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Essay: The role of brand equity in competitive environments

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Abstract

This research is intended in analysing the role of brand equity in competitive environments and the way in which strategic brand management of companies help in building brand equity and the brand loyalty levels. Using qualitative research methodology, case study research method is chosen in which two case studies Starbucks India and Cafe Coffee Day are chosen. The case study analysis showed that both the companies have followed the customer based brand equity model in the process of building and managing the brand according to their strategic goals. Underpinned by the customer based brand equity model and model of strategic brand management, this research showed the positive influence of strategic brand management process in the two chosen companies on brand equity and on the brand loyalty levels.

Chapter 1: Introduction

1.1 Research Rational

With the increased globalization and the internationalization, the boundaries among the companies have declined resulting in the creation of highly competitive and dynamic markets. These changes occurring in the market require company’s operating in this market to undergo certain changes which includes adjusting of the organizational structure, management structure, business portfolio and so on. The increase in competition level in the market place has created drastic changes in customer behavior and their preferences. Due to the availability of large number of brands that are global and also local in the market. In such a highly competitive and dynamic global market, management of the brands is very crucial to understand customer behavior and their by adjust the brand accordingly. According to Rosenbaum (2015) brand management is not only important for global companies but is also equally crucial for local companies as nearly 55 % of the customers tend to prefer global brands as they are considered as high quality when compared to that of local brands. Altering the role of company’s brand to create value for the customers help in contributing new interpretation towards brand importance. As brand is considered as a long term investment of an organization, it certainly requires appropriate management which made companies and also researchers to in cooperate the concept of strategy into brand management. According to Kapferer (2012) the process of incorporating strategy and the brand management helps in long term planning of managing the brand which there by helps in making the company profitable to the long term investment that is made by the company on its brand development.

Indian coffee industry is one such market that is undergoing huge changes over the past few years in terms of competition level, market dynamism and customer preferences. According to Murthy & Naidu (2012) the growing population of India increased the middle class population, increase in purchasing power has made India has one of the potential destinations for coffee shops. The changing life styles of Indians and the Inclination of Indians to the global culture have made the coffee market in India experience drastic growth from very small coffee shops costly coffee lounges which are being owned giant coffee retailers such as Starbucks, Barista and Cafe Coffee day and Coastal Coffee. The entering of global coffee manufacturing company as Costa coffee and Starbucks into Indian market has increased the competition level year by year in this market. According to Srivastava (2015) 13 % of with the contribution from cafes and restaurant towards Indian food industry is from organized players 2008. This number is expected to reach 27 % by the end of 2016. Jeong (2014) stated that the Indian coffee market currently is worth of nearly $ 150 million which is has under gone growth rate of nearly 40 % over the previous 5 years. Study carried out by Sahitha (2014) identified key growth drivers of coffee retailing market in India. These key drivers are urbanization, increase in disposable increase, increase in middle class population, and increase in consumption culture of Indians and so on. Yoffie & Bijlani (2013) showed that Indians who were saving oriented towards consumption oriented in the past 5 years. In this highly competitive dynamic and highly potential market, brand management is highly crucial for the existing coffee retailers in order to survive in this industry. Brand equity and brand loyalty are found to be important aspects that help companies to with stand competition level and survive in highly dynamic industries (Mishra, 2013). Hence the current research intends in identifying the role of strategic brand management in influencing brand equity levels and also customer loyalty levels of company’s present in India coffee market.

1.2 Aim and Objectives

The main aim of this research work lies in identifying the role of strategic brand management in building brand equity and customer loyalty levels. This research also aims at analysing the two case studies star bucks and Cafe coffee day to analyse the brand building process in these two companies and the way in which strategic brand management helps in improving brand equity and customer loyalty levels of these chosen companies.

The satisfaction of this aim is done through the following objectives:-

  • To critically review the literature works on strategic brand management and brand equity in order to identify the way in which strategic brand management affects the brand equity levels.
  • To identify the role of strategic brand management and its influence on brand equity and customer loyalty of an organisation.
  • To identify the brand building process at Starbucks India and cafe coffee day through the application of customer based brand equity model.
  • To identify the role of strategic brand management adopted Starbucks India and café coffee day on the brand equity and customer loyalty levels.

1.3 Research Methodology

Research methodology is a combination of several steps that helps in conducting the research in a systemic manner. Among qualitative and quantitative research methodology the current project utilizes qualitative research methodology in which case study is the data collection method used to collect theoretical and descriptive data. Two case studies Starbucks India and cafe coffee day are chosen to identify the brand building process and strategic brand management practices which influence their brand equity and customer loyalty levels.

1.4 Thesis Outline

The organization of the report is done as follows.

  • Chapter 2: This is the literature review chapter in which the background work of brand equity and the existing works that concentrated the link between strategic brand management and brand equity or covered.
  • Chapter 3: This is the research methodology chapter in which the details about the research methods that are used in the current project are specified.
  • Chapter 4: This is the case study analysis and discussion chapter in which the findings about strategic brand management practices at cafe coffee day and Starbucks are analyzed and discussed further.
  • Chapter 5: This is the conclusion chapter in which the summary of the findings are presented.

Chapter 2: Literature Review

2.1 Overview

The main intention of this chapter lies in specifying the literature review of the project. In this chapter initially the importance of strategic brand management and the way in which strategic brand management helps in improving brand equity of the company are presented. The process involved in creating brand equity along with the theoretical frameworks that are related to brand equity are covered in this report. Finally review of the existing works that target on building brand equity levels of a company is provided in this report.

2.2 Brand Equity

Brand equity in the literature of marketing, brand equity is the term which is used to specify the relationship existing between brands and the customers. This brand equity is being debated in the literature of accounting and also in the literature of marketing in order to have long term focus on brand management. Even though researchers and companies are identified the importance of being strategic in the process of managing the brands, lack of appropriate guidelines and appropriate definition of strategic management have handed the company\’s in totally adopting strategic brand management. Feldwick (1996) defines brand equity as brands totally value specified as separable assets. This brand equity is also specified as a measure of customer’s strength which is attached to that of the brand. Brand equity in other words is also specified as the description of customer association, customer beliefs regarding the brand. All these three definitions of brand equity consist of interrelationships which can be clearly represented in the form of brand equity chain as shown below (Wood, 2000).

Initially the brand descriptions also known as brand identity or the brand image will be tailored based on needs of target market with the help of marketing mix. Brand strength will be determined by the success of brand description. Brand strength also known as brand loyalty also determines the value of brand because of its implication in future cash flows (Lim & Weaver, 2014).

2.3 Creation of brand equity

Brand equity is indicated as an advantage that is being connected to the name of the brand and symbol that can supplement the worth which is offered by products or service or an organisation. According to Buil (2013), brand equity consists of different assets which are being categorised into brand awareness, brand loyalty, perceived quality and brand associations. Strong brand is characterised to have high levels of the brand equity which is indicated as positive influence of known brand name on the reaction of customers towards products and the services. According to Bruhn (2012), brand equity will not just occur instead is produced carefully and also nourished through highly effective marketing programs. As given in figure 1, creation of brand equity involves four steps as given below (Cox et al, 2014):

  • The first step deals in building positive level of brand consciousness and brand associations in customer minds resulting in creation of brand identity
  • Next step involves creation of brand meaning in consumer mind. Brand meaning specifies what brand stands for to its customers.
  • Third step involves in obtaining proper responses from the customers and final step results in creation of brand resonance.

The management of the brand equity in an organization results in either maintaining brand loyalty or brand awareness or perceived quality or brand associations. All these assists which are created by brand equity of a company offers high value to the customers and there by offers high value to the organization (Buil, 2013)

2.4 Strategic Brand Management

Strategic brand management is defined as a process which is crucial for creating and also sustaining brand equity levels of an organization. According to Keller et al (2011) strategic brand management involves in development of a strategy which has the ability in improving the brand awareness, sustaining it, strengthen brand associations and also emphasizing on the utilization and the brand quality. This process of strategic brand management initially deals in obtaining clear understanding regarding the brand and the ways it must be positioned with respect to its competitors. This strategic brand management aims at identifying and also establishing brand positing that helps in reflecting the benefits which can be maximized by the organization. In order to satisfy this, aim the essence of the brand will establish in the form of brand characteristic such as brand attributes, brand benefits along with the selection of appropriate ways of presenting it (Santos, 2013).

Despite of the importance of the strategic brand management in building brand equity levels, it is highly ignored by marketers and also researchers. Successfulness of strategic brand management is completely based on the brand portfolio planning. Brand portfolio of an organization deals with brands of several related organizations. As the level of globalization increased, competition level among the companies as also increased showing the importance of managing brand in global place. This management of brand Helps Company’s in dealing with the changing preferences of customers towards global brands. This brand management when performed according to the company strategic is not only important for the global brands but is also crucial for the local brands to overcome the competition level (Ghodeswar, 2008).

2.5 Strategic brand management for brand equity

In the present brand management strategy, brand assets are one of the important factors that are to be protected for the competency of the firm. For a brand to survive in the present world, the organizations vision is the important factor which is used to reflect its competitive effort. As per the recent writings the main work of this brand management depends on following features: brands positioning, inside branding and brand transportation ability (kellerandLehmann, 2006). Gupta et al (2012) proposed three ways for maintaining, securing the brand equity. They are: brand positioning mind set, inside brand management and invariable brand transportation.

1. Brand positioning

In the perspective nature of Tuškejet al (2013), the customers and the purchasers mind set is taken into account and accordingly brand is developed, created. This technique is unique as the customers as targeted as well as the brand development takes place at the same time. This type of mind set of the organization makes the brand friendly by which that customer needs and requirements are satisfied. Brand orientation also takes place with wide range on marketing with values that is concentrated in emotion rather than reason and symbolical values. Here the brands are made as resources that deal with the firm’s identity because they are the reason for the competitive spirit or competence at any level in the market. This identity helps the brand to determine its goals and objectives. Even the brand management is dependent on these objectives that challenge the customer’s expectations. In this stage the brands value is increased by interactions between the customers and the company by the usage of symbols. By this, there would be increase in the experience for both end users and customers as well (Fulati, 2007).

2. Inside-out brand management

The management of the brand is to be done internally by the cooperation of the works and staff. This was first identified by Merriless in the year 2007 (Merrilees, 2007). They are the one who told that there is a need internal brand management rather than outside-in .this states that spreading the brands spirit internally is important rather than just communicating with other brands. This would also improve the support for the firm globally. Moreover, this spirit in the brand makes the employees to spread the popularity of the brand with the interactions between the customer and end users; this was greatly explained by Keller et al (2011). According to Gupta and Kumar (2013), companies based on the services provided depends only on the cooperate culture which is inculcated in the company. In this case of culture, great accent is to be placed on the relationships between the employees and customers. Employees involved in these relationships would improve the inside-out brand management. Certain signal messages or symbols are used in the project for the management of the firm and this signal messages would rather symbolize the culture externally to the customers and stakeholders. According to Urška et al (2013), culture management would help in reducing the price of processing the information and also reduces the problems occurring during the processing of information.

3. Invariable brand delivery

Adding to the concepts of brand positioning mind set and inside brand management, invariable brand delivery is also an important factor for delivering the product to the customers. Kapferer (2012) identified that the reputation of the brand is one of the crucial assets for the organization. Moreover the duties and obligations of the manager increase consistently because of the works and tasks that are involved in brand building. The performance of the organization and the wages of the employee depend on the factors like sales improvement and brand reputation. The investigations done by Santos (2013), in the year 2013 is based on the customer perspective relation and the profits of the brand. The outcome of this research proves that the marketing values are the key to the brands reputation. It is also the factor for increasing and influencing the share price of the brand in the market which intern increases the firm’s ability in gaining good reputation (M\’zungu et al, 2013). In addition to this the brands reputation depends on the product and its outcome in the market. The brands popularity and familiarity determines the outcome. These factors are further increased by practicing better delivery methods and better advertising methods. These advertisements are to be designed in customer’s perspective and in a creative way (Venkateswaran et al, 2011).

2.6 Customer based brand equity model (CBBE)

The customer based brand equity model explains the process that is to be followed for building a brand. This CBBE model shown in figure 2, also helps in depicting the brand value as the differential impacts that clients have based on their reaction to the advertising of that brand. This CBBE model consists of many steps that depict the order for building a brand strongly. There are six dimensions specified in this model that help companies to build brand equity as part of the brand building process (Keller et al, 2011). These six dimensions are brand salience, brand performance, brand imagery, customer judgments, customer sentiments or feelings and brand resonance. The top most point of the brand equity model is the brand resonance and is known only when the top of pyramid is earned. When the customer knows the brand value and familiar with the unique associations of the brand then that customer holds the position of resonance with the brand in terms of brand loyalty (keller, 2016).

Brand Salience

There are certain questions to be imposed in order to build and identify brand salience. These questions are used for the development of the brand by depicting the brands value and identity. The manager or the negotiator will be able to identify the brand and ensure that the particular brand meets the customer satisfaction (keller, 2016). In the customer perspective, a brand is to be well advertised for its awareness among the people and the brands knowledge is to be known by providing an association or link between the product category and the brand. Basically salience ensures in creating brand awareness that refers to how easily a brand is recognized and what the importance is given to that brand when compared to other brands. salience also refers to the same thing which also includes how is the brand popularized and how the customers find the product and purchase it by themselves. The level of salience can be determined by the extent and dimension or breadth of the brand. Here extent refers to the knowledge of the customer that is how easily a customer is able to recognize the product or brand. Dimension refers to the ability of the customer that happens when a purchase is made. This is the basic and foremost step that is to be followed in the brand pyramid (Bakshi & Mishra, 2016).

Brand performance and brand imagery

The second step that is followed in pyramid is brand performance and followed by brand imagery. Here the answers for the questionnaires are obtained by tangible and intangible features of the brand. Here basic questions like what am I? Why is it used? Will be answered. Tangible features or the characteristic deals with the ability by which a service or a product is seen by the customer in order to purchase it (Boukis et al, 2014). On the other hand, intangible features or the characteristic deals with the feedback that is how the customers feel about the brand. For the overall increase in brand equity, focus is to be laid on both brand performance and brand imagery. Brands performance is initiated by delivering the product of that particular brand to the customer according to his/her needs, followed by their expectations of the brand based on their previous experience. By this analysis, brand performance or routine can be improved. Brand imagery is the image that is developed by the customers about the brand rather than the product, so this can be improved either by brand experience or by advertising. The entire brand links associated comes under these two factors to bring a unique and particular brand that is strong enough to compete with other brands. So these dimensions are the key factors for the brands loyalty and strive way for the brands future development (Karadeniz, 2010)

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