Brand equity : an approcah to value based brand management

Schafer, Nina (2005-12)

Thesis (MBA)--Stellenbosch University, 2005.

Thesis

ENGLISH ABSTRACT: Brands are getting more and more valuable. In this age of cross-border mergers and acquisitions. the value of brands is a key detenninant of a company value and stock market capitalization. For the consumer a brand also plays a significant role. It is seen as a sign of quality, helping them make their purchasing decisions. Yet brand loyalty and established customer relationships can no longer be taken for granted or assumed to last forever in an environment of increased competition. Brand loyalty is vitally dependent on how the relationship between the brand and the consumer is nurtured and specifically developed: A strong brand brings with it the opportunity to raise the proftle of a product and the company that sells it, setting them apart from rivals in the marketplace. A strong brand even allows companies to command a price premium for their products. In this way the value of a brand or brand equity becomes a company's most important asset. But the questions are: How much is the brand actually worth? And how can a brand's value be boosted? The term brand equity originated as a business-financial concept, and consists in "[the] net present value of all future net surpluses over his cash input that the owner of a brand can earn". Such financially oriented measurement of brand equity is a suitable approach for expressing it as a monetary value as required for purposes of financial statements, licensing agreements or acquisition decisions. There is a wide variety of brand valuation models available to detennine a monetary value on brand equity, but in some cases these models are controversial. and the value of their resu1ts as an objective statement may be limited. The consumer oriented perspective on brand equity sets itself apart from the financial approach by focusing on the judgments made by consumers, with a view to improving the effectiveness and efficiency of marketing measures and also brand management on a longterm basis. This behavioural approach endeavours to reach a qualitative explanation of the factors driving brand equity and to determine psychological constructs of brand strength by means of operational measurement. The underlying study project illustrates some of the most common brand valuation models, shows their respective advantages and disadvantages and explores the different approaches to brand equity. Methods to increase brand equity by putting it in the focus ofa Value Based Brand Management explain its drivers and individual brand processes. This approach to a successful brand management is fmally compared with the current brand management process of the FMCG brand NNEA. Recommendations on how this international brand could be managed more efficiently with respect to brand equity conclude this study project.

AFRIKAANSE OPSOMMING: Handelsmerke raak al hoe meer waardevol. In hierdie eeu van oorgrens-samesmeltings en oornames, is die waarde van 'n handelsmerk 'n sleutelfaktor om 'n maatskappy se waarde en aandelebeurs-kapitalisering te bepaal. Handelsmerke speel ook 'n belangrike rol in die lewe van verbruikers. Dit word beskou as 'n simbool van kwaliteit, 'n hulpmiddel om aankopebesluite te vergemaklik. Nietemin kan lojaliteit teenoor 'n handelsmerk en gevestigede klienteverhoudings nie as vanselfsprekend aanvaar word, of aanvaar word dat dit vir altyd sal aanhou, in 'n omgewing waar kompetisie toeneem nie. Lojaliteit teenoor 'n handelsmerk is in essensie afhanklik van hoe die verhouding tussen die handelsmerk en die verbruiker opgepas en spesifiek ontwikkel word: 'n gevestigde handelsmerk skep die geleentheid om die profiel van 'n produk, asook die relevante maatskappy se profiel, te verhoog - en derhalwe hulle te onderskei van mededingers in die mark. 'n Sterk handelsmerk bring selfs mee dat 'n prys-premie vir produkte gehef kan word. Op die manier word die handelsmerkwaarde of handelsmerk-ekwiteit 'n maatskappy se grootste bate. Maar die vraag is: hoeveel is 'n handelsmerk eintlik werd? Asook, hoe kan 'n handelsmerk se waarde vermeerder word? Die term handelsmerk-ekwiteit het sy oorsprong as 'n besigheidfinansiele konsep en is gewortel in "[die] netto huidige waarde van aIle toekomstige netto surplusse oor die kapitale-insette wat die eienaar van die handelsmerk kan verdien". Bogenoemde finansieel - georienteerde maatstaf van handelsmerk-ekwiteit, is 'n geskikte benadering om dit in monetere waarde uit te druk, soos benodig vir finansiele state, lisensiering-ooreenkomste of oorname besluite. Daar is 'n wye verskeidenheid handelsmerk waardasie modelle beskikbaar om die monetere waarde van handelsmerk-ekwiteit te bepaal, maar in sommige gevalle is die modelle kontroversieel, wat daartoe lei dat die waarde van hulle resultate, as 'n objektiewe waarneming, beperk kan wees. Die verbruiker- georienteerde benadering tot handelsmerk-ekwiteit onderskei homself van die finansiele benadering deur te fokus op die besluite wat gemaak word deur verbruikers, met die oog daarop om bemarkingsmaatstawwe, asook die bestuur van 'n handelsmerk, meer effektief en doeltreffend te maak op 'n langtermyn basis. Hierdie gedragswetenskaplike benadering poog om 'n kwalitatiewe verklaring te gee vir die faktore wat handelsmerkekwiteit dryf en om 'n psigologiese struktuur te gee aan die impak wat 'n handelsmerk het via 'n operasionele maatstaf. Die onderliggende projek iIIustreer die mees aanvaarde waardasie-modelle, asook hulle onderskeie voordele en nadele en ondersoek die verskillende benaderings tot handelsmerkekwiteit. Metodes om handelsmerk-ekwiteit te vermeerder deur dit te benader aan die hand van Waarde-gebaseerde Handelsmerk Bestuur (Value Based Brand Management) gee insig ten opsigte van sy drywers en individuele handelsmerkprosesse. Hierdie benadering tot suksesvolle handelsmerkbestuur word ten slotte vergelyk met die huidige handelsmerkbestuur-prosesse wat deur die FMCG handelsmerk NIVEA gevolg word. Aanbevelings aangaande meer effektiewe bestuur van hierdie internasionale handelsmerk aan die hand van handelsmerk-ekwiteit, sluit hierdie projek af.

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