Social Factors affecting Consumer Behaviour
Consumer Behaviour is an effort to study and understand the buying tendencies of consumers for their end use. Social factors play an essential role in influencing the buying decisions of consumers. Human beings are social animals. We need people around to talk to and discuss various issues to reach to better solutions and ideas. We […]
Customer Retention – A Strategic Process to Retain Existing Customers
It is difficult to exactly define customer retention as it is a variable process. A basic definition could be ‘customer retention is the process when customers continue to buy products and services within a determine time period’. However this definition is not applicable for most of the high end and low purchase frequency products as […]
How Inclusive Development by Engaging All Stakeholders is Essential for CSR
Resistance to Global Corporations and their activities In recent years, global corporations have realized that their activities across the developing countries are running into trouble because of fierce resistance from those indigenous peoples whose lands are being acquired by these global corporations as well as protests from civil society activists and environmentalists regarding concerns over […]
Stockholder Management vs. Stakeholder Management
The Dominant View: The Business of Business is Profits Ever since the modern corporation took shape in the form that it is now, there has been an overriding consensus that the corporation exists to serve its shareholders or stockholders. The late legendary economist of the Chicago School, Milton Friedman remarked that the “responsibility of business […]
The Role of Institutional Investors in Promoting Good Corporate Governance
We have discussed how corporate governance and the practice of ethical and normative business practices are essential for companies to stay the course and reap longer term benefits. In this article, we look at how institutional investors or the investors who are not individuals but large fund managers and investment houses play a major role […]
Imagine walking in aisle of a typical super market (Shaw’s, Costco etc) to purchase salt, there are many offerings but choice is “Morton”. It is a simple example but a great situation to understand brand and brand equity. Companies already know that identity of product created over period of time through strategic marketing is brand, but now what is “Brand Equity”.
From customer’s point of view, association created which results in favorable and positive action towards a brand, in context with other product can be referred as brand equity. If that action is in favor of any brand than is positive brand equity and that action is not favorable than its negative brand equity. Therefore in the above example, action of consumer in purchasing “Morton” is suggesting positive brand equity. And since this brand equity is from customer’s perspective, Customer Based Brand Equity.
Brand equity is a good barometer to understand past action and future course of action for marketers, who are active in formulating strategies for a given brand. If in present, customer has developed favorable attitude towards the brand then it is a clear indication that past investment (time, money, etc) have found there mark. The present also leads the way how marketers should plan future course, as to achieve desired results. But one aspect is absolutely clear that brand knowledge is a key factor in establishing brand equity.
To further stress point of brand knowledge, an experiment was conducted by Larry Percy with respect to brand equity using Beer as product. Aim was to understand consumer response for the same brands under two different set ups. The first set up was where consumer had no knowledge about the brand and in the second next set up, brand name was not disclosed. Result showed that consumer were highly critical of preferred beer when they were not aware of brand. A favorable response was recorded after brand disclosure, leading to conclusion that brand knowledge contributes a lot in understanding customer based brand equity.
Brand knowledge which is crucial in evolution of brand equity consists of brand awareness and brand image. Here brand awareness means the ability created by brand with which consumer can recall and recognize in any given environment.
On the other hand brand image are visuals, logo, style etc with which brand is associated. Customer based brand equity results in creation of strong brand and this is achieved when brand awareness and image are at high level. But how to create a strong brand based brand equity ?
A thing to understand here is that brand equity resides in the mind of the customer, so conviction has to be brought in strategy as to permanently occupy consumer mind space. The process is like climbing a ladder, one step at a time. And at each step an objective is achieved creating leading to a strong brand.
A classic example here would be of “Google” and “Apple”. Both these brands have become synonymous with search engine and entertainment in mind of customers.
When brand is able to achieve sense of oneness with its consumer then it can be said that strong brand has been created.
Companies tend to benefit a lot, in terms loyalty as consumer will stick to the brand no matter what price premium they have to shell out. These consumers become sort of brand ambassador and recommending usage of brand. There by creating consumer based brand equity.
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