Brand Value Equity: Three Levels Of Brand Equity

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Brand equity is usually defined as the marketing effects or outcomes that accrue to a product given its brand name compared with those that would accrue if the same product does not have the brand name. Brands with high levels of equity are associated with outstanding performance including sustained price premiums, inelastic price sensitivity, high market shares, successful expansion into new categories, competitive cost structures and high profitability.
Brand Value Creation: to explain the phenomena of brand equity, Keller and Lehmann (2003) developed the brand value chain (BVC) model. It theoretically explains how brand related to investments affect firm financial value by changing customer mindsets and subsequent market performance. Brand
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The outcome of these actions are reflected in market performance indicators such as price premiums, reduced price elasticity, increased market share, brand expansion into other categories, etc. Based on the brand’s market performance, the financial market makes assessments and adjustments to reflect the value of the brand.
Three Levels of Brand Equity Measures: The extant literature has proposed brand equity measures at three levels: individual, product and firm. One approach is to measure consumer’s state of mind with regard to a brand, i.e. consumer-based brand equity (CBBE). This family of mindset measures includes awareness, attitude, attachments, associations, loyalty toward a brand, etc.
Another approach involves measuring product level outcomes. These measures of brand equity include loyalty, price premium, market share, revenue, net profit, etc. Since these metrics can be obtained and computed through sales information, they maintain the desirable features of being accessible and objective. Moreover, because these measures are closely related to financial returns, they provide a valuable reference for brand
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Customers decide what to purchase and what not to purchase based on their preferences and their perceptions of brands. The customer level process by which these preferences emerge and impact observed behavior can be captured using hierarchy of effects models and can be appropriately summarized via the following aspects: (1) brand awareness; (2) brand associations; (3) attitudes toward the brand; (4) brand attachment; and, (5) brand-related purchase and post-purchase behaviors. Brand awareness ranges from simple recognition to brand recall. Brand associations are the pieces of information in consumers’ memories that are activated by the brand name. Customer attitudes towards the brand can range from negative effects such as hatred to simple acceptability or attraction. Brand attachment ranges from disinterest to higher levels of the loyalty hierarchy such as advocacy, love, and even addiction. Finally, customer activity is the ultimate behavioral outcome of brand equity, namely purchase, consumption frequency, involvement, price sensitivity, word-of-mouth communications,

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