Brand Equity Models

De Chernatony and Cottam suggest that rather than one comprehensive methodology to evaluate brand success, there are a range of financial and non-financial measures that collectively provide the necessary insight. Agarwal et al explained that there are two different approaches to measure brand equity; direct approach and indirect approach. The direct approach tries to assess the added value of the brand and appears to be the accepted definition of brand equity. The indirect approach tries to identify the potential sources of brand equality. An understanding of these sources for a firm's own and competitive brands is critical for the brand manager. Agarwal et al argued that both these authors (Aaker and Keller) suggest a variety of indirect measures and methods to estimate brand equity based on their frameworks.

For example, Aaker suggests using repurchase rates, switching costs, level of satisfaction, preference for brand and perceived quality on various product and service dimensions as potential measures among others. Likewise, Keller suggests correct top-of-mind recall, free associations, ratings of evaluations, and beliefs of associations as some of the measures of brand knowledge. Ravi argued that developing further insights into the measurement of consumer based brand equity is important in the face of the prominence of branding. Understanding the dimensions of brand equity, then investing to grow this intangible asset raises competitive barriers and drives brand wealth. How to measure brand equity is very important in assessing the value of brands. Further, we are going to discuss different models of CBBE.

Aaker's Brand Equity Model

Aaker provided the most comprehensive brand equity model which consists of five different assets that are the source of the value creation. These assets include: brand loyalty; brand name awareness; perceived brand quality; brand associations in addition to perceived quality; and other proprietary brand assets – e.g., patents, trademarks, and channel relationships.

Brand Loyalty

Based on Aaker's model, Ovidiu discussed that Brand loyalty generates value by reducing marketing costs and leveraging trade. Loyal customers expect the brand to be always available and entice others advising them to use it. Retaining existing customers is much less costly than attracting new ones. Even if there are low switching costs, there is a significant inertia among customers. It is also difficult for competitors to communicate to satisfied brand users because they have little motivation to learn about alternatives. Therefore, competitors may be discouraged from spending resources to attract satisfied and loyal customers and even if they do so, this requires a long time. Aaker (1992) believes that focusing on brand loyalty is often an effective way to manage equity. Also, Pitta and Katsanis suggested that brand equity increases the probability of brand choice, leads to brand loyalty.

Figure 2: Aaker's Customer-Based Brand Equity Framework

Brand Name Awareness

Brand awareness is a key and essential element of brand equity which is often overlooked. Brand awareness refers to "the ability of a potential buyer to recognize or recall that a brand is a member of a certain product category". Brand awareness has different level; at the recognition level, it can provide the brand with a sense of the familiarity as well as a signal of substance, commitment and awareness and at the recall level, it further affects choice by influencing what brands get considered and selected. For many companies, brand awareness is pivotal and it underlies the strength of successful brands. Awareness plays an important role in most of conceptual models of brand equity. Brand awareness generates a high level of purchase, mainly because consumers are likely to buy those brands they are familiar with enhancing the firm's profitability and sales.

Perceived Brand Quality

Aaker explained that perceived quality provides value by providing a reason to buy, differentiating the brand, attracting channel member interest, being the basis for line extensions, and supporting a higher price. In other words, perceived quality is the consumer's judgment about a product's overall excellence or superiority. Perceived quality is included as an asset distinct from brand. It has become an important business thrust for many firms and can be the motivation for programs designed to enhance brand equity. Perceived quality is a sufficiently important and accepted strategic consideration.

Brand Associations

Brand associations or brand image is perhaps the most accepted aspect of brand equity. In fact, it is anything linked in customers' memory to a brand. Brand association include product attributes, customer benefits, uses, users, life-styles, product classes, competitors and countries. Associations can help customers process or retrieve information, be the basis for differentiation and extensions, provide a reason to buy, and create positive feelings. Consumers use brand associations to process, organize, and retrieve information in memory and this helps them to make purchase decisions. In order to build strong brand equity in the market, it is fundamental to understand the core dimensions of brand image, which is brand personality. When there is a higher level of brand association, there is a higher tendency for brand extension to become relevant to customers. brand equity model

Brand Assets

Based on Aaker's model, Ovidiu discussed that brand assets refers to patents, trademarks and channel relationships which can provide strong competitive advantage. Trademark protects brand equity from competitors who might want to confuse customers by using a similar name, symbol or package. Patent can prevent direct competition if strong and relevant to the purchase decision process. Finally, a distribution channel can be indirectly controlled by a brand as customers expect the brand to be available. brand equity model

Keller's Brand Equity Pyramid

Keller defined consumer-based brand equity at individual level taking brand knowledge as a starting point, which is conceptualized as an associative network, where the associations are nodes. In 2003, he defined brand equity as differences in customer response to marketing activity. The concept behind the brand equity is to form how customers think and feel about the product or service relying on positive experience. A company should create a situation that your customer will have positive thoughts and feelings and perceptions concerning the brand. Keller model identifies 6 elements including brand salience, brand performances, brand imagery, brand feelings, brand judgments and brand relationships. brand equity model

 

Figure 3: Keller's Customer-based Brand Equity Pyramid

The first stage relates to brand identity and uses brand salience as a measure of the awareness of the brand. Formally, brand awareness refers to customer's ability to recall and recognize the brand; brand awareness also involves linking the brand name, logo and symbol to certain association in memory. Building brand awareness involves making sure that customer understand the product or service category in which the brand competes. Based on Keller's model, Kerri-Ann et al explained that the first step in building a strong brand is to ensure the correct brand identity; the purpose is to create an identification of the brand with customers and an association in their minds with a specific product class or need. To do this, brand salience must exist, which represents aspects of brand awareness and the range of purchase and consumption situations in which the brand comes to mind. The salience building block is, therefore, made up of two sub-dimensions – need satisfaction and category identification.

Kerri-Ann et al discussed the second step of Keller's model as establishing brand meaning by linking tangible and intangible brand associations. Brand meaning is, therefore, characterised in either functional (brand performance) or abstract (image-related) associations. Brand response is the third step in the Keller's model and represents opinions and evaluations of the brand based on a combination of associations identified in brand meaning. These judgments include overall quality, credibility, consideration and superiority. Brand feelings are customers' emotional responses and reactions to the brand. Keller identifies six types: warmth, fun, excitement, security, social approval and self-respect. Brand relationships constitute the final step in the pyramid where brand response is converted to create an intense, active loyalty relationship between customers and the brand. The pinnacle of the pyramid is resonance, which refers to the nature of the relationship between the customer and the brand. It is described as having four elements: behavioural loyalty, attitudinal attachment, sense of community and active engagement. There is an obvious sequence in this "branding ladder" and this meaning cannot be established unless identity has been created. Responses cannot occur unless the right meaning has been developed and the relationship cannot be forged unless the proper responses have been elicited.

Yoo and Donthu (2002) Brand Equity Model

Yoo et al structural model of brand equity formation consists of three components: Marketing mix elements selected from the traditional "4p" marketing activity (i.e. price store, image, distribution intensity, advertising spending, and price deals), brand equity dimensions (i.e. perceived product quality, brand loyalty, and brand awareness/associations) and overall brand equity. According to the model, marketing managerial efforts can be classified into two types: brand -building activity and brand-harming activity. These authors extend Aaker's model by placing brand equity as a separate construct between the dimensions of brand equity and the value for the customer and the firm. In addition, Yoo and Donthu developed and validated cross-culturally invariant multidimensional consumer-based brand equity. They tried to extend the brand equity concept; for instance brand loyalty in their research refers to the tendency to be loyal to a focal brand, which is demonstrated by the intention to buy the brand as a primary choice, in contrast other researches that relied on behavioral aspects of brand loyalty. They combined brand awareness and brand associations into one group and focused on three of assets; brand awareness/associations, perceived quality and brand loyalty. By mapping the assets of brand equity it is possible to determine if some aspects of brand equity seen to be more important than others for the consumer, or if a brand is lagging behind in one or many dimensions. In order for a brand to maintain high brand equity and be the preferred choice of consumers, it is important that it stays in tune with how the brand is perceived by firm's customer base.

Figure 4: Structural brand equity model (source: Yoo et al (2002))

Luming Wang and Adam Finn Customer Based Brand Equity Model (2013)

Model presented by Luming Wang and Adam Finn is quite different from prior consumer-based brand equity (CBBE) research that examined well-known brands in different product categories. Their research focused on the within-product category differences in terms of the sources of CBBE. To facilitate the comparison, they proposed a hybrid measurement model of CBBE that systematically integrates various existing CBBE dimensions and examined the substantive difference among master brands and their sub-brands within a product category. They explained that this model distinguishes the latent CBBE construct from its dimensions, and separates its formative dimensions (causes of CBBE) from its reflective (effects of CBBE) dimensions based on the causal relationship with the construct. They added another formative dimension, that is brand emotions, to expand the coverage of the CBBE domain from solely cognitive to include cognitive and non-cognitive, spontaneous emotional reactions to brands. They emphasized that formative dimension (such as uniqueness and perceived quality) jointly define CBBE. Eliminating any of them may alter the conceptual domain of the construct and decreases the construct validity; especially, formative dimensions can be used to identify potential; cannibalization effects among sister sub-brands within a brand portfolio.

Figure 5: Customer-based brand equity Model

Destination Brand Equity Model

Few researches related to evaluation of destination brands had been done. Model proposed by Boo et al is one of the most practical models among a review of the broad literature in this area. Measurement assumptions of the model include:

(1) A destination brand could be measured by employing the concept of customer-based brand equity;

(2) Destination brands should be evaluated by comparison with other competitive destination(s) in the same destination brand category;

(3) The destinations should be well-known and popular among tourists;

(4) Tourists must have experienced the destinations as tourists.

These assumptions distinguish the unique characteristics of destination brand measurement. Destination brand experience can be considered an emerging concept of the destination brand equity measurement model in terms of a destination context. They emphasized that this is unique and different from the construct that is suggested in retail brand equity measurement approaches. Destination brand experience had a positive effect on destination brand value. However, destination brand experience did not influence destination brand loyalty directly. Furthermore, Boo et al explained that destination brand awareness affected destination brand experience directly. Top-of-mind awareness can be an important predictor of tourists' destination brand experiences. Their research offers enhanced insight into how tourists perceive a destination brand, indicating that a specification of the destination brand measurement model, free from the established relationships in the marketing literature (i.e., relationships among awareness, image, quality, value, and loyalty), needs to be developed. The specified theoretical model was only one plausible model of the data, and the direction of the paths was theoretical. Basically, they focused specifically on the factors related to destination brand equity.

 

Figure 6: Destination brand equity model

CAA Integrated Brand Equity Model

Wang.H et al indicated that there is a growing interest in brand formation and brand valuation among global firms, but global marketers typically ignore one of the key factors of brand building – corporation ability association (CAA). They represent the model which tries to explore the structural relationship between CAA and consumer-based brand equity variables and its product-market outcomes. They utilized Aaker and Keller's theoretical framework of brand equity and developed a brand equity model combining customer-based brand equity with product-market outcome approaches. Set of scales are developed and tested on a national sample of Chinese consumers. The final results in their research indicate that CAA is an important factor in building and preserving brand equity. CAA and brand awareness have impact on quality perception, which has positive impact on brand resonance, brand extensibility, and price flexibility. Brand resonance has positive influence on brand extensibility and the intention to repurchase. In addition, they argued that for global marketers operating in China, brand equity is a culturally market-based asset and global companies must focus on building corporation ability association in China in order to enjoy the substantial competitive and economic advantages provided by brand equity.

 

Figure 7: CAA integrated brand equity model