Brand equity has four components – energized differentiation, relevance, esteem, and knowledge. Define the meaning of each component and give an example of how it could be used to impact a target market. How are these components combined to produce brand strength and brand stature?
The brand equity can be called as an extra mileage given to a brand on all aspects of factors that consumer evaluates during their purchase decision. The extra-ordinary treatment given by the customers to a brand, when expressed in economic terms can be called as its brand equity. Brand Equity can be further divided into 4 parts, namely, Energized differentiation, relevance, esteem and knowledge.
Firstly, the Brand should energize differentiation which means the product should both energize the customers for purchase while also differentiating it from the rest products in the market. According to Aaker, if the product is exciting enough, it will make the product visible in the market and cause a decline in negative information of the product in market. While, energized differentiation can also establish the product as unique and containing unequal benefits as compared to the rest in the market. Say, Wendy has differentiated itself as health conscious people’s fast food, which energized the similar segment and adds to its brand equity. So, a marketer should always focus on the differentiation in an energizing way, so that it is well perceived by the market.
Secondly, relevance is important for any product or services. According to Aaker D. A., the companies which can establish the relevance of its product and services to their potential customers is only preferred by the customers. Say, Snickers initially established itself as “Power-Bar” which wasn’t relevant to the target segment as they had better products like Granola bars as better alternative. Only, when it branded it now, as bar for small hunger, that it become relevant and hence successful in market. One marketer should therefore, make a connection to a relevant target market, using stories that is relevant to that target market.
Esteem, on the other hand, is important in any brands. People mostly prefer a brand that boosts them their self-esteem. For example, Drinking Coke has been established as a culture in our society due to heavy investment as promoting it as an important drink for celebrations. They have also introduced some festival packagings to appeal to the market. This fashionable thing, therefore excels the self-esteem. Hence, marketers should promote brand in the way that it promotes the esteem.
Lastly Knowledge is related to knowing the products, its features and benefits accurately and persuasively that it is trusted by the customers. If more people are aware of the product and it has all above-mentioned features, it is most likely that people will buy that brand. So, as a marketer, it is important to understand what are the key knowledge that the customers need to know and can influence sales. The marketer should rephrase this knowledge into the way the target customers understand and deliver.
A brand strength and brand statue is an outcome of all a good brand performance. For a good brand performance, a company should energize differentiate, differentiate, increase esteem and must be known to a large people. If the above things work in coordination, brands perform better with a better status as perceived by people. If the product is known to large people but not relevant to the people, the brands will not perform better. Say, people know about Segway but their wheel carts had no relevance to many people, hence company couldn’t do better. While in China, the copy of Segway was doing better because of its relevance, with slight changed design, to the cycle driving population (Actually the Chinese company ended up buying Segway). So, it is better for a company to have coordination of these components rather than working in isolation for having better brand performance, brand strength and brand status.