Brand Equity Unfolded

In the last post we have seen a general definition for ‘Brand Equity’. Once that has been understood, now it is time to look at what Brand Equity technically means.

The Equity of any Brand can be said to be made up of two components:
1. Brand Stature
2. Brand Strength

Brand Stature is nothing but a report card of the brand, i.e. an indicator of what the brand has been and its effect and relationship with various stakeholders till now.

Brand Strength, unlike Brand Stature, is not a lagging indicator. It is a leading indicator. It is made up of those elements that tend to tell us what is the brand potential and how differentiated and relevant it is going to be in times to come.

Therefore, if one looks in terms of time, Brand Equity covers the past, present and the future strength of a brand.The figure below shows how the equity of a brand can be plotted on a grid. The Stature is taken on the x-axis while the Strength on the y-axis.

There are a number of models that are used for Brand Equity, and all of them come up with different factors on which the equity depends. But whether it be factors taken in the Aaker’s Model, in Young and Rubicam’s (Y&R) Model, or any other model, all the factors can be placed either under Brand Stature or under Brand Strength.

For example, in Y&R’s Model called the Brand Asset Valuator (BAV), four key dimensions (factors) of Brand Equity are:

1. Differentiation: Perceived Distinctiveness
2. Relevance: Personally Appropriate
3. Esteem: Perceived Quality and Increase in Popularity
4. Knowledge: Awareness and Understanding

If we were to club these dimensions under our two components, we would get the following two equations:

1. Brand Stature = Brand Esteem + Brand Knowledge
2. Brand Strength = Brand Differentiation + Brand Relevance

After going through this post and the last one, I think we have at least understood the basics of what Brand Equity is…. I hope that when someone asks us what this phrase means, we won’t be stumped and will be able to give a general and a technical definition, sufficient for us to impress the other I guess!! ;-)

Brand Equity – What exactly is this!!

‘Brand Equity’ is a very often used and misused phrase. This phrase is present in almost every text that one reads about marketing in general and branding in specific. But how many of us know what exactly does this mean!! All of us use this phrase during our Branding classes and even in all the written exams that we take related to this subject. But it is only when asked specifically what this means is when so many of us get confused!!

Let us try to see what this phrase actually means…. In simple words the following is a definition of Brand Equity:

“Differential effect that brand knowledge has on consumer response to the marketing of that brand”

Read the above definition again…. Now take examples of brands and see if it is true or not! When I see an ad of Airtel, my response to this marketing activity is very different from my response to an ad of BSNL. This is due to Brand Equity. The more the equity of a brand, the more favourable is the consumer response to that brand.

Another important point to be noted here is that if there is no differential consumer response, then the marketed product is not a brand but a commodity.

Try and look at each marketing activity from now on and try to think how our response to it is different from what it would have been had it the marketing not come from the same brand. This exercise shall help us internalize this simple definition of Brand Equity…

The next post on this blog shall discuss a more technical definition of this phrase and make an attempt to taking the concept to a more formal level… Till then, happy exercising!! (My exercising I mean internalizing the concept through the exercise mentioned above)

Vaseline: Outdoor Advertising for the Blind

Vaseline has taken outdoor advertising to a new level with this one!! How many FMCG brand managers would care to take an extra initiative and market specifically for the visually impaired?? Well, this one did!

Here is an outdoor poster that conveys the brand's message "Your skin is amazing", but the language is Braille. This brand by Unilever is one of the first ones to have started advertising for this segment of the population. Just imagine how much Brand Connect Vaseline can establish with this segment by such an initiative! And don't forget the Brand Loyalty it will achieve amonst the segment!!

Hats off to you Vaseline!!

Applying Aristotle's Philosophy to Branding!

"More than hard assets, branding has more to do with the soft assets of an entity (generally a product or a service)". This statement looks very obvious today. But this was not always this obvious.

Branding as a subject has evolved over the years and with time marketers have realised that more than the product attributes or functional benefits, a brand connects more with the consumers on the dimensions of Brand Value. This was conspicuously noted when there was a hue and cry in the USA over the replacement of their favourite Coke by New Coke. The issue was not just about a drink that now tasted differently, it was about the value system that the brand loyalists believed in!

But in the early days of branding, it was the hard assets that were given much more significance. And this approach traces its roots to the Aristotle way of thinking. The entire western way of thinking traces its roots to Aristotle.

Aristotle said that every entity has Four Causes: Material, Efficient, Formal and Final. Applying this to branding, Aristotle's Four Causes of Branding would be:

1. Material Cause: What is the brand physically?

2. Efficient Cause: Who makes the product/service?

3. Formal Cause: What makes it identifiable to the world?

4. Final Cause: Which is the ulimate reason for its being?

Applying this to the brand Diet Coke (as per the book 'The Philosophy of Branding' by Thom Braun)"

1. Material Cause: Carbonated Drink

2. Efficient Cause: Coca Cola

3. Formal Cause: Characteristic Pack Design

4. Final Cause: Cool Refreshment with no Sugar

As one can see from this, it is only the hard assets that are stressed upon. And imagine, it was this approach that marketers would have initially started with! Thankg God we have come a long way since then!

Post-it® Note Persuasion: A Sticky Influence

In a recent study by Randy Garner from Sam Houston State University it has been shown how a personailzed "Post-It" note along with a questionnaire or any response sheet can increase the probability of getting a response. This is a breakthrough study for all market-researchers, e-mail marketers and students of marketing! The abstract of the paper that has been published is given below for your reference:

"Four studies examine the influence of attaching a seemingly insignificant Post-it note to a survey packet on the likelihood of completing the survey. Participants who received a packet with an affixed Post-it note request had significantly higher return rates than participants who received the identical survey with (a) no sticky note,(b) the same message written on the cover sheet but without a Post-it or (c) a blank Post-it with no message provided. Furthermore, they returned the materials more promptly with higher quality responses. A more personalized Post-it appeal increased returns when the survey was long and time consuming but was no more effective than a nonpersonalized Post-it when the survey was easy to complete. Results suggest that the Post-it leads the request to be interpreted as a solicitation for a personal favor, facilitating a normative compliance response."

Contextual Marketing: Arrive Alive Tries it Out!

Contextual Marketing, as the term suggests, means creating an impact using the right product with the right message when the consumer is the right frame of mind. The term traces its roots to internet marketing when banner ads of Tylenol appeared whenever the stock market in the US dropped by a 100 points... The right frame of mind for the consumers (brokers in this case) isn't it!!

Today, contextual marketing has become a necessity for any kind of product or service in almost every product category. In-Store Marketing and Customer Contact Programmes are nothing but off-shoots of this concept.

Here is an example of how contextual marketing finds a place in a somewhat unkown but yet innovative application. Arrive Alive was launched by the North Wales Road Casualty Reduction Partnership at Ysbyty Glan Clwyd in October 2001. The aim of the campaign is to make the roads of North Wales safer by encouraging people to keep within the speed limits, reducing collisions and, consequently, reducing the number of people killed and injured. Today the same campaign has ben replicated in other countries too, South Africa being one of them.

In order to promote their recent campaign of 'think before you drink and drive', Arrive Alive decided to hit pub-goers in the right frame of mind i.e. use Contextual Marketing! Look at these stickers of paased out individuals that have been stuck inside toilets at pubs. Innovative and effective right!!

The agency Jupiter Drawing Room has done a good job with this campaign. But hey!! Right now they have a lot of real life volunteers to demonstrate the effects of drinking too much by actually getting passed out in toilets at pubs!! Hope stickers replace them soon ;-)

Customer Satisfaction and Customer Loyalty

It is being observed across the world that customer satisfaction has little correlation with customer loyalty. 80% of customers who defect to competitors score themselves as “satisfied” or “very satisfied” on surveys! (“Turning your Consumers into Die-Hard Fans” by John Blasberg, Vijay Vishwanath and James Allen)


Therefore, customer satisfaction does not guarantee customer loyalty. I am using a Loyalty-Satisfaction Matrix to explain the subject in some detail.


‘Proprietors’ are companies that command high loyalties despite poor satisfaction because probably the customer does not have any other choices available. Most companies fall under the ‘Distracted’ class. Though they try to focus on increasing customer loyalty, they end up concentrating on the wrong activities that eventually lead to customer satisfaction only. It is only a few companies like Starwoods Hotels that are true ‘Winners’ and offer highly customer centric loyalty programs to create highly loyal customer advocates.


The kind of loyalty behavior exhibited out of the nine options of the Product Patronage Matrix (http://marketingexplorers.blogspot.com/2007/08/product-patronage-matrix.html) is highly customer specific. This largely depends on the values, beliefs and attitudes of the customer and this in effect necessitates understanding the customer well in order to design loyalty programs successfully.


This is even more important from an Indian perspective where tastes, preferences and even cultures vary widely. Therefore, customization of loyalty programs according to the product category and the customer values, beliefs and attitudes is important.


It is a high level of customization of loyalty programmes shall aid in the movement of customers from other cells to 'Winners' in the Loyalty-Satisfaction Matrix.

Avon Nail Fortifier: Print Creative

Carrying on with the tradition of acquainting you with some of the best print creatives of the world, here is one that was used in Sao Paulo, Brazil to advertise Avon Nail Fortifier. I personally thought it was very creative.

PRIYAGOLD Valuation by Brand Finance... But How is this Valuation Done??

Recently, the valuation of Surya Foods’ flagship brand PRIYAGOLD was done at Rs.1200 crores. This gave the Noida-based food company reason to cheer before the company floats an IPO later this year.

The valuation was done by Brand Finance. Now the important question is, how is this Brand Valuation actually done!! I am trying to explain this in through this post…

It is nearly twenty years since RHM, a UK-based food manufacturing company, placed the value of its brand portfolio on the balance sheet as part of its defense against a hostile takeover bid. While it was not the first instance of brand values being capitalized on the balance sheet, the context and subsequent result caused many accountants to fall off their stools in horror.

Since then, Brand Valuation has gained increasingly more importance over the years.

Brand Finance is an independent consultancy, headquartered in London, which focuses on the management and valuation of brands and branded businesses. Since 1996, Brand Finance has performed hundreds of brand valuations with an aggregate value of over $150 billion.

Brand Finance calculates brand values using the ‘Royalty Relief’ approach. This approach is recognized by technical authorities worldwide. The methodology used to value a brand is briefly explained in the text below.

The future revenues of the brand over a five-year explicit period are estimated taking market growth, competitive forces, historic sales and analysts’ projections, growth assumptions into consideration. A Royalty Rate is applied to the future revenues to determine the Royalties that would be payable for the use of the brand by a third party. The determined royalties are then discounted and the NPV calculated gives the Brand Value.

The Discount Rate is determined using the Brand Beta Analysis (proprietary of Brand Finance) that uses a Brand Rating corresponding to the brand. The Brand rating is similar to a credit rating and delivers insight into the underlying strength of the brand and illustrates how valuations require a robust analysis of a brand’s performance in order to determine its value.

According to Brand Finance, the top ten brands in the world by value are listed below in decreasing order of their brand value:

1. Coca-Cola
2. Microsoft
3. Citi
4. Wal-Mart
5. IBM
6. HSBC
7. GE
8. Bank of America
9. Hewlett-Packard
10. Marlboro

Product Patronage Matrix

Product patronage Matrix is an interesting concept that was introduced by Louis P. Bucklin in his book titled 'Retail Strategy and Classification of Consumer Goods'.

Product Patronage Matrix builds from the foundation of classification of goods and stores the cross-classification of the each product motive with each patronage motive, a three by three matrix is created representing nine different types of customer buying.

The following are the product motives which are derived from customer attitudes towards a product:

Convenience Goods: Those goods, for which the customer before his need arises, possesses a preference map that indicates a willingness to purchase any of a number of known substitutes rather than to make the additional effort required to buy a particular item

Shopping Goods: Those goods for which the customer has not developed a complete preference map before the need arises, requiring him to undertake search to construct such a map before purchase

Specialty Goods: Those goods for which the customer before his need arises, possesses a preference map that indicates a willingness to expend the additional effort required to purchase the most preferred item than the most readily accessible substitutes
Similarly, the following indicate the patronage motives which are derived from consumer attitudes towards a retail establishment.

Convenience Stores: Those stores for which the customer before his need for some product arises, possesses a preference map that indicates a willingness to buy from the most accessible store

Shopping Stores: Those stores for which the customer has not yet developed a preference map, requiring him to undertake a search to construct such a map before purchase

Specialty Store: Those stores for which the customer before his need arises, possesses a preference map that indicates a willingness to buy from a particular establishment even though it may not be the most accessible

Bhopal Medical Appeal Campaign : A Testimony to the Power of Advertising

Here is one of the eight ads from the Bhopal Medical Appeal Campaign that have been doing rounds in the west since 1994.

Many people say that these ads are too long, and that no one has either the time, patience or enthusiasm to read long copies! But this campaign PROVES THEM WRONG. Not only are these ads read, they also generate enough income off the page to pay for themselves and run a clinic in Bhopal employing a staff of 40.

The clinic and its work are testimony to the power of advertising, because this campaign started without a single penny!

The first ad, a double page spread in the UK's Guardian newspaper ran on a personal guarantee to pay if the ad failed. Happily, the public's response was so generous that that first ad enabled the sponsors to buy a building in Bhopal, hire staff and begin training them. Fourteen years later, the sponsors have been able to give medical care to nearly 30,000 people!

This my friends is the power of advertising!!!

For a look at the other copies and details about the ads, refer to the following link which is also the source of this ad.

http://adsoftheworld.com/media/print/bhopal_medical_appeal_may_god_forgive_you

Multilevel Marketing (aaproach companies like Tupperware and Avon follow) is different from Buzz!

Buzz is nothing but all the word-of-mouth that exists about a product. This buzz travels through invisible networks where each node is a person.

(see http://marketingexplorers.blogspot.com/2007/07/identify-network-hubs-for-word-of-mouth.html)

Experts said that if people can create word-of-mouth about a product, why not use them to sell the product itself. This gave rise to Multilevel Marketing (MLM) where companies like Tupperware, Avon, Amway and Oriflame create distribution channels in the invisible networks. But it is important to note that MLM is not buzz. It has very different objectives and ways in which it operates. To give a clear picture on the distinction between the two, I am including an excerpt from the book “The Anatomy of Buzz” by Emanuel Rosen:

“While these programs work for certain companies, it’s important to note that the phenomenon they’re based upon is not exactly buzz. There is a key difference between and a marketing scheme in which friends are supposed to sell something to their friends or recruit them as distributors. While buzz may be stimulated with an occasional incentive, it is usually free from any monetary transaction. A customer recommends a product because she truly believes in this product. Part of her credibility comes from the fact that she has nothing to gain by recommending the product, which is not the case when she is selling it.

Advocates of MLM love to point out the potential for exponential growth that comes with this method. (“If your friend tells two friends, and these two friends tell two friends, you reach a huge audience very fast.”) But in real life this exponential growth is hardly ever reached. Why not? Because many people don’t want to get involved in this type of business and don’t feel comfortable selling to their friends. Most people want to talk with their friends without having to sell them anything. When they meet a relative, they want to hear about the family, without thinking of how they could enroll him as part of their “downline” (the industry term for the chain of distributors one recruits).

MLM is far from gone, however. The very same trends that cause customers to rely on their friends in making purchasing decisions – information overloaded, customer skepticism, and customer connectivity – could help MLM organizations to expand, especially in product categories such as skin care, personal services, and food supplements. There is also evidence that this marketing method is more effective in certain social circles and countries than in others. But as MLM grows, it’s important not to confuse it with buzz. Don’t expect an MLM organization to grow at the rate of an ICQ or Hotmail. It’s a different phenomenon.”

Heat Activated Urinal Billboards

The world of Interactive Advertising is endless. It was innovative to see Urinal Advertising changing the face of interactive advetising. But HAUB (Heat Activated Urinal Billboards) have taken it to a new level!!

HAUB uses heat sensitive ink technology. This innovative medium combines high definition colour graphics, hidden by "disappearing ink" delivering an interactive message to a captive audience... A perfect strategy to get your message across.

Used successfully in a "Drunken Driving Campaign" in New Zealand, it is a perfect Billboard to deliver any message to a male audience. Strategically placed in the corner of a urinal, (yes that's correct... studies show that 8-10 males prefer the corner), it's sure to generate interest when a male enters the bathroom.

The heat in a male's urine starts filling colours in the image and thus delivers the message! The automatic flush from the toilet re-sets it for the next unsuspecting visitor... A perfect repetitive marketing tactic.

Very Strong Tape by Penline, Malaysia

Penline is a Malaysian stationary company. They have been coming up with creative and high-impact outdoor and print advertisements for a considerable amount of time now.

Here are some samples from their basket.

The taped billboard shown below has been talked about in the marketing circles quite a lot already.

Shown below is one of their print advertisements. Neat work!!

Identify Network Hubs for Word-of-Mouth Marketing

The structures through which Word-of-Mouth spreads are similar to networks as shown in the figure below. There are certain hubs that are connected to other nodes and it these hubs that spread word of mouth to these nodes.

It becomes important for marketer to target these hubs to spread word of mouth to as many people as possible. In Word-of-Mouth parlance, these hubs are called Network Hubs or Opinion Leaders. According to Emanuel Posen, an expert on the subject, Network Hubs are individuals who communicate with more people about a certain product than the average person does.

To enable marketers to identify these Network Hubs, some common characteristics that are exhibited by these individuals have been observed and identified. The acronym used for these characteristics is ACTIVE:

1. Ahead in adoption
2. Connected
3. Travellers
4. Information-Hungry
5. Vocal
6. Exposed to media

By “Ahead in adoption” it is meant that Network Hubs are early to adopt or reject an idea or an offering than the others.

They are “Connected” in the sense that they are more cosmopolite i.e. more oriented towards the outside world.

It has been observed that opinion leaders generally travel more than an average individual. They make more out-of-town trips. Today, this behaviour is complemented by virtual travelling i.e. surfing more and more websites on the internet.

Opinion Leaders often serve as ‘local experts’ because they are well-informed since they always want to learn more. Because of this trait of theirs, it is not unusual to see many people approaching opinion leaders for advice on what to purchase and what not.

Network Hubs are “Vocal” not because they are necessarily out-spoken, but because they voice their opinions more often.

And finally, they are more exposed to media. This may be true because they read more magazines and watch more advertisements or because they themselves are part of the media. This is why many marketers approach personalities and experts, who are more exposed to the media, to talk about their products in person or in editorials.