Brand equity – assets and liabilities

Brand equity has been defined as a set of brand assets and liabilities associated with a brand, its name and symbol that add or decrease the value of a product or service to a company and/or that company’s customers. If the brand’s name or symbol were to change, some or all of the assets or liabilities could be affected and even lost, although some could be moved to a new name and symbol. The assets and liabilities on which brand equity is based differ according to context, according to Aaker (1991). However, they fall into five categories:

1. Brand Loyalty

2. Brand name (awareness)

3. Perceived quality

4. Brand Associations

5. Other Proprietary Brand Assets

brand loyalty –

It is expensive for any business to acquire new customers and relatively inexpensive to retain existing customers, especially if the existing customers are satisfied or happy with the brand. Competitors may even be discouraged from expending resources to acquire already satisfied customers. In addition, higher loyalty means greater trading leverage; because customers expect the brand to be available at all times.

Brand Awareness –

People often buy a familiar brand because they are comfortable with the familiarity or assume that a well-known brand is likely to be reliable and of reasonable quality. When consumers feel uncomfortable about a product name, they avoid the product – and that leads to lost sales. Brand names should be easy for customers to visualize in terms of pronunciation and spelling.

Perceived Quality –

A brand is associated with a perception of overall quality that is not necessarily based on knowledge of detailed specifications. Perceptions of quality can take slightly different forms depending on the industry. Perceived quality means something different to Compaq or IBM than it does to Coca-Cola or Pepsi. Perceived quality directly impacts purchasing decisions and brand loyalty, especially when a shopper is unmotivated or unable to conduct detailed analysis. It can also support a premium price, which in turn can create gross margin that can be reinvested in brand equity. In addition, perceived quality can be the basis for brand extension. When a brand is highly regarded in one context, it is assumed to be of high quality in a related context.

Brand Associations –

The underlying value of a brand name is often based on certain associations associated with it. The associations of the Jaguar car brand, for example, may make the ownership and driving experience “different”. If a brand is well positioned on a key attribute in the product class (e.g. technological superiority), it will be difficult for competitors to attack. If they attempt a frontal attack by claiming superiority over that dimension, there will be a credibility problem. You might be forced to find another, perhaps inferior, basis for competition. Therefore, an association can represent a barrier for competitors.

Other Proprietary Brand Assets –

This fifth category represents other proprietary brand assets such as patents, trademarks, and distribution partnerships. Brand values ​​are most valuable when they prevent or prevent competitors from undermining a customer base and loyalty. These assets can take various forms. For example, a brand protects brand equity from competitors who want to confuse customers by using a similar name, symbol, or packaging. A patent, if strong and relevant to the customer’s choice, can prevent direct competition. A distribution channel can be controlled by a brand because of a history of brand performance.