Essay Example on Brand Equity

Introduction

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Like many other business terms, brand equity is a common phrase, although many of the users of it do not fully grasp the concept of brand equity. Brand equity can simply define as the sum total of the brand value determined by the marketplace. Brand equity can either be high or low, a high brand equity means the brand is of great value in the marketplace and a low brand equity means the brand has a lower value in the marketplace. Good brand equity means that the brand is easily recognizable and relatable, sometimes this means it is the first product a potential customer will think about when purchasing. High brand equity may also mean that customers are more willing to pay apremium as products are associated with high quality. Brand equity is a non-tangible and invisible asset to a company and as a result is not easily calculated or quantified. Brand value or brand equity is a matter that lies squarely in the minds of consumers and customers in the marketplace. Brand equity, therefore, cannot be accounted for in financial statements, at least not accurately.

Metrics used to measure Brand equity and Comparison between groups

This paper will consider brand equity using the following measures, brand image, and brand awareness. Brand image is the dimension that deals with what it is exactly that a brand represents while brand awareness deals with how well known or popular is a brand. Strong brand awareness means that a brand is easily recognizable and remembered, it also means that the brand is popular among the customers in the marketplace and often customers think of it first when thinking of a related product. Brandimage, on the other hand, is what a specific brand represents, this is the information that is available to customers about a brand and what the brand can be remembered for. Brand equity can be strengthened or diminished depending on the environment and how the customers and the general public view the specific brand in relation to its competitors.

Financial statements and records may provide a sense of brand. An organization that has displayed good performance and receives awards, as a result, gains good publicity and is viewed as a top notch company. It can be observed that multi-billiondollar corporations have high brand equity, brands that have been ranked as having the highest brand equity more often than not also have the strongest financial muscle. Financial statements can hence be used as indicators of brand equity. Groups of brands can be compared using this method.

Comparison in the Beer industry

Guinness is one of the worlds most popular alcoholic drink, with distribution to most regions of the world. The company being over 250 years old has a long history and legacy. The Guinness brand has great brand awareness globally rivalled by few. The brand is believed by customers in the market to be associated with strength and communion and over the years has emerged a loyal market base. Corona is a Mexican beer brand, the brand was named Mexicos largest beer brand with a brand value of US $8 billion after experiencing a growth from last year. Corona is a more regional brand compared to Guinness. The Latin American beer brand has high market awareness in the Americas but a lower awareness globally. Another multimillion dollar Latin American beer brand is Brahma. Brahma is a Brazilian beer maker that is ranked as the eighth most valuable Latin American brand. Brahma is also a more regional brand with a smaller brand awareness than Corona and Guinness. Skol another Latin American beer manufacturer is ranked the second most valuable Latin American brand after Corona and Aguila is ranked ninth. As of 2014 Skol was estimated to be worth US $7,055 million while Aguila was averaged at US $3,565 million. Both Skol and Aguila are regional brands however Skol has a larger brand equity as a result of it larger brand awareness and brand image.

Comparison in the Fashion industry

Zara is a highly sought after fashion brand that has been causing stirs in the fashion industry. Zara is all about the run way fashion and bring it to the ordinary person. The brand has recently expanded into the Australia market as the new kid in the block. Brand awareness of the fashion brand is strong regionally but not as globally as some other fashion brands such as Gucci. Zara has a good brand image as it viewed as one of the most fashion forward brands in the market which increases its appeal to the market. The brand has only been expanding over the past few years and seems set to expand more. Veja a fashion shoe brand that was established in 2004 is another big player in the fashion industry. The regional brand is most popular in Brazil and France and has a low global market penetration. The brand image is strong as the market views the company as being an ethical company. The shoe making company has cut out a niche with the small scale businesses and local people and this is reflected on the brand. Consumers of the brands product have customer loyalty as the brand means more to them than just shoes. The company has increased production from 5000 to 125000 pairs within only six years. Lululemon is another fashion brand, the brand came into the market facing already well established competition including Nike and Armour, multibillion dollar brands. The brand has also grown drastically especially with fashion girls athletic shoes. Lululemon is an American multinational with a relatively large brand awareness that is known in most regions of the globe. The brand image is strong, this is inspired by the companys performance in the NYSE. Although the company is young the brand has grown in leaps and bounds.

Brand Equity in the automobile industry

The automobile industry is a competitive multi-billion dollar industry and any advantage even a small one can cause a huge difference. Some customers are willing to pay up to $4000extra on a luxury car just because of the cars brand. Similar cars may have similar features and fuel consumption but have a difference of approximately $3000 and the difference is only attributed to the brand, this observation is common one across the globe. The automotive industry brands not being much understood or being an intensely advertised industry customers still have preferred brands. This section of the paper will take a look at what informs thecustomer on a good brand in the automobile industry. This section will also take a specific interest in the following car brands: Volkswagen, Tesla, Ford and Chery.

Toyota has for the longest time been among the car companies in the world that have had a strong brand equity, in 2014 Toyota was the leading car brand. Toyotas brand value has been linked to advertising, cheaper products, low fuel consumption and good publicity such as winning awards. Ford came in second in the 2014 brand perception, Tesla and Volkswagen also had strong brand perceptions and both came in the top ten car brands in 2014. In the information age where customers can now go online and perform a survey of the market before buying a car, brand is now more important than ever before.

German automakers have enjoyed the perception of high quality and strong performance and continue to lead in the premium automotive market. Volkswagen and BMW are the two most notable in this sector of the market. Volkswagen and BMW have aligned their brand with comfortable performance through marketing and word of mouth. Volkswagen is also set out to become the largest mass production and sale automobile company overtaking Toyota.

Volkswagen being in operation for a long time and having branches spread across the world has managed to foster great brand awareness. Any car owner or potential car buyer knows the brand Volkswagen or has heard of it. The brand alongside its German counterparts also has astrong brand image. The brand is associated with high performance and quality vehicles and as a result customer pay premium for the brands product.

The factors that inform automobile consumers of what car brand to buy include quality, safety, performance, value, fuel economy, design style, and technology. According to a survey carried out by the National research center in the USA, the car brand associated with quality is Toyota, Mercedes-Benz then Ford at third. Tesla, a relatively young startup compared to other automobile companies has grown its brand quickly to become Americas fifth best-perceived vehicle brand placing above much larger companies such as Mercedes-Benz. Tesla is the fastest growing automobile brand in the world moving from the 47th best perceived to fifth best perceived in the USA within a year. The growth of the brand can be attributed to winning awards, a good perception as a result of raising stock prices, great crash-test performance. Tesla also received good publicity from magazines and the internet increasing brand awareness.

Ford is one of the top brands in America pegged at approximately $20.3 billion. The multibillion-dollar automotive has a great brand awareness from advertisements. One of the brands products, the Ford Mustang is popular with performance loving customers. The car is perceived to be the best sports vehicle by the American population since brand equity is all about the customers perception and understanding the Ford Mustang is a big boost to the Ford brand. The Ford brand by just being traded at the NYSE stock exchange gives the brand an appearance of stability and quality. Ford co. is arguably Americas largest car maker both in terms of financial weight and brand penetration.

Globalization and Brand Equity

In the modern globe, brands are not just limited to specific countries or even continents or regions. The world has become a global village and brands are now venturing into several different parts of the world. Corporate organizations have been reengineered so as to fit into the new way of things. Globalization has however posed many new challenges that previous companies did not encounter. Globalization has brought an increased passed of business and along with it agreat competition. This can be viewed as damaging especially for new and little-known brands as they have to compete with large multinationals that have expanded into their country. Globalization has also lead to increased monitoring as information is becoming more and more easily attainable, for instance, the gas emission most recent scandal by Volkswagen has increased monitoring in this section. The information about the Volkswagen scandal was available online the moment the news about it broke out. Globalization means that the entire Volkswagen brand had to suffer as a result of a scandal that affected only a certain region of its market share.

Conclusion

Brand equity is an invisible and non-tangible asset to a company, despite being an asset that cannot be quantified and related to financial statements. Brand equity is of great importance to a company as it determines what and how the company will communicate to its market share. The research paper also concludes that building brand equity is difficult and takes time and strategy. Destroying a brand, however, is much easier and one scandal can turn back what a company has worked for ages to achieve. Volkswagen is a good example of how a good brand can suffer from a simple scandal. Volkswagen was recently caught up in a fuel emission scandal that cheated emission tests, the scandal has cost the company millions and smeared mud all over their good name. The scandal has cost the company some loyal customers and has also lead to a change in brand perception, now the brand has been associated with fraud and poor gas emissions.