[1][2][3][4] In the research literature, brand equity has been studied from two different perspectives: cognitive psychology and information economics.
It has been suggested however that firms may charge premiums that cannot be solely explained in terms of technological superiority and performance-related advantages.
Quantitative brand equity includes numerical values such as profit margins and market share, but fails to capture qualitative elements such as prestige and associations of interest.
In a survey of nearly 200 senior marketing managers, only 26 percent responded that they found the "brand equity" metric very useful.
A brand encompasses the name, logo, image, and perceptions that identify a product, service, or provider in the minds of customers.
For example, if you were to take the value of the firm, as derived by its market capitalization—and then subtract tangible assets and "measurable" intangible assets—the residual would be the brand equity.
More sophisticated marketing mix models have a floating base that can capture changes in underlying brand equity for a product over time.
Free association tests and projective techniques are commonly used to uncover the tangible and intangible attributes, attitudes, and intentions about a brand.
Rival GM division Chevrolet re-entered the midsize market when the company resurrected the Malibu nameplate in 1997 (and later the Impala in 2000 as their answer to imports e.g. the Honda Accord and Toyota Camry including its stretched platform Avalon) which had been dormant since 1983 when the company phased out its remaining RWD midsize G platform.
The Malibu, originally part of the mid-size Chevelle lineup until 1977 as the top trim level, GM promoted its trim level to full model status (at the time the Chevelle nameplate was retired (and has remained dormant since because of its association with the musclecar era) its trim level had brand recognition and better known), a practice first demonstrated in 1969 when the Chevy II lineup was rebadged (the Nova was the top trim level; it was one of the finalists for the official model name dating back to 1962 but Chevrolet management wanted its car nameplates beginning with a "C" – the promotion of the Nova from trim level to official model status broke the tradition of using C-word names by Chevrolet with its automobile and truck product lineup on a selective basis.
The aging Taurus, which became one of the most significant cars in American auto history, would be abandoned in favor of three entirely new names, all starting with "F," the Five Hundred, Freestar, and Fusion.
The Five Hundred name was thrown out and Taurus was brought back for the next generation of that car in a surprise move by Alan Mulally.
Because brands are crucial assets, however, both marketers and academic researchers have devised means to contemplate their value.
Utilizing a statistical regression analysis of the factors driving the cash flow multiple and thus share price, the variance in Familiarity and Favorability above or below the base expected level is analyzed.
As a point in time analysis, this method is used for brand equity valuation of a company based on its current Familiarity and Favorability, Revenue and Market Cap.
[18] Marketers use conjoint analysis to measure consumers' preference for various attributes of a product, service, or provider, such as features, design, price, or location.
By including brand and price as two of the attributes under consideration, they can gain insight into consumers' valuation of a brand—that is, their willingness to pay a premium for it.
While event study offer evidence that brand equity positively affects financial performance, many studies focus on customer mindset metrics to offer this relationship (Berger, Eechambadi, George, Lehmann, Rizley & Venkatesan, 2006; Buil, Martinez & de Chernatony, 2013).
As exemplified by Agrawal & Kamakura's (1995) research, the economic worth of celebrity endorsers, the authors demonstrate that an announcement of brand association of a product and celebrity creates a movement in stock value; whereby, shareholder interest is influenced by the endorsement as evidenced from the time-series data.
Ultimately, high equity counterparts will yield stronger results due to their market familiarity.
Simon & Sullivan (1993) suggested long-term analysis of events, as determined by financial returns and market performance, better captures the effect of customer mindset brand equity.
The high-tech sector showed no contemporaneous effects and brand equity is realized in the future with significant delay.
Shifts in consumer behavior, competitive strategies, government regulations, and other aspects of the marketing environment can profoundly affect the fortunes of a brand.
Besides these external forces, the firm itself may engage in a variety of activities and changes in strategic focus or direction that may necessitate adjustments in the way that its brands are being marketed.
Brands that receive inadequate support, in terms of such things as shrinking research and development or marketing communication budgets, run the risk of becoming technologically disadvantaged or even obsolete.
As a consequence, prices may move up or down, product features may be added or dropped, ad campaigns may employ different creative strategies and slogans, and different brand extensions may be introduced or withdrawn over time in order to create the same desired knowledge structures in consumers' minds.