UNDERSTANDING BRAND EQUITY
ANSWERS TO TEN COMMON BRANDING QUESTIONS
Kevin Lane Keller Tuck School of Business Dartmouth College
UNDERSTANDING BRAND EQUITY
ANSWERS TO TEN COMMON BRANDING QUESTIONS One of the most popular and potentially important marketing topics to arise in the 1980's was the concept of brand equity. The emergence of brand equity, however, has meant both "good news" and "bad news." The good news is that it has raised the importance of the brand in marketing strategy -- which heretofore had been relatively neglected -- and provided impetus for managerial interest and academic research activity. The bad news is that the concept has been defined a number of different ways for a number of different purposes, resulting in some confusion and even frustration with the term. Despite these differences, most observers are in agreement that brand equity should be defined in terms of marketing effects uniquely attributable to a brand. That is, brand equity relates to the fact that different outcomes result in the marketing of a product or service because of its brand, as compared to if that same product or service was not identified by that brand. There is also basic agreement in the following: These differences arise from the "added value" endowed to a product as a result of past investments in the marketing for the brand; there are many different ways that this value can be created for a brand; brand equity provides a common denominator for interpreting marketing strategies and assessing the value of a brand; and there are many different ways as to how the value of a brand can be manifested or exploited to benefit the firm. Beyond this general agreement, however, the specific approaches to motivating and defining brand equity can vary greatly depending on the perspective and purpose adopted. The objective of this paper is to provide a concise, up-to-date primer on brand equity. Its goal is to illuminate, clarify, and improve the ability of managers to actually use branding principles and brand equity concepts in their organizations. The paper is organized around ten of the most common (and important) branding questions, as summarized in Figure 1.
1. WHAT IS A BRAND? WHY ARE BRANDS IMPORTANT?
Branding has been around for centuries as a means to distinguish the goods of one producer from those of another. In fact, the word "brand" is derived from the Old Norse word "brandr" which means "to burn" as brands were and still are the means by which owners of livestock mark their animals to identify them. According to the American Marketing Association, a brand is 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 should be contrasted from a product. A product is anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a need or want. Thus, a product may be a physical good (e.g., a cereal, tennis racquet, or automobile), service (e.g., an airline, bank, or insurance company), retail store (e.g., a department store, specialty store, or supermarket), person (e.g., a political figure, entertainer, or professional athlete), organization (e.g., a non-profit, trade organization, or arts group), place (e.g., a city, state, or country), or idea (e.g., a political or social cause). A brand is a product then but one that adds other dimensions that differentiate it in some way from other products designed to satisfy the same need. These differences may be rational and tangible -- related to product performance of the brand -- or more symbolic, emotional and intangible -- related to what the brand represents. Thus, extending the example from above, a branded product may be a physical good (e.g., Kellogg’s Corn Flakes cereal, Prince tennis racquets, or Ford Taurus automobiles), a service (e.g., United airlines, Bank of...
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