BUS631: Brand Management

During the past few decades, brand equity has become one of the major areas of attention to managers and marketing researchers owing to its major role as a significant intangible firm asset. Many definitions of brand equity exist (table 1). One of the most widely accepted definitions states that brand equity is the "added value endowed by the brand to the product". There are some other definitions by other researchers as well. Aaker conceptualized brand equity as a set of brand assets and liabilities linked to a brand, its name and symbol that add to or subtract from the value provided by a product or service to a firm and/or to that firm's customers. Definition by Keller focused on marketing; he described brand equity as "the differential effect of brand knowledge on consumer response to the marketing of the brand". Brand equity has also been defined as "the enhancement in the perceived utility and Desirability a brand name confers on a product". Vázquez et al. mentioned that brand equity is the utility that the consumer associates to the use and consumption of the brand. Clow and Baack pointed out another definition: they considered brand equity as a set of characteristics that make a brand unique in the marketplace, allows the company to charge a higher price and retain a greater market share than would be possible with an unbranded product.

We can evaluate the brand equity from different perspectives, As Baalbaki mentioned brand equity can be seen from three different perspectives, in next part of article we are going to discuss each of them, (see figure 1). brand equity model

Figure 1: Brand Equity Perspectives

Financial Perspective (Financial- Based Brand Equity)

Brand equity in the 1980s, as seen from the financial perspective, was viewed as a method that gave managers guidance in understanding brand enhancement. In this perspective, the measures focused on stock prices or brand replacement. Simon and Sullivan defined brand equity as "the incremental cash flows which accrue to branded products over and above the cash flows which would result from the sale of unbranded products". Supporters of the financial perspective (FBBE) define brand equity as the "total value of a brand which is a separable asset – when it is sold or included in a balance sheet". Wood discussed that from a financial perspective it is possible to give a monetary value to the brand that can be useful for managers in case of merger, acquisition or divestiture. Estimating a financial value for the brand is certainly useful but it does not help marketers to understand the process of building brand equity. Wood believes that marketing perspective of brand equity can help marketers to understand the brand in the minds of customers and to design effective marketing programs to build the brand.

Customer Perspective (Customer-Based Brand Equity)

Extant literature on brand equity has focused on the perspective of cognitive psychology known as consumer-based brand equity. The customer-based brand equity (CBBE) approach is the dominant perspective and the one preferred by a majority of academics and practitioners in marketing research because if a brand has no meaning or value to the consumer it is ultimately meaningless to investors, manufacturers, or retailers. Motameni also mentioned this perspective as a marketing perspective. He used the concept of brand equity in the context of marketing decision-making. Keller used the term consumer-based brand equity to refer to brand equity and noted that customer-based brand equity occurs when the consumer is familiar with the brand and holds some favourable, strong and unique brand associations in their memory. Positive customer-based brand equity has many advantages like long term revenues, customers' willingness to seek out for themselves new channels of distribution, the ability of firms to command higher prices and the effectiveness of marketing communications. Several scholars have theorized brand equity similar to Aaker. Although Aaker and Keller conceptualized brand equity in a different way, both defined brand equity from customer perspective. Szőcs mentioned that Consumer-based brand equity is referred in literature as a decision support tool that sets up a useful diagnosis for the managers about the ideas consumers have about the brand. Consumer-based brand equity can be best formulated as a construct caused by brand-related associations in which the effect of brand-related associations is concentrated. In order to be able to make recommendations to managers on how to manage their brand equity or study the nomological network of its constituent components, we need to generate a better understanding of the composition of brand equity in disparate cultural contexts and distinct product categories.

Employee Perspective (Employee-Based Brand Equity)

Youngbum Kwon discussed that the definitions of Employee-based brand equity and Customer-based brand equity are similar in respect that they are both values that come from the innate nature of the brand. Employee-based brand equity is defined from the employee perspective and is based on the differential effect that brand knowledge has on an employee's response to his or her work environments and cultures. Youngbum Kwon presented a three dimension model based on King and Grace and Aaker research.

Table 1: Definitions of brand equity

The three dimensions are Brand knowledge, Role Clarity, Brand commitment. Cardy et al argued that subjective and emotional employee judgments concerning an organization reflect brand equity in the reflection of several following questions: what is the employee perception of an organization's reputation; does it convey a sense of respect to its members; does an individual associate certain emotions, lifestyles, or experiences with an organization; has an employee forged an organizational identity, or considered the firm a part of himself or herself. All these questions describe subjective, intangible factors that imply developing an emotional tie with a firm or its culture. In a marketing sense, brand equity results in increasing the positive feelings that make one less likely to defect to a competing product. HRM can adopt the brand equity concept to strengthen the psychological contract with employees and make them less likely to leave. According to King and Grace, Employee-based brand equity serves as a foundation to build Customer-based brand equity because employees who understand and wholeheartedly endorse the organization's objectives deliver these values to their customers. In fact, employees are important resources for company brand success.