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Brand equity is the general evaluation of the worthness of a brand from the perspective of the consumers. Therefore, it is a key component in brand management and a key source of competitive advantage for many organizations in the global economy. Keller (1998) claims that brand equity is the effect of brand knowledge on the marketing strategies applied for the brand. Therefore, brand knowledge is key to the idea of brand equity a high level of brand awareness increases the chances of choosing a brand. Brand awareness and image can also be used in the definition of brand equity. Awareness of a brand is the strength of memory of the brand in the consumer’s mind. This enables the consumer to identify the products in different conditions. On the other hand, brand image is related with consumers’ perceptions about the brand as shown by the brand associations in the memory of the consumer.
Brand equity is a set of associations held in the consumer’s memory in relation to the brand. This definition shows that brand equity is highly related to the attitudes of the consumers consisting of beliefs, affection, and other familiarities related to the brand such as brand outlook. Research on brand equity has shown four cognitive components of brand equity in a consumer-oriented perspective. These components are global brand attitude, brand knowledge, strength of consumer preference, and brand heuristic. Other aspects have been used to extend brand equity by using aspects such as brand relations, perceived excellence, brand reliability, and awareness (Srinivasan, Park and Chang, 2005). In light of these aspects of brand equity, brand equity can be taken to be a set of resources and responsibilities linked to a specific brand, which add or subtract value from the brand in the eyes of the consumers.
Significance of Brand Equity
The value of brand equity is derived from five assets of brand equity. These assets are awareness, loyalty, perceived quality, brand associations, as well as other rand assets. The most significant assets in this list are brand associations and perceived quality of the products. These brand equity assets are essential in adding value for both the customer and the enterprise. Brand loyalty on the side of the customers can enable a brand to withstand an attack from the marketing strategies of a competitor. This also makes the efforts undertaken by the competitive manufacturers to draw the devoted clientele of other brands to be unsatisfactory in this effect. Brand awareness is essential in providing familiarity to a brand and acts as a sign of sustainability and promise for the customers about quality and satisfaction. This influences consideration of a customer to a brand as well as the selection of a brand by the customer in the market due to brand memory. Perception of quality influences brand loyalty and the decision to purchase. This is especially true in cases where the customer is not stimulated by marketing inducements or does not have the time to undertake detailed analysis before the purchase. Brand association is essential in the memorization of information and is used as the base for product extension and differences (Donthu, Lee & Yoo, 2000). Therefore, brand associations provide a purchase reason for consumers and arouse positive feelings towards a product.
Brand equity creates worth for both the producers and the clients. However, manufacturer value is created from the client’s value for brand equity as a base. Other dimensions of brand equity such as awareness, brand associations, and perceived quality lean towards influencing brand loyalty, one of the assets of brand equity. In effect, brand loyalty is the primary basis for brand equity and is independent from other brand equity dimensions. Proprietary brand assets in the five assets of brand equity include trademarks, patents, and distributors and are more difficult to measure. Therefore, previous research on brand equity focuses on the measurement of the other assets, which are brand relations, loyalty superficial excellence, and brand knowledge (Aaker & Jacobson, 1994). What follows is an explanation of some of the factors that influence brand equity in international marketing.
Marketing communication in the consumer market is mostly composed of advertising. Therefore, advertising expenditure is important in determining the effect of communication on consumers and brand equity. The perception about advertising is that it provokes consumers in different segments of the market since different individuals in the target market are provoked by different message in the advertisements (Angel & Manuel, 2005). Studies have shown that marketing communication in a firm contributes significantly to brand equity. This means that effective communication in the market is essential in the creation of a affirmative brand representation and brand knowledge.
The perceptions of consumers on the level of spendingon advertising can have an effect on brand equity, as well as all its constituent components. If consumers perceive high spending on advertising bty a firm, they feel that the management of the firm is confident about the product thus influencing the perceived quality of the product. This relationship between marketing expenditure and perceived quality has been justified by studies such as Aaker and Jacobson (1994). This study showed the positive relationship between expenditure on marketing and the investment of the firm in a brand. Increased investment in a brand involves a higher perception on quality of the brand. The positive relationship between investrment in marketing and quality not only affects perceived quality but also supports the decision to purchase by the consumer due to increased product value. The consumer receiving the advertisement perceives it as a reaffirmaion of his or her decision to purchase.
Some of the variables that may be used in determining brand equity are brand awareness and brand attitude, which utilize the exposure effect toinfluence the valuation of a customer towards a specific brand. Exposure effect is the phenomenon of exposing a marketing objective repeatedly. The audience of a marketing campaign will have a positive attitude towards the marketing objective when it is exposed repeatedly. Exposure effect is also a key aspect in the alteration of consumer preferences and attitudes. Purchase willingness and confidence, as well as brand knowledge, attitude, and familiarity are all influienced by marketing expenditure. Purchase decision is influenced by the increase in brand value, which is influenced by increased marketing expenditure.
Pricing and Price Promotion
Price promotions are a common marketing strategy used by firms to beat their competition in highly competitive markets. However, research has shown that price promotion as a marketing strategy reduces brand equity. Although reduction in product prices increases the willingness of consumers to purchase, the effect on brand choices is mostly short term. Promotions affect brands by changing price sensitivity of non-loyal customers, but the effect is minimal upon consideration of the long-term effects. Therefore, price promotions erode brand equity in the end. The main reason for this effect is customers consider that price as an indirect standard of product quality. The concept that price is positively correlated to product quality plays an important role in this relationship. It makes consumers to shun the products that have to use incentives that affect the established price level because of the negative effect on brand equity.
Although sales and price promotions have short-term benefits for the consumers, they weaken brand equity and have a negative long-term effect on sales. Purchase willingness and perceived quality are negatively influenced by the reduction in prices as a marketing strategy. Lowering the price of products in the market may also lead to confusion among the consumers. The reason for this effect is that variability and instability in prices presents an image of instability in quality (Donthu, Lee & Yoo, 2000).
Goods and services can be presented on a continuum based on experience, search, or credence attributes that the consumers use to evaluate products in the market. Search products are those that the consumer requires adequate information before making the purchase decision because of their attributes. The consumer can only evaluate experience products after some consumption, as opposed to before the purchase. On the other hand, credence goods have attributes that the consumer cannot verify even after consuming them. These categories mean that some products can be inspected to identify favorable characteristics before purchase. Experience goods can only be assessed after consumption while credence goods have attributes that are still unknown to consumers after the purchase. This makes credence goods significantly different from the search and experience goods. The uncertainty experienced by consumers before the purchase of these goods is different and essential in the selection of marketing strategies. Credence and experience goods, which have higher pre purchase uncertainty, require more effective and frequent marketing strategies. Therefore, although there is a positive relationship between brand equity and advertising expenditure, the relationship is not homogenous for all products. The relationship is significantly different for different product categories.
Based on the category of products being marketed, price and provision of added information can be beneficial for consumers and sellers in terms of brand equity. Since search goods have low levels of variability, price acts as the primary driver of purchase decisions. For the other products price is not as significant as additional information. This means price promotion for experience and credence goods erodes brand equity significantly. The difficulty of obtaining pre purchase information for experience and credence goods mean that price is used as a direct cue of the quality of these products. This means the impact of price promotion on brand equity is different for search and non-search goods (Mitra, Reisss & Capella, 1999).
Distribution of products in the market can be said to be intensive when the products are easy to access and available in a large number of stores. However, distribution types differ based on products and their effect on brand equity is variable. Consumer satisfaction is higher when products are available to consumers conveniently. Intensity in distribution reduces the search time for products, thus; lowering the cost of travel to different stores while gathering information. Products that are intensively distributed require less sacrifice by the consumers thus makes the acquisition of such products more acceptable and friendly. Consumer satisfaction based on convenience of purchase for a product results in positive perceived quality, which increases brand equity. However, the nature of the products also influences the effect of distribution on brand equity. The need for servicing or the urgency of consumption results in increased brand equity for products that are intensively distributed (Donthu, Lee and Yoo, 2000).
Strong brand associations and brand awareness results in a given brand image for a product. Brand associations are complex and connected through episodes and ideas that establish the network of brand knowledge. The associations are more solid if they are based on multiple instances of experience or communication exposure through marketing. Brand associations that result in high brand awareness are positively related to brand equity because they show commitment in the firm and thus increased quality. This influences the decisions of buyers during the purchase and thus the long-term behavior for the brand is improved. A high level of perceived quality implies that consumers recognize differentiation in the product. Perceived quality is an essential component of rand value for a product and signifies superiority of the product in the market (Aaker, 1991). In the fast food service industry, perceived value is based on previous experience at the restaurant and knowledge about the products offered at the restaurant. Brands that offer convenience to the consumers in terms of quick service are perceived better that those offering slow service (Whalen, 2009). Providing information on the source of the good in terms of the supply chain can also show confidence in this industry thus improving perceived quality for consumers.
Indirect Elements in the Marketing Mix
Brand equity is also affected by other indirect elements of the marketing mix. These elements are mostly out of the control of the firm but still influence brand equity and the decisions of consumers. Country of origin is one such factor. The country of origin for many products and services is more important than the country of manufacture because of globalization, internationalization, and outsourcing. Studies have shown that the country of origin effect may affect the equity of certain brands (Thakor & Katsanis, 1997). The country of origin effect works by building secondary associations for the brand. It is important for the marketer to understand the sources of brand equity in the international context in order to leverage on them. One of the brand equity components affected by country of origin is the perceived quality. Moreover, the country of origin effect differs based on product category and the destination country (Chattopadhyay, Shivani & Krishnan, 2009).
Another indirect element of the marketing mix that influences brand equity is peer recommendation. This works because consumers have more trust in information created by other consumers, as opposed to the manufacturers or sellers. Consumers search this information to reduce the risk and obtain accurate pre-purchase information. This means information from other consumers is more important than marketing information from the firm. Positive information from colleagues, friends, and relatives may influence a consumer to purchase a product. Such information increases perceived quality thus increasing brand equity and the possibility of purchasing the product.
Measurement of Brand Equity in the Fast Foods Industry
Brand equity in the fast foods industry can be measured by assessing the regulatory understanding of the restaurant. This can be assessed in relation to the Food and Drugs Authority regulations on hygiene and quality. Innovation through the development of products that appeal to the consumers is important. Responsiveness to the specific needs of markets in different markets and market segments is another important aspect of brand equity in this industry. The issue of regionalization in foreign countries should be assessed in this category. Additionally, the perceived quality of ingredients is an important element that can be used to measure brand equity (Kulkarni, 2009). Finally, the aspect of price is also essential, because of the minimal search required for the purchase of fast food; a price strategy would be an adequate measure of brand equity.
In conclusion, brand equity in an international context is dependent on different aspects some of which are from within the firms while others are external. Some of the internal factors are distribution, pricing and price promotion, marketing communication, perceived quality and product category. Brand equity is based on the perceptions of people about a brand based on their experience and knowledge about the brand. Some aspects such as price endorsement have a harmful result on brand equity although they may have a positive effect on short-term revenue. Issues such as country of origin and peer recommendation affect brand equity because of their effect on perceived quality. These factors affect brand associations even though they are beyond the control of companies. For firms to succeed in the competitive global economy, they have to be aware of the sources of their brand equity in order to leverage them. This will also be beneficial because it reduces the possibility of consumer confusion through strategies that are not in line with customer expectations.