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MARKETING COMMUNICATIONS CHALLENGES: ENHANCING BRAND EQUITY, INFLUENCEING BEHAVIOR, AND BEING ACCOUNTABLE

Chapter Objectives

  • Explain the concept of brand equity from both the company’s and the customer’s perspectives.
  • Describe the positive outcomes that result from enhancing brand equity.
  • Appreciate a model of brand equity from the customer’s perspective.
  • Understand how marcom efforts must influence behavior and achieve financial accountability.

Chapter Overview

The basic issues addressed in this chapter are these: What can marketing communicators do to enhance the equity of their brands and, beyond this, affect the behavior of their present and prospective customers? Also, how can marketing communicators justify their investments in advertising, promotions, and other marcom elements and demonstrate financial accountability?

The concept of brand equity is explained from both the company’s perspective and the consumer’s perspective. The firm-based viewpoint of brand equity focuses on outcomes extending from efforts to enhance a brand’s value to its various stakeholders and discusses various outcomes: (1) achieving a higher market share, (2) increasing brand loyalty, (3) being able to charge premium prices, and (4) earning a revenue premium. From the perspective of the customer, a brand possesses equity to the extent that they are familiar with the brand and have stored in their memory favorable, strong, and unique brand associations. Brand equity from the customer’s perspective consists of two forms of brand-related knowledge: (1) brand awareness and (2) brand image. The chapter covers three ways by which brand equity is enhanced and labels these the (1) speak-for-itself approach, (2) message-driven approach, and (3) leveraging approach. The chapter then discusses ten traits shared by the world’s strongest brands.

The latter portion of the chapter covers the concept of ROMI, or return on marketing investments. Several difficulties of measuring marcom effectiveness are discussed: (1) choosing a metric, (2) gaining agreement, (3) collecting accurate data, and (4) calibrating specific effects. The chapter then discusses marketing-mix modeling (i.e., multivariate regression analysis) and how it can assist managers in determining the effect of each marcom element on sales volume.

When Polls Fail to Reveal the Complete Picture

Marketing researchers and pollsters are constantly surveying people about their likes and dislikes, their voting intentions, their thoughts about which actors should win Academy Awards, and on and on. Pollsters also investigate consumers’thoughts and feelings toward brands. In a recent online poll 2,400 adults were asked to spontaneously identify up to three brands that they personally regarded as the “best.” Coca-Cola, Sony, Toyota, Dell, Ford, Kraft Foods, Pepsi-Co, Microsoft, Apple, and Honda were identified as the 10 “best” brands. Critics suggestthat such polls are not true indicators of the equity of abrand, as Ford Motors is anything butone of the world’s best brands in terms of profitability, marketshare, sales growth, and consumer confidence. “Best brands” surveys are more a measure of brand awareness than of brandequity.

The World’s Perception of America

Nations can bethought of as brands. Firms that use “country of origin” labels are affected by the positive or negative image of that country. Many countries actively market themselves with thegoal of forging favorable and strong associations in theminds of people around the world. TheNations Brand Index (NBI) is a barometer of globalopinion toward over 35 countries. Each quarter, 25,000 people are surveyed on their perceptionsof these countries. Respondents areasked questions about each country in six areas:

1. Exports—satisfaction with products andservices produced

2. People—thoughts and feelings about the people

3. Governance—perceptions of whether the countrycan be trusted to make responsible decisions and touphold international peace and security.

4. Tourism— perceptions of a country’s natural beautyand historical heritage

5. Culture and Heritage—perceptions and feelings of a country’sheritage and its culture

6. Immigration and Investment—willingness to live, work, and/or pursue education.

A nation’s “brand” image is the sum of its scoreson these six dimensions. The countries rank the best overall are: UK, Germany, Canada, France, Switzerland, Australia, Italy, Sweden , Japan, and the Netherlands. The US is ranked 11th.

Many peopleoutside the United States regard America as relativelyuncultured, and given the recent US war mongering the poor performance on the governancedimension is hardly surprising given the widespreadopposition to the war in Iraq, the U.S.government’s recent record on treatment of enemy combatants(think Abu Ghraib and Guantanamo Bay), itssaber-rattling posture toward Iran and North Korea, and

so on.

A country’s image, like any brand image, can be changed. It is important as a matter of international relationsand economics that a country has a positiveimage.

Neuromarketing and the Case of Why Coca-Cola Outsells Pepsi

The infamous “Pepsi Challenge” was conducted with the use of neuromarketing, which is a specific application of the field of brand research called neuroscience. Functional magnetic resonance images (fMRIs) can scan the brains of individuals employing their various senses upon exposure to stimuli. Brain scans reveal which areas of the brain are most activated in response to external stimuli. In the new-fangled Pepsi Challenge, the reward center of the brain revealed a much stronger preference for Pepsi versus Coke when study participants were unaware of which brand they had tasted. However, the result was opposite when participants knew the name of the brand they were about to taste. In the non-blind taste test, a different region of the brain was more activated and Coca-Cola was the winner. Activation of the area of the brain associated with cognitive functions revealed that participants now preferred Coke. The inferredexplanation is a difference in brand images, with Coke possessing the more attractive image earned through years of effective marketing and advertising effort.

Chapter Outline

  1. Introduction

Recall from Chapter 1 the framework for thinking about all aspects of the marcom process (Figure 1-3):

  • Fundamental decisions (positioning, targeting, objective setting, and budgeting)
  • Implementation decisions (mixing elements, creating messages, selecting media, and establishing momentum)
  • Outcomes (enhancing brand equity and affecting behavior)
  • Program Evaluation

This chapter focuses on the desired outcomes of marcom efforts.

  1. Brand Equity

Abrand represents 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.”

Without a recognizable brand, a product is but a mere commodity.

It’s more than just a name, term, symbol, etc. – a brand is everything that one company’s particular offering stands for in comparison to other brands in a category of competitive products.

Brand equity can be considered either from the perspective of the organization that owns a brand or from the vantage point of the customer.

A Firm-Based Perspective on Brand Equity

Focuses on outcomes extending from efforts to enhance a brand’s value to its various stakeholders.

As the value, or equity, of a brand increases, various positive outcomes result:

  • achieving a higher market share
  • increasing brand loyalty
  • being able to charge premium prices
  • earning a revenue premium, which is defined as the revenue differential between a branded item and a corresponding private labeled item

A Customer-Based Perspective on Brand Equity

Brand equity exists to the extent that consumers are familiar with the brand and have favorable, strong, and unique associations with the brand.

Brand equity has two main forms of consumer knowledge: brand awareness and brand image.

  • Figure 2.1 portrays the two dimensions of brand knowledge and delineates each dimension into its specific components.
  • Brand awareness: when a consumer thinks about a product category and a brand name comes to mind. Awareness is the basic dimension of brand equity and has three dimensions:
  • Brand recognition: consumer is able to identify a brand if it is presented to them on a list or if hints/cues are provided.
  • Brand recall: consumer can retrieve a brand name from memory without any reminders.
  • Top-of-mind-awareness (TOMA): brand is first that consumer thinks of when asked about product category.
  • The failure of dot-coms can be seen in part as a failure of not building successful brand equity such that consumers could remember and know what their businesses did. Indeed, the dot-coms assumed that basic brand awareness was all they needed, when in fact the brand must ultimately be tied to some benefit.
  • Brand Image: the types of associations that come to mind when contemplating a particular brand.
  • An association is simply the particular thoughts and feelings that a consumer has about a brand.
  • Associations can be based on attributes (product-related and non-product-related), benefits, and overall evaluation (attitude).
  • Associations derived from brand benefits stem from functional, symbolic, or experiential needs. (Note: These needs are explained in Chapter 5)
  • Four main kinds of associations aretype, favorability, strength, and uniqueness.

Five dimensions have been identified for different brands’ “personalities.”

  1. Sincerity—brand is seen as down to earth, wholesome and cheerful (e.g., Mr. Goodwrench).
  2. Excitement—brand is seen as daring, spirited, imaginative, and up-to-date (e.g., Hummer).
  3. Competence—brand is seen as reliable, intelligent, and successful (e.g.,

Toyota).

  1. Sophistication—brand is seen as upper class and charming (e.g., Rolex).
  2. Ruggedness—brand is seen as tough and outdoorsy (e.g., Timberland)

Enhancing Brand Equity

Efforts to enhance a brand’s equity are accomplished through the initial choice of a positive brand identity but mostly through marketing and marcom programs that forge favorable, strong, and unique associations with the brand in the consumer’s mind.

Three ways by which brand equity is enhanced: (1) speak-for-itself approach, (2) message-driven approach, and (3) leveraging approach.

  1. Enhancing Equity by Having Brand Speak for Itself -by trying and using brands, consumers learn how good (or bad) they are and what benefits they are (in)capable of delivering. Marketers help the brand to speak for itself through point-of-purchase materials and appealing sales promotions.
  2. Enhancing Equity by Creating Appealing Messages - marcom practitioners can build advantageous associations via the dint of repeated claims about the features a brand possesses and/or benefits it delivers. This tack is effective if the marcom message is creative, attention getting, and believable.
  3. Enhancing Equity via Leveraging -brand associations can be shaped and equity enhanced by leveraging positive associations already contained in the world of people, places, and “things” that are available to consumers.

TEACHING NOTE: When using the leveraging approach, three factors influence the result (from Keller 2003, chapter endnote #21):

  • What is the consumer’s knowledge of the other entity (i.e., person, place, or thing)?
  • How meaningful is that knowledge?
  • How likely is it that that knowledge will actually affect what they think of the brand?

Leveraging Associations from other Brands –alliances between two brands can enhance both brands’ equity and profitability.

  • Co-branding: two brands enter into an alliance that potentially serves to enhance both brands’ equity and profitability. Brands that enter into alliances do so on grounds that their images are similar, that they appeal to the same market segment, and that the co-branding initiative is mutually beneficial. Most important requirement for success is that brands possess a common fit and that the combined marcom efforts maximize the advantages of the individual brand while minimizing the disadvantages.

TEACHING NOTE: A recent study examined the impact of co-branding on consumers’ perceptions of brand equity for the co-branded product and the two brands that comprised it and concluded that co-branding represents a “win/win strategy” for both partners. The study found that while low equity brands benefit most from co-branding, the brand equity of the high equity brand was not denigrated even when paired with a low equity partner brand. So the worst case scenario of a high equity brand paired with a low-equity partner results in no loss of equity for the higher equity brand, and the best case scenario is one in which both partners experience substantial benefits from the alliance. (Source: Washburn, Judith H., Brain D. Till, and Randi Priluck (2000), “Co-Branding: Brand Equity and Trial Effects,” Journal of Consumer Marketing, 17(7), 591-604.)

  • Ingredient branding: pairing a branded ingredient to build equity in a brand (e.g., “Intel Inside”).

TEACHING NOTE: Another example ofingredient branding is The Solae Company, which is trying to increase consumer awareness of its soy protein and products that include it. This company, along with General Mills, created 8th Continent Soymilk, and the Solae soy protein ingredient is prominently featured in the product’s advertising. The manufacturers believe that touting the fact that Solae soy protein is an ingredient is a smart strategy because they can provide consumers taste assurance and years of nutritional research backing its nutrition claims. This example, as well as a few others, led the author to suggest three things that should be kept in mind when considering ingredient branding:

  • the ingredient brand and the finished product should each support the other’s positioning,
  • functional claims need to be backed by research, and the host brand should receive incremental marketing value from the relationship, and
  • all marketing activity should convey a consistent message to consumers.

(Source: “Branding Partnerships: The Combination of Branded Products WithBranded Ingredients Can Create Consumer Pull,” (2005),Beverage Industry, (June), 59-62.)

Leveraging Associations from People – aligning a brand with people, such as employees or endorsers, can be both advantageous and disastrous as the brand is linked with their reputation. Companies that cannot manage the reputation of the people with whom they have linked their brand may suffer if the person becomes discredited.

Leveraging Associations from Things –events and causes provide opportunities for linkages with brands.

Leveraging Associations from Places – the channel through which a brand is carried (Wal-Mart vs. Nordstrom) or country-of-origin both serve as possible associations through which a brand can enhance their image. “Made in” labels have varying influence on consumers dependent upon the associations of the target market with the particular country.

What Benefits Result From Enhancing Brand Equity?

brand loyalty determines the long-term growth and profitability of a brand

  • insulates the brand from price competition
  • consumers expectations and adoption of brand extensions influence their loyalty

TEACHING NOTE: Marketers should be aware, however, that care must be taken when enhancing brand equity to avoid the situation called trademark cancellation, or“genericide.” This is a condition in which a manufacturer’s brand represents a product category in consumers’ minds, and consequent legal action may result in that brand name being declared a generic term. Examples of brands that have suffered from genericide are aspirin, thermos, yo-yo,shredded wheat, escalator, and trampoline. If this is the case, that brand’s mark can be used by competitors. Taylor and Walsh (2002) reviewed court cases andoffer ways to avoid a finding of genericness:

select a distinctive, nongeneric name when the product is introduced,

monitor employees’ and advertising’s use of the trademark,

monitor competitors’ and others’ use (i.e., trade) of the trademark,

make use of appropriate survey evidence when a case comes about, and

make use of expert witnesses (p. 165).

While marketers want their brand to dominate a product category, it is imperative that a brand’s owner takes actions to preserve the legal protection of the brand’s equity. For more information on this issue, see Oakenfull, Gillian and Betsy Gelb (1996), “Research-Based Advertising to Preserve Brand Equity But Avoid ‘Genericide’,” Journal of Advertising Research, (Sept/Oct) 65-73 and Taylor, Charles R. and Michael G. Walsh (2002), “Legal Strategies for Protecting Brands from Genericide: Recent Trends in Evidence Weighted in Court Cases,” Journal of Public Policy & Marketing, 21 (Spring), 160-167.

Characteristics of World-Class Brands

The biannual EquiTrend survey usesthree main dimensions to determine highly successful brands: familiarity with a brand, quality and likelihood of purchasing a product.

  • Combining the three dimensions gives a brand equity score.
  • 10 world class brands identified in Table 2.2: Reynolds Wrap, Ziploc, Hershey’s Milk Chocolate Bars, Kleenex Facial Tissues, Clorox Bleach, WD-40,Heinz, Windex, and Campbell’s Soup.
  • All these brands had a straightforward promise of what they deliver, have consistently delivered it, and have positive associations in consumers’ memories.

The annual Interbrand ranking determines 100 top global brands by using: (1) the percentage of a company’s revenue that can be credited to a brand, (2) the strength of a brand in terms of influencing customer demand at the point of purchase, and (3) the ability of the brand to secure continued customer demand.

  • Top brands identified in Table 2.3: Coca-Cola, Microsoft, IBM, GE, Nokia, Toyota, Intel, McDonald’s, Disney, and Mercedes.
  1. Affecting Behavior and Achieving Marcom Accountability

Marcom efforts should be directed, ultimately, at affecting behavior rather than stopping with enhancing equity.