Strategic Market Management, 10th Edition

CHAPTER NINE

Building and Managing Brand Equity

You do not merely want to be considered just the best of the best. You want to be considered the only ones who do what you do.

—Jerry Garcia, The Grateful Dead

You cannot make a business case that you should be who you're not.

—Jeff Bezos, Amazon

The secret of success is constancy of purpose.

—Benjamin Disraeli

A business strategy is enabled by brand assets. A brand gives a firm permission to compete in product markets and services, and it represents the value proposition of the business strategy. Thus, it is strategically crucial to develop, refine, and leverage brand assets.

Anecdotes abound about the power of a brand to improve financial performance, but solid research also shows that, on average, building brands generates a payoff in terms of stock return. In fact, the brand effect on stock return is nearly as large as that of accounting ROI in such diverse settings as large-cap, Internet, and high-tech firms. Further, efforts to estimate the value of brand assets as compared with other intangible assets—such as people and IT technology—and tangible assets reveal that the brand assets represent from about 15 percent (Toyota and GE) to more than 75 percent (BMW and Nike) of the value of the firm. Even the lower number is significant strategically.

Brand equity is the set of assets and liabilities linked to the brand. The conceptualization of brand equity, which occurred in the late 1980s, was pivotal because it changed the way ...