Papers

Kevin Lane Keller

is the E. B. Osborn Professor of
Marketing at the Amos Tuck
Understanding brands, branding
School of Business at
Dartmouth College. Keller’s
and brand equity
academic resumé includes
degrees from Cornell, Kevin Lane Keller
Carnegie-Mellon and Duke Received (in revised form): 24 March 2003
Universities, award-winning
research and faculty positions
at Berkeley, Stanford and UNC.
His textbook, Strategic Brand Abstract
Management, has been adopted Branding has become a top management priority which has
at top business schools and necessitated that all members of an organisation have an
leading firms around the world
and has been heralded as the
understanding and appreciation of some branding basics. Towards
‘bible of branding’. that goal, this paper outlines some important principles of brands,
branding and brand equity. The paper also highlights some key
concepts in building, measuring and managing brand equity.
Keywords: brands, branding,
brand equity, brand value,
integrated marketing Introduction
communications In an increasingly complex world, individuals and businesses are faced
with more and more choices, but seemingly have less and less time to
make those choices. The ability of a strong brand to simplify consumer
decision making, reduce risk and set expectations is thus invaluable. More
and more firms and other organisations have therefore come to the
realisation that one of their most valuable assets is the brand names
associated with their products or services. Creating strong brands that
deliver on that promise and maintaining and enhancing the strength of
those brands over time is thus a management imperative — but a major
challenge at the same time. In fact, the prestigious Marketing Science
Institute designated ‘brands and branding’ as the second most important
‘top-tier’ priority facing marketers for 2002–2004 and a topic deserving
of intensive research attention. Accordingly, the purpose of this paper is
to review some branding fundamentals and key concepts to help provide a
foundation to such efforts.1

Brands
According to the American Marketing Association (AMA), a brand is a
‘name, term, sign, symbol, or design, or a combination of them intended
to identify the goods and services of one seller or group of sellers and to
differentiate them from those of competition’.2 Technically speaking,
then, whenever a marketer creates a new name, logo, symbol, etc for a
Kevin Lane Keller
new product, he or she has created a brand. It should be recognised that
Amos Tuck School of Business
Dartmouth College many practising managers, however, refer to a brand as more than that —
100 Tuck Hall defining a brand in terms of having actually created a certain amount of
Hanover
New Hampshire 03755
awareness, reputation, prominence and so on in the marketplace. In some
USA sense, a distinction can thus be made between the AMA definition of a
Tel: +1 603 646 0393 ‘small ‘‘b’’ brand’ versus the sometimes industry practice of a ‘big ‘‘b’’
Fax: +1 603 646 1308
E-mail: brand’ — a ‘brand’ versus a ‘Brand’. It is important to recognise this
kevin.l.keller@dartmouth.edu distinction, as disagreements about branding principles or guidelines can

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often revolve around the definition of what is meant by a ‘brand’ as much

as anything.
Why are brands important? What functions do they perform that make
them so valuable to marketers?
In terms of the roles of brands to consumers, they provide:

Roles of brands — identification of source of product

— assignment of responsibility to product maker
— risk reducer
— search cost reducer
— promise, bond or pact with maker of product
— symbolic device
— signal of quality.

In terms of the roles of brands to firms, they provide:

— means of identification to simplify handling or tracing

— means of legally protecting unique features
— signal of quality level to satisfied customers
— means of endowing products with unique associations
— source of competitive advantage
— source of financial returns.

Branding
Brands clearly provide important benefits to consumers — both
individuals and firms. An obvious question then is, how are brands
created? How do you ‘brand’ a product? Although firms provide the
impetus to brand creation through their marketing programmes and other
activities, ultimately a brand is something that resides in the minds of
consumers. A brand is a perceptual entity that is rooted in reality but is
more than that and reflects the perceptions and perhaps even the
idiosyncrasies of consumers.
Branding a product To brand a product, it is necessary to teach consumers ‘who’ the
or service product is — by giving it a name and using other brand elements to help
identify it — as well as ‘what’ the product does and ‘why’ consumers
should care. In other words, to brand a product or service it is necessary
to give consumers a label for the product (ie ‘here is how you can identify
the product’) and to provide meaning for the brand to consumers (ie ‘here
is what this particular product can do for you and why it is special and
different from other brand-name products’). Branding involves creating
mental structures and helping consumers organise their knowledge about
products and services in a way that clarifies their decision making and, in
the process, provide value to the firm.
For branding strategies to be successful and brand equity to be created,
consumers must be convinced that there are meaningful differences
among brands in the product or service category. The key to branding is
that consumers must not think that all brands in the category are the same.
Brand differences are often related to attributes or benefits of the product
itself. For example, brands such as Gillette, Merck, Sony, 3M and others

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 Understanding brands, branding and brand equity

have been leaders in their product categories for decades due, in part, to
continual innovation. Other brands create competitive advantages through
non-product-related means. For example, Coca-Cola, Calvin Klein,
Chanel No. 5, Marlboro and others have become leaders in their product
categories by understanding consumer motivations and desires and
creating relevant and appealing images surrounding their products.

Brand equity
Branding is thus all about creating differences. Most marketing observers
also agree with the following basic principles of branding and brand
equity. These differences in outcomes arise from the ‘added value’
endowed to a product as a result of past marketing activity for the brand.
There are many different ways that this value can be created for a brand.
Brand equity provides a common denominator for interpreting marketing
strategies and assessing the value of a brand; and there are many different
ways as to how the value of a brand can be manifested or exploited to
benefit the firm — in terms of greater proceeds and/or lower costs.
The marketing advantages of strong brands can be summarised as:

— improved perceptions of product performance

The marketing — greater loyalty
advantages of strong — less vulnerability to competitive marketing actions
brands — less vulnerability to marketing crises
— larger margins
— more inelastic consumer response to price increases
— more elastic consumer response to price decreases
— greater trade cooperation and support
— increased marketing communication effectiveness
— possible licensing opportunities
— additional brand extension opportunities.

Although various perspectives have been employed to study brand

equity,3 customer-based approaches view brand equity from the
perspective of the consumer.4 The basic premise of customer-based brand
equity models is that the power of a brand lies in what customers have
learned, felt, seen, heard, etc about the brand as a result of their
experiences over time. In other words, the power of a brand lies in the
minds of consumers or customers and what they have experienced and
learned about the brand over time.
The challenge for marketers in building a strong brand is therefore
ensuring that customers have the right type of experiences with products
and services and their accompanying marketing programmes so that the
desired thoughts, feelings, images, beliefs, perceptions, opinions and so
on become linked to the brand. Consumer knowledge is what drives the
differences that manifest themselves in terms of brand equity. This
realisation has important managerial implications. In an abstract sense,
according to this view, brand equity provides marketers with a vital
strategic ‘bridge’ from their past to their future, as follows.

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Brands as a reflection of the past

All of the dollars spent each year on manufacturing and marketing
products should not be thought so much as ‘expenses’ but as
‘investments’ — investments in what consumers learned, felt,
experienced, etc about the brand. If not properly designed and
implemented, these expenditures may not be ‘good’ investments, in that
the right knowledge structures may not have been created in consumers’
minds, but they should be considered investments nonetheless. Thus, the
quality of the investment in brand building is the most critical factor, not
necessarily the quantity of investment beyond some minimal threshold
amount.
Brand equity as a In that sense, it is actually possible to ‘overspend’ on brand building if
bridge money is not being spent wisely. For example, in the beverage category,
brands such as Michelob, Miller Lite and 7Up saw their sales decline in
the 1990s despite sizeable marketing support, arguably because of poorly
targeted and delivered marketing campaigns. Conversely, there are
numerous examples of brands which amass a great deal of brand equity
by judiciously spending on marketing activities that create valuable,
enduring memory traces in the minds of consumers. For example, despite
being outspent by such beverage brand giants as Coca-Cola, Pepsi and
Budweiser, the California Milk Processor Board was able to reverse a
decades-long decline in consumption of milk in California partly through
their well-designed and executed ‘Got Milk?’ campaign.

Brands as direction for the future

At the same time, the brand knowledge that has been created over time by
these marketing investments dictates appropriate and inappropriate future
directions for the brand. Consumers, be they individuals or organisations,
will decide, based on their brand beliefs, attitudes, etc, where they think
the brand should go and grant permission (or not) to any marketing action
or programme. Thus, at the end of the day, the true value and future
prospects of a brand rest with consumers and their knowledge about the
brand and their likely response to marketing activity as a result of this
knowledge. Understanding consumer brand knowledge — all the different
kinds of things that become linked to the brand in the minds of consumers
— is thus of paramount importance as the underpinning and foundation
of brand equity.

Building strong brands

From a customer-based brand equity perspective, building a strong brand
can be thought of in terms of a sequential series of steps, where each step
is contingent upon successfully achieving the previous step.5 All steps
involve accomplishing certain objectives with customers — both existing
and potential customers. The first step is to ensure identification of the
brand with customers and an association of the brand in customers’ minds
with a specific product class or customer need. The second step is to
establish firmly the totality of brand meaning in the minds of customers
— ie by strategically linking a host of tangible and intangible brand
associations with certain properties. The third step is to elicit the proper

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 Understanding brands, branding and brand equity

customer responses to this brand identification and brand meaning. The

fourth and final step is to convert brand response to create an intense,
active loyalty relationship between customers and the brand.
These four steps represent a set of fundamental questions that
customers invariably ask about brands — at least implicitly if not even
explicitly — as follows (with corresponding brand steps in parentheses).

— Who are you? (Brand identity.)

Four steps to build a — What are you? (Brand meaning.)
brand — What about you? What do I think or feel about you? (Brand
responses.)
— What about you and me? What kind of association and how much of a
connection would I like to have with you? (Brand relationships.)

There is an obvious ordering of the steps in this ‘branding ladder’, from

Branding ladder identity to meaning to responses to relationships. That is, meaning cannot
be established unless identity has been created; responses cannot occur
unless the right meaning has been developed; and a relationship cannot be
forged unless the proper responses have been elicited.
Enacting the four steps to create the right brand identity, brand
meaning, brand responses and brand relationship is a complicated and
difficult process. To provide some structure, it is useful to think of
sequentially establishing six ‘brand building blocks’ with customers. That
Brand building is, constructing a strong brand can be seen as establishing a logically
blocks constructed set of six building blocks to accomplish the four steps
necessary to create a strong brand. To connote the sequencing involved,
these brand building blocks can be assembled in terms of a brand pyramid
(see Figure 1). Creating significant brand equity involves reaching the top

Relationships ⫽ =
4. 4.RELATIONSHIPS Intense,
INTENSE,
Resonance
What
Whatabout
aboutyou and&me?
you me? active
ACTIVE loyalty
LOYALTY

Positive,
POSITIVE,
3. Response
3. RESPONSE ⫽ = Judgments Feelings accessible
ACCESSIBLE
What
Whatabout
aboutyou?
you? reactions
REACTIONS

Strong, FAVORABLE
STRONG, favourable
Meaning ⫽ =
2. MEANING
2.
Performance Imagery &and uniqueBRAND
UNIQUE brand
What
Whatare
areyou?
you? ASSOCIATIONS
association

Identity ⫽ = DEEP, BROAD

1.1.IDENTITY Deep, broad
Who Salience BRAND
Whoare areyou?
you? brand awareness

Figure 1: Customer-based brand equity pyramid

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or pinnacle of the brand pyramid and will only occur if the right building
blocks are put into place. The corresponding brand steps represent
different levels of the brand pyramid, as follows.

Brand identity
Achieving the right brand identity involves creating brand salience with
customers. Brand salience relates to aspects of the awareness of the brand,
eg how often and easily the brand is evoked under various situations or
circumstances. To what extent is the brand top-of-mind and easily
recalled or recognised? What types of cues or reminders are necessary?
How pervasive is this brand awareness? A highly salient brand is one that
Breadth and depth of has both depth and breadth of brand awareness, such that customers
brand awareness always make sufficient purchases as well as always think of the brand
across a variety of settings when it could possibly be employed or
consumed. As an example, soft drinks have much breadth in awareness in
that they come to mind in a variety of different consumption situations. A
consumer may consider drinking one of the different cola varieties of
Coke virtually anytime, anywhere. Other beverages have much more
limited perceived consumption situations, eg alcoholic beverages, milk
and juices.

Brand meaning
Brand salience is an important first step in building brand equity, but
usually not sufficient. For most customers in most situations, other
considerations, such as the meaning or image of the brand, also come into
Brand image play. Creating brand meaning involves establishing a brand image and
what the brand is characterised by and should stand for in the minds of
customers. Although a myriad of different types of brand associations are
possible, brand meaning broadly can be distinguished in terms of more
functional versus more abstract considerations.
‘Brand performance’ relates to the ways in which the product or service
attempts to meet customers’ more functional needs. Thus, brand
performance refers to the intrinsic properties of the brand in terms of
inherent product or service characteristics. How well does the brand rate
on objective assessments of quality? To what extent does the brand satisfy
utilitarian, aesthetic and economic customer needs and wants in the
product or service category?
‘Brand imagery’ deals with the extrinsic properties of the product or
service, including the ways in which the brand attempts to meet
customers’ more psychological or social needs. Brand imagery is how
people think about a brand abstractly rather than what they think the
brand actually does. Thus, imagery refers to more intangible aspects of
the brand such as user imagery, usage imagery, brand personality and
values and brand history, heritage and experiences. With functional
differences on the basis of brand performance becoming increasingly
competed away, creating differences on the basis of brand imagery has
gained importance.
Thus a number of different types of associations related to either
performance or imagery may become linked to the brand. Regardless of

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 Understanding brands, branding and brand equity

the type involved, the brand associations making up the brand image and
meaning can be characterised and profiled according to three important
dimensions that provide the key to building brand equity.

Dimensions of brand — Strength. How strongly is the brand identified with a brand
image association?
— Favourability. How important or valuable is the brand association to
customers?
— Uniqueness. How distinctively is the brand identified with the brand
association?

Successful results on these three dimensions produce the most positive

brand responses, the underpinning of intense and active brand loyalty. To
create brand equity, it is important that the brand have some strong,
favourable and unique brand associations in that order. In other words, it
does not matter how unique a brand association is unless customers
evaluate the association favourably, and it does not matter how desirable a
brand association is unless it is sufficiently strong that customers actually
recall it and link it to the brand. At the same time, it should be recognised
that not all strong associations are favourable and not all favourable
associations are unique.

Brand responses
Brand responses refer to how customers respond to the brand and all its
marketing activity and other sources of information — what customers
think or feel about the brand. Brand responses can be distinguished
according to brand judgments and brand feelings, ie in terms of whether
they arise more from the ‘head’ or from the ‘heart’.
Brand judgments and Brand judgments focus upon customers’ own personal opinions and
feelings evaluations with regard to the brand. Brand judgments involve how
customers put together all the different performance and imagery
associations for the brand to form different kinds of opinions. Customers
may make all types of judgments with respect to a brand, but in terms of
creating a strong brand, four types of summary brand judgments are
particularly important: brand quality, brand credibility, brand
consideration and brand superiority.
Brand feelings are customers’ emotional responses and reactions with
respect to the brand. Brand feelings also relate to the social currency
evoked by the brand. What feelings are evoked by the marketing
programme for the brand or by other means? How does the brand affect
customers’ feelings about themselves and their relationship with others?
These feelings can be mild or intense and be positive or negative in
nature. Six important types of brand-building feelings are warmth, fun,
excitement, security, social approval and self-respect.6 The first three are
more experiential and immediate, increasing in level of intensity. The
latter three are more private and enduring, increasing in level of gravity.
Although all types of customer responses are possible — driven from
both the head and heart — ultimately what matters is how positive they
are. Additionally, it is important that they are accessible and come to

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mind when consumers think of the brand. Brand judgments and feelings
can only favourably impact on consumer behaviour if it is the case that
consumers internalise or think of positive responses in any of their
encounters with the brand.

Brand relationships
The final step, brand relationships, focuses upon the level of identification
Brand resonance that the customer has with the brand. ‘Brand resonance’ refers to the
nature of the relationship that customers have with the brand and the
extent to which customers feel that they are ‘in sync’ with the brand.
Consumers ‘own’ brands in the brand knowledge they create, but if that
knowledge is not favourable (eg if the judgments and feelings are not
positive), consumers will choose not to develop any loyalty or even
preference towards a brand.
Brand relationships can be usefully characterised in terms of two
Intense, active dimensions — intensity and activity. Intensity refers to the depth of the
loyalty psychological bond that customers have with the brand, eg how strong are
the attitudinal attachment to the brand and sense of community with other
brand users or the company itself? In other words, how deeply felt is the
loyalty? Activity refers to how frequently the consumer buys and uses the
brand, as well as engages in other activities not related to purchase and
consumption — the extent to which customers seek out brand
information, events, other loyal customers and so on. In other words, in
how many different ways does brand loyalty manifest itself in day-to-day
consumer behaviour? Examples of brands with high resonance include
such brands as Harley-Davidson, Apple, Jeep, eBay and others.
The strongest brands excel on all six of these factors and thus fully
execute all four steps in building a brand. The most valuable brand
building block, brand resonance, occurs when all the other brand building
blocks are completely ‘in sync’ with respect to customers’ needs, wants
and desires. In other words, brand resonance reflects a completely
harmonious relationship between customers and the brand. With true
brand resonance, customers have a high degree of loyalty marked by a
close relationship with the brand, such that customers actively seek means
to interact with the brand and share their experiences with others. Firms
that are able to achieve resonance and affinity with their customers should
reap a host of valuable benefits, including greater price premiums and
more efficient and effective marketing programmes.

Illustrative example
A brand powerhouse essentially built in the 1990s, Starbucks amassed a
great deal of brand equity by establishing a strong set of brand building
blocks. Becoming closely identified with quality coffee has led to a great
deal of brand salience. This reputation can also be found in consumer
perceptions of brand performance and imagery. Starbucks has concertedly
provided superior delivery of a desired benefit by recognising America’s
need for ‘a really good cup of coffee’. Based initially on lessons learned
overseas, Starbucks has delivered a superior product in part by extreme
vertical integration. Starbucks is involved in its coffee from start to finish

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 Understanding brands, branding and brand equity

— from the selection and procurement of the coffee beans to their

roasting and blending to their ultimate consumption.
In terms of usage imagery, Starbucks also creates key core brand values
in its retail distribution through company-owned coffeehouses. Starbucks
views them as a ‘third place’ — not work and not home — where
customers can be rewarded with a rich sensory experience. Starbucks
attempts to create the most satisfying possible experience in its
coffeehouses by appealing to all five senses — through the rich aroma of
the beans, the premium taste of the coffee, the product displays and
attractive artwork adorning the walls, the contemporary music playing in
the background and even the cosy, clean feel of the tables and chairs. The
‘Starbucks experience’ is to create stores with an inviting, enriching
environment that is comfortable and accessible yet also stylish and
elegant.
Through innovative and unique product formulation and retail service
Building Starbucks’ delivery, Starbucks has also been able to create much credibility and
brand equity emotionality. In the words of one of their key marketers, Starbucks likes
to be seen as the ‘chief protagonist of the coffee culture’. By virtue of its
perceived expertise and trustworthiness, Starbucks has successfully
introduced new products leveraging their coffee reputation, such as
Frappuccino iced coffee and premium coffee ice cream. By creating a
rich sensory experience, Starbucks has been able to elicit a strong
emotional response both individually and in a broader social context.
The startling success of Starbucks in creating brand resonance is
evidenced by the fact that its customers average 18 store visits a month
with an expenditure of $3.50 a visit. This high level of consumer
involvement and aggressive product development resulted in Starbucks
realising an annual growth rate of sales and profits exceeding 50 per cent
through much of the 1990s, and also resulted in the brand performing
comparatively strongly in the economic slump that characterised the
beginning of the following decade. A customer-based brand equity
perspective, however, also provides diagnostic insight into where the
brand could go wrong. Perceived over-expansion, exploitation of its name
and loss of a personal touch could erode the valuable sense of credibility
and emotionality that the brand worked so hard to attain.

Integrated marketing communications and brand equity

According to a customer-based brand equity perspective, building brand
equity requires, in part, creating awareness of the brand; linking strong,
favourable and unique associations to the brand in consumers’ memory;
eliciting positive brand judgments or feelings; and/or facilitating stronger
consumer-brand connections and brand resonance. In general, this
knowledge-building process will depend on all brand-related contacts —
whether marketer initiated or not. From a marketing management
perspective, there are three main sets of factors or ‘brand equity drivers’.

— The initial choices for the brand elements or identities making up the
brand (eg brand names, URLs, logos, symbols, characters,
spokespeople, slogans, jingles, packages and signage).

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Brand equity drives — The marketing activities and supporting marketing programme and
the manner by which the brand is integrated into it (eg product,
pricing, distribution and communication strategies).
— Other associations indirectly transferred to the brand by linking it to
some other entity (eg the company, country of origin, channel of
distribution or another brand).

Although the judicious choice of brand elements and secondary

associations can make some important contributions to building brand
equity, the primary input comes from the marketing activities related to
the brand. Given its importance and complexity, it is worth briefly
considering the role of marketing communications in particular in more
detail.

Role of marketing communications

Marketing communications can be defined as the means by which firms
attempt to inform, persuade and remind consumers — directly or
indirectly — about the brands that they sell. In a sense, marketing
communications represent the ‘voice’ of the brand and are a means by
which it can establish a dialogue and build relationships with consumers.
Although advertising is often a central element of a marketing
communications programme, it is usually not the only one — or even
the most important one — in terms of building brand equity. Listed
below are some of the commonly used marketing communication
options.

Marketing — Media advertising: TV, radio, newspapers, magazines.

communication — Direct response advertising: mail, telephone, broadcast media, print
options media, computer-related, media-related.
— Online advertising: websites, interactive ads.
— Place advertising: billboards and posters, movies, airlines, lounges,
product placement, point of purchase.
— Point-of-purchase advertising: shelf talkers, aisle markers, shopping
cart ads, in-store radio or TV.
— Trade promotions: trade deals and buying allowances, point-of-
purchase display allowances, push money, contests and dealer
incentives, training programmes, trade shows, cooperative advertising.
— Consumer promotions: samples, coupons, premiums, refunds/rebates,
contests/sweepstakes, bonus packs, price-offs.
— Event marketing and sponsorship: sports, arts, entertainment, fairs
and festivals, cause-related.
— Publicity and public relations.
— Personal selling.

Although different communication options can play different roles in

the marketing programme, one important purpose of all marketing
communications is to contribute to brand equity. In addition to forming
the desired brand knowledge structures, marketing communication

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programmes can also provide incentives that elicit the differential

response that makes up customer-based brand equity.
Thus, perhaps the simplest — but most useful way — to judge
advertising and/or any other communication option is in its ability to
achieve the desired brand knowledge structures and elicit the differential
response that makes up brand equity. For example, how well does a
proposed ad campaign contribute to awareness or creating, maintaining or
strengthening certain brand associations? Does a sponsorship cause
consumers to have more favourable brand judgments and feelings? To
what extent does a direct mail piece or promotion encourage consumers
to buy more of a product? At what price premium?

Mixing and matching marketing communications

One implication of this conceptualisation of customer-based brand equity
is that the manner in which brand knowledge is created does not matter
— only the resulting nature of that knowledge.7 For example, The Body
Building brand Shop created a global brand image without even using conventional
equity at The Body advertising. Their strong associations to personal care and environmental
Shop concern occurred through their products (natural ingredients only, never
tested on animals, etc); packaging (simple, refillable, recyclable);
merchandising (detailed point-of-sale posters, brochures and displays);
staff (encouraged to be enthusiastic and informative concerning
environmental issues); sourcing policies (using small local producers
from around the world); social action programme (requiring each
franchisee to run a local community programme); and public relations
programmes and activities (taking visible and sometimes outspoken
stands on various issues).
Communications and In particular, from the perspective of customer-based brand equity,
customer-based marketers should evaluate all possible communication options available
brand equity to create knowledge structures according to effectiveness criteria as well
as cost considerations. In particular, customer-based brand equity
provides a common denominator by which the effects of different
communication options can be evaluated. Each communication option
can be judged in terms of the effectiveness and efficiency by which it
affects — directly or indirectly — brand salience, brand meaning, brand
responses and brand relationships.
Different communication options have different strengths and can
accomplish different objectives. Thus, it is important to employ a ‘mix’ of
different communication options, each playing a specific role in building
or maintaining brand equity. For example, some media are demonstrably
better at generating trial than engendering long-term loyalty (eg sampling
or other forms of sales promotion). At the same time, the marketing
communication programme should be put together in a way such that the
‘whole’ is greater than the ‘sum of the parts’. In other words, as much as
possible there should be a ‘match’ among certain communication options
so that the effects of any one communication option are enhanced by the
presence of another. For example, as part of the highly successful ‘Drivers
Wanted’ campaign, VW has used television to introduce a story line that
it continued and embellished on its website.

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Measuring brand equity

Given that customer-based brand equity models define brand equity in
terms of the differences that arise in customers’ response to marketing
activity as a result of the knowledge that customers have about the brand,
there are two basic approaches to measuring brand equity. An ‘indirect’
approach could assess potential sources of customer-based brand equity
by identifying and tracking consumers’ brand knowledge structures in
terms of the brand identity, meaning, responses and relationships
Direct and indirect dimensions identified above. A ‘direct’ approach, on the other hand, could
approaches of brand measure customer-based brand equity more directly by assessing the
equity measurements actual impact of brand knowledge on consumer response to different
elements of the marketing programme, eg in terms of the marketing
advantages listed earlier in this paper.
The two general approaches are complementary, and both can and
should be employed by marketers.8 In other words, for brand equity to
provide a useful strategic function and guide marketing decisions, it is
important for marketers to understand fully the sources of brand equity,
how they affect outcomes of interest (eg sales) and how these sources and
outcomes change, if at all, over time. For the purposes of determining the
overall financial value of brands, the various consumer benefits emanating
from the brand that were outlined above can be assessed and combined to
provide an overall estimate of brand equity and value. For example, one
popular industry method by Interbrand concentrates on the price
premiums afforded the brand and then considers a number of discount
factors to determine the appropriate long-term brand value.9

Managing long-term brand equity

Effective brand management requires taking a long-term view of
marketing decisions — the ability to think at least one to three years
down the line, if not longer. Any action that a firm takes as part of its
marketing programme has the potential to change consumer knowledge
about the brand in terms of some aspect of brand awareness or brand
Short-term and long- image. These changes in consumer brand knowledge from current
term marketing marketing activity will also have an indirect effect on the success of
effects future marketing activities. Thus, from the perspective of customer-based
brand equity, it is important when making marketing decisions to consider
how the changes in brand awareness, image, response and relationships
that could result from those decisions may help or hurt subsequent
marketing decisions. For example, the frequent use of sales promotions
involving temporary price decreases may create or strengthen a ‘discount’
association to the brand, with potentially adverse implications for
customer loyalty and responses to future price changes or non-price-
oriented marketing communication efforts.
A long-term perspective of brand management recognises that any
changes in the supporting marketing programme for a brand may, by
changing consumer knowledge, affect the success of future marketing
programmes. Additionally, a long-term view necessitates proactive
strategies designed to maintain and enhance customer-based brand equity

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 Understanding brands, branding and brand equity

over time in the face of external changes in the marketing environment

and internal changes in a firm’s marketing goals and programmes.

Reinforcing brand equity

Brand equity must be actively managed over time by reinforcing the
brand meaning and, if necessary, by making adjustments to the marketing
programme to identify new sources of brand equity. Brand equity is
reinforced by marketing actions that consistently convey the meaning of
the brand to consumers in terms of what products the brand represents;
what core benefits it supplies; what needs it satisfies; and how the brand
makes those products superior and which strong, favourable and unique
brand associations should exist in the minds of consumers.
In managing brand equity it is important to recognise the trade-offs that
Reinforcing and exist between those marketing activities that fortify the brand and
leveraging brand reinforce its meaning and those that attempt to leverage or borrow from
equity its existing brand equity to reap some financial benefit. At some point,
failure to fortify the brand will diminish brand awareness and weaken
brand image. Without these sources of brand equity, the brand itself may
not continue to yield as valuable benefits.
For example, as Coors Brewing devoted increasing attention in its
marketing on growing the equity of less-established brands (eg Coors
Light beer) and introducing new products (eg Zima clear malt beverage),
ad support for the flagship Coors beer slipped from a peak of about $43m
in 1985 to a meagre $4m by 1993. Perhaps not surprisingly, sales of
Coors beer dropped by half from 1989 to 1993. In launching a new ad
campaign to prop up sales, Coors returned to its iconoclastic, independent
Western image. Marketers at Coors now admit they did not give the brand
the attention it deserves. ‘We’ve not marketed Coors as aggressively as
we should have in the past ten to 15 years.’
Another example of the downside of failing to support a brand
adequately occurred in the oil and gas industry. In the late 1970s
consumers had an extremely positive image of Shell Oil and saw clear
differences between the brand and its major branded competitors. In the
early 1980s, for various reasons, Shell went through a period of time
where it cut back considerably on its advertising and marketing support
for the brand. As a result, Shell no longer enjoys the same special status
in the eyes of consumers and is now seen as much more similar to other
oil companies.
Reinforcing brand equity thus requires consistency in the amount and
Importance of nature of the supporting marketing programme for the brand. Although
innovation and the specific tactics may change, the key sources of equity for the brand
relevance should be preserved and amplified where appropriate. Product innovation
and relevance are paramount in maintaining continuity and expanding the
meaning of the brand.

Conclusion
In summary, regardless of the particular definition adopted, the value to
marketers of brand equity as a concept ultimately depends on how they
use it. Brand equity can offer focus and guidance, providing marketers

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with a means to interpret their past marketing performance and design

their future marketing programmes. Everything the firm does can help to
enhance or detract from brand equity. Those marketers who build strong
brands have embraced the concept and use it to its fullest as a means of
clarifying, communicating and implementing their marketing actions.
Towards that goal, this paper advanced some concepts and principles with
respect to customer-based brand equity, a set of approaches with much
potential managerial insight.

References
1. For a more advanced view of the branding literature, see Keller, K. L. (2002) ‘Branding and brand
equity’, in Weitz, B. and Wensley, R. (eds) Handbook of Marketing, Sage Publications, London,
pp. 151–178.
2. American Marketing Association, www.ama.org.
3. Other approaches are based on economic principles of signalling — see Erdem, T. (1998) ‘Brand
equity as a signaling phenomenon’, Journal of Consumer Psychology, Vol. 7, No. 2, pp. 131–157.
There is also more of a sociological, anthropological or biological perspective — see McCracken,
G. (1986) ‘Culture and consumption: A theoretical account of the structure and movement of the
cultural meaning of consumer goods’, Journal of Consumer Research, Vol. 13, June, pp. 71–83;
Fournier, S. (1998) ‘Consumers and their brands: Developing relationship theory in consumer
research’, Journal of Consumer Research, Vol. 24, No. 3, pp. 343–373.
4. Aaker, D. A. (1991) Managing Brand Equity, New York, Free Press; Aaker, D. A. (1996) Building
Strong Brands, New York, Free Press; Keller, K. L. (2003) Strategic Brand Management, 2nd edn,
Prentice-Hall, Upper Saddle River, NJ.
5. Keller, K. L. (2001) ‘Building customer-based brand equity: A blueprint for creating strong
brands’, Marketing Management, Vol. 28, No. 1, pp. 35–41.
6. Kahle, L. R., Poulos, B. and Sukhdial, A. (1988) ‘Changes in social values in the United States
during the past decade’, Journal of Advertising Research, February/March, pp. 35–41.
7. Schultz, D. E., Tannenbaum, S. I. and Lauterborn, R. F. (1993) Integrated Marketing
Communications, NTC Business Books, Lincolnwood, IL.
8. For holistic perspectives on how to combine different measurement approaches, see Ambler, T.
(2000) Marketing and the Bottom Line, Pearson Education, London; Epstein, M. J. and Westbrook,
R. A. (2001) ‘Linking actions to profits in strategic decision making’, MIT Sloan Management
Review, Spring, pp. 39–49; Keller, K. L. and Lehmann, D. (2003) ‘The brand value chain:
Optimizing strategic and financial brand performance’, Marketing Management, May/June, in
press; Srivastava, R. K., Shervani, T. A. and Fahey, L. (1998) ‘Market-based assets and shareholder
value’, Journal of Marketing, Vol. 62, No. 1, pp. 2–18.
9. Murphy, J. (1989) Brand Valuation, Hutchinson Business Books, London.

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