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Published by NTC Publications Ltd Farm Road, Henley-on-Thames, Oxon RG9 1EJ, UK Tel: +44 (0)1491 411000 Fax: +44 (0)1491 571188 |
Oct 1991 |
Brand equity expresses the value of a brand to consumers beyond strictly physical assets, and as a commercial property. Defining strong brands; how brand images drive brand equity.
Ever since David Ogilvy focussed attention on the concept of brand image in the 1950s, marketers have struggled to come to grips with the idea. Ogilvy declared:
'... every advertisement must be considered as a contribution to the complex symbol which is the brand image - as part of the long-term investment in the reputation of the brand'.
Although Ogilvy identified advertising's contribution to image, he also recognised that advertising was not the only source of imagery for a brand.
While there has been general agreement that brands - at least some brands - do have images, there has been far less consensus about what images are, whether they can be measured, how they are formed, and, ultimately, what they are worth.
There is also a good deal of confusion about the relationship of brand image to a relative newcomer to the lexicon of marketing, 'positioning'.
This paper will offer some insights about the nature of brand images, and explore the relationship of image to the concept of brand equity.
Anthropologist John Sherry has noted that brands have become so ubiquitous in twentieth century America that we could well be described as living in a rich 'Brandscape'.
From this brandscape of availability, however, we select what might be better labelled a 'personal brandspace' in which to live. A personal brandspace suggests a proximity - both positive and negative - to the plethora of brands available to me.
From the Crest toothpaste I brush with each morning to the Rémy Martin cognac that ends my day, I move in a perceptual space richly furnished with brand symbols.
It's raining, so I take my L.L. Bean raincoat and my Knirps umbrella. As I get into my Subaru to go to the office, I must decide whether Shell, Texaco, or Chevron will be the gasolene I buy; whether The San Francisco Chronicle or The Wall Street Journal will fill me in on the news, and whether I'll grab breakfast at McDonalds or the Hilton. In either case, I'll pass a Burger King, a Wendy's, and a Jack In The Box before I eat.
As I get on the freeway, I notice that a Mercedes is just ahead of me, and that a U Haul trailer is about to switch lanes behind me.
Between my home and my office, I pass Wells Fargo, Security Pacific, and Bank of America branches, as well as billboards for Winston's Coca Cola, and Sapporo Beer.
My secretary comes in wearing a pair of Levi's and Nikes. She tells me she got a great deal on Rossignol skis, but is thinking of taking up biking, and do I know anything about Cannondale?
At lunch, I choose a Becks beer; my Marlboro-smoking guest considers a Diet Coke, but then opts for a glass of Mondavi Zinfandel with his meal, and a Perrier to start.
I could go on, but the point is inescapable. And I haven't even turned on my Sony TV to watch the advertising!
Indeed, from the brands I use, and other brands that are adjacent to me, you may quite possibly have started to develop a mental picture of me; an idea of what I'm like and expectations of how I might behave. Brands not only furnish the environment in which I live, but they also enrobe me, and by so doing, help define who I am.
Further insight as to the role brands play comes from visiting another city for the first time: familiar brands create a feeling of security for the visitor. Holiday Inns once based an advertising campaign on no surprises and that, of course, is a strong brand's generic promise.
But there is more to it than that: when sociologist Louis Wirth described the ennui of life in the city, he noted that while one lived, played, worked and prayed with the same people in small towns, the inexorable march towards urbanisation and relocation brought far more fragmented relationships. For some, the constancy of brands, of how they feel about them, and of how they believe they will be treated, yields a pleasing degree of comfort. As one moves through one's daily routine, there is a certain measure of reassurance in the familiar advertisements, signage and logos that one encounters.
Finally, on a very practical level consumers like brands because they package meaning. They form a kind of shorthand that makes choice easier. They let me escape from a feature-by-feature analysis of category alternatives, and so, in a world where time is an ever diminishing commodity, brands make it easier to store evaluations.
The first brands were developed by industrial concerns over a century ago to wrest control of sales of products from retailers. But while brands originated in the field of consumer goods, today the concept of brand has spread to a far wider range of 'purchasables'. Service brands abound, as do brands in the business-to-business field. Indeed, the utility of paradigm shifting is such that it is not uncommon for sophisticated marketers in tourism to refer to ski resorts, cities and countries as brands, for movie makers to refer to films as brands, or for utility managers to describe their firms as brands.
And I suspect that when it comes to attracting students, recruiting faculty or winning grants, it is surely not inappropriate to think of universities as brands.
Although the definition of brand equity is often debated, and the term is frequently confused with brand image, we suggest that there is a clear distinction.
Brand equity deals with the value, usually defined in economic terms, of a brand beyond the physical assets associated with its manufacture or provision.
While brand image is a concept originated and 'owned' by marketers and advertising specialists, the idea of a brand having an equity that exceeds its conventional asset value is a notion that was developed by financial people. Underlying a brand's equity is the concept of what is sometimes referred to as a brand's 'consumer franchise', 'loyalty', or even its 'fans'.
Brand equity can be thought of as the additional cash flow achieved by associating a brand with the underlying product or service.
In the case of an acquisition of a brand it is the expectation of that future cash flow that commands a premium over the cost of developing the plant and infrastructure required to bring a new, competing brand to the market.
It is useful - albeit incomplete - in this connection, to think of a brand's equity as the premium a consumer would pay for a branded product or service compared to an identical unbranded version of the same product/service.
It also follows that stronger brands will have more equity than weaker competitors.
A good example of this comes from the field of personal electronics, where it is not unusual for several marketers to share the same production facilities. So it happens that Sony, Nikon, and Ricoh all market an identical camcorder, alike in all respects except for brand name and price. The Sony version sells for an average price that is about ten per cent higher than the Nikon, and yet outsells the latter. The Ricoh retails for about eight per cent less than the Nikon, but enjoys-a smaller share of market.
While the controversy about whether or not to include brand equity on a company's books is not yet resolved, the very fact that it is a debatable issue has already had the effect of focussing attention on the financial properties of brand values.
What is a strong brand? Interestingly, marketers are not particularly articulate in identifying the characteristics of brand strength beyond share of market. However, when asked to identify strong brands with no supporting guidelines, there is a great deal of agreement about which brands are strong and which are not.
Rolex, for example, is consistently described as a strong brand, as is Alka Seltzer. Not surprisingly, so are IBM, Pepsi, Green Giant, Kleenex, Volkswagen and the New York Times. Winston, however, is not. Neither is Canada Dry, nor the New York Daily News.
There are several attributes that seem to characterise brands marketers describe as strong: salience with respect to the product category is one. Levitt has noted that strong brands are also more likely to have shape and substance. They evoke a more extensive, richer set of associations. Visual images and words or phrases linked with strong brands are likely to be more easily retrieved from memory.
Finally, strong brands are held in high regard.
Interestingly, while strong brands often have high market shares, market share alone does not distinguish them from other brands.
While brand equity has come to stand for a financial concept associated with the valuation placed on a brand, it is useful to recognise that the equity of a brand is driven by brand image, a consumer (or customer) concept.
Schematically, the relationship may be represented as shown in Exhibit 1.
Any expectation of the cash flow premium enjoyed by a successful brand ultimately depends upon consumer behaviour. And consumer behaviour is, at root, driven by perceptions of a brand. While behavioural measures of purchase describe the existence of equity, they fail to reveal what is in the hearts and minds of consumers that is actually driving equity.
If brand equity is the added value brought by a brand, how can we most usefully define brand image?
A good starting point is to describe the image of a brand as that cluster of attributes and associations that consumers connect to the brand name.
These evoked associations can be 'hard': they can be specific perceptions of tangible/functional attributes, such as speed, premium price, user-friendliness, length of time in business or number of flights per day.
They can also be 'softer' or more emotional attributes, like excitement, trustworthiness, fun, dullness, masculinity, or innovation. A brand like Apple might be associated with youthful ingenuity, while IBM might be linked to efficiency. Prudential may evoke thoughts of stability, while Allstate may conjure up care.
The image of a brand can be described as having three contributing sub-images: the image of the provider of the product/service, or corporate image; the image of the user; and the image of the product/service itself.
However, the relative contribution of these three elements varies by product category and by brand. In the case of Marlboro, the corporate reputation of Philip Morris plays hardly any role at all in forming the brand's image. The product image itself contributes; but perhaps the strongest contributor is the impression people have of the brand's users.
Gray Poupon plays heavily on the image of the user, a little on the image of the product, and not at all on the reputation of the manufacturer.
All three components of image are operating for the leading brands in the personal computer field: image of maker, product and user each clearly contribute to the brand image of Macintosh, for example, as well for IBM's PC.
Schematically, then, the relationship we've postulated thus far is shown in Exhibit 2.
Clearly, the user component of brand image can be described in terms of imputed personality. Consumers have little difficulty in describing who might smoke Marlboro cigarettes, serve Gallo wine, or wear Calvin Klein jeans.
Less obviously, however, by employing sufficiently sensitive questions, researchers have found that rich, consistent descriptions of the personality and character of the brand itself can be elicited. Consumers have little trouble describing brands as selfish or generous; dull or sparkling; charming or stiff. While some brands are seen as responsible, distinguished, sentimental or righteous, others are described as slippery, sophisticated, careless, or arrogant.
Although brand personality studies have heretofore been largely ad hoc in nature, some progress is now being made in the development of standardised transnational brand personality measures.
More recent research has suggested that brands can also evoke feelings as well as associations. Some brands make one feel happy; others, confident or safe, while still other brands evoke feelings of boredom, confusion or amusement.
Although conventional wisdom has implied that consumers are blank tablets upon which marketers etch images, some investigators have suggested that the dialogue is two-way. Lannon describes consumers as interacting with brands. Blackston has demonstrated the possibility of brand relationships by showing that consumers are not only able to describe the way they see brands, but also the way in which brands see them.
Brand images also have a strong non-verbal component. For many brands - especially strong brands - the unique symbols long associated with them are automatically accessed from memory as soon as the brand is shown. For some, the pictorial image of silver-wrapped kisses comes to mind when the word Hershey is presented; others see the silver-on-chocolate brown wrapper. When Green Giant is mentioned, people see the Giant himself in their mind's eye. For some, the red field with a yellow shell appears when Shell is mentioned. The distinctive 'batwing' shape alone evokes identification of its owner, Levi Jeans.
Indeed, King has suggested that the use of a well chosen 'visual metaphor' can capture, through association, desirable values to be associated with a brand. The visual metaphor can provide a powerful set of symbols that are particularly important in service categories, where there is no tangible product per se. Examples might include the Wells Fargo stagecoach, symbolising a bank that comes through for its customers, Merrill Lynch's bull denoting optimism, and the visual representation of 'the way is clear' for Germany's Volksbanken Ralffelsenbanken suggesting a high level of service.
Visual representations also seem to have some unique advantages.
While counter argument is sometimes elicited by verbal messages, visual representations are processed differently, and not subjected to the same logical scrutiny employed for verbal propositions. As a consequence, they are more likely to be accepted. If the Green Giant, for example, symbolises fresh-from-the-farm, this is less likely to be challenged by the viewer than a verbal claim stating that a brand of canned vegetables is farm-fresh.
There has long been concern among marketers that the softer attributes of brands have little impact on purchasing behaviour. However, recent research evidence suggests that this is not necessarily the case.
A BBDO study that asked consumers to estimate the extent to which leading brands in a category were truly different or pretty much the same revealed that consumers were far more likely to find differences in categories that rely on emotional appeals, such as beer and cigarettes, than those utilising predominantly rational appeals, such as cleaning products.
A possible explanation for this may be that functional differences between many brands today are at best marginal; most or all detergents, for example, claim they clean better than the competition. And in any event, technological progress is so rapid that any advantage is short lived.
However, the so-called softer characteristics of image such as brand personality, being less constrained by the physical attributes of the underlying products, are often far more differentiated. The metaphorical and symbolic vocabularies available are much richer. Bank of America and Security Pacific may become locked in combat about who offers the best rates and points on mortgages. But they cannot today 'own' the traditions of the spirit of the West, combining strong values of dependability and commitment that Wells Fargo has so effectively pre-empted.
Brand personality has two other advantages to those interested in building brands: one is that while features can change, and today's advantage can become tomorrow's liability, brand personality, if it taps more enduring values, has a far better chance of continuing longevity.
A second advantage is that brand personality encourages more active processing on the part of the consumer, suggesting that he or she can interpret the image of a brand in a manner that is more personally meaningful.
If we put the concepts discussed thus far together, we can now represent the way in which associations drive image which in turn drives equity (see Exhibit 3).
In addition to direct and indirect (ie word of mouth, media reports, etc) personal experience with a brand, media advertising is an obvious source of image, both reflecting and forming the brand's gestalt. Morris the cat for Nine Lives cat food, the Friendly Skies of United, Karl Malden for American Express Cheques, the man with the eye patch for Hathaway shirts, and Budweiser's Clydales are all examples of the residua of well established campaigns. This is not, of course, a new phenomenon. The Doyle Dane Bernbach advertising for a plain-to-the-point-of-ugliness car, the Volkswagen Beetle, was so uniquely effective that one could argue that the advertising actually became a product attribute. By purchasing the car, a buyer also obtained bragging rights to the sophistication of the car's advertising. Buyers were transformed from simply being practical, to being clever, in the know, and smart.
However, although some marketers treat media advertising as the sole source of brand image, this is clearly not the case, and in fact is a dangerous assumption since the sword of image obviously cuts both ways. Other sources include:
Direct mail contributes, but not always positively. Interestingly, most direct marketers place heavy emphasis on the behavioural response that their efforts obtain, but neglect its impact on image. As a consequence, while the sophisticated Annic Liebowitz print ads for the American Express Card induce me to think of the card as prestigious, the direct mail pieces that clutter my mail box urging me to sign up suggest a company that's certainly not above hustling me.
Similarly, sales promotion can also contribute, both positively and negatively, to image. For example, a company that constantly runs price promotions tends to reduce perceptions of quality; consumers feel that the brand is worth less because it is always on special.
But an Ivory soap promotion that gave awards to consumers who found specially made bars of Ivory that didn't float, moved product and found a fresh way to reinforce the purity associations of the brand's image.
Names can also contribute strongly as they do for Eveready batteries, Formula 44 cough medicine, Orville Redenbacher popcorn, Compaq computers, and IBM. But names, too, can dilute image: Purolater found that their name served them less well than did Airbourne's when they tried to compete with Federal Express. When a company called Documents Handling Limited entered the international package delivery business, they changed their name to 'DHL'. Kentucky Fried Chicken has just changed its name to 'KFC' to help shed today's negative associations with frying.
Corporate identity, design and packaging are also contributors: the Campbell Soup can label and classic shape of the Coca Cola bottle are both unmistakable examples of packaging's contribution. The Rock of Gibraltar has long stood for Prudential and its rock-solid stability.
The Golden Arches identify McDonalds, while San Francisco's Pyramid building symbolises Transamerica, and the 'good hands' mean Allstate Insurance.
Even here, the sword can cut two ways, however: in its efforts to expand its overnight delivery service facilities in Europe, Federal Express bought a trucking company in Germany. Along with trucks, the company owned a barge company. The acquisition was duly rebranded. As a consequence, passers-by see boats bearing the Fed Ex logo leisurely plying the Rhine.
Michael Purvis of the design firm SBG suggests that some brands., through their packaging, have come to 'own' certain colours; competitors usurp those colours at their peril.
Purple and orange belong to Federal Express. IBM owns dark blue in business machines. Yellow belongs to Kodak in photography. For batteries, Duracell owns bronze and black. Tiffany can claim light blue through their unique packaging; red and white belongs to Campbell.
A firm's relations with its public can also contribute to image.Tylanol, in the long run, won respect for its proactive handling of package tampering. The brand added to its image of integrity. In contrast, Perrier damaged its credibility by vacillating over explanations about how traces of benzene had got into the product. AT&T's efforts to force a takeover of NCR paints a more predatory picture of the company than the view most would have previously held.
McDonald's is an example of a firm that seems to have an uncommonly good understanding of the way in which public relations contributes to image. Although it would be hard to justify the opening of a unit in Russia on the basis of revenue generation alone, the media coverage of opening a unit in Moscow makes the firm seem a little more international, a bit more forward looking. Their public commitment to reducing the environmental pollution they cause increases the perception of the company as a good citizen, as do tray liners offering tips for conserving water in drought areas. Introducing a lean hamburger - despite (or perhaps because of) the fact that it is not expected to be a big seller in the short term - says that the firm is concerned about the health of its customers.
For service-oriented businesses, the firm's employees are significant channels of image communication. As Berry has noted, while the job of the chief marketing person in a company marketing 'things' is to purchase and organise outside resources such as advertising, his opposite number in a service business has the primary task of getting everybody in the firm to do marketing.
One consequence of this is that corporate culture can indirectly play an important role in image development. The Avis 'we try harder' theme is an example of the way in which one firm tried to involve employees and thus impact perceptions of Avis. More recently, General Mills Olive Garden restaurant unit has successfully motivated staff to deliver a consistently high service level, subbranded 'Hospitaliana'.
Yet another term in the lexicon of marketing is positioning, or more completely, brand positioning. This refers to both the process and end result of building (or re-building) an image for a brand relative to a target market segment. The American Express card, for example, has been positioned as the appropriate method of payment for travel and entertainment for upper income consumers.
Miller Lite was positioned as the beer that gave heavy beer drinkers 'permission' to drink more. American Airlines' positioning is as the businessman's airline.
While it is not always necessary to specify a distinct market segment in connection with developing a position for a brand, it is usually the case that a market target is implied by a successful positioning strategy.
In the past, research on branding has largely focussed on the identification of brand image, and also on the monitoring of changes in image. Studies of this type were usually descriptive in nature.
Today the key issues in branding research, from a practitioner's point of view, focus on two themes: one is how to quantify brand equity. The other is how to identify the elements of brand image likely to impact changes in consumer behaviour and in turn lead to changes in brand equity.
While some very imaginative approaches are being pursued that employ econometric modelling to decompose brand value using the market value of a firm's stock as the dependent variable, other investigators are concentrating on measures that are closer to consumer behaviour.
A particularly intriguing approach utilises a two factor trade-off between brand and price through time in an attempt to gauge changes in equity as a consequence of marketing activities.
There are two goals that are normally involved in assessing brand image. The most frequent is simply revelation and understanding.
The second goal is more action oriented: it addresses the question of modification of the brand's image. The technology for accomplishing the second goal is also more complex. Recently, Morgan has demonstrated that micromodelling, which enables the researcher to build a model of an individual's brand image and to relate that image to the person's preference structure can provide a link between changes in brand image and brand choice. Through simulating changes on a disaggregate basis, the micromodel is able to predict the effect of shifts in brand image in terms of shifts in preference. Studies of this type are particularly appealing to the practitioner in the sense of providing prescriptions for action.
The market has clearly declared that brand equity is alive and well. The point of this paper has been to demonstrate the relationship between brand image and equity, to identify some of the attributes of image, and to suggest some of the sources from which a brand develops an image.
A particularly fruitful direction for future research will be to continue to explore the connection between elements of a brand's image and the equity that the brand commands. In the main, most firms currently develop brands by refining and recombining functional attributes. But the increasing speed of technological change is such that there would appear to be better opportunities for developing stronger, more erosion resistant brands by allocating a larger share of resources to the so-called softer side of image than is currently the case.
References
Note:
This paper was first given in San Francisco last May, at the 10th annual advertising and consumer psychology conference, sponsored by the society for Consumer Psychology.
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