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For companies, brands are core strategic assets, while for consumers, brands represent a value they are willing to pay for. But how valuable are brands and what makes them valuable? Neither of these are trivial questions, as can be seen in attempts to estimate the value brands represent for corporations. Every year, different organizations produce rankings of the most valuable global brands.

Among the better-known examples are the Interbrand Report,²Millward Brown BrandZ Top 100³and Branddirectory: Brand-Finance Global 500.⁴Interestingly, these rankings and the value they attach to the brands differ substantially. For instance, in the 2014 global brand rankings, Coca-Cola was ranked third by Interbrand but only twelfth by Millward Brown BrandZ. Moreover, the company’s brand equity was given as US $81,563 million and US $33,722 million, respec-tively. The reasons for these discrepancies lie in the different methodologies used to estimate brand equity. After all,estimating brand equities is not an exact science.

Notwithstanding the differences in ranking and value, experts agree that strong global brands are worth billions—regardless of the currency used—and are immensely important to companies.

Why do consumers seek out branded products? From a utilitarian point of view, buying a branded product reduces the risk that something could be less functional or of lower quality and thus saves the consumer time that would otherwise be needed to compare the specifications of similar products. Thus, when purchasing branded products, consumers pay extra for consistent quality, trustworthy components or ingredients, and reliable after-sales service. In the case of branded services, consumers can be more confident that the professionals delivering the service will meet the general standards set by the organization itself.⁵On the other hand, a brand not only optimizes the search for products but can also enhance the consumer’s personal image and status in society. In addition, a brand may create a feeling of familiarity and affection or may satisfy a consumer’s concern about the ethics and corporate social responsibility credentials of the manufacturer or distributor. In short, a brand represents a whole range of utilitarian and emotional benefits and consumers link the brand to a network of associations. However, the fact that the consumer associations and perceptions linked with a brand may vary between cultures represents a considerable challenge for global marketing strategy.

2Interbrand—Rankings (2014).

3Millward Brown BrandZ Top 100 Global Brands (2014).

4Brand Finance (2014).

5Anholt (2003).

8.2.2 Brand Architecture

The specific role of the brand in the communication process depends on thebrand architecture of a corporation. Some companies use their corporate name as brand on all their products and services (e.g., Mitsubishi cars, appliances or the bank), while others link sub-brands to their corporate brand (e.g., Nestle´ puts its name on Alete, BeBa, Maggi, Nescafe and KitKat). Then there are manufacturers that use one band name for products that are related to each other. An example of such umbrella branding or family branding is the German company Beiersdorf that uses its Nivea brand not only for its traditional hand creams but also for deodorants, soaps or body milk. Still other companies do not emphasize their corporate name on their products at all. Procter and Gamble, for instance, uses self-standing product names like Tide, Pampers or Pantene for its individual products.

Similarly, some retailers put their own brands on the products they sell in their stores. These so-calledprivate labels or store brands reflect the power shift that has taken place in recent decades from manufactures to retailers. Examples include Tesco, which offers a wide range of its own brands under the labels Tesco Finest, Tesco Organic, Tesco Everyday Value, etc. Likewise, Marks and Spencer has developed Blue Harbour into one of Britain’s largest brands for men’s casual wear and Per Una as a brand for female designer fashion garments.

8.2.3 Brand Identity, Brand Image, Brand Resonance

Marketing strategy is packed with terminology and branding is no exception. There are a number of key terms that need to be understood when branding issues are discussed. Initially, two central terms need to be distinguished:brand identity and brand image. Brand identity is what a company can control: the brand name, logo, design, symbol, or sound. In other words, brand identity signifies how the company wants to be perceived. Its brand image, on the other hand, denotes the way the brand is perceived by its audiences. Thus, brand image refers to all the associations, characteristics and attributes which audiences attach to the brand; it is the sum of impressions of the brand that consumers hold in their minds.⁶

Two other terms closely related to brand image arebrand personality and brand resonance. Brand personality assigns human characteristics to a brand, such as being ‘friendly’, ‘down-to-earth’ or ‘creative’. While all brands develop more or less distinct brand personalities over time, some companies try to shape the process by associating their brand with cartoon characters (e.g., on cereal boxes), mascots (e.g., the Miami Dolphins) or through celebrity endorsements (e.g., George Clooney for Nespresso).

Finally,brand resonance refers to the perceived relevance and engagement of the brand in the minds and lives of the consumers or other stakeholders. It reflects

6Keller (2007).

the intensity of the psychological bond audiences have with the brand. The latter can be broken down into behavioral loyalty (e.g., repeat purchases), attitudinal attachment (e.g., brand love), a sense of community (e.g., a feeling of affiliation with other people who use the brand) and active engagement (e.g., joining a club centered on the brand or visiting brand-related websites).⁷Five factors, the 5 A’s, explain how such loyalty relationships between consumers and brands are established⁸:

Awareness: The more salient a brand, the more consideration it will receive in the purchase decision.

Associations: The positioning of a brand (e.g., functional associations or imagery-related associations).

Attitudes: Cognitive and affective dimensions as well as judgments and feelings.

Attachment: The strength of the psychological relationship between the consumer and the brand (e.g., brand love).

Activity: The behavior towards a brand (e.g., purchase or joining a brand community).

The dimensions arehierarchical: brand awareness is a prerequisite for having brand associations, while the latter logically precede attitudes, which may finally lead to attachment and activity. Keller summarizes the relationships in a brand resonance or customer-based brand equity pyramid. Below, this is extended to include the 5 A’s (Fig.8.1).

To manage the equity of brands over time, managers need to observe closely any changes in the building blocks that lead to brand resonance. This may involve

Fig. 8.1 Building brand resonance. Source: Based on Keller, K.L. (2001). Building customer-based brand equity: A blueprint for creating strong brands. Marketing Science Institute, Working Paper, Report No. 01-107, 7

7Keller (2001).

8Keller (2010).

analyzing the brand associations in the consumers’ mind, e.g., through developing so-called ‘mental maps’ for their consumers.

8.2.4 Brand Extension

When individual brands are associated with strong and distinctive benefits or values, companies can leverage the equity associated with an existing brand name to introduce new products or services.⁹In such brand extensions, the new brand name includes an existing brand name, as in Coke and Coke Zero. There are several different permutations of brand extensions. The Coke example would be a line extension, as the new product, i.e., Coke Zero, belongs to the same product category. This would obviously not be the case when the brand is used in an entirely different product category, for example, Porsche cars, clothing, and sunglasses. A common form of brand extension is anendorser brand extension, which uses a well-known parent brand to endorse a sub-brand through the use of “by” or “from.”

An example would be Courtyard by Marriott. Finally, there are also brand alliances, sometimes also referred to as co-branded extensions. Typical examples can be found on many credit cards, such as the brand alliance between the frequent-flyer Star Alliance’s Miles and More program and MasterCard. Similarly, Sch€offel and many other producers of outdoor clothing also co-brand with GoreTex.

Brand extensions leverage the familiarity and core associations of consumers with the parent brand. There is a considerable body of research¹⁰that has analyzed the acceptance of brand extensions by consumers. The most pertinent factors are:

(1) the consumers’ trust, liking and experience with the parent brand; (2) the consistency of the brand extension with the brand image of the parent brand; and (3) the prominence and accessibility of information, i.e., whether the information on the parent brand is sufficiently prominent from the marketer’s point of view, as well as whether the customers’ associations are sufficiently accessible in their memories to influence the judgment of the new brand extension.¹¹

In general, consumers need to perceive a close fit between the parent brand and the brand extension for the latter to be successful. However, there are a number of reasons why companies may opt to introduce brand extensions that areinconsistent with the parent brand and stretch the brand. This includes cases where a brand needs revitalization;¹²where marketers sell products to consumers who are more innova-tive, less risk averse and relatively hedonistic;¹³ where a company deliberately wants to increase the breadth of a brand in order to improve its options for brand

9Loken et al. (2010).

10Detailed reviews can be found in: Keller (2002), Czellar (2003) and V€olckner and Sattler (2006).

11Loken et al. (2010).

12Brown (1997).

13Klink and Smith (2001).

extensions at a later stage (it is easier to extend a broad brand into a wider range of categories than to extend a narrow brand¹⁴); and where the brand can exploit a first mover advantage in a new category.¹⁵