A theory of âthe brandâ?
There is no universally accepted definition of the brand construct. The American Marketing Associationâs (AMA) 1960 definition of the brand as a âname, 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 competitorsâ is widely cited, particularly in the academic literature and textbooks originating from North America (e.g. Aaker, 1991; Keller, 1993 and 2008; Kotler and Armstrong, 2007). With few exceptions (e.g. Ewing et al., 2009), the 1960 version of the AMAâs definition is the one still cited today, instead of the more recent, shorter but conceptually equivalent version that is currently found in the online Dictionary of Marketing Terms available on the AMA website: âa name, term, design, symbol or any other feature that identifies one sellerâs good or service as distinct from those of other sellersâ (www.ama.org/resources/Pages/Dictionary.aspx?dLetter=B, accessed 23 November 2015).
Interestingly, the AMAâs Dictionary of Marketing Terms also reports an âadded definitionâ of âbrand and brandingâ as:
A brand is a customer experience represented by a collection of images and ideas; often, it refers to a symbol such as a name, logo, slogan, and design scheme. Brand recognition and other reactions are created by the accumulation of experiences with the specific product or service, both directly relating to its use, and through the influence of advertising, design, and media commentary.
(www.ama.org/resources/Pages/Dictionary.aspx?dLetter=B,
accessed 23 November 2015).
This âadded definitionâ reflects the fact that, in spite of its popularity, the original 1960s AMA definition is often criticized as too preoccupied with the product (e.g. Crainer, 1995), too mechanical (Arnold, 1992), âdeconstructionistâ (Kapferer, 1992), reductionist and restrictive (de Chernatony and DallâOlmo Riley, 1998) and out of touch with reality, being focused on the notion of a âsmall bâ brand versus the practising managersâ preference for a âbig Bâ Brand perspective (see Keller, 2006).
A âsmall bâ brand notion focuses mainly on the firmâs input activity (de Chernatony, 1993) of differentiating its offering by means of a name and a visual identity, enabling consumers to recognize different brands at the point of purchase. This is akin to the interpretation of the brand as a âlogoâ. According to this perspective, there is little difference between a âbrandâ and a âtrademarkâ, as defined by the US Federal Trademark Act (Lanham Act): âany word, name, symbol, or device, or any combination thereof adopted and used by manufacturers or merchants to identify their goodsâ (see Cohen, 1986: 62). As a matter of fact, the AMA Dictionary of Marketing Terms notes that a trademark is: âA legal term meaning the same as brand. A trademark identifies one sellerâs product and thus differentiates it from products of other sellers. A trademark also aids in promotion and helps protect the seller from imitations.â (www.ama.org/resources/Pages/Dictionary.aspx?dLetter=T, accessed 23 November 2015).
Thus, while the interpretation of the brand as a âlogoâ enables recognition, the brand as a âlegal instrumentâ enables prosecution of infringers. In either case, however, the brand concept is devoid of deeper meaning, hence its âsmall bâ.
In contrast, a âbig Bâ Brand notion sees brands as more than mere identifiers and legal instruments, but as complex entities and value systems. As stated as early as 1955 by Gardner and Levy: âA brand name is more than the label employed to differentiate among the manufacturers of a product. It is a complex symbol that represents a variety of ideas and attributesâ (1955: 35). More recently, Kapferer (2008: 171) added to this, asserting: âA brand is not the name of a product. It is the vision that drives the creation of products and services under that name. That vision, the key belief of the brands and its core values is called identity.â However, a more holistic stance of the âbig Bâ Brand blends the input of the firm (brand elements and brand identity), with the âoutputâ perspective (de Chernatony, 1993) of the brand as an image, or set of mental associations in consumersâ minds, which add to the perceived value of a product or service (Keller, 2008). Taking this a step forward, the brand can be conceptualized as a ââvalue systemâ which transforms the usage experience through the subjective meanings the brand represents for consumers.â (de Chernatony and DallâOlmo Riley, 1998: 427).
De Chernatony and McDonaldâs (2003: 25) definition of a successful brand as:
an identifiable product, service, person or place, augmented in such a way that a buyer or user perceives relevant and unique added values which match their needs more closely. Furthermore its success results from being able to sustain these added values in the face of competition
reflects the holistic âbig Bâ notion of the Brand. While retaining the âinputâ (what the company does) perspective of the brand as an âidentifierâ, de Chernatony and McDonald introduce the notion of the brand as adding value to a product and, importantly, that a brandâs success is dependent upon consumersâ perceptions of whether the brand matches their needs better than other brands in the product category. It then follows that being able to sustain consumer perceptions of a brandâs differential value is the key to successful brand management. For the firm, therefore, a well managed brand becomes an important instrument of differentiation and of competitive advantage (Porter, 1976; Hamel and Prahalad, 1996). Furthermore, the differentiation achieved through branding constitutes a barrier to entry, by making it difficult for competitors to emulate the companyâs offerings (Jones, 1986; de Chernatony and McDonald, 2003).
The concept of the brand as perceptions in consumersâ minds and of the added value a brand brings either to the consumer or to the organization is at the basis of the so-called âequityâ of the brand. This is the second contentious area in the branding literature.
Conceptualizing and measuring âbrand equityâ
As also evident from Chapters 2, 3 and 4, âbrand equityâ is a very much discussed, complex and multifaceted concept which has caused great controversy among academic researchers and practitioners alike. Disagreement between researchers persists on the dimensions of âbrand equityâ and, particularly, on the issue of its measurement. Some even question the usefulness and relevance of the âbrand equityâ concept.
First, as Kapferer (2008) remarks, two âbrand equityâ paradigms do exist: the first is customer-oriented, is based on the relationships consumers have with the brands they buy, from indifference to attachment, and focuses on the consequent relative âstrengthâ of the brand. This paradigm is the focus of Chapters 2 and 3. In contrast, the second âbrand equityâ paradigm is concerned with the brandâs financial value, as a separable asset (e.g. Simon and Sullivan, 1993; Chu and Keh, 2006; and Chapter 4 in this Companion). To these two approaches, Feldwick adds a third interpretation of âbrand equityâ as a âdescription of the associations and beliefs the consumer has about the brandâ (1996a: 87) (see Chapter 3 of this Companion).
Within the customer-oriented paradigm of âbrand equityâ is Kellerâs (1993) definition in terms of âthe marketing effects uniquely attributable to the brandâ (p. 1); more precisely Keller defines customer-based brand equity as âthe differential effect of brand knowledge on consumer response to the marketing of the brandâ (p. 2). As noted by Barwise (1993) and by Ailawadi et al. (2003), this notion of differential effect or âadded valueâ is found in many customer-oriented definitions of brand equity. For example Farquhar (1989: 24) defines brand equity as the ââadded valueâ with which a given brand endows a productâ. Similarly, from an information economics perspective, Erdem and Swait (1998) note that brands act as a signal of a productâs position in the marketplace and, as such, they increase consumer-expected utility by decreasing both information cost and perceived purchase risk: âconsequently, consumer-based brand equity can be defined as the value of a brand as a signal to consumersâ (Erdem and Swait, 1998: 140). An outcome of this differential effect or consumer-expected utility and, possibly, a measure of a brandâs equity, is consumersâ willingness to pay a premium price for the brand. Hence, Axelrod (1992) defines brand equity as: âthe incremental amount your customer will pay to obtain your brand rather than a physically comparable product without your brand nameâ.
Overall, these customer-based, added value perspectives of brand equity fit within the âbig Bâ notion of the Brand put forward by the definition of de Chernatony and McDonald (2003) and with the concept of a brandâs differentiation and strength as a measure of its success.
The brand equity perspective of the firm is also concerned with the notion of the differential effects that accrue to a product due to its brand name. For example, Farquhar (1989: 25) notes that âbrand equity also imparts competitive advantages to the firmâ, in terms of providing opportunities for licensing and brand extensions. Brand equity also makes the brand more resilient to crisis situations and competitive attack, as well as more readily accepted and more prominently displayed by the trade. The financial paradigm of brand equity also takes the perspective of the firm and is generally expressed in terms of the incremental cash flow or profit that can be attributed to a brand (Barwise et al., 1990; Simon and Sullivan, 1993). However, value can be subtracted as well as added, as remarked by Aakerâs (1996: 7) definition: âBrand equity is a set of assets (and liabilities) linked to a brandâs name and symbol that adds (or subtracts from) the value provided by a product or service to a firm and/or that firmâs customersâ.
Despite overall agreement among researchers on the general notion of brand equity in terms of the differential effects attributable to the brand, disagreement persists on whether equity should be measured from the consumer or from the firm ...