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Measurement of brand equity is conducted on three levels: the firm level, the product level, and the consumer level. At the firm level, the equity of the brand is measured as a financial asset by subtracting all other measurable variables; what remains is called brand equity. Product level evaluation calculates equity by subtracting the price of a generic product from the price of the branded product. The remainder is the value of the perception of the brand in the marketplace. Consumer level measurement tracks brand recognition and opinion as opposed to seeking a financially quantifiable number for equity.

The brand management and product management divisions of a company typically will actively seek strong brand equity in the marketplace. One common method of gaining equity is through advertising campaigns that promote the brand. Messages that are delivered through advertising are created by the company, unlike other factors which are beyond corporate control. The company, however, is not able to control the consumer reaction to the campaigns they create.

Publicity and consumer reviews of a brand are aspects of brand equity not managed by the company. Depending on the source, the effects of these factors may affect the brand perception positively or negatively. While companies actively pursue positive reviews and articles, they can be damaged by negative press.

Companies or products with the strongest equity tend to be those with the highest market share and profits. A sure sign of high brand equity within a certain category is the use of a brand name to define all products of a certain type. For example, referring to any paper tissue as a Kleenex? demonstrates the high brand equity of this product in the paper tissue category.

Brand extensions, or the launch of a product in a new category by using the name of a high equity brand, are a common method of leveraging the high equity of a product or brand. Diet Sprite is an example of a brand extension as the success of Sprite in the general soft drink category was leveraged to enter the diet soft drink category. Brand extension products are also called spin-off products and can be found in many categories.

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  • Posted On May 3, 2012
  • Published articles 4

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