Managing Brand Equity By David A. Aaker Review

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My rating: 4 Stars

Managing Brand Equity Review:

Right at the start I have to say that this books is best to use as continuation to the book Building Strong Brands written by the same author. First book will teach you on what steps you need to take when starting to build your brand; and from this book you will learn proper steps that you need to take in order to manage your brand along the way and focusing on long-term profits more, over the short-term profits. I have to say that you won’t get much just by reading one of these two books – you have to read them both.

Let me just to quickly summarize you chapters:

  1. What Is Brand Equity?
  2. Brand Loyalty
  3. Brand Awareness
  4. Perceived Quality
  5. Brand Associations The Positioning Decision
  6. The Measurement of Brand Associations
  7. Selecting, Creating, and Maintaining Associations
  8. The Name, Symbol, and Slogan
  9. Brand Extensions The Good, the Bad, and the Ugly
  10. Revitalizing the Brand
  11. Global Branding and a Recap

Like the first book from that I’ve read from David, this one is also very technically written with step-by-step instructions how you will approach on managing your established brand. Same as the first book because it’s written in this matter, there are too much content in it to be digested all at once. You’ll definitely will need to get through this book and the first one to get best out of them. Take a lot of notes from them and through them several times. If you like to get my notes from this book send me an email, I’m glad to share my notes.

There are many stories of successful brand management, as well as many stories from band brand managements which leads into failing business. And I think it’s much important to focus on failures and learn from other companies mistakes what we need to avoid doing. One thing that has surprise me is, that how even established brand which are not upscale brands can’t become upscale because of the brand perception that was already established – the story of Levi’s tailored suits and failing with that business. Of course this is just one story, there’s plenty more; but important lesson here is, we need to establish at the beginning what we want our brand to represent.

I suggest everyone to read both of these books because they offer great content and learning material. After all, both of these books was written by a professor and a man who have the credibility. It’s much better to read books from people like David.

If you like, you can read my other reviews of Marketing & Sales Books

Also, check out my Best Business Books List

Managing Brand Equity Summary:

1 – What Is Brand Equity?

THE IVORY STORY

One Sunday in 1879 Harley Procter, one of the founders of the candle and soap firm Procter & Gamble (P&G), heard a sermon based on the Forty-fifth Psalm, “All thy garments smell of myrrh, and aloes, and cassia, out of ivory palaces.” The word “ivory” stuck in his mind— and became the name of the firm’s white soap.

THE ROLE OF BRANDS

A brand is a distinguishing name and/or symbol (such as a logo, trademark, or package design) intended to identify the goods or services of either one seller or a group of sellers, and to differentiate those goods or services from those of competitors. A brand thus signals to the customer the source of the product, and protects both the customer and the producer from competitors who would attempt to provide products that appear to be identical.

BRAND-BUILDING NEGLECT

Despite the often obvious value of a brand, there are signs that the brand-building process is eroding, loyalty levels are falling, and price is becoming more salient. The accompanying insert suggests a series of indicators of a lack of attention to brands which most firms will find familiar.

  • THE USE OF SALES PROMOTION
  • PRESSURES FOR SHORT-TERM RESULTS
    • The Brand-Building Potential of Advertising

THE ROLE OF ASSETS AND SKILLS

One approach to introducing a strategic orientation is to change the primary focus from managing short-term financials to the development and maintenance of assets and skills. An asset is something a firm possesses, such as a brand name or retail location, which is superior to that of the competition. A skill is something a firm does better than its competitors do, such as advertising or efficient manufacturing.

  • MANAGING THE BRAND NAME

WHAT IS BRAND EQUITY?

Brand equity is 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.

  • PROVIDING VALUE TO THE CUSTOMER
  • PROVIDING VALUE TO THE FIRM
  • BRAND LOYALTY
  • AWARENESS OF THE BRAND NAME AND SYMBOLS
  • PERCEIVED QUALITY
  • A SET OF ASSOCIATIONS
  • OTHER PROPRIETARY BRAND ASSETS

WHAT IS THE VALUE OF A BRAND?

Developing approaches to placing a value on a brand is important for several reasons.

  • PRICE PREMIUMS GENERATED BY THE BRAND NAME
  • BRAND NAME AND CUSTOMER PREFERENCE
  • REPLACEMENT COST
  • BRAND VALUE BASED UPON STOCK PRICE MOVEMENTS

BRAND VALUE BASED UPON FUTURE EARNINGS

The best measure of brand equity would be the discounted present value of future earnings attributable to brand-equity assets. The problem is how to provide such an estimate.

  • APPRAISING BRAND ASSETS
    • Brand Loyalty
    • Awareness
    • Perceived Quality
    • Brand Associations
    • Other Brand Assets
  • ESTIMATING A MULTIPLIER
  • TWO QUALIFICATIONS

ISSUES IN MANAGING BRAND EQUITY

  1. The bases of brand equity
  2. Creating brand equity
  3. Managing brand equity
  4. Forecasting the erosion of equity
  5. The extension decision
  6. Creating new names
  7. Complex families of names and sub-names
  8. Brand-equity measurement
  9. Evaluating brand equity and its component assets

2 – Brand Loyalty

THE MICROPRO STORY

In 1979, MicroPro introduced a word-processing program called WordStar to run on CP/M, the standard operating system of the day for personal computers.¹ The first reliable, full-featured word-processing program, WordStar came to dominate the market for serious word-processing users. With a clever use of pairs of keystrokes, a touch typist could do a wide variety of word-processing tasks extremely quickly.

BRAND LOYALTY

The brand loyalty of the customer base is often the core of a brand’s equity. If customers are indifferent to the brand and, in fact, buy with respect to features, price, and convenience with little concern to the brand name, there is likely little equity.

  • BRAND LOYALTY AS ONE BASIS OF BRAND EQUITY

MEASURING BRAND LOYALTY

  • BEHAVIOR MEASURES
  • SWITCHING COSTS
  • MEASURING SATISFACTION
  • LIKING OF THE BRAND
  • COMMITMENT

THE STRATEGIC VALUE OF BRAND LOYALTY

  • REDUCED MARKETING COSTS
  • TRADE LEVERAGE
  • ATTRACTING NEW CUSTOMERS
  • TIME TO RESPOND TO COMPETITIVE THREATS

MAINTAINING AND ENHANCING LOYALTY

  • TREAT THE CUSTOMER RIGHT
  • STAY CLOSE TO THE CUSTOMER
  • MEASURE/MANAGE CUSTOMER SATISFACTION
  • CREATE SWITCHING COSTS
  • PROVIDE EXTRAS

SELLING OLD CUSTOMERS INSTEAD OF NEW ONES

Perhaps the most common mistake that firms make is to attempt to grow mainly by attracting new customers.

  • A CUSTOMER-RETENTION ANALYSIS

3 – Brand Awareness

THE DATSUN-BECOMES-NISSAN STORY

In 1918 a Japanese automobile firm soon to become Nissan produced a two-seat automobile they called Datson—“the son of Dat.” In part an acronym, this name reflected the initials of the car’s three main financial backers: Den, Aoyama, and Takeuchi.¹ The name was later changed to Datsun, in part to avoid confusion with a similar word which in Japanese meant “to lose money.”

THE GE-BECOMES-BLACK & DECKER STORY

In contrast, Black & Decker, which in 1985 acquired GE’s small-appliance business, decided on an abrupt name change even though they had the freedom to use the GE name for several years

WHAT IS BRAND AWARENESS?

Brand awareness is the ability of a potential buyer to recognize or recall that a brand is a member of a certain product category.

HOW AWARENESS WORKS TO HELP THE BRAND

  • ANCHOR TO WHICH OTHER ASSOCIATIONS CAN BE ATTACHED
  • FAMILIARITY/LIKING
  • SUBSTANCE/COMMITMENT
  • BRANDS TO CONSIDER
  • THE COFFEE STUDY
  • LANDOR’S IMAGEPOWER
  • THE LIMITATIONS OF AWARENESS

THE POWER OF OLD BRAND NAMES

Certainly there is a decay factor over time, especially when top-of-mind recognition is involved. However, a remarkable phenomenon is that when a brand becomes really well established, with high recognition created as a result of many exposures and usage experiences, recognition tends to stay high over a long time-period even if advertising support is dropped.

HOW TO ACHIEVE AWARENESS

  • BE DIFFERENT, MEMORABLE
  • INVOLVE A SLOGAN OR JINGLE
  • SYMBOL EXPOSURE
  • PUBLICITY
  • EVENT SPONSORSHIP
  • CONSIDER BRAND EXTENSIONS
  • USING CUES
  • RECALL REQUIRES REPETITION
  • THE RECALL BONUS

4 – Perceived Quality

THE SCHLITZ STORY

The Joseph Schlitz Brewing Company started in 1850 as a small brew-house supplying a Milwaukee restaurant. It received a growth impetus when the 1871 Chicago fire destroyed many of that city’s breweries. In 1872 the slogan “The beer that made Milwaukee famous” was born.

WHAT IS PERCEIVED QUALITY?

Perceived quality can be defined as the customer’s perception of the overall quality or superiority of a product or service with respect to its intended purpose, relative to alternatives.

HOW PERCEIVED QUALITY GENERATES VALUE

  • REASON-TO-BUY
  • DIFFERENTIATE/POSITION
  • A PRICE PREMIUM

CHANNEL MEMBER INTEREST

  • BRAND EXTENSIONS
  • THE PIMS FINDINGS

WHAT INFLUENCES PERCEIVED QUALITY?

  • DIMENSIONS OF PERCEIVED QUALITY: THE PRODUCT CONTEXT
  • DIMENSIONS OF PERCEIVED QUALITY: THE SERVICE CONTEXT
  • DELIVERING HIGH QUALITY
  • SIGNALS OF HIGH QUALITY
  • PRICE AS A QUALITY CUE
  • MAKING PERCEPTIONS MATCH ACTUAL QUALITY

5 – Brand Associations The Positioning Decision

THE WEIGHT WATCHERS STORY

In 1978 the H. J. Heinz Company bought the Weight Watchers International for $71 million, and Foodways National, which made and marketed Weight Watchers frozen entrees, for $50 million.¹ Two years later they purchased Camargo Foods, a Weight Watchers licensee for nonfrozen foods.

ASSOCIATIONS, IMAGE, AND POSITIONING

A brand association is anything “linked” in memory to a brand. The association not only exists but has a level of strength. A link to a brand will be stronger when it is based on many experiences or exposures to communications, rather than few. It will also be stronger when it is supported by a network of other links.

HOW BRAND ASSOCIATIONS CREATE VALUE

  • HELP PROCESS/RETRIEVE INFORMATION
  • DIFFERENTIATE
  • REASON-TO-BUY
  • CREATE POSITIVE ATTITUDES/FEELINGS
  • BASIS FOR EXTENSIONS

TYPES OF ASSOCIATIONS

  • PRODUCT ATTRIBUTES
  • INTANGIBLES
  • CUSTOMER BENEFITS
  • RELATIVE PRICE
  • USE/APPLICATION
  • USER/CUSTOMER
  • CELEBRITY/PERSON
  • LIFE-STYLES/PERSONALITY
  • PRODUCT CLASS
  • COMPETITORS
  • COUNTRY OR GEOGRAPHIC AREA

6 – The Measurement of Brand Associations

THE FORD TAURUS STORY

In December of 1985, Ford launched its Taurus automobile.¹ As shown in Figure 6-1, it had a rounded, aerodynamic look and “feel.” This design was a radical departure from the norm, and thus a major risk for Ford.

WHAT DOES THIS BRAND MEAN TO YOU?

  • INDIRECT APPROACHES
  • FREE ASSOCIATION
  • PICTURE INTERPRETATION
  • IF THIS BRAND WERE A PERSON
  • ANIMALS, ACTIVITIES, AND MAGAZINES
  • THE USE EXPERIENCE
  • THE DECISION PROCESS
  • WHAT IS THE BRAND USER LIKE?
  • WHAT DISTINGUISHES BRANDS FROM ONE ANOTHER?
  • FROM PRODUCT ATTRIBUTES TO BENEFITS TO PERSONAL VALUES
  • INTERPRETING QUALITATIVE MARKETING RESEARCH

SCALING BRAND PERCEPTIONS

  • BEYOND ATTRIBUTES AND BENEFITS
  • WHO ARE THE RELEVANT COMPETITORS?
  • REMOVING REDUNDANCY: IDENTIFYING UNDERLYING DIMENSIONS
  • IDENTIFYING THE IMPORTANT PERCEPTUAL DIMENSIONS
  • THE SCALING TASK
  • DETERMINING PERCEPTIONS BY SEGMENT
  • BEYOND PERCEPTIONS
    • Association strength
    • Clarity of the image

7 – Selecting, Creating, and Maintaining Associations

THE DOVE STORY

Dove was introduced nationally in 1957. It was positioned as a beauty bar (not a soap) with one-fourth cleansing cream that “creams” skin while washing. The cleansing cream was shown being poured into the beauty bar.

THE HONEYWELL STORY

Honeywell is a $7 billion firm which has long been a leader in providing solutions to control and automation problems for buildings, industrial process applications, aircraft, and other settings. In most areas it is considered the premium high-quality option.

WHICH ASSOCIATIONS?

  • SELF-ANALYSIS
  • COMPETITORS’ ASSOCIATIONS
  • TARGET MARKET
    • An Association That Provides a Reason-to-Buy
    • An Association That Adds Value
    • Transformational Advertising
    • A Segmentation Commitment

CREATING ASSOCIATIONS

  • IDENTIFYING AND MANAGING SIGNALS
  • UNDERSTANDING UNANTICIPATED SIGNALS
  • THE ROLE OF PROMOTIONS
    • Strengthening Associations and Brand Awareness
    • Promotions to Enhance Loyalty
    • Promotions to Enhance Perceived Quality
    • Add Value
  • THE ROLE OF PUBLICITY
  • INVOLVING THE CUSTOMER
  • CHANGING ASSOCIATIONS

MAINTAINING ASSOCIATIONS

  • BE CONSISTENT OVER TIME
  • BE CONSISTENT OVER ELEMENTS OF THE MARKETING PROGRAM
  • USE THE ORGANIZATION TO PROTECT BRAND EQUITY

MANAGING DISASTERS

  • RESPONDING TO DISASTERS

8 – The Name, Symbol, and Slogan

THE VOLKSWAGEN STORY

In 1968 the VW Beetle (or Bug) sold 423,000 units in the U.S.—more than any other single automobile model had ever sold. That record, which still stands, was to be the high-water mark for the remarkable little German import, a car that sold more units than the Model-T Ford.

NAMES

The name is the basic core indicator of the brand, the basis for both awareness and communication efforts. Often even more important is the fact that it can generate associations which serve to de- scribe the brand—what it is and does. In other words, the name can actually form the essence of the brand concept.

  • GENERATING ALTERNATIVES
  • IS IT EASY TO LEARN?
  • DOES IT SUGGEST THE PRODUCT CLASS?
  • WILL THE NAME SUPPORT A SYMBOL OR SLOGAN?
  • DOES IT SUGGEST DESIRED BRAND ASSOCIATIONS?
  • ARE THERE UNDESIRABLE ASSOCIATIONS?
  • IS THE NAME DISTINCTIVE?
  • WILL IT BE STRONG LEGALLY?
  • THE SELECTION PROCESS
  • CHANGING NAMES

SYMBOLS

The reality is that most firms and products are fairly similar; the differences that do exist, such as service quality, are difficult to communicate in an effective and credible manner. When products and services are difficult to differentiate, a symbol can be the central element of brand equity, the key differentiating characteristic of a brand.

  • ATTRIBUTE ASSOCIATIONS
  • MULTIPLE ASSOCIATIONS
  • POSITIVE FEELINGS: LIKING
  • SYMBOLS AS INDICATORS OF BRANDS AND PRODUCT CLASSES
  • UPGRADING THE SYMBOL
  • GUARDING THE SYMBOL

SLOGANS

As with the name and symbol, a slogan is most effective if it is specific, to the point, and memorable for some reason—interesting, relevant, funny, catchy, or whatever. It also needs to be linked to the brand. Some brands have spent tens of millions, only to find that few shoppers can link the brand with the slogan.

9 – Brand Extensions The Good, the Bad, and the Ugly

THE LEVI TAILORED CLASSICS STORY

In the early 1980s Levi Strauss, a $2 billion firm, enjoyed a large market share in its various product categories and felt that it needed to expand its market in order to maintain growth. The expansion decision was guided by a segmentation study of the men’s apparel market which revealed five distinct men’s apparel segments.

BRAND EXTENSIONS

Brand extensions, the use of a brand name established in one product class to enter another product class, have been the core of strategic growth for a variety of firms, especially during the past decade. The power of such a strategy is evidenced by the sheer “numbers.”

THE GOOD: WHAT THE BRAND NAME BRINGS TO THE EXTENSION

  • BRAND ASSOCIATIONS
  • QUALITY ASSOCIATIONS
  • AWARENESS/PRESENCE
  • TRIAL PURCHASE

MORE GOOD: EXTENSIONS CAN ENHANCE THE CORE BRAND

Extensions can (and ideally should) enhance the core brand. Instead of the extension’s weakening the brand name and draining its good will, the extension should reinforce its image, providing a building function.

THE BAD: THE NAME FAILS TO HELP THE EXTENSION

  • THE NAME DOES NOT ADD VALUE
  • NEGATIVE ATTRIBUTE ASSOCIATIONS
  • THE NAME CONFUSES
  • THE FIT IS POOR
  • POOR QUALITY PERCEPTIONS
  • THE EXTENSION IS NOT SUPPORTED

THE UGLY: THE BRAND NAME IS DAMAGED

  • UNDESIRABLE ATTRIBUTE ASSOCIATIONS ARE CREATED
  • EXISTING BRAND ASSOCIATIONS ARE WEAKENED
  • QUALITY IMAGE IS AFFECTED
  • A DISASTER OCCURS
  • THE BRAND FRANCHISE IS CANNIBALIZED

MORE UGLY: A NEW BRAND NAME IS FOREGONE

Perhaps the worst potential result of an extension is a foregone opportunity to create a new brand equity. Consider where P&G would be without Ivory, Camay, Dreft, Tide, Cheer, Joy, Pampers, Crest, Secret, Sure, Folger’s, Pringles, and their 70 or so other brands.

HOW TO GO ABOUT IT

  • WHAT ARE THE ASSOCIATIONS?
  • DETERMINING CANDIDATE PRODUCT CLASSES
  • SELECTING CANDIDATE PRODUCTS

STRATEGY CONSIDERATIONS

  • WHEN DOES AN EXTENSION MAKE SENSE?
  • THINK STRATEGICALLY
  • USE NESTED BRAND NAMES
  • HEDGE YOUR BETS
  • THE STAGE IN THE PRODUCT LIFE CYCLE
  • PROTECTING AND NURTURING THE BRAND NAME

10 – Revitalizing the Brand

THE YAMAHA STORY

Yamaha Pianos offers an example of how a declining market can be revitalized. After decades of investment and effort, Yamaha had succeeded in capturing 40% of the global piano market. Unfortunately, this market was declining by 10% every year and low-cost Korean firms were entering. It was a classic time to milk the brand equity and try to recover as much return as possible. Clearly, to even maintain share was going to be difficult and unrewarding.

INCREASING USAGE

  • INCREASING THE FREQUENCY OF USE
  • INCREASING THE QUANTITY USED

FINDING NEW USES

The detection and exploitation of a new functional use for a brand can rejuvenate a business which has been considered a has-been for years. A classic example is Jell-O, which began strictly as a dessert product but found major sources of new sales in applications such as Jell-O salads.

ENTERING NEW MARKETS

An obvious way to generate growth is to move into a new market area with the potential for new growth. Heretofore that market may not have been ready for the product, or the price may have been excessive for that market, or perhaps no firm had even thought of that market. In any case, it nevertheless represents untapped sales potential for the industry.

  • HOW TO FIND NEW MARKETS

REPOSITIONING THE BRAND

  • CHANGING ASSOCIATIONS
  • ADD VALUE BY DIFFERENTIATING: NEW ASSOCIATIONS

AUGMENTING THE PRODUCT/SERVICE

  • CUSTOMER INVOLVEMENT

OBSOLETING EXISTING PRODUCTS WITH NEW-GENERATION TECHNOLOGIES

Sometimes a sleepy industry can be revitalized by a product which obsoletes the existing installed base and accelerates the replacement cycle. Certainly the Yamaha Disklavier is such an example. Others include the large-head tennis racket, color television, and the transistor radio.

ALTERNATIVES TO REVITALIZATION: THE END GAME

THE MILKING OPTION

DIVESTMENT OR LIQUIDATION

SELECTING THE RIGHT END GAME: MILK VS. EXIT

11 – Global Branding and a Recap

THE KAL KAN STORY

Early in 1989, Mars changed the name of its Kal Kan cat food to Whiskas in the U.S., to complete the creation of a worldwide name.

THE PARKER PEN STORY

Parker Pen in 1985 launched a global business strategy in order to combat Cross from above and the Japanese from below.² The centerpiece of the effort was a new pen, called the Victor, and a common advertising campaign (built around the theme “It’s wrought from pure silver and writes like pure silk”), a common slogan (“Make your mark with a Parker”), and a common pricing strategy. The effort was a disaster—so bad in many of its 150 markets that local units resisted pressures to adopt it.

A GLOBAL BRAND?

Should there be a global brand—a single name, symbol, and slogan together with common associations? Should the same one familiar brand name (such as Kodak, McDonald’s, Sony, IBM, or Coca- Cola) be used throughout the world? Or should a variant, a related but different brand name, be adapted for each country, or even for different regions within a country? If different brands are now used, should they be replaced by a global brand name?

TARGETING A COUNTRY

Even if the name is not established, the constraint that the name, symbols, and associations work in all countries is very confining.

ANALYZING THE CONTEXT

A proposal for globalization of the brand—the symbol, the slogan, or associations—should be accompanied by a country-by-country (or region- by-region) analysis. As Figure 11-1 summarizes, there are a set of advantages and disadvantages to a global brand that can guide the analysis. Assume that there is a global brand option that will be driven by the largest markets or by the most established markets. For each country or region several questions need to be addressed.

A RECAP

After spending 10 chapters discussing brand equity and its management, it is time to sit back and reflect—to take as it were a stroll down memory lane.

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Product details

  • File Size: 5815 KB
  • Print Length: 331 pages
  • Publisher: Free Press (December 1, 2009)
  • Publication Date: December 1, 2009
  • Sold by: Amazon Digital Services LLC
  • Language: English
  • ASIN: B002ZJCR14
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Managing Brand Equity By David A. Aaker
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