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Brand loyalty

Loyalty is a direct measure of how willing customers are to stick to a brand.

Therefore Aaker argues the price premium as the basic indicator for brand

loyalty and the single best measurement of brand equity. Loyal customersprevent entry of potential competitors and lower the treat of substitutes. Nextto that loyalty facilitates in time so it is possible to respond to market

innovations and to create to protection shield against price fighters. Hence,

Aaker defines brand loyalty as a core dimension in the brand equity model(Aaker, 1996:319-323).

The importance of loyalty is also recognized and correlated to brand equity byKapferer. Strong brands can only be strong if they have a solid supply of loyal

customers. Where the financial brand value is a function of brand equity, loyaltydecreases the risk of expected future returns. Loyal customers spend more andtheir spending could easily increase over time as a result of loyalty programs.

Compared to prospect / non-customers, loyal customers are 5 times less costly

to contact (Kapferer, 2007:203).

Loyalty is often measured as repeating sequence of purchase. Keller argues thatrepeat buying does not necessarily address high customer loyalty, nor does ahigh level of customer satisfaction. Customers can purchase repeatedly and feel

very satisfied without demonstrating intrinsic loyalty to the product, brand or

organization. Nonetheless repeatedly buying is part of brand loyalty. Loyaltydemands deeper attitudinal attachments that fully satisfy customer needs, it'sbeyond having a positive attitude to the brand (Keller, 2007:71&88).

Love and Gelbert argue that strong brands consistently win two moments of

truth and that they will earn a special place in the mind of customers. The first

moment of truth occurs when the customer chooses the brand above thecompetition. The second moment of truth occurs when the customer experiences

the brand and the brand promise is congruent with the brand experience. Hence

loyalty is directly linked to value of trust earned by credibility as a result of themoments of truth. Therefore trust can be seen as a simple foundation of loyaltyprograms (as quoted in Kotler & Pfoertsch, 2006:VI).

Aaker defines five loyalty segments which guide companies to develop theirstrategic and tactical market insight (Aaker, 2002:22-23);

1. Noncustomers2. Price switchers3. Passively loyal customers4. Fence sitters5. Committed customers

Organizations should enhance loyalty of the fence sitters, the ones who have no

brand preference between two or more brands, and the committed customers.Brand awareness, perceived brand quality, a well managed brand identity andbehavioural brand loyalty programs could leverage brand loyalty among these

groups (Aaker, 2002:22-23). The latter has also been addressed by Kapferer

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who argues that behavioural loyalty programs create an emotional connectionbetween the brand and customers (Kapferer, 2007:86).

Brand equity

Brand equity is the financial value of a brand which provides capital/value toproducts and services. Brand equity is related to future returns that customers

generate to the product or service. Developed brand assets in the past, enable

the brand to leverage her strength and should deliver future value to the brand.Hence brand equity fulfils a bridging role where it connects the past to thefuture. Kapferer distinguishes three levels; (1) brand assets, (2) brand strength

and (3) brand value. The sequence from past to future is a conditionalconsequence which differs in time due to competitive and environmentalchanges (Kapferer, 2007:14). See figure 20.

Kotler and Keller argue that the value of a brand is directly related to theperception and mind set of prospects and customers. It reflects the direct and

indirect brand experience of what they have seen, heard, learned, thought and

felt over time (Kotler and Keller, 2006:276). A strong brand characterizes it selfby a strong customer base, or even better by a sustainable base of loyalcustomers. For that reason the customer determines the future attractiveness of

a brand and its brand equity. Kapferer recommends four indicators of brandequity (Kapferer, 2007:17):

1. Aided brand awareness, measures whether the brand has the power toevoke long-lasting images, memories, and emotions.

2. Spontaneous brand awareness (unaided awareness), measure ofsalience

3. Evoked set, also called consideration set.4. Previous consumption of the brand.

Kotler and Pfoertsch came to the conclusion that, no matter which brand equity

paradigm is used; brand equity drivers are built around four key drivers which

leverage consumer's perceptions of the brand: (1) perceived quality, (2) nameawareness, (3) brand associations and (4) brand loyalty (Kotler & Pfoertsch,2006:70).

Hence brand equity is an intangible asset that delivers (financial) value to the

customers on one hand and value to the organization on the other hand. From acompany perspective Anderson and Narus (as quoted in Kotler & Pfoertsch,2006:69) addressed brand equity in a preferred customer response of:

1. Greater willingness to try a product or service2. Less time needed to close the sale of an offering3. Greater likelihood that the product or service is purchased4. Willingness to award a larger share of purchase requirement5. Willingness to pay a price premium

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6. Less sensitive in regard to price increase7. Less inducement to try a competitive offering

This is also congruent with Aaker and Joachimsthaler who defined brand equity

as: "...a set of brand assets (or liabilities) linked to a brand's name and symbol

that adds to (or subtract from) a product or service" (Aaker and Joachimsthaler,

2000:17).

Aaker formed his brand equity model around the five categories of brand assets:

1. Brand loyalty.2. Brand awareness.3. Perceived quality.4. Brand associations.5. Other proprietary assets.

Aaker determines the five categories as the main determinants of brand equitywhich deliver positive or negative value to the customer and organization. See

figure 21. Each category can be seen as a brand asset that creates value. It's ofvital importance to understand the source that creates value and the way itcreates value, these are the indicators/ effect as displayed in figure 21 (Aaker,1996:8).

Aaker has set 10 brand equity measurement variables, based on the first four

primarily categories of the equity model in figure 22. The measures should

reflect brand equity and forces that drive the market. Next to that, themeasures should be sensitive and it should be applicable across brands, productlines and markets (Aaker, 1996:317). See figure 22.

Kotler and Keller argue that the foundation of brand equity is formed by the

brand knowledge of the consumers. Brand knowledge enables the consumer todifferentiate brands and guides the mind and response to marketing activities as

a result of this knowledge (Kotler and Keller, 2006:278). The reason why brand

equity occurs and how marketeers can create this is captured in Keller's

definition: "Customer-based brand equity occurs when the consumer has a high

level of awareness and familiarity with the brand and holds strong, favourable,

and unique brand associations in memory." Keller labelled this as customer

based brand equity (CBBE) and developed a CBBE pyramid model, also known as

the "brand resonance pyramid"

The model is build around 4 sequential steps from bottom to top, where each

next step is conditional to the success of achieving the objectives of the

previous step, situated on the right side of figure 23. Parallel on the four stepsKeller defined 4 questions customers ask them self about the brand, situated on

the right side of figure 23. The four steps of CBBE pyramid are structured in six

core building blocks with a rational route on the left side: performance andjudgement, and an emot ional route on the right side: imagery and fee ling.

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The means by which brand equity is build, may differ from time to time and on

customer group/segmentation. Whether this is based on geographic zone,

country, product, culture is not relevant as long as marketers understand therelevance of each building block in relation to the target group (Keller, 2007:86-87). Keller argues that global active organizations need to build their global

customer based equity model on his "Ten commandments of Global Branding"

(Keller, 2007:607-627);

1. Understand similarities and differences in the global branding landscape.

International markets will vary in many aspects and brands can loose easilytheir local relevance due to local consumer behaviour and local competitive

market forces.

2. Don't take shortcuts in brand building.

Local brand awareness and positive brand image come first, before successfulmarketing programs can be exported into new local markets to buildsustainable long term brand equity.

3. Establish marketing infrastructure.

Logistics are very important, the product needs to be manufactured,distributed, sold and consumed. Marketing infrastructure encompasses

international chain distribution for products and market intelligence.

4. Embrace integrated marketing communication.

Successful global active brands will establish integrated marketingcommunication programs, which safeguard brand heritage and brand

positioning across all traditional and non-traditional communication tools.

5. Cultivate brand partnership.

Successful global active brands establish partnership to access localdistribution channels within their international markets.

6. Balance standardization and customization.

One of the aspects of globalization is the blend of global and local brandelements, as well in product and price strategies. The balance needs to be

reviewed, measured, managed and set against the most efficient and effective

global marketing programs.

7. Balance global and local control

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Building global brand equity depends heavily on the balance of internalintegration and differentiation. Key aspects are local responsiveness,

integration (scale of economy) and globally dispersed knowledge diffusion.

Basically it captures standardization of core brand aspects and local adaption

of secondary aspects.

8. Establish operable guidelines

To guide local marketers across the globe, operable guidelines need to beestablished which should capture a brand charter and a clear product line

strategy.

9. Implement a global brand equity measurement system.

A set of organizational processes- 3 implementation steps(1) brand equitycharter, (2 brand equity reports, (3) brand equity responsibilities)

10. Leverage brand elements.

Core brand elements should be standardized for global purposes and selectedvery carefully to leverage the global brand. This captures the verbal and

nonverbal elements as well which can have a severe impact on the

effectiveness of global marketing programs.

Organizations are able to build a reputable brand by understanding the

correlation between brand awareness and brand value. It is extremely importantto create a consistent, unambiguous, transparent and recognizable balance

between the internal qualities and external tangible and intangible signs without

discrepancy in the association set in the mind of the stakeholders. A reputablebrand is the most efficient of external signals to create value (Kapferer,2007:21).

Brand communication

Marketing communication is an important tool by which organizations inform,teach, persuade and remind stakeholders about their activities, added value and

brands. Hence marketing communication can establish a dialogue and

strengthen the relationship with and among stakeholders. Marketingcommunication is the voice of the brand (Keller, 2007:230).

Communicating brand values to stakeholders is a core activity of brandmanagement. In general communicating to stakeholders starts with

communicating to the brand ambassadors: the employees of the organization.By understanding the brand values employees can start a word of mouthepidemic of positive incentives and spread the brand message to differentiate

the brand within the playing field (Kotler & Pfoertsch, 2006:129). The

importance and power of communication is given by the fact that communicationcan reveal the brand's tangible and intangible meaning rather then focusing on

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visible product commodities. That's why brands are not jeopardized by offeringproducts on oligopolistic markets (Kapferer, 2007:194).

Marketing communication contributes meaningful to enhance brand equity which

is in essence determined by brand experience and brand knowledge created in

the mind of stakeholders. Brand managers and marketers need to evaluate

marketing communication options strategically to determine how they cancontribute to brand equity. Keller has formed a short list of eight generalmarketing guidelines (Keller, 2007:272-273);

1. Be analytical

Communication programs should have a conceptual framework, based ontheoretical and managerial guidelines.

2. Be curious

Communication based on curiosity, triggers the marketer to look for newcustomer insights and high level of customer understanding.

3. Be single-minded

Dedicated/custom communication to a specific target group will enhance thecommunication effectiveness.

4. Be integrative

Integrated and balanced communication across all communication interfacesusses all communication tools in a consistent manner.

5. Be creative

Communicate creative, using unique exposure techniques to create beneficial,strong, unique and sustainable brand associations.

6. Be observant

Maintain market and stakeholder knowledge on high level through monitoringand research.

7. Be patient

Building a strong brand and brand equity is investing in future returns, henceeffective communication request patience and a long term view.

8. Be realistic

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Marketing communication is a complex process and has severalinterdependent direct and indirect determinant factors. Marketing

communication objectives should be specific and realistic (SMART) to avoid

too much deviation.

Kotler and Pfoertsch approaches brand communication from a holistic paradigmto encounter the complex B2B interactions and construct a branding triangle.They segregate the communication environment into four groups; (1)collaborators, (2) company, (3) customers, and (4) general public. The

interdependencies are captured and visualized in the branding triangle. Next to

that they associate the group intersection towards different marketingperspectives; (1) internal marketing, (2) external marketing, and (3) interactivemarketing. See right triangle in figure 24 (Kotler & Pfoertsch, 2006:107-109).

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