirability, and suitability for satisfying their consumption-related goals.
With the message-driven approach marcom practitioners attempt to build positive brand-
related associations through creative messages that are attention getting, believable, and
Each of these approaches should be independent. Through a consumers first-hand experience
with a brand it should speak-for-itself with a message consistent with the message-driven
8. Select a brand of vehicle (automobile, truck, motorcycle, SUV, etc.) and with this brand
describe the type, favorability, strength, and uniqueness of brand associations that you hold
in memory for this brand. Do the same for the brand’s differentiation, relevance, esteem, and
knowledge that hit holds for you.
Students should answer this question along the lines of the illustration given in the chapter of
Henry and the McDonald’s fast-food chain.
9. What are your reactions to the application of neuroscience to marketing (neuromarketing)
that was described in the IMC Focus? Do you consider this technique ethical? Do you fear
that with the knowledge obtained from its application marketers will be able to manipulate
The application of neuroscience to marketing described in the IMC Focus really serves to
illustrate the importance of building brand equity through various marketing and marcom
processes. It seems to validate that consumers’ preferences can be influenced by these
activities. The IMC Focus illustrated that consumers preferred Pepsi when they did not know
the brands they tasted, but they preferred Coke when they did know, seemingly because of all
the strong and positive associations they had with the Coke brand. The real ethical question
comes down to whether or not it is ethical for marketing to influence consumers’ preferences
for a brand they would not have chosen based on actual experience but no knowledge of
10. Describe the leveraging strategy for enhancing brand equity. Take a brand of your choice
and, with application of Figure 2.5, explain how that brand could build positive associations,
thereby enhancing its equity, by linking itself to (a) places, (b) things, (c) people, and (d)
other brands. Be specific.
The leveraging strategy for enhancing brand equity holds that brand associations can be
shaped and equity enhanced by leveraging positive associations already contained in the
world of people, places, and ―things‖ that are available to consumers. The culture and social
systems in which marketing communications takes place are loaded with meaning. Through
socialization, people learn cultural values, form beliefs, and become familiar with the
physical manifestations, or artifacts, of these values and beliefs. Marcom practitioners can
leverage meaning, or associations, for their brands by connecting them with other objects that
already possess well-known meaning. Students can select any brand to answer this question,
and they should be aware that (a) ―places‖ can refer to country of origin or channels, (b)
―things‖ include events, causes, and third party endorsements, (c) ―people‖ refers to
employees and endorsers, and (d) ―other brands‖ includes things such as alliances,
ingredients, company, and extensions.
11. What does it mean to say that marketing communications should be directed, ultimately, at
affecting behavior rather than merely enhancing equity? Provide an example to support your
Marketing communications are directed communications from a marketer to a target
audience with a goal of changing or affecting behaviors. While enhancing equity is important
as it implies that consumers have awareness of, and favorable attitudes toward a brand, it
does not necessarily mean that consumers will act. As with the example in the text,
consumers are aware of the dangers of smoking, and believe that smoking is bad for them;
yet, new consumers take up smoking every year. The real goal of anti-smoking campaigns is
to convince people to either quit smoking or not to take up smoking at all.
12. Why is demonstrating financial accountability an imperative for marcom practitioners?
Two primary motivations underlie the increased focus on measuring marketing performance.
The first is from the CEO, the Board, and other executives putting greater demand for
accountability on the marketing function. A second reason is that CMOs must get better at
what they do because it is becoming increasingly difficult to justify expenditures without
knowledge of what works and what doesn’t.
13. Assume that your college or university has had difficulty getting nonstudent residents in the
local community to attend basketball games. Your school’s athletic director requests that an
organization you belong to (say, a local chapter of the American Marketing Association)
develop an advertising program that is to be targeted to local residents to encourage them to
attend basketball games. What measures/metrics could you use to assess whether the
advertising program you developed has been effective? How might you assess the ad
One metric could be the number of non-student tickets sold for each game throughout the
season. One way to assess the effects of the marcom program is to use marketing-mix
modeling. The data for each period could be the non-student attendance at each game along
with corresponding advertising and promotion expenditures for each program element during
the time leading up to a given game. While just looking at game attendance will let you know
how successful the over-all marcom program was, marketing mix modeling will allow you to
determine the relative effectiveness of each marcom element.