how sustainable is your brand? mervel c. fleur
TRANSCRIPT
Management School of Maastricht in conjunction with FHR Lim A Po Institute
HOW SUSTAINABLE IS YOUR BRAND?
CREATING AND SUSTAINING LONG-TERM BRAND EQUITY IN SURINAMESE MANUFACTURING COMPANIES
A Research Paper presented by:
MERVEL C. FLEUR
SURINAME
“This paper was submitted in partial fulfilment of the requirements for the Degree of Master of Business Administration at the Maastricht School of
Management (MSM)”
Paramaribo, July 2005
DEDICATION
To: My God, Lord and Saviour
He has granted me the Serenity To accept the things I cannot change Courage to change the things I can
And Wisdom to know the difference He has promised me to lead me
Step by Step and every step Will be A Marvel
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ACKNOWLEDGEMENTS
Many individuals have contributed to the successful conclusion of this final
project with their mental and physical support. I would therefore use this
opportunity to express my appreciation to:
My supervisor, Dr. Rene Samson, for guiding me through this painstaking
process of writing and presenting an excellent thesis;
Dr. Hans Lim A Po, the inspiration behind the first Suriname MBA, for offering
me the opportunity to make a dream come true;
My fellow students for their spontaneous support during the MBA program and
for moulding and shaping me to become a better team player;
My colleagues, for holding ‘the fort’ at the work place when I was not around
because of the MBA classes;
My family, for their understanding and for just being there for me;
Mrs. Shirley Asjes, for her meticulous review of the grammar in this paper;
All senior managers, who have participated in this research and have
enthusiastically, provided relevant information.
All others, not mentioned here, but have contributed in any way to the
achievement of this successful endeavour
To All, words are not enough to express my gratitude!
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TABLE OF CONTENTS
DEDICATION.................................................................................... i
ACKNOWLEDGEMENTS ............................................................. ii
TABLE OF CONTENTS ................................................................ iii
LIST OF FIGURES ......................................................................... vi
LIST OF TABLES .......................................................................... vii
LIST OF APPENDICES ............................................................... viii
LIST OF ABBREVIATIONS ......................................................... ix
EXECUTIVE SUMMARY ...............................................................x
CHAPTER 1 INTRODUCTION......................................................1
1.1 General View............................................................................................. 1
1.2 Background ............................................................................................... 3
1.3 Research Questions ................................................................................... 4
1.4 Scope and Research Objectives................................................................. 4
1.5 Research Methodology.............................................................................. 5
1.6 Limitations of the Research....................................................................... 5
1.7 Relevance of the Study.............................................................................. 6
1.8 Outline of the Study .................................................................................. 6
CHAPTER 2: THEORETICAL FRAMEWORK OF THE
BRAND EQUITY CONCEPT..........................................................8
2.1 Introduction: What is Brand Equity?......................................................... 8
2.2 Customer Oriented Brand Equity Models ................................................. 9
2.2.1 Aaker's Brand Equity Model ......................................................... 9
2.2.2 Keller’s Model on Brand equity .................................................... 9
2.2.3 Kapferer’s Approach on Brand Equity ....................................... 10
2.3 Financial Brand Equity............................................................................ 12
2.3.1 The Relevance of Brand Valuation.............................................. 12
2.3.2 Brand Valuation Methods ........................................................... 12
2.4 How to Create and Sustain Brand Equity in the Long Term................... 14
2.5 Brand Equity Creation: Brand Identity and Positioning ......................... 15
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2.6 Building Brand Equity............................................................................. 17
2.7 Measuring Brand Equity.......................................................................... 20
2.8 Grow and Sustain Brand Equity .............................................................. 20
2.8.1 Brand Product Matrix, Brand Hierarchy and Brand Architecture
Strategies ..................................................................................................... 20
2.8.2 Brand Extensions......................................................................... 23
2.8.3 Brand Reinforcement and Revitalization..................................... 25
2.9 A Legal Perspective on Brand Equity ..................................................... 27
2.10 Chapter Summary.................................................................................... 29
CHAPTER 3 BRANDING AND BRAND MANAGEMENT IN
SURINAME......................................................................................30
3.1 The Macro-Economic Environment: Some Key Aspects Influencing
Entrepreneurship...................................................................................... 30
3.2 Competitiveness of Surinamese Businesses in General .......................... 30
3.3 The Role of Branding and Brand Management in Surinamese Companies
............................................................................................................. 31
3.4 Brand Valuation in Suriname .................................................................. 32
3.5 Legal Framework for Brands in Suriname .............................................. 32
3.6 Characteristics of Surinamese Companies with Strong Local Brands .... 33
3.7 Background of Companies Participating in the Research ....................... 34
3.8 Chapter Summary.................................................................................... 35
CHAPTER 4 RESEARCH MODEL AND METHODOLOGY36
4.1 Research Model for Creating and Sustaining Brand Equity ................... 36
4.2 Research Approach and Strategy............................................................. 37
4.3 Data Collection........................................................................................ 38
4.4 Data Analysis Procedure ......................................................................... 39
4.5 Limitations of the Research Methodology .............................................. 39
4.6 Chapter Summary.................................................................................... 40
CHAPTER 5 RESEARCH RESULTS ..........................................41
5.1 Awareness of the Status and Role of the Brand ...................................... 41
5.2 The Brand Creation Process .................................................................... 42
5.3 Management of the Brand ....................................................................... 42
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5.4 Measuring Brand Performance................................................................ 43
5.5 Knowledge and Status of Brand equity................................................... 43
5.5.1 Customer Based Brand Equity .................................................... 43
5.5.2 Financial Brand Equity ............................................................... 45
5.5.3 Legal protection of the brand ...................................................... 46
5.6 Building and Sustaining the Brand.......................................................... 46
5.6.1 Brand Architecture ...................................................................... 46
5.6.2 Marketing and Brand strategies.................................................. 47
5.7 Chapter Summary.................................................................................... 48
CHAPTER 6 GAP ANALYSIS AND IMPLEMENTATION .....49
6.1 Gap analysis ............................................................................................ 49
6.2 Impact of Identified Gaps on Brand Management and Brand Equity ..... 50
CHAPTER 7 CONCLUSIONS AND RECOMMENDATIONS.53
7.1 Introduction ............................................................................................. 53
7.2 Conclusions ............................................................................................. 53
7.3 Recommendations ................................................................................... 54
7.4 Constraint Envisioned ............................................................................. 57
7.5 Implementation Strategies ....................................................................... 57
7.6 Directions for further Research ............................................................... 58
REFERENCES............................................................................... xiii
APPENDICES ............................................................................... xvii
v
LIST OF FIGURES
Figure 1: Brand Value Breakdown........................................................................ 3
Figure 2: The Strategic Brand Management Process .......................................... 15
Figure 3: Strategies for Sustaining Brand Equity Long-Term ............................ 24
Figure 4: Brand Reinforcement Strategies .......................................................... 25
Figure 5: Revitalization Strategies ...................................................................... 27
Figure 6: Research Model for Creating and Sustaining Brand Equity Long-Term
..................................................................................................................... 36
Figure 7: Brand Awareness Main Brands Participating Companies ................... 44
Figure 8: Brand Loyalty Main Brands Participating Companies ........................ 44
Figure 9: Perceived Quality Main Brands Participating Companies................... 44
Figure 10: Brand Value Breakdown Main Brands Participating Companies...... 45
Figure 11: Phases for improved Long-Term Brand Equity in Surinamese
Companies ................................................................................................... 56
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LIST OF TABLES
Table I: Roles that Brands Play............................................................................. 2
Table II: SWOT Local Companies with Strong Brands...................................... 33
Table III: Key Indicators Participating Companies............................................. 34
Table IV: Roles that Brands Play in Participating Companies ........................... 41
Table V: Gap Analysis ........................................................................................ 49
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LIST OF APPENDICES
APPENDIX A: Aakers Brand Equity Model .................................................... xvii
APPENDIX B: Keller’s Brand Equity Model..................................................xviii
APPENDIX C: Kapferer: from awareness to financial brand equity (value) ..xviii
APPENDIX D: Interbrand’s Brand Strength Factors......................................... xix
APPENDIX E: Marketing Communication Options........................................... xx
APPENDIX F: Top 10 Global Brands, Valuated by Interbrand ........................ xxi
APPENDIX G: Product-Brand Matrix ............................................................... xxi
APPENDIX H: Example Brand Hierarchy Colgate .......................................... xxii
APPENDIX I: House of Brands vs. Branded House......................................... xxii
APPENDIX J: Advantages and Disadvantages of Brand Architecture Strategies
..........................................................................................................................xxiii
APPENDIX K: Research Questionnaire ........................................................... xxv
APPENDIX L: Frequency Tables Research Questionnaire ........................... xxxvi
viii
LIST OF ABBREVIATIONS
Abbreviation Title
AMA The American Marketing Association
CARICOM Caribbean Community
CSME Caricom Single Market and Economy
CBBE Customer- Based Brand Equity
IAS International Accounting Standard
NPV Net Present Value
EVA Economic Added Value
DCF Discounted Cash Flow
WIPO World Intellectual Property Organization
SME Small and Medium Enterprises
FDI Foreign Direct Investment
MDC More Developed Countries
SWOT Strength, Weaknesses, Opportunities and Threat Analysis
EU European Union
ACP African, Caribbean an Pacific Countries
CIC N.V. Consolidated Industries Corporation
SAB Suriname Alcoholic Beverages
MAVEFA Margarine en Vetten Fabriek (Margarine and Fats
Company)
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EXECUTIVE SUMMARY
Until 1996 the Surinamese economy could be characterized as a closed economy.
After the removal of trade barriers for the CARICOM countries, Suriname faced
the implications of an open economy for the first time. Since Suriname did not
submit a separate tariff schedule for sensitive goods, the influence of this
competition penetrated into almost all sectors. In this changing environment
many new products were introduced, increasing the number of brands, the cost of
creating brand associations, distribution and advertising. All of these made it
more difficult to build strong brands. During the period of 1996 - 2000, many
Surinamese companies used to their monopolistic position or a less competitive
environment, could not cope with this new situation and collapsed. Only those
companies that were able to adapt to the new market situation survived, although
many of them lost a huge market share. One of the main characteristics shared by
these companies was that they all had strong local brands which enabled them to
survive in this highly competitive environment.
This research aims to asses the awareness of the role and value of the brand in
Surinamese manufacturing companies. Furthermore, the brand creation and
management process within these companies are examined to see whether these
can sustain long-term brand equity. In addition, the researcher sought to
contribute to the knowledge of marketing and brand management within these
companies by using skills and competencies acquired during the MBA program
The research concentrates on Surinamese manufacturing companies of fast
consumer goods with strong brand equity. These companies own strong local
brands and the role of branding and current brand management and marketing
strategies will be reviewed to gain insight into the brand creation and
management process within these companies. The recommendations focus on
improvement of this process in order to sustain these brands in the long term.
.
The research questions put forward in this study are:
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1. What is the role and value of branding for Surinamese manufacturing
companies?
2. How have these companies been able to create and develop strong,
competitive brands and can they maintain this brand equity on the long
term?
An exploratory study was conducted and mainly the inductive approach was
used because brand equity is a relatively new phenomenon within the
Surinamese market. Empirical evidence was tested by the use of a theoretical
framework originating from relevant existing theories. A small sample size of six
companies with strong brands was chosen to carry out the research.
Brand management is still in its infancy. As already stated, brand equity is a very
new concept within the emerging Surinamese market. Therefore, this has its
implications on the brand equity development within the companies which
participated in the study. Mainly, the research revealed the following:
• Management of these companies is aware of the role of the brand and how
the brand contributes to the value of the company (brand equity)
• These companies own strong brands, however, the brand creation process
did not start off with proper brand positioning or brand identity. These were
created and built over time. Currently, in most companies neither are
positioning statements available nor is the brand identity clearly described
• Brand performance is measured through sales trends and only a few
companies measure through customer surveys. A tracking system to
continuously measure brand performance is missing. In addition, brand
valuation is not considered a means to measure brand performance
• The responsibility to manage the brand is in half of the cases not assigned to
a brand or marketing manager even though there are brand objectives in
place which are often incorporated into a corporate business plan
• In most cases these companies have marketing and brand strategies in place
to build the brand, however, these are not deployed enough on the brand
level. The brand architecture strategies are in general neither structured nor
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have a long-term strategic intent selected, although management is aware of
the benefits of this.
• Revitalization strategies were in general successful; brand extensions were
also carried out in a successful manner. Brand reinforcement strategies, on
the other hand, need to be more explicitly defined on a brand level in order
to be more successful.
• The customer-based brand equity assets, brand awareness, brand loyalty,
perceived quality are considered very high in the local market and provide a
good basis for sustaining long-term brand equity. In addition, the brand
value as part of market capitalization is relatively high and, therefore, it
would be a prerequisite to nurture these brands
• Legal brand protection needs improvement because of outdated laws. This
could cause legal disadvantage.
The researcher recommends the following actions in order to improve long-term
brand equity:
• Establish or improve brand management systems by assigning
responsibilities to manage the brand, training of responsible managers in
specific required skills and by introducing a brand equity management
policy within the company
• Improve customer-based brand equity by: repositioning mature brands to
increase the lifetime of the brand and/or establishing brand identity if
lacking; reviewing the brand architecture of the brand portfolio; and
defining appropriate marketing and specific brand strategies for each brand
• Establish a brand equity management system by the use of financial brand
valuation methods, appropriate customer-based brand equity measures to
improve the levels of these CBBE assets and by putting a brand-tracking
system in place to continuously measure the performance of the brand
• Revitalize mature brands and continuously reinforce the brand by
implementing better designed brand strategies and programs.
• Establish proper legal framework by improving laws and becoming a
member of an international organization for property rights and brand
protection
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CHAPTER 1 INTRODUCTION
1.1 General View
The new global economy is characterized by rapid technological change and increased
information exchange, resulting in more sophisticated consumer preferences and intense
competition. As the environment has become more complex, the foundations of the old
industrialized economies have shifted from natural resources to intellectual, intangible assets.
One such intellectual, intangible asset is a brand.
The word 'brand' is derived from the Old Norse word ‘brandr’ and means ‘to burn’. Brands
were in the ancient days a means by which stockowners of live stock marked their animals to
identify them (Keller, 2004, p.3). The American Marketing Association (AMA) describes a
brand as ‘a name, term, 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
competition’.
Thus, the function of the brand was twofold:
1. to identify the goods and services
2. to differentiate from the competition
The 1980s can be considered a turning point in the brand conception. The brand equity
concept came alive. One of the results of the European Union globalization was the
increasing number of mergers and acquisition of companies with strong and established
brands. The main question back then was: What is the brand worth (as part of goodwill). The
need for proper brand valuation became increasingly apparent and many valuation
methodologies were developed. Due to the recession and saturated markets in the 1990s a
shift was made from brand to customer equity, which, in fact, is a prelude to financial brand
equity. The emergence of the brand equity concept stressed the importance of the brand in the
marketing strategy which, until then, was neglected. Aaker (1990) one of the first authors on
the concept of brand equity states: ‘Brand equity is a set of brand assets and liabilities linked
to a brand, its name and symbol, which add or subtract from the value provided by a product
or service to a firm and/or firm’s customers’. According to Aaker, the most important assets
of a firm are its intangible assets, such as equity represented by a brand name and are often
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not capitalized in the balance sheets. Brand equity is a basis of competitive advantage and
future earning streams.
Moreover, brand equity in this context should be considered an asset and not a liability
because in current brand management theories it is only referred to as a means of value
creation, both for the customer as well as for the company. The ultimate objective of creating
and managing brand equity is to increase and sustain the long-term financial value of the
brand. Before the 1980s companies bought a production capacity, hence, the company’s value
was measured in tangible assets. As the brand equity concept emerged after the 1980s,
companies 'bought' a place in the mind of the consumer1. In fact, when paying a high price for
a company with a strong brand, the acquiring company 'buys' a position in the potential
consumers’ mind.
In addition, this brand equity concept broadened the perspective on the roles of the brand. The
current roles reflect the value of the brand for both the consumers as well as the company.
Table I provides an overview of these roles
Table I: Roles that Brands Play
CONSUMERS MANUFACTURERS Identification of source of product Assignment of responsibility to product maker Risk reducer Search cost reducer Promise, bond, or pact with maker of product Symbolic device Signal of quality
Means of identification to simplify handling or tracing Means of legally protecting unique features Signal of quality level to satisfied customers Means of endowing products with unique associations Source of competitive advantage Source of financial returns
Source: Keller, 2004
Consistent managing and nurturing of brands over time has resulted in strong international
brands such as Coca Cola, Procter and Gamble and Unilever. The vast majority of their
corporate value is made up of intangible assets and goodwill. Studies show that only 10% of
corporate value is made up of tangible assets while 70% of the value of the intangible assets
is made up of the brand. Figure 1 depicts a graphical overview of the brand value breakdown
of five international companies with global brands for 2003.
1 Aaker, A. (1991), Managing Brand Equity: Capitalizing On The Value of a Brand Name 2
Figure 1: Brand Value Breakdown
-
20
40
60
80
100
120
Coca Cola Johnson &Johnson
Procter & Gamble Unilever Amazon.com
net tangible assets Intangibles and goodwill Source: Keller, 2004
The graph reveals the importance of the intangible assets as well as the brand value as part of
the corporate value. In fact, building a strong brand enhances long-term and sustainable brand
equity and ultimately increases market capitalization of the company
1.2 Background
Suriname joined CARICOM on 4 July 1995 and became a full member of the group’s
common market in January 1996. The Revised Treaty of Chaguaramas2 which established
the Caribbean Community was ratified and enacted by Suriname into domestic law in 2003.
The Treaty establishes the legal basis for the CARICOM Single Market and Economy
(CSME), which includes the free movements of goods, services, capital and skilled persons
within the sub-region, as well as growing harmonization of laws and regulations governing
economic activities within the Community.
However, while CARICOM negotiates trade agreements as a bloc, each state submits a
separate tariff schedule for sensitive goods; a mechanism through which a country like
Suriname may address any special need for concessions in particular sectors. No special
2 Suriname Report, WT/TPR/S/135, Trade Policy Review 3
provisions have been made for Suriname in trade agreements negotiated between CARICOM
and other countries.
As a result, Surinamese manufacturing companies faced for the first time severe competition
from other Caricom countries. In this changing environment many new products were
introduced, increasing the number of brands, the cost of creating brand associations,
distribution and advertising. All of these made it more difficult to build strong brands.
During the period of 1996 - 2000, many Surinamese companies used to their monopolistic
position or a less competitive environment, could not cope with this new situation and
collapsed. Only those companies that were able to adapt to the new market situation survived,
although many of them lost a huge market share. One of the main characteristics of these
companies was that they had strong local brands which enabled them to survive in this highly
competitive environment.
Even though these Surinamese companies use branding as a strategy to compete, the question
is: Does the management know the value of the brand?
1.3 Research Questions
This research will try to answer the following questions:
1. What is the role and value of branding for Surinamese manufacturing companies?
2. How have these companies been able to create and develop strong, competitive brands
and can they maintain this brand equity on the long term?
1.4 Scope and Research Objectives
In this research the focus will be on typical Surinamese manufacturing companies that have
been able to develop strong and established brands within the Surinamese market. Most of
these companies have existed for decades and were able, intentionally or not, to create strong
brands through their specific marketing and brand strategies. These strategies will be
reviewed and analyzed to see how this brand equity was created and whether they can still
provide long-term brand equity.
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The objectives of this study are:
• To asses the awareness of the role and value of the brand
• To examine the brand creation and management process within Surinamese
manufacturing companies
• To contribute knowledge to brand management within these companies by using
skills and competencies acquired during the MBA program
1.5 Research Methodology
This research will be a qualitative study and will be conducted within a small sample. The
theoretical framework of this study is the result of a critical literature review of key academic
theories on this topic. Secondary, as well as tertiary literature sources such as books, white
and research papers, articles and internet sources will be explored within this review. Primary
data will be collected through interviews with key managers within companies with strong,
established brands. This data will be analyzed and key findings from this analysis will form
the basis for the recommendations. The research methodology will be further discussed in
chapter 4.
1.6 Limitations of the Research
This research can be considered an exploratory study. Due to time and financial constraints a
more in-depth analysis consisting of accurate measurement of relevant brand equity assets is
not possible. Although many companies use branding as part of their marketing strategy to
protect their products and to gain profits, the brand equity concept is relatively new in
Suriname. Information is not available nor filed in a coherent manner, resulting in (primary)
data collection being based on experience and skills of senior and commercial managers and
fragmented business and marketing plans (instead of specific brand plans). It is expected that
not a lot of research has been done on this topic as yet. Financial valuation of the brand and
customer brand equity will be based on estimates and/or realistic assumptions from these
senior and commercial managers.
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1.7 Relevance of the Study
In general, when a strong brand is created and sustained it means guaranteed future earning
streams for the company. In the long run the market capitalization of the company is
enhanced and, moreover, the shareholder value is increased.
The researcher's personal interest originates from the fact that in daily practice there is little or
no difference experienced in managing the various brands within the companies’ brand
portfolio. This phenomenon has been noticed by the researcher in various Surinamese
companies and the interest arose to find out how the value of the brands are managed and
whether there is a solid base for sustainable brand equity.
In addition, this study will be relevant to companies in several aspects:
• It may give awareness to managers about the value and power of a brand
• Recommendations of this study can be used as a guideline to increase
competitiveness
• The information can be used as a starting point to streamline the current brand
strategies or to choose appropriate brand strategies for the different market segments
to create and sustain brand equity in the long term
1.8 Outline of the Study
The outline of this study is as follow:
Chapter 2 provides a theoretical framework based on the literature review;
Chapter 3 gives an overview of the Surinamese business environment wherein these
companies operate;
In Chapter 4 a research model and the methodology of the research will be presented and
discussed;
The main research results, which will be a base for a gap analysis is the theme of chapter 5;
The gap analysis is the result of a comparison between the theoretical framework and the
current brand management and strategies of Surinamese companies in other words what have
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these companies done and are currently doing to create and build long-term brand equity.
This will be presented in Chapter 6.
Finally, Chapter 7 offers some recommendations and alternative approaches to build and
sustain brand equity in Surinamese companies.
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CHAPTER 2: THEORETICAL FRAMEWORK OF THE BRAND EQUITY CONCEPT
2.1 Introduction: What is Brand Equity?
Since the emergence of the brand equity concept, several authors have tried to describe this
phenomenon. Although many schools of thought exist about this concept they can be
integrated in basically two main approaches, namely:
• Customer-oriented brand equity: This approaches the question of brand value by
taking the consumers’ point of view. This approach does not put a financial value on
brands; instead it measures consumer behaviour and attitudes that have an impact on
the economic performance of brands.
• Financial brand equity: This refers to the value of the brand which, in fact, is an
intangible, intellectual asset built over time as a positive result of business investment.
The overall description of brand equity integrates the ability of the brand to provide added
value to the company’s products and services. One unifying definition put forward by
Kapferer (2004) is: “A strong brand (strong brand equity) is a name that influences buyers
through the value it offers and is backed by a profitable economic formula.”
Primarily, three common customer-based brand equity models of well-known and
experienced authors on brands and brand management, namely Aaker, Keller and Kapferer,
will be highlighted in chapter 2.2 to give a more in-depth explanation of the brand equity
concept. In addition, some financial brand valuation methods will be described to give a
better understanding of the financial part of the brand equity concept.
A theoretical model for creating and sustaining brand equity, which is in fact the topic of this
paper, will be presented in the chapter 2.4. This will be as a guideline through the paper and is
the basis for this research.
Finally, the underlying theoretical concepts within this model will be explained in chapter 2.5
until 2.8. Chapter 2.9 discusses thereafter the legal perspective as this is a condition for
sustaining a brand in the long term.
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2.2 Customer Oriented Brand Equity Models
2.2.1 Aaker’s Brand Equity Model
Aaker (1991) one of the pioneers who wrote one of the best-known brand equity concepts
states: ‘Brand equity is a set of brand assets and liabilities linked to a brand, its name and
symbol, which add or subtract from the value provided by a product or service to a firm
and/or firm’s customers’. According to him there are five determinants of brand equity:
1. Brand loyalty: a measure of the attachment that a customer has to a brand.
2. Brand awareness: the ability of a potential buyer to recognize or recall that a brand is
a member of a certain product category.
3. Perceived quality: a customer’s perception of the overall quality or superiority of a
product or service with respect to its intended purpose, relative to alternatives
4. Brand association (in addition to perceived quality): anything ‘linked’ in memory to a
brand e.g. McDonald and Ronald Mc Donald
5. Other proprietary assets such as patents, trademarks, channel relationship are legal
and institutional benefits which a brand can offer and protect its value.
According to Aaker these five brand assets create value for the customers as well as for the
company. All of these different assets contribute to the value creation in their own way, for
example, brand loyalty reduces marketing costs because there is less cost involved to retain
loyal buyers then to gain new consumers. Furthermore, perceived quality gives the
opportunity to charge a premium price to customers. Appendix A gives an overview of
Aaker's model and how each brand asset contributes in the value creation process.
2.2.2 Keller’s Model on Brand equity
Keller (2004) perceives the brand as a collection of memory associations. Brands have
financial value because they have created assets in the mind of the customers. The basic
premise of his model, the customer-based brand equity (CBBE) model, is that the power of a
brand lies in what customers have learned, felt, seen, and heard about the brand as a result of
their experiences over time. Customer-based brand equity is formally defined as the
differential effect that brand knowledge has on consumer response to the marketing of that
brand (Keller 2004). Three key aspects of this definition are:
• Differential effect: refers to the fact that brand equity evolves and exists through
differences in consumer response. If there are no differences, the brand can be
considered a generic product or commodity
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• Brand knowledge: the difference in consumer reactions is a result of knowledge of the
brand. Ultimately brand equity is thus the experience (feelings, learning) of the brand
that exist in consumers’ minds
• Consumer response to marketing: brand equity is made up by the differential response
by consumers which is reflected in perceptions, preferences and behaviour related to
marketing aspects of that particular brand.
According to Keller (2004) there are two key components that build customer-based brand
equity:
1. Brand awareness: consists of brand recognition and brand recall performance. Brand
recognition consists of the consumers’ ability to confirm prior exposure to the brand
when given the brand as a cue. Brand recall, on the other hand, refers to the ability of
consumers to retrieve the brand from memory when given the relevant cue within a
product category
2. Brand Image: a positive brand image is created by marketing programs that link
strong, favourable unique associations
Thus, when the consumer has a high level of awareness and familiarity with the brand and
holds strong, favourable and unique associations in memory, customer-based brand equity
occurs. Appendix B gives a brief overview of the brand elements of Keller’s brand equity
model
2.2.3 Kapferer’s Approach on Brand Equity
According to Kapferer a brand that does not make it possible to create a profitable business
has no value. To clarify the brand equity concept he distinguishes three levels of analysis:
brand assets, brand strength and brand value.
• Brand assets are the sources of influence of the brand
• Brand strength is the result of the brand assets and these results are in fact the ‘brand
equity outcomes’. The brand strength is expressed in competitor’s behavioural
indicators such as market leadership, market share, price premium etc.
• Brand value is the ability of a brand to deliver profit. If the brand is not profitable, it
has no value.
Appendix C depicts a graphical overview and shows an underlying time dimension behind
these three concepts. Brand assets are associations learnt through time, while the brand
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strength is a measure of the present status of the brand. Brand value is a projection into the
future.
How does the brand add value to the customer as well as to the company according to
Kapferer?
• Value for the customer
One basic assumption in Kapferer’s brand equity approach is that the value of a brand lies in
the implicit contract between the brand and its customers, trading a seal of quality for
automatic repeat purchasing3. According to Kapferer the brand name generates value by
reducing transaction risk for the company as well as for the consumer. Brands exist because
there is perceived risk. As soon as this risk disappears the brand name no longer has benefits,
in other words, brands draw their value from their ability to reduce risk and uncertainty. For
example, a ‘brand sensitivity’ study in 1998 reveals (by Laurent and Kapferer) that in certain
product categories such as photocopy paper, rubber pads and sugar, brands are often not
relevant to consumers. Frequently in these markets strong brands do not exist because there is
less risk in the purchase of the product brand involved.
• Value for the company
Brands add value for the company because when paying a high price for a company with
strong brands, there is more certainty in acquiring future cash flow. Consequently, the brand
reduces the perceived risk of the financial analyst. In addition, if the brand is strong, it
benefits from a high degree of loyalty resulting in stability in expected future sales.
Moreover, when the brand is well-known and therefore a symbol of quality, new markets can
be entered into more easily in this manner lowering the launch cost for the brand
In summary, brand equity in these three models is viewed from different perspectives,
namely:
• Aaker focuses on brand assets. The value of the brand is created and maintained through
these assets i.e.: brand awareness, perceived quality, brand loyalty, brand associations and
other proprietary brand assets
• Keller refers to brand equity as a collection of mental associations that generate different
reactions to the brand.
• Kapferer argues that the value of the brand exists because of the perceived risk.
11
2.3 Financial Brand Equity
2.3.1 The Relevance of Brand Valuation
Tangible assets were considered as the main source of business value until the 1980s. Even
though management was aware that intangible assets such as technology, patents, employees’
knowledge and skills, and brands, were at the core of corporate success, accounting practices
for goodwill did not deal with the rising importance of these intangible assets. As a result of
the increasing numbers of takeovers, mergers and acquisitions of companies with strong
brands, the brand valuation process was encouraged. In general, brand valuation is a financial
measure or indicator of the strength of the brand and, besides balance sheet reporting, is now
a mainstream business tool which can be applied for the following purposes4: Financially Focussed
• Licensing and Franchising
• Tax planning
• Merger and Acquisition Planning
• Securitized Borrowing
• Investor Relation
• Balance Sheet Reporting
Strategically Oriented
• Brand portfolio Reviews
• Marketing Budget Determination
• Resource Allocation
• Strategic Marketing Planning
• Internal Communication
2.3.2 Brand Valuation Methods
According to International Accounting Standards (IAS), brand valuation or the financial
valuation of the brand, comprises of the determination of the fair value of the brand. In
general, according to these standards, an asset can enter the accounts if it is:
• Identifiable from other assets of a business
• Able to generate on-going future benefits and cash flow for the business
• Protected and not free in the public domain
• Transferable from a seller to a buyer
The brand name is considered an identifiable asset, which means that it can be separated from
the entity and sold, transferred, licensed, rented or exchanged, individually or together with a
3 BBDO (November 2001), Brand Equity Excellence, Volume 1: Brand Equity Review 4 Brand Finance plc (June 2000), Current Practice in Brand Valuation; Brand Finance (July/August 2003), Into the great unknown; www.Interbrand.com, Seven applications of Brand valuation. 12
related contract, asset or liability5. Several methods have been developed over time to
determine the brand value posted on the company's balance sheet. Five common models are6:
• Valuation by historical cost: This method of brand valuation is a cost-oriented
approach. The underlying assumption is that a brand is an asset whose value comes
from investments over a period of time. This approach suggests adding together all the
costs such as developmental costs, marketing cost, advertising and communication
costs, which are associated with a particular period. One example of this method is the
calculation of the residual value of the brand valuated at historical cost. The residual
value formula is: [ ∑ Brand Cost – ∑Brand Revenues ] @ historical cost.
• Valuation by replacement cost: A key question when using this approach is: how
much would it cost to replace or recreate the brand? This ‘new brand’ must reflect all
the brand elements of the original brand such as awareness, percentage of trial
purchases and repurchases, market share, distribution network, image and leadership.
• Valuation by market price: This method suggests determining the brand value by
comparing it with the ‘fair market value’ of similar brands in the market. This
approach is often used in the real estate market.
• Valuation by Royalties (or licence-based brand valuation): This approach valuates the
brand on the basis of license rates that are similar in the industry and earned by
comparable brands7.The brand value is calculated based upon how much a company is
willing to pay to license the brand.
• Valuation by future earnings: This methodology comprises the valuation of the brand
based on expected returns and profits of brand ownership. One of the most common
methods is the Interbrand approach8, which was the first consulting firm that
recognized the economic value of brands by pioneering and establishing brand
valuation. Their model calculates the brand value as the Net Present Value (NPV) of
the earnings that are expected in the future. Four basic elements underlie this model:
1. Financial Forecasting. Consists of the following basic steps:
• Forecast a five years projection of the brand’s future earnings
• Deduct the operating costs, corporation tax and charge for the employed
capital necessary to operate the brand
5 Bonham, M. et Al (2005), Ernst & Young, International GAAP 2005: Generally Accepted Accounting Practice under International Financial Reporting Standards 6 BBDO (November 2001), Brand Equity Excellence, Volume 1: Brand Equity Review 7 BBDO, (November 2001), Brand Equity Excellence, Volume 1: Brand Equity Review 8 Interbrand (2001), Interbrand World’s Most Valuable Brand’s 2001 Methodology, www.Interbrand.com 13
• Derive the intangible earnings (EVA= Economic Added Value),which will be
the result
2. Role of Branding. The role of the brand analysis has the objective to determine the
brand earnings as the percentage of the intangible earnings. These brand earnings are
solely attributable to the brand.
3. Brand Risk. The brand risk analysis must provide the risk rate at which the
forecasted brand earnings should be discounted to their NPV. The discount rate
consists of the risk-free rate (yield on a government bond) and a brand premium
which is derived from the brand strength analysis. Appendix D depicts an overview
of factors determining the brand strength
4. Brand Value calculation. The brand value calculation is calculated as the NPV of the
projected brand earnings.
The aforementioned measures can be used in a variety of ways; however, each method has its
advantages and disadvantages. The choice for a brand valuation method is dependent on the
purpose for valuating a brand. For example, if a brand name is licensed, it will be appropriate
to use the valuation by royalties method. Interbrand’s approach has become a widely
accepted method to valuate especially international brands. Appendix F provides an overview
of the top ten global brands, valuated by Interbrand.
2.4 How to Create and Sustain Brand Equity in the Long Term
After discussing the various brand equity concepts, customer oriented as well as financially
based, many companies may question how to create this brand equity and to maintain it in
the long run in order to maximize shareholder's value. As already stated, customer-oriented
brand equity is a prelude to financial brand equity, therefore, the growth process has to be
viewed at first from a customer-based brand equity perspective. Keller (2004) best describes
this process in a four-step model that he calls the Strategic Brand Management Process. The
purpose of this process is to create, build and sustain brand equity by implementing various,
but still organized, marketing and brand activities, programs and strategies. This process
involves four key steps which are illustrated in figure 2. This model will be used as a basis to
describe the process of creating and sustaining brand equity in this paper and is preferred by
the researcher as the author is one of the few who have been able to capture this process in a
simple model, although the brand equity concept is a very complex phenomenon and many
14
theories have evolved over time. Furthermore, this four-step model allows continuous
improvement because of the measurement aspect within the model and is able to adapt
changes as the environment changes.
There are a number of underlying key concepts within each step that will be discussed in the
next paragraphs. A few key concepts are modified within the model; these will be viewed
from different authors’ perspectives.
Figure 2: The Strategic Brand Management Process
STEPS KEY CONCEPTS
Brand Positioning
Source: Keller, 2004 (model slightly modified by the researcher)
2.5 Brand Equity Creation: Brand Identity and Positioning
Sustainable brand equity means building and managing strong brands over a period of time.
All strong brands started somehow, somewhere and intentionally or not these strong brands
were created. Most famous brands started as ordinary names of innovative products. Brand
Identify and Establish Positioning and Values
Brand Identity
Building Brand Equity Plan and Implement Marketing Programs and Strategies
Brand Value Chain
Brand Audit Measure and Interpret
Brand Tracking Brand Performance Brand Management System
Brand Product Matrix
Grow and Sustain Brand Equity
Brand Extensions
Brand Portfolio, Brand Hierarchy, Brand Architecture strategies
Brand Reinforcement and Revitalization
15
names are often randomly chosen, without prior study or analysis. One example is Coca Cola
that just reflects the content of the product. Mercedes for instance was the name of Mr.
Daimler’s daughter. Brand names are a means to give distinctiveness and add value to the
product. The tangible product in itself does not have a sustainable competitive advantage
since it is only a matter of time before it is copied by the competitor. Many companies
respond to competition by innovation; developing a whole new product or adding more
features and benefits to the product. Even though products change, the brand name stays.
Ultimately, the main driver of the consumers’ choice is not the product features nor other
tangible benefits, but brand preferences.
One basic key in creating a strong brand is a well-defined brand platform consisting of: the
brand identity; in the narrowest sense referred to as brand essence or brand mantra; and
brand positioning, as the unique and distinctive characteristic of a brand. A Brand identity is a
unique set of brand associations that the brand strategist aspires to create and maintain
(Aaker et al, 2000). These associations represent what the brand stands for and imply a
promise to customers from the organization members. Keller (2004) refers to a deeper sense
of brand identity, the brand mantra which relates to the core brand essence or core brand
promise. The brand mantra is an articulation of the heart and soul of the brand and captures
the indisputable essence or spirit of the brand positioning and brand values. In this context
Keller also adds the brand core values, a set of abstract associations (attributes and benefits)
characterizing the 5-10 most important aspects of the brand, as part of the brand identity
Positioning a brand means emphasizing the distinctive characteristics that make it different
from its competitors and make it more appealing to the public. Positioning is a result based on
an analysis of the following four questions (Kapferer, 2004):
1. A brand for what? Refers to the brand promise and consumer benefit
2. A brand for whom? Reflects the target market
3. A brand for when? Refers to the occasion when the product will be used
4. A brand against whom? Who are the main competitors this brand will compete with?
A standard positioning formula brought forward by Kapferer (2004) is: ‘For…………….(definition of target market)
Brand X is …………….(definition of frame of reference and subjective category)
Which gives the most ……………..(promise or consumer benefit)
Because of ……………………..(reason to believe)’
16
The target specifies the nature and psychological or sociological profile of the individual to
be influenced, that is, buyers or potential consumers. The frame of reference is the subjective
definition of the category, which will specify the nature of the competition. The third point
specifies the aspect of differences which create the preference and the choice of a decisive
competitive advantage: it may be expressed in terms of a promise or a benefit. The fourth
point reinforces the promise or benefit, and is known as the ‘reason to believe’9.
Once the brand platform, the foundation for brand design, is defined the brand manager can
integrate the marketing-mix elements into strategies and marketing programs to build the
brand.
2.6 Building Brand Equity
When building the brand, the main question should be: How can the brand be integrated
within marketing programs to increase brand equity? Marketing strategies must be executed
in such a way that brand equity is maximized. In this paragraph, the focus will be on building
brand equity from the viewpoint of the traditional marketing-mix elements, product, price,
channel strategy and marketing communication (Keller 2004). This paragraph does not
provide an exhaustive description nor a list of all the strategies and marketing activities to be
applied; however, key indicators within these strategies will be pointed out to build the brand.
i. Product strategy
Three aspects of the product strategy are of eminent importance when building the brand:
The product itself is a key source of brand equity and is the basis of what consumers
experience with the brand. As already stated the product itself does not have a
sustainable competitive advantage, however, the quality features of the product must
meet or surpass customer expectations in order to create brand loyalty and will be,
consequently, a basis for sustainable brand equity.
The Perceived Quality of a product is the quality that is perceived by the customers
relative to alternative competitor’s products and must be met in order to be considered
a distinctive product brand. In this perspective a product that is backed by a Total
Quality Management system can be perceived by the consumer as a quality product
and be associated with high quality standards. Moreover, brand intangibles, such as
9 Kapferer J. (2004), The New Strategic Brand Management: Creating and Sustaining Brand Equity Long Term 17
product delivery, accuracy etc. increase the quality image of the brand and are,
therefore, also an essential source of brand equity.
Relationship marketing: the meaning of the brand (brand resonance) is enhanced when
a stronger bond with the customer is created. The focus therefore should not be solely
on the product but includes a broader set of activities to personalize the brand
experience and ultimately to create loyal customers. The basic idea behind the
relationship marketing concept is that current customers are the key to long-term
brand success. Relationship marketing involves various programs such as loyalty
programs, mass customization (personally customized products on a large scale), etc.
ii. Price Strategy
The Price strategy is that element of the traditional marketing mix that primarily
generates revenue. The company's price strategy influences consumer perceptions and
determines how consumers categorize the brand (high, medium, low priced). In many
market segments, consumers infer the quality of the product brand on the basis of price.
Price segmentation becomes increasingly relevant, because different consumers have
different value perceptions. Customers must perceive that they receive value for money in
every price segment to create a positive attitude towards the brand. Price premiums can
be charged when consumers feel the brand represents unique personal values and,
therefore, can be considered as an indicator of high customer-based brand equity because
of the positive attitude and loyalty the consumers have towards the brand. There are
various price strategies, however, the choice of the best fitting strategy depends heavily
on the perceptions of the brand and the personal values attached to it.
iii. Channel strategy
Marketing channels are mutually dependent organizations involved in the process of
making the product available for the consumer (Keller 2004). The success or failure of a
brand is not the sole responsibility of the acceptance of the consumer; distributors also
contribute to this success. There are a number of different channels which can be
classified into direct an indirect channels. Direct channels are those channels that offer the
product directly to the customer through personal contact (mail, phone, sales person),
whereas indirect channels involve selling the product through intermediaries such as
retailers, wholesaler etc. How do these two contribute towards brand equity?
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1. Indirect channels (in this case retailers) contribute in general by the actions and
support given to brands through these channels, for example:
• Strong, favourable and unique associations of the retailer. The retailer may have a
good reputation because of wide product range, variety of product assortment, credit
policy and the brands it carries
• Transfer of retail image to brand image. Consumers assume that if this retailer sells
only high quality products, the products bought must also be of high quality
• Brand-related services of the retailer
• Increasing brand awareness through display and merchandising. Retailers actively
enhance the brand equity by stocking and displaying the product.
• Cooperative advertising
2. Direct Channels enhance brand equity by improving the understanding of the
customer with regard to unique characteristics and the depth, breadth and variety of
the product brands. One example being company-owned stores which have control
over the sales process and as a result can build a stronger customer relationship. These
stores have the opportunity to expose the brand variety and its own unique brand
image.
Both direct and indirect channels must also be chosen based on the maximization of brand
equity. Furthermore, the choice will be based upon the advantages and disadvantages each
channel or a combination of channels provide.
iv. Marketing Communication
Marketing communications are the means by which firms attempt to inform, persuade,
and remind consumers directly or indirectly about the brands they sell (Keller, 2004).
Marketing communication represents the voice of the brand and is of eminent importance
in creating brand awareness and a positive brand image in the consumer's mind. This
enhances brand equity for consumers who will respond more favourably to a particular
brand. Communication can establish a dialogue and build customer relationship.
Appendix gives E an overview of the marketing communication options. A proper
communication mix relevant for the brand must be established to build brand equity.
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2.7 Measuring Brand Equity
There are a number of ways to measure brand equity from a customer's perspective as well as
from a financial perspective. Financial brand equity methods measure the financial value of a
brand at a certain point in time. These methods were discussed in chapter 2.3 where Appendix
F gives an overview of the financial valuation the top ten global brands in 2004, valuated by
Interbrand. During the value creation process it is also essential to measure brand equity to
understand the effectiveness of marketing activities and programs on the performance of the
brand. A number of common tools to measure brand performance can be distinguished
(Keller, 2004):
1) Brand Audit is a broad examination of a brand in terms of sources of brand equity
from the perspective of both the firm as well as the consumer. A brand audit consists
of a brand inventory and a brand exploratory. The brand exploratory is to provide a
comprehensive profile on how all the products and services are marketed and branded
by a company. The brand exploratory is research activity directed to understanding
what consumers think and feel about the brand and its corresponding product category
in order to identify sources of brand equity. The brand audit is meant to provide
relevant information for setting long-term strategic directions for the brand
2) Brand Value Chain is a means to trace the value creation process for brands to better
understand the financial impact of brand marketing expenditures and investment. This
value chain has a number of value stages starting with the marketing program
investment which affects the customers’ mindset and, therefore, market performance.
Ultimately, all these elements in the value chain influence the shareholder's value.
3) Brand Tracking are ongoing tracking studies to provide marketers with current
information on how their brands and marketing programs are performing
4) Brand Equity Management System involves establishing a set of organizational
processes designed to improve the understanding and use of the brand equity concept
within a firm. It requires designing brand equity charters and reports and assigning
brand equity responsibilities.
2.8 Grow and Sustain Brand Equity
2.8.1 Brand Product Matrix, Brand Hierarchy and Brand Architecture Strategies
Branding strategies, just like the tangible product and the brand name itself, are a means of
value creation. Thus, a branding strategy is not a design problem but more a decision on how
20
the different parts and products of the company could add value to the total brand value chain.
For example, one reason for Unilever’s product brand strategy is that each individual product
gains shelf space in the distributor's channel, therefore, increasing the number of facings. This
is a way of stimulating and increasing the chance of impulse buying. Canon conversely uses
the umbrella brand strategy as it provides, on the one hand, economies of scale and, on the
other hand, increased brand awareness. As a result, everyone and everything in the company,
including the branding strategy, contributes to this value creation. A brand strategy can be
described as ‘the number and nature of common and distinctive brand elements applied to the
different products sold by the firm’ (Keller 2004).
Two basic tools to identify the branding strategy and to determine whether these strategies
really add to or maximize the value of the various brands within the total brand portfolio are
the product-brand matrix and the brand hierarchy. The product-brand matrix is a graphical
representation of all brands and products sold by the company (see appendix G). The row
represents the product-brand relationship and gives an indication of the brand extensions; the
number of products under a single brand name. While the columns represent the brand-
product relationships and give an overview of the brand portfolio of the company. The brand
portfolio is a set of brands and brand lines carried by the company in a particular category.
Often different brands are designed and marketed in different market segments. The brand
portfolio must be judged on its ability to collectively maximize brand equity. So the optimal
brand portfolio is one in which each brand maximizes equity in conjunction with the other
brands.
The branding strategy of a company can also be summarized in a brand hierarchy, especially
those firms that carry multiple brands in their brand portfolio. The brand hierarchy, which is
similar to an organizational structure, provides the relationship that brands have with each
other within the brand portfolio. The brand hierarchy evaluates the companies’ brand
architecture and can help to give perspective on which new strategies to implement for
leverage or for building a brand (appendix H provides an example of a brand hierarchy). How
do the different levels of the brand hierarchy contribute to brand equity? According to Keller
brand elements at each level can contribute to brand equity through their ability to create
awareness as well as to foster strong, favourable and unique brand associations and positive
responses.
21
Brand architecture organizes and structures the brand portfolio by specifying brand roles
and the nature of relationship between brands and between different product-market contexts
(Aaker et al, 2000). Thus, the brand architecture provides the basic branding structure that a
company implements to market their products. Kapferer (2004) distinguishes six models in
the management of brand-product relationship or brand architecture:
i. Product brand strategy: The product brand strategy involves the assignment of a
particular name to one and only one product (or product line) as well as one exclusive
positioning. Each product has a well-defined positioning and is offered to a particular
market segment. When the product can be defined as a whole product category, we
speak of a ‘branduct’. In this case the product is so specific and has no equivalent; two
examples are Post-It and Bailey’s Irish Cream.
ii. Line brand strategy: The line brand strategy provides coherent response under a
single name by proposing many complementary products. One successful concept is
used by extending the brand, while at the same time staying very close to the original
product.
iii. Range brand strategy: Range brands present a single brand name and promote a range
of products belonging to the same area of competence through a single promise.
iv. Umbrella brand strategy: Umbrella brands offer the same brand support for several
products in different markets. Each of them has its own advertising and develops its
own communications, yet, each product is called by its own generic name. One very
important note is that the brand is at its best when companies with superior products
use the umbrella brand strategy.
v. Source brand strategy: This strategy is identical to the umbrella brand except for one
key point – the product has its own brand name and is no longer called by one generic
name but each has an own name. This is a two-tier brand structure known as double-
branding. Within the source brand the family spirit dominates, although each product
has its own individual name, for example, Christian Dior is the family name and, for
instance, ‘I love Dior’ is the individual name.
vi. Endorsing brand strategy: The endorser brand gives its approval to a wide diversity of
products grouped under product brands, line brands and range brands e.g. Marriot is
an endorser for Courtyard by Marriot and Fairfield Inn. The endorser is the guarantor
of their credibility, quality and security. The endorsing brand is placed lower down
because it acts as a base guarantor. Usually an endorser represents an organization
22
rather than the products. Organizational associations such as innovation, leadership
and trust provide more relevance in the endorser context
vii. A Branded House or a House of Brands? New trends in branding strategies have
resulted in two extreme strategic alternatives in brand architecture: the Branded House
and the House of Brands. A Branded House uses a single master brand to market its
products while in the House of Brands strategy each independent stand-alone brand
maximizes its impact on the market. These two alternatives are a mixture of the six
aforementioned strategies and are chosen based on the strategic intent of the company.
Appendix I provide a graphical model of these two approaches.
In general, the choice of which strategy is the most suitable one depends on several aspects
such as the business model, the competition and customer trends and needs. In practice, most
firms use a mixture of the different strategies. One key point in the decision-making process
for choosing the most appropriate strategy (strategies) is to make the assessment which
strategies deliver optimal brand equity and a sustainable competitive advantage. Appendix J
provides an overview of the advantages and disadvantages of each brand strategy.
The above-mentioned tools and brand architecture strategies are a necessary framework
which needs to be clearly identified before strategic decisions are made for growing and
sustaining the brand. There are three common growth brand strategies: brand extensions,
brand reinforcement and brand revitalization. These will be discussed in the following
paragraphs.
2.8.2 Brand Extensions
Since the presence is its source of income, managing the brand involves maintaining it as it is
now and simultaneously building towards the future through development and innovation.
Kapferer mentions three initiatives that should be taken at the same time to build and sustain
brand equity, which are illustrated in figure 3 below. In this paragraph the focus will only be
on the brand and line extensions.
23
Figure 3: Strategies for Sustaining Brand Equity Long-Term
Source: Kapferer, 2004
Brand extensions are a means of capitalizing on an existing brand’s equity to market new
products and services. In this perspective we distinguish between line extensions and brand
extensions. ‘Brand (or category) extensions involve the use of an established brand name to
enter a different product category’ (Aaker and Keller, 1990). To the contrary, ‘line
extensions involve the use of an established brand name for a new offering in the same
product category’ (Reddy et al., 1994). Brand extensions are useful because of growth and
profitability. Brand extensions relies on the ability to create a competitive advantage by
leveraging the reputation attached to the brand name in a growth category, different from the
brand’s present categories (Kapferer, 2004). A brand extension is considered successful if it
contributes to both its own brand equity in the new category and the parent brand equity, that
is to say it must add value by strengthening or add unique and favourable associations to the
extended brand in the new category as well as the parent brand (Keller, 2004). The parent
brand is the existing brand that gives birth to a brand extension. The sub-brand is a brand
connected to a parent brand that augments or modifies the associations of the master brand
(Aaker et al, 2000).
Prototype Repositioning
Brand Extensions
Line Extensions
And upgrading
Brand communication for image and proximity (sponsoring, relationship marketing…)
Brand (Code, Signs)
To match the ever evolving needs to attract new consumers:
To capture new sources of growth to obtain the brand franchise and reinforce brand authority
- New users (formats) - New desires (variety) - New needs (ingredients
24
2.8.3 Brand Reinforcement and Revitalization
i. Brand Reinforcement
Brand equity must be managed in such a way that the brand meaning is reinforced. It is
crucial that marketing actions should be reviewed regularly and when necessary adjusted to
identify new sources of brand equity. Brand equity is reinforced when marketing actions
consistently communicate the meaning of the brand to consumers in terms of brand awareness
and brand image (Keller, 2004). There are a number of ways to reinforce the brand. These are
captured in figure 4.
Figure 4: Brand Reinforcement Strategies
Brand Awareness
Source: Keller, 2004
Basically, brand reinforcement requires the following actions:
- Maintain consistency over time: it is of eminent importance to give marketing support
to the brand in a consistent way in terms of the amount and nature of support. This is
necessary to maintain the strength and favourability of brand associations
- Protect sources of brand equity: sources of brand equity such as product features and
brand associations must be protected. Sometimes, even if the changes are small, it can
affect the equity negatively. The affects to consumer responses must be actively
monitored in order to sustain brand equity.
- Fortify versus Leverage: thorough considerations must be given to those marketing
activities that further strengthen the equity of the brand or those that just provide
leverage to the equity of an existing brand for short-term financial benefits. For
Brand Reinforcement Strategies
-What does the brand represent? - What benefits does it supply? - What needs does it satisfy?
Brand Image - How does the brand make products superior? - What strong, favourable and unique associations exist in the customers mind?
Innovation in product design, manufacturing and merchandising
Relevance in user and usage imagery
Consistency in amount and nature of marketing support
Continuity in brand meaning; changes in marketing tactics
Protecting sources of brand equity
Trading off marketing activity to fortify vs. leverage brand equity
25
example, cutting the advertising budget of a brand with high awareness to invest in
another brand or brand extensions to provide leverage on an existing brand’s equity.
In the long run the equity of that particular brand may diminish.
- Supporting marketing programs: must be also actively managed and if necessary
changed if these programs do not contribute to the brand’s equity.
ii. Brand Revitalization
There are a number of reasons why brand equity declines varying from: changing consumer
preferences; emergence of new competitors and new technologies; or change in the
(marketing) environment. However, even if brands end their commercial activity, they do not
immediately lose their assets. The image of the brand often remains long-term in consumers’
memories; after years brands may still bring to mind a number of positive and negative
associations. The key brand asset that is lost is the brand salience, the capacity of the brand
to be evoked spontaneously in consumers’ mind as soon as the need to buy the product type
appears (Kapferer, 2004). Research has shown that many mature brands have untapped
potential. Companies should take time and effort to understand why these brands are fading in
order to implement the right strategy to revitalize these brands. Once a mature brand is
chosen for revitalization the key task is to get it back into the consumer’s mind. There are
number of revitalization strategies, which are illustrated in figure 5.
The figure illustrates two mainstream brand revitalization strategies. One is that brands have
to return to the basics to recapture the lost sources of equity. To the contrary, other brands
have to change fundamentally (new sources) to regain lost ground.
26
Figure 5: Revitalization Strategies
Source: Keller, 2004
2.9 A Legal Perspective on Brand Equity
One condition for sustaining a strong brand is brand protection. Although not mentioned in
Keller’s model it is necessary to present some general information about brand protection.
The legal perspective on brand equity will thus be discussed in this paragraph.
According to World Intellectual Property Organization (WIPO) ‘a trademark is a distinctive
sign which identifies certain goods or services as those produced or provided by a specific
person or enterprise’. It originates from ancient times when craftsmen reproduced their
signatures or ‘marks’ on their artistic or utilitarian products. This concept evolved over time
and has become the basis of today’s system of trademark registration and protection. A
trademark provides protection to the owner of the mark by ensuring the ‘exclusive right’ to
use it to identify goods or services, or to authorize another to use it in return for payment10.
10 WIPO, What is a Trademark?, www.wipo.org
Brand Revitalization Strategies
Refresh old sources of brand equity
Create new sources of brand equity
Expand depth and breadth of awareness and usage of brand
Increase quantity of consumption
Improve strength, favorability and uniqueness of brand associations
Increase frequency of consumptio
Bolster fading associations
Neutralize negative associations
Create new associations
Identify additional opportunities to use brand in same basic way
Identify completely new and different ways to use brand
Retain vulnerable customers
Recapture lost customers
Identify neglected segments
Attract new customers
27
The question may arise why trademark protection of brand elements such as logos, names and
symbols is such a brand management priority? Counterfeiting has evolved massively over the
last two decades. In China alone, 94 percent of all software units are believed to be
counterfeited and 20 percent of western brand name products sold in China are counterfeit.
For this reason legal protection is an essential part of sustaining the brand in the long-term.
Trade mark protection hinders the efforts of unfair competitors such as counterfeiters, who
use similar distinctive signs to market inferior or different products or services. Registration
of a trademark must be done by the national or regional trademark office in a Register of
Trademarks. The effects of such a registration are limited to the country (or in the case of
regional registration to the countries) concerned. World Intellectual Property Organization
(WIPO) administers a system of international registration of marks which is governed by two
treaties, The Madrid Agreement concerning the international registration of marks and the
Madrid Protocol. There are sixty countries which are party to one or both agreements and
therefore, trademarks are protected in these countries (Madrid Union).
Legally, the courts have created a hierarchy for determining eligibility for registration,
presented in descending order11:
• Fanciful (e.g. Kodak)
• Arbitrary (e.g. Camel)
• Suggestive (e.g. Everyday)
• Descriptive (e.g. Ivory)
• Generic (e.g. Aspirin)
Fanciful brand names are the most easily protected since they are not easily copied because of
their uniqueness. One main reason for the decay of the brand is when the brands become
generic. In this case the brand name is considered a descriptive word, part of every day
vocabulary with no distinctive properties and thus easily copied or counterfeited. Generic
names are, therefore, not able to be protected. Brand names that are difficult to protect
include those that are surnames, descriptive terms, or geographic names or those that relate to
a functional product feature.
11 Keller, K. (2004), Strategic Brand Management, Third Edition
28
2.10 Chapter Summary
Chapter 2 provides two main definitions of the brand equity concept i.e. customer-based
brand equity and financial brand equity. Three approaches on the brand equity concept of
well-known authors are described, each one from the author’s own perspective. In addition,
some brand valuation measures are explored. Keller’s model, the Strategic Brand
Management Process, is presented and used as a basis to explain the steps in creating and
sustaining brand equity which, in fact, is the theme of this study. The various underlying key
concepts, such as marketing strategies to build the brand and brand strategies to sustain the
brand, are discussed to give more detailed information on how this process exactly should
take place. Finally, some attention is given to the legal perspective of brand equity since
brand protection is a condition for sustaining brand equity.
29
CHAPTER 3 BRANDING AND BRAND MANAGEMENT IN SURINAME
3.1 The Macro-Economic Environment: Some Key Aspects Influencing
Entrepreneurship
Until 1996 the Surinamese economy could be characterized as a closed economy. After the
removal of trade barriers for the CARICOM countries, Suriname faced the implications of an
open economy for the first time. Since Suriname did not submit a separate tariff schedule for
sensitive goods, the influence of this competition penetrated into almost all sectors. In
addition, poor macroeconomic management resulted in hyperinflation and exchange rate
fluctuations. The current government has been able to stabilize the exchange rate in the past
four years because of a tighter monetary and fiscal policy and, therefore, were able to
successfully launch the Surinamese Dollar in 2004. Consequently, the economy became
increasingly dollarized as a result of the lingering effects on confidence hyperinflation, the
liberalization of foreign exchange controls, bank lending regulations and reserve requirements
that strongly favour foreign currency intermediation12. Presently, the economy still depends
heavily on bauxite and gold; oil contributes substantially to the economy as well. Private
remittances from abroad are another important source of cash inflows into the economy;
however, these do not contribute to the macroeconomic development.
3.2 Competitiveness of Surinamese Businesses in General
Although the nominal exchange rate has stabilized, the real effective rate appreciated by a
cumulative 19% between August 2002 and December 2004, reflecting Suriname’s relatively
high inflation rate13. This appreciation undermined the competitiveness of especially the non-
mineral exports and local industries. Moreover, there is a large and inefficient public sector
consisting of nearly 120 enterprises, accounting for 60% of the employment. The private
sector consists mainly of small and medium enterprises (SMEs) of which the vast majority is
relatively weak and underdeveloped due to; a lack of long-term funds against low interest
rates; weak government support and incentives; a bad investment climate; and lack of
specialized knowledge. Large enterprises are the result of foreign direct investment (FDI) or
12 International Monetary Fund (March 8, 2005) , Suriname Staff Report for 2004 Article IV Consultation; The Economist Intelligence Unit, Suriname Country Report (February 2005) 13International Monetary Fund Suriname (March 8, 2005), Staff Report for 2004 Article IV Consultation 30
are parastatals (government-owned companies or public enterprises). There are a number of
large private enterprises (family businesses), which have grown over the years to larger
businesses. Export is discouraged due to lack of good export facilities, bad infrastructure and
tax policies. In addition, , given the fact that these regulations create unnecessary red tape,
entrepreneurs in general consider government regulations as export barriers. To develop the
private sector and especially the SMEs, Surinamese business development institutions
developed closer working relationships with institutions within the EU and ACP countries to
enhance the investment climate and to support and facilitate SMEs through low-interest rate
funds and specialized knowledge through education. Additionally, the ‘Surinamese Business
Forum’ was established in 2002 to provide business support to these SMEs and to create and
implement strategies to make Surinamese businesses more competitive. Notwithstanding
these developments, Surinamese companies, in general, are still very weak and do not focus
enough on the opportunities within the CARICOM, focussing more on the local market.
3.3 The Role of Branding and Brand Management in Surinamese Companies
After removal of the trade barriers for the CARICOM countries, the introduction of many
new competitive products in the Surinamese market increased the awareness of Surinamese
manufacturers to market their product in a different way in order to stay competitive. From
1996-2000, many SMEs collapsed because competition made retailers and consumers aware
of another choice; therefore, shifting customer and consumer preferences. It was in this period
when companies started to restructure and became leaner and meaner organizations. The role
of marketing management became increasingly apparent, but, due to lack of specialized
knowledge, marketing management became just the responsibility of the sales manager,
especially within SMEs. In many companies these management disciplines are increasingly
being separated because of the development of these specialized skills. This has improved the
effectiveness of marketing practices within the Surinamese market on the one hand, but the
emerging Surinamese market, on the other hand, does not allow for sophisticated marketing
practices to be implemented in the same manner as in the more developed countries (MDCs).
Investments in marketing programs and activities have augmented in the last five years;
however, brand management as part of marketing management is still in its infancy.
31
3.4 Brand Valuation in Suriname
The financial market in Suriname is relatively underdeveloped. Approximately ten companies
are listed on the stock exchange market; the value of stocks is as a general rule based on the
market price. Due to the underdeveloped financial market the market price often does not
reflect the fair value of the company; therefore, most companies valuate their assets based on
the Discounted Cash Flow method (DCF method). Valuation of intangible assets such as
goodwill as part of the market capitalization is still in an emerging stage. Intangible assets are
valuated according to IAS standards. Goodwill is in general activated in the case of
acquisition and licensing or franchising and the valuation of goodwill is also done according
to DCF method. Financial brand equity is a very new concept in Suriname. Brand valuation, a
tool for measuring financial brand equity, is still not a distinctive financial discipline but is
incorporated in the valuation of goodwill. Goodwill (including the value of the brand) is only
posted on the balance sheet for the relevant period until the value is completely depreciated.
3.5 Legal Framework for Brands in Suriname
The law for trademark protection in Suriname originates from 1912. As many articles are
outdated, a design law has been proposed and is still awaiting approval by the government.
The law for first trademark registration is used worldwide as a starting point; however, in
Suriname the law for first trademark usage is still applicable. The law for first trademark
registration indicates that the producer or distributor who first registers its trademark at the
bureau for intellectual property in that specific country has the legal right to carry the
trademark for is products. To the contrary, the law for first trademark usage states that the
producer or distributor who first produces or distributes the product has the legal right. Lack
of awareness of this fact will result in a legal disadvantage over international companies. In
addition, Suriname is not a member of WIPO which provides international guidelines for
trademark registration and protection and assists in international trademark litigation cases.
However, it is required that the manufacturer or distributor registers its products in every
country wherein the product is marketed as a solid base for trademark protection. In
summary, Suriname still faces many challenges if the legal trademark competitiveness and
protection of Surinamese firms is to be increased.
32
3.6 Characteristics of Surinamese Companies with Strong Local Brands
Notwithstanding the disadvantages within the Surinamese market and even though brand
management is still in an early stage of development, some local companies have been able to
create and maintain strong brands. These companies distinguish themselves from other
companies by the following main characteristics:
• The majority of these companies have been established for decades and have been able
to create brand heritage
• These companies are often local market leaders in their specific target market
• In general, these companies distinguish themselves from the competition by a good
product and perceived quality.
• There is a good customer-channel relationship
• Management is more aware of the role and has a better understanding of the impact of
marketing activities.
Presented below is a SWOT analysis, reflecting the common strengths, weaknesses,
opportunities and threats of these businesses.
Table II: SWOT Local Companies with Strong Brands Strengths
Strong brand name locally , brand heritage
Good product quality, comparable to
international high quality imported products
Transfer of knowledge, technology for
manufacturing companies operating under a
license
Ethnic related (real Surinamese, exotic) products
allows for product differentiation. Basis for a
competitive advantage in the global market
Weaknesses Weak brands in the global market, because of
lack of international brand awareness, brand
recognition
Management awareness of the value of the
brand (brand equity)
Still some monopolistic vision because of late
entrance to the CARICOM, resulting in inertia
No modern infrastructure within and outside the
company, lack of capacity
Too much focus on the small local market,
resulting in no economies of scale
Still inefficiency within the operations, High cost
structure
Shortage of skilled employees
Opportunities Caricom market, larger market available (export
or establish own subsidiary)
Niche market (European). Products are
considered exotic
Threats Free Trade Area of the Americas (FTAA)
Legal (Brand) Protection
Export Facilities
Government regulations
Source: Researcher’s Assessment
33
3.7 Background of Companies participating in the Research
Six companies with strong established brands participated in this study. The table (III) below
provides relevant background information of these firms.
Table III: Key Indicators Participating Companies
Company Name
No. of Employees
Yearly Revenue (2004) in US$ x 1000
Market Segment
Estimated Total Market share
Main Brands in Brand Portfolio
Surinaamse Brouwerij
84 20,000 Beer 87% Heineken (international brand) Parbo Beer, Parbo Power Stout, Parbo Chiller
CIC (NV Consolidated Industries Corporation)
125 9,000 Detergents and Plastics
60% Witboi, Ozon, Sun, Klinol
MAVEFA (Margarine en Vetten Fabriek)
35 2,500 Butter, Margarines
90% Marigold, Golden Brand, Gelebek, Bake ‘n Fry
SAB (Surinam Alcohol and Beverages)
70 15,000 Alcohol, Rum
70% Marienburg Rum, Borgoe, Black Cat, Ponche Campos
Fernandes Bottling Company N.V.
250 24,000 Carbonated Soft Drinks
75% Coca Cola, Fanta, Sprite (international brands) Fernandes Soft drinks, Fiesta
Fernandes Bakery
320 11,000 Bread, Pastry and Snacks
50% Fernandes Bread and Pastry, Tesa Fesa, Krie Kra.
Source: Yearly Reports 2003, 2004 of Participating Companies; Research Results
34
Except for MAVEFA, these private enterprises are considered large companies within the
Surinamese market. They collectively provide employment to approximately 1000 employees
and earn 90 million US$ on revenues, which is a considerable contribution to the Surinamese
private sector. These enterprises are market leaders in their respective market segments. The
oldest local brands in the product portfolio of these businesses are: Parbo (50 years), Witboi
(40 years), Gelebek (40 years), Fernandes soft drinks (60 years), Fernandes bread (35 years)
and Marienburg Rum (50 years). Both Fernandes Bottling Company as well as the
Surinaamse Brouwerij, a local brewery, carry internationally strong brands that is to say Coca
Cola and Heineken. These two companies are also involved in a strategic partnership for sales
and distribution. This gives them both the opportunity to share marketing knowledge with the
licensee as well as local market knowledge with each other. Some brands in the brand
portfolio are exported to the CARICOM, Europe and other countries within the Caribbean or
South America. On a global scale Surinamese brands are still very small and relatively
unknown; nevertheless, some brands were able to successfully penetrate niche markets. Two
examples are the franchising of the Fernandes brand to the Coca Cola Company in the
Netherlands and the export of the Ozon line from CIC to Trinidad (CARICOM).
3.8 Chapter Summary
In Chapter 3, influences of the Surinamese macro environment on businesses and its effect on
competitiveness of these businesses are described. Furthermore, branding and brand
management in the Surinamese context are discussed along with some other key aspects of
brand equity i.e. brand valuation and brand protection. Characteristics of companies that own
strong brands, in general, and relevant background information of those that are participating
in this study are also presented in this chapter.
35
CHAPTER 4 RESEARCH MODEL AND METHODOLOGY
4.1 Research Model for Creating and Sustaining Brand Equity
As discussed in the aforementioned sections, branding and brand management in Suriname
are still in an emerging stage. Nevertheless, a number of Surinamese manufacturing
companies have been able to build strong brands over time and thus have created strong brand
equity. The question is what steps and strategies where taken and implemented to create and
maintain these strong brands (brand equity). Keller’s model, as discussed in chapter 2.4,
illustrates four key steps i.e.:
• Creating brand equity
• Building brand equity
• Measuring brand performance, equity
• Sustaining brand equity
These steps are of great importance in the process of sustaining the brand in the long-term in
a successful manner. Within every step key underlying concepts as described in chapter 2.5 to
2.8 form the ‘building blocks’ of this model. However, is this model and all of these concepts
fully applicable for creating and sustaining brand equity within these Surinamese
manufacturing companies? First, the following research model in figure 6 is proposed to
systematically indicate which relationships and whether correlation exists between the
variables in the research unit.
Figure 6: Research Model for Creating and Sustaining Brand Equity Long-Term
Brand Creation
Building Brand
Sustaining Brand Equity
Long Term Brand equity
Measuring Brand performance, Brand equity
Source: Researcher’s Appraisal
36
Based on the above-mentioned figure the following relationship is assumed between the
variables: The independent variable in this model is brand equity creation and the dependent
variable is long-term brand equity. Unless a brand is created, the brand cannot be built nor
sustained. The two variables building and sustaining brand equity are sequential steps and are
mediating variables. Brand equity will be sustained in the long term if relevant marketing and
brand strategies, which are the underlying concepts of these variables, are implemented
effectively. Between all the steps it is necessary to continuously measure the brand
performance to be able to identify whether the brand-building process is on the ‘right track’.
This variable is the moderating variable and this proposed model will be the basis for
conducting the research.
4.2 Research Approach and Strategy
The main approach for this study is the inductive approach; however, there are some elements
of the deductive approach included. The inductive approach states that data should be
collected and theory should be developed as a result of your data analysis. To the contrary,
the deductive approach involves the development of a theory from an existing theory which is
subjected to a rigorous test. One element frequently used in the deductive approach and is
also used in this study is the survey method; however, prior to the actual survey, in-depth
interviews were conducted to get a feel for key issues. Another element is the use of a
theoretical framework; the reason for the use of this as a foundation for this study is because
there are certain advantages attached to this strategy. First, it links the research with the
existing body of knowledge and provides an initial analytical framework (Saunders et al.,
2003). Furthermore, since brand equity is a relatively new concept internationally and very
new (or generally unknown) in Suriname it would become too complex to establish a self-
developed theoretical framework. Therefore, a research model was created and based on this
model, this research was conducted. The variables within this model and their key underlying
elements were used for the formulation of the questionnaire.
As already stated, the focal point in this survey is on manufacturers that manufacture products
with strong brands, which are fast-consumer goods. Brands of services or durable goods were
not included in this research.
37
4.3 Data Collection
This research can be considered an exploratory study since brand equity is a very new
concept within the Surinamese market. In general, exploratory studies are valuable means of
finding out ‘what is happening; to seek new insights; to ask questions and to assess
phenomena in a new light’ (Robson, 2002:59). Therefore, in this study no hypothesis is
formulated; only research questions are used. The aim is to present a theory (or hypothesis)
based on the findings of this phenomena in this new perspective. A small sample was chosen
based on the purposive or judgmental sampling method. This sampling method enables you to
use your own judgment to select cases that will best enable you to answer your research
question (s) to meet your objectives. A variant of this sampling method is homogeneous
sampling which focuses on a particular subgroup in which all the sample members are similar
(Saunders et al, 2003). In this research the sample consists of six companies with strong local
brands. These companies have various characteristics in common which are described in
chapter 3.
Various activities were completed during the data collection process, which comprises of the
following steps:
1. A desk research was done to identify the theoretical framework of this topic. Data for
the literature study was retrieved mainly from primary and secondary sources i.e.
white and research papers and books. Articles from the internet were another source
of information.
2. A survey among senior managers was conducted since brand equity is considered a
strategic issue and, therefore, the responsibility of top management. The following
approach was used:
• In-depth interviews and brainstorming sessions with three senior managers (or
brand/marketing managers) were completed as a pre-test to determine key questions
and identify errors within the questionnaire.
• The questionnaire used is a structured (and for the additional viewpoints a semi-
structured) questionnaire; however, respondents were given the opportunity to add
relevant viewpoints on the various topics. It was considered necessary to structure the
questionnaire to guide the process of information collection and to stay within the
relevant empirical framework related to the theory. The questions were mainly open-
ended questions to get as much information as possible since the brand equity concept
is relatively new in Suriname. Furthermore, closed questions were included especially
38
for the more specific brand equity and strategy questions because more specific
information was also required. In general, it is assumed, however, that closed
questions could influence the outcome of the survey so the open-ended approach was
chosen primarily.
• The interviews were done face-to-face several days after the respondents received the
questionnaire by mail or e-mail. The questionnaire was sent in advance to give senior
management the opportunity to assess the brand management and brand equity policy
of the company. The information was primarily gathered based on management
experience or fragments of business plans. A glossary of terms was included to ensure
clarity on the various concepts of brand equity.
4.4 Data Analysis Procedure
The data was processed in an access data base. First, a content analysis was conducted;
qualitative data was categorized and then summarized in frequency tables (see appendix L).
Data that could not be categorized but was still useful are integrated as comments in the
analysis. The categorized data was used to find similarities and trends and was a base for
stating key findings of the research. A gap analysis will be done (in chapter 5) to determine
the gap between relevant theories and the outcome of the survey. Based on the gap analysis,
strategies and recommendations will be developed. In the next paragraphs the key research
results will be discussed.
4.5 Limitations of the Research Methodology
The following limitations were encountered because of the chosen research methodology:
1. Even though a glossary of terms was included there was still some ambiguity because
of the general lack of knowledge of the brand-equity concept. This was minimized
during the face-to-face interview. However, due to lack of information within the
company some questions could not always be completed in a satisfactory way
2. The process of categorizing and summarizing qualitative data is very complex;
therefore, only key information relevant to this study was processed and presented.
3. The outcome of this research does not allow generalization for the complete
manufacturing industry in Suriname, principally because of the small sample size.
39
4.6 Chapter Summary
A self-developed conceptual research model for creating and sustaining brand equity was
presented in this chapter. This model is the foundation for conducting the research.
Furthermore, the research approach, strategy and data collection process, and the limitations
of the research methodology were discussed.
40
CHAPTER 5 RESEARCH RESULTS
The data was analysed based on the findings of the research questionnaire. Frequency tables
with the results relating to the questions are illustrated in appendix L. The frequencies within
these tables are not used to provide a general statement for the complete Surinamese
manufacturing industry. The results are used to give an overview of the status of the brand
equity concept, the management and brand strategy development within these companies.
An overview of the key findings of this research is presented below.
5.1 Awareness of the Status and Role of the Brand
In general, management is aware of what the brand stands for and the role of the brand. Table
IV presents the main roles these brands fulfil within these companies.
Table IV: Roles that Brands Play in Participating Companies Surinamese Manufacturers Income Generator Identification Brand meets customer needs (product & personality) Provides Quality to customers & consumers Source of Pride Risk Reducer Increases recognition and awareness Association with the company Distinction from competitor
Source: Research Results The relevance of the brand to the mission and vision is clear for management and thus
integrated in the company strategies. According to these companies the brand enhances the
company image, contributes substantially to profitability, growth and continuity, provides
strategic direction and is a symbol of quality and trust. The main competitive advantages for
these companies are brand heritage, the price-quality combination and the brand as a symbol
of national pride because it is considered real Surinamese and exotic. All companies are
aware of owning strong and strategic brands. The arguments put forward mainly focus on
high brand awareness and recognition, contribution to sales, profit and growth and market
share and leadership.
41
5.2 The Brand Creation Process
The study shows that:
• Brand names are chosen without prior study about the limitations of that particular brand
name. Most companies had their first brand name chosen through a public poll and it is
said that this was a trend in the early days. These brands can be considered unique
because they cannot be easily copied; most have existed for 40 years or more and have a
strong brand heritage. On the other hand, in some instances new brands that were
introduced after the first brands, appeared to be too generic.
• There is no evidence that in the brand creation process companies start off with a proper
brand positioning and identity. The current positioning statements of most companies
only refer to the position in terms of market share within the target market. The consumer
benefit and reason to believe which, in fact, respectively reflects the aspect of
‘difference’ creates the preference and the choice of a decisive competitive advantage,
according to Kapferer, are not integrated in the positioning statement. The core promise
of the brand is lacking in most positioning statements.
• In the brand creation and building process it is of great importance to know what the
consumer expects. Most of the companies say they are aware of the relevance and do
measure these expectations. It is noteworthy that the research shows that, according to
management, these expectations focus more on the tangible aspects of the brand, for
example the quality, the price-quality combination and the taste. Only two companies
attach an emotional value to the brand (e.g. association with lifestyle). This is actually
part of the intangible aspect of the brand (equity) and should be integrated into the core
promise to the consumer.
5.3 Management of the Brand
A few tools are used to manage the brand. One relevant observation is that half of the
companies do not have a marketing or brand manager who is responsible for the branding
policy and management of the brand portfolio. Another finding is that brand valuation is a
very new concept and is thus not used as a means to manage the brand. Most companies state
that they have a brand plan and brand objectives. The main brand objectives according to the
companies are:
• To remain relevant for the target group (current & new generations);
• Growth in sales volume and brand image and increase market share;
42
• To maintain market leadership;
• Profit generation;
• To increase brand preference.
5.4 Measuring Brand Performance
Most companies measure their brand performance mainly through sales trends which, in fact,
is just a basic measuring instrument. Research is conducted essentially to receive more
information on consumers and their expectations. Specific measurement tools to track
particular customer-based brand equity elements are lacking. There is also no continuous
cycle of tracking brand performance. Only two of the six companies conduct an exhaustive
yearly consumer research.
5.5 Knowledge and Status of Brand equity
5.5.1 Customer Based Brand Equity
All customer-based brand equity elements received a reasonably high score. The estimated
brand equity assets are (based on Aakers’ approach on brand equity): brand awareness, brand
loyalty, perceived quality and brand associations. The average percentage ranges for brand
awareness are between 80 – 100%, for brand loyalty between 30 – 90% and for perceived
quality between 50 - 90%. This means that the vast majority of the target market is aware of
the brand however fewer consumers are loyal to the brand. The brand is by and large
perceived as a high quality product, which is a core strength and source of competitive
advantage. Brand associations are not commonly in use, but in cases where they are
implemented, the companies have a relatively high score. Figure 7, 8 and 9 depict three
graphs showing the estimated brand equity assets (excluding brand association) per company.
43
Figure 7: Brand Awareness Main Brands Participating Companies
Brand Awareness Main Brands
90100
90 9580
90
0
20
40
60
80
100
120
Sur. Brouwerij CIC MAVEFA SAB Fern. Bottl. Fern. Bakery
company
%
Source: Research Results
Figure 8: Brand Loyalty Main Brands Participating Companies
Brand Loyalty Estimates Main Brands
90
30
8090
60 60
0102030405060708090
100
Sur. Brouwerij CIC MAVEFA SAB FernandesBottling N.V.
FernandesBakery
Company
%
Source: Research Results
Figure 9: Perceived Quality of the Main Brands of Participating Companies
Perceived Quality Main Brands
90
50
80 85 85
70
0
20
40
60
80
100
Parbo CIC M AVEFA SAB FernandesBott ling
N.V.
FernandesBakery
company
%
Source: Research Results 44
5.5.2 Financial Brand Equity
None of the companies put the value of the brand as a separate intangible asset on their
balance sheet. As already mentioned, brand valuation is not a method to manage the brand.
All companies believe it is a useful concept since the brand is internationally considered a
valuable intangible asset and can be used in strategic decision making. According to one
company it is an interesting concept, however, of little value in daily practice. The methods
mainly preferred if the brand is valuated, are the DCF and market price method, since the
companies feel it will better reflect the future value potential of the brand. The brand value as
part of market capitalization varies from 40 – 70%. Figure 10 depicts an overview of the
brand value as part of the market capitalization for these companies. The graph reveals the
contribution of the main brand to the companies’ assets. The main brands considered in this
graph are: Parbo (Surinaamse Brouwerij), Ozon (CIC), Golden Brand (MAVEFA),
Marienburg Rum (SAB), Fernandes soft drinks (Fernandes Bottling Company), Fernandes
Bread (Fernandes Bakery). Other brands within the brand portfolio are not considered
because of the complexity of valuating the brand and because this is not common practice
within these companies.
Figure 10: Brand Value Breakdown Main Brands Participating Companies
70
40 40 40 4060
0102030405060708090
100
%
Sur.Brouwerij
CIC MAVEFA SAB FernandesBottling N.V.
FernandesBakery
Company
Brand Value Main Brand as part of Market Capitalization
Net Assets Brand Value %
Source: Research Results
45
5.5.3 Legal protection of the brand
All companies are registered locally and only those companies that export are registered at
the country of destination. Almost all companies (four) with export brands face the problem
of legal acceptance or trademark registration since some brand names appear to be too
generic. In some instances they were confronted with litigation cases because the name was
already registered by a third party. For example, Parbo lost its trademark in the Netherlands to
a third party who was at first a distributor and then continued the registration even though the
distributorship ended. This gave him the advantage of using the brand name and the
Surinaamse Brouwerij lost the case.
5.6 Building and Sustaining the Brand
5.6.1 Brand Architecture
Many companies use a mix approach of brand architecture strategies. The strategies were, in
general, not intentionally chosen or chosen with a strategic direction in mind. Brands which
were introduced later, however, received a different approach as the companies were aware of
the value potential of the brand name. Especially, brand awareness and the ability to create
more leverage on the current brand names were the main drivers to use current established
brand names for brand extensions within for example a range brand strategy (OZON, Borgoe
are two examples). Two-tier brand architecture strategies are a relatively new concept for
most of these companies. Two companies indicated that one of these strategies, namely, the
endorsing brand strategy is used. Based on the researcher's observation it could be stated that
these strategies are not well developed and well promoted. According to these companies the
benefits of using a particular brand architecture strategy are:
• The ability to create (or get more) leverage on an existing brand name (Line, range,
umbrella brands)
• Reduction of marketing cost (Line, range, umbrella brands)
• A high level of brand awareness and brand recognition in the market (Line, range,
umbrella brands)
• Less risk that another brand name could be damaged (product brands).
46
5.6.2 Marketing and Brand strategies
i. Strategies implemented at the launch
Strategies at the launch indicated that simple marketing programs were used. The main
strategies implemented were: intensive channel distribution, dealer incentives, in-store
promotions and house-to-house campaigns. In fact, the main focus was a simple method of
relationship marketing and the use of indirect channels.
ii. Strategies in times of change and over time
During the CARICOM free trade introduction period not all companies changed their
strategies since they were convinced it did not directly affect their businesses. Other
companies had to change their strategies because of the intensive competition. The main
strategies were:
1. Brand revitalization and brand reinforcement to renew the look in compliance with
international standards and then followed by promotion of the brand
2. Brand extensions. Examples of these local brand extensions are: Golden Brand Slim,
Fernandes Light, Borgoe Extra or Black Cat Limon.
3. Improved quality level
All companies consistently implemented at least one strategy over time; the most relevant
strategies were:
• Investment in the brand in both good and bad times
• Focus on distinctive (exotic) core values (real Surinamese product, brand) and
communicate them
• Consistency in communication, advertising and promotion
• Leverage on a international brand to build the local brand (two companies with
international brands in the brand portfolio)
• Emphasis on quality
iii. Current & Future Strategies
Current and future brand strategies focus especially on brand extensions and finding new
sources of brand equity (new markets and users). All companies currently use a mix of
various brand and marketing strategies such as advertising, promotions, and loyalty programs.
The researcher observed, however, that these marketing programs are not deployed
sufficiently at the brand level. The focus is more on building knowledge of the brand, but the
development of the specific brand equity assets are still insufficient.
47
5.7 Chapter Summary
The key findings of the research are presented in chapter 5. The results first focus on the
awareness of management about the role of the brand. Further, the results of the process of
brand creation and managing the brand are discussed. Brand equity estimates are presented to
give an indication of how strong the brands are perceived by management. Finally, the
strategies used to build and sustain the brand were presented.
48
CHAPTER 6 GAP ANALYSIS AND IMPLEMENTATION
6.1 Gap analysis
The table (V) presented below will focus on the gaps identified between the four steps within
the research model presented in chapter 4.1 and the research results discussed in chapter 5.
Table V: Gap Analysis Steps Key Concepts Current Status
within Surinamese companies
Action points to be implemented
Brand Equity Creation
Brand Identity Brand Positioning
The brand identity is not specified. The focus is more on tangible aspects of brand, product. Brand positioning statement is lacking or focus only on position within the target market
Develop brand identity. Create emotional values to establish attachment to the brand Position or reposition the brand. Define positioning statement.
Building Brand Equity
Implementing Marketing, brand programs and strategies
Marketing programs are being implemented. Specific brand programs are there. In researcher's opinion insufficient
Deploy strategies at brand level based on specific consumer needs
Measuring Brand Equity
Brand measuring tools: Brand audit Brand value chain Brand tracking Brand management system Financial Measure: Brand Valuation
Use of simple brand measurement tools: through sales information and limited consumer research. Insufficient use of brand management tools, responsibilities No financial brand valuation
Conduct exhaustive market research to get specific knowledge on status brand equity assets to be able to improve brand equity Implement a brand equity management policy Introduce appropriate financial brand valuation method
Sustaining Brand Equity
Brand architecture strategies
Brand architecture is not intentionally chosen. More knowledge on management level is needed to define what the appropriate brand
Get insight into brand architecture and structure of brand portfolio to be able to make better strategic brand decisions
49
Brand Revitalization and Brand reinforcement
architecture strategy is or to build on existing architecture strategy to be able to sustain the brands and determine good brand strategies In general, brand revitalization of most brands were successful Brand reinforcement in a developing stage
Adjust if necessary revitalization strategies to maximize brand life time Implement proper mix of brand reinforcement strategies
Other Relevant aspects needed to build and sustain brand equity
Legal Brand protection: Trademark protection Brand Management
Brand protection through local registration and in country of destination Part of sales, marketing manager's responsibilities or no brand manager assigned
Government action needed to become member of international trademark organization and to upgrade current trademark protection law. Companies should not only protect names but logos and other proprietary assets of the brand Upgrade or hire specialized skills and assign responsibilities
Source: Researcher’s Assessment
6.2 Impact of Identified Gaps on Brand Management and Brand Equity
The table illustrates that there is a gap between what is considered necessary to create and
build brand equity in the long-term and the actual situation. According to the analysis, the
steps taken by these companies do not fully comply with the activities, programs and
strategies suggested in the four-step model. In summary, the table reveals the following:
• In general the brands are strong, but the brand is not clearly positioned and the brand
identity is not clearly formulated. As already mentioned in chapter 2.5 the brand identity
consists of associations which represent what the brand stands for and imply a promise to
50
customers from the organization members. Moreover, the positioning statement gives an
indication of the distinctive characteristics against the competitors. Without a clear brand
identity and positioning, strategy formulation can become very ambiguous, therefore,
having a negative impact on the further implementation of brand strategies
• The brand was built by implementing particular marketing strategies, but there is
insufficient focus on building the brand by implementing specific brand strategies, in
other words, the strategies focus more on selling ‘the product’ rather than ‘the brand’.
The implications will be that even though there is currently a high level of brand loyalty
there will be no emotional (or personal) attachment to the brand, therefore, weakening
the basis to elevate the brand and to fulfil personal customer needs
• There are merely simple tools used to measure the brand and little or no responsibilities
assigned to manage the brand. Development of the brand and therefore brand equity
could stagnate since there is neither management nor tracking tool plus necessary
changes in strategies could not be revealed nor could changes be adapted.
• The customer-based brand equity assets are considered high, however, there is no
financial measure attached to the brand, hence, strategic decisions to build these assets
could be made based on ‘feelings’ instead of proven financial measures. In addition, the
brand value as part of the market capitalization indicates that the brand contributes
substantially to the company’s assets. The challenge should be to improve these levels of
brand value, therefore enhancing the shareholders value.
• Decision making on current brand architecture is not structured, however, through
experience management is aware of the benefits of these brand architecture strategies.
Further decision making on whether to optimize brand leverage through for instance
brand extensions because of the already existing brand equity or to introduce new brands
could be injudicious
• Current and future strategies focus on brand extensions and finding new sources of brand
equity. Without knowledge about which brand equity assets should be built or sustained,
decision making on the most suitable strategy could be again misguided. New
opportunities might be overlooked since information is not available.
• As already stated in chapter 3, Surinamese companies, in general, will have a legal
disadvantage over international companies if the local trademark law does not comply
with international trademark standards. The result of this disadvantage is that many
companies will lose this long-term brand equity that has been built over time. The
51
probability of losing their trademark is very high if there is no uniformity with
international standards.
The aforementioned gaps and their implications are generally applicable for all six
companies. Certain aspects within the brand management and brand strategies of a few
companies are better developed than others, so some gaps are not in all cases applicable.
The action points within the table are preliminary guidelines for the recommendations.
52
CHAPTER 7 CONCLUSIONS AND RECOMMENDATIONS
7.1 Introduction
The aim of this study was to find out the role and value of branding within Surinamese
manufacturing companies. Furthermore, the researcher sought to assess the brand creation,
management and building process within these companies. The question raised in this
perspective was how strong local brands were created and long-term brand equity was built
over time. The research results and the gap analysis were presented in chapter 5 and 6. In this
chapter the conclusions and recommendations based on these findings will be presented. Also
implementation strategies and suggestions for further research will be discussed.
7.2 Conclusions
Suriname is an emerging market where brand management is still in its infancy. Before
Suriname’s entrance to the CSME, the business market was characterized by monopolies.
Because of the competition of CARICOM products, the need for differentiating and the need
to improve the levels of marketing and brand activities became increasingly apparent.
Notwithstanding the intensive competition, local companies were able to build strong brand
equity over time. The research results have proven that management is conscious of the high
levels of customer-based brand equity assets (brand awareness, brand loyalty, perceived
quality and brand associations) of the brand in the market. In addition, the brand value as part
of market capitalization shows that the main brand contributes substantially (between 40 and
70%) to the market value of the company.
In general, management is aware of what a brand is and the role of the brand but there is
insufficient awareness that the brand is an intangible asset that can provide long-term value
and a sustainable competitive advantage. For this reason the brand is not fostered and
managed in order to generate maximum brand equity. Often the focus is on short-term
profitability and even though continuity is also considered an objective, this has more to do
with ‘the product’ than with the ‘brand’.
The research further shows that the brand creation process started without studies of the
implications of a brand name and without a good brand positioning statement or brand
53
identity. This may be the main reason why strategies are not well-developed at the brand
level. In addition, lack of knowledge and management experience with brand management
and brand equity policies play an important role. The brand portfolio is managed with simple
tools and brand equity assets are, in general, not measured. Moreover, in certain instances
there are no managers appointed to manage the brand.
Nevertheless, the strong brand equity established by these companies provides a solid base
for further elevation of the brand. Current and future strategies focus especially on brand
extensions and finding new sources of brand equity i.e. new users and new markets.
Therefore, the conditions to sustain this brand equity must be set in order to maximize brand
leverage. A further discussion on the relevant aspects to be successful in this assignment can
be found in the recommendations.
7.3 Recommendations
Before presenting the recommendations, it might be useful to take into consideration the key
aspects that could have led to the establishment of this long-term brand equity within
Surinamese enterprises. Based on the results and background information the researcher
suggests the following reasons:
• First, the closed economy allowed local brands to obtain an established position over
time. There were little or no import products, so consumers were merely aware of other
than local brands and therefore loyal to local brands
• When the CARICOM products came in, there was already a certain level of brand loyalty
gained; hence, giving local brands an advantage over imported brands. Additionally,
these companies generally adapted to the market change through brand reinforcement
and brand revitalization and by improving the product and brand features according to
international standards. Consumers reacted positively to this change and the majority
stayed loyal to the brand.
• Furthermore, the power of old brand names played an important role. Before opening up
to the CARICOM, therefore increasing the availability of international competitive
brands, the local companies were able to establish brand heritage. According to Aaker
(2000), the establishment of a strong name anchored by high recognition creates an
enormous asset. The asset gets stronger over the years as exposure and experience grow.
54
As a result, a challenging brand – even with enormous advertising budget and superior
product or service – finds it difficult to fight its way into the memory of the customer.
• The high quality of these local brands and the high level of perceived quality contributed
to brand preference over time.
• Within the emerging Surinamese market the use of simple marketing activities such
personal and good channel relationship, in-store promotions, dealer incentives and house-
to-house campaigns were adequate to build the brand and ultimately stronger brand
equity. The need for sophisticated marketing tools was not relevant back then,
furthermore, consistent implementation of these strategies enhanced brand equity.
This study disclosed various areas of improvement in the brand-equity building process.
Based on the study findings, the researcher suggests the following recommendations, which
can be implemented in phases as presented in figure 11 on the next page.
One critical condition in sustaining brand equity is to establish a proper legal framework. The
current Surinamese trademark law must be improved and updated. Moreover, Suriname needs
to become a member of an international organization for intellectual property rights for
assistance in trademark protection. This is a responsibility of the Government; however, local
businesses must support or continuously require that this process should be put in place.
55
Figure 11: Phases for improved Long-Term Brand Equity in Surinamese Companies
Phase 1 Establish or improve brand management system within the company by: • Assigning responsibilities for brand
management • Training of responsible managers in specialized
skills • Introduction and improvement of the brand
equity policy within the company
Phase 2 Improve customer- based brand equity • Reposition or define the position strong mature brands
and strategic brands; create brand identity if lacking • Screen the current brand portfolio and decide on the
company’s brand architecture strategy. A useful tool might be the brand product matrix and the brand hierarchy for this assessment.
• Define marketing and brand strategies at each brand
level after positioning and defining the brand identity. Make strategic decision on what the long-term brand strategy should be for the complete brand portfolio
Phase 3 Establish brand equity measurement system • Implement relevant financial brand valuation methods
to measure the level of financial brand equity • Introduce specific brand equity measures (for
example establish an incentive for responsible management) to improve the levels of the customer-based brand equity assets in the market
• Implement a continuous brand measurement system
to track the brand performance (brand audit etc)
Phase 4 Continue Brand Reinforcement and Brand revitalization • Continuous reinforce the brand by implementing
special designed brand strategies and programs • Revitalize mature brands if necessary
Source: Researcher’s Assessment 56
7.4 Constraint Envisioned
The emerging Surinamese market is characterized by underdevelopment in many areas. In
this context this involves less-developed marketing research companies, an underdeveloped
stock market and lack of adequate training programs for specialized skills. In addition,
sophisticated international consumer marketing programs and brand strategies are not yet
applicable in the local market. The legal foundation for intellectual property protection can
also be considered a hurdle if proactive actions are not taken by the government. The above-
mentioned reasons can be impediments in the process of elevating brand equity resulting in a
more disadvantages compared to international companies with strong brands.
7.5 Implementation Strategies
In order to implement the recommendations, bearing the impediments in mind, the following
strategies to improve the brand equity management within local companies can be
considered:
• Companies operating under a franchise could share knowledge with other local
companies. For instance, Fernandes Bottling Company operating under the Coca Cola
franchise is already sharing knowledge with the Surinaamse Brouwerij, which also
operates under the Heineken franchise. These companies have an advantage in that
international companies with strong brands are actively involved in the determination of
marketing and brand strategies, therefore enhancing the brand equity building process.
The knowledge gained can be very useful for managing the self-developed brands within
the brand portfolio.
• Strategic alliances with larger companies on a global level or within the CARICOM to
share knowledge. Companies that are relatively small can start strategic alliances with
international companies. One area of collaboration could be sharing marketing and brand
strategy knowledge while the local company provides local market knowledge.
• Franchising of local brands to other larger companies and sharing experience in the
international market. For example, Coca Cola Netherlands and the Fernandes franchise:
Marketing knowledge and the brand equity building results in the international market
can be shared
57
• International consultancy in collaboration with local brand management. This option has
the advantage that local management is directly involved in the process of defining brand
equity policies and to work on self-developed brand strategies
• Hire specialized skills to set up the framework for brand equity management and policies
and train local management on the job.
A mixed approach of above-mentioned strategies may be useful but this depends primarily on
the branch of the business and available opportunities.
7.6 Directions for further Research
This study can be considered a start off since the concept of brand equity is fairly unknown.
This was experienced when conducting this research as explanation was required in most
cases for this concept. This study could be extended on a total market scale to be able to know
the exact brand equity status for local companies. Brands of services and producers of non-
fast consumer goods could be included. In order to define brand equity policies, strategies and
a brand equity measurement system within the company, the exact levels of the brand equity
assets should be assessed by a consumer survey.
58
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xvi
APPENDICES
APPENDIX A: AAKER’S BRAND EQUITY MODEL
Source: Aaker, 1991
Reduced Marketing Cost Trade Leverage
Brand Loyalty Attracting New Customers - Create Awareness - Reassurance
Provides Value to Customer by Enhancing Customer’s:
Time to Respond to Competitive threats
- Interpretation/
Processing of Information Anchor to which other
Associations Can Be Attached
- Confidence in Purchase Decision
Brand Awareness
Familiarity Linking Signal Of Substance/ Commitment - Use Satisfaction Brand to Be Considered
Other Proprietary Brand Assets
Perceived Quality
Brand Associations
BRAND EQUITY
Provides Value to Firm by Enhancing:
Reason-to-Buy Differentiate/Position
- Efficiency and Effectiveness of Marketing Programs
Price Channel Member Interest Extensions
- Brand Loyalty - Prices/ Margins
Help Process/ Retrieve Information
- Brand Extensions Differentiate/ Position - Trade Leverage
Reason-to-Buy Create Positive Attitude/ Feelings Extensions
Competitive Advantage
- Competitive Advantage
xvii
APPENDIX B: KELLER’S BRAND EQUITY MODEL
Source: BBDO, Brand Equity Excellence, Volume 1: Brand Equity Review, 2001
Brand Knowledge
Brand Image Brand Awareness
Uniqueness of
Associations
Strength Advantage Types Brand Recall
Brand Recognition of
Associations of
Associations of
Associations
APPENDIX C: KAPFERER: FROM AWARENESS TO FINANCIAL BRAND EQUITY (VALUE)
Brand assets Brand strength Brand value
Brand awareness Market share Net discounted cashflow attributable to the brand after
paying the cost of capital invested to produce and run the
business and the cost of marketing
Brand reputation (attributes, benefits,
competence, know-how, etc.)
Market leadership
Brand personality Market penetration
Brand deep values Share of requirements
Brand imagery Growth rate
Brand preference or attachment Loyalty rate
Patents and rights Price Premium
Source: Kapferer, 2004
The table illustrates the value creation process of the brand through time:
• The brand assets are the sources of influence of the brand. The brand assets are the
mental associations and affects (starts from customers’ point of view).
• The brand strength reflects the ‘brand equity outcomes’ as a result of these assets at a
specific point in time in a specific market
The brand value is the ability of the brand to generate profit and is a projection in the
future
xviii
APPENDIX D: INTERBRAND’S BRAND STRENGTH FACTORS
Factor of valuation Maximum score (%)
Description
Market 10 Brands in markets where consumer preferences are more enduring score
higher
Stability 15 Long-established brands in any market would score higher because the
depth of loyalty they command
Leadership 25 A market leader is more valuable
Profit Trend 10 The long-term profit of the brand is an important measure of it’s ability to
remain contemporary and relevant to consumers
Support 10 Brands that receive consistent investment and focused support usually have
a much stronger franchise. The quality of this support is equally important
Geographical spread 25 Brands that have proven international acceptance and appeal are inherently
stronger than regional or national brands. They are less susceptible to
competitive attack and are therefore more stable assets
Protection 5 Suring full protection for the brand under international trademark and
copyright law
Brand Strength 100
Source: www.buildingbrands.com
xix
APPENDIX E: MARKETING COMMUNICATION OPTIONS
Media Advertising TV
Radio
Newspaper
Magazine
Trade Promotions Trade deals and buying allowances
Point-of-purchase display allowances
Push money
Contests and dealer incentives
Training Programs
Trade Shows
Cooperative advertising
Direct Response Advertising Mail
Telephone
Broadcast Media
Print Media
Computer-related
Media-related
Consumer Promotions Samples
Coupons
Premiums
Refunds and rebates
Contests and sweepstakes
Bonus packs
Price-offs
Online advertising Web sites
Interactive ads
Event Marketing and Sponsorship Sports
Arts
Entertainment
Fairs and festivals
Cause-related
Place Advertising Billboards and Posters
Movies, airlines and lounges
Product placement
Point of purchase
Publicity and Public relations
Point-of-purchase Advertising Shelf talkers
Aisle Markers
Shopping cart ads
In-store radio or TV
Personal Selling
Source: Keller, 2004
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APPENDIX F: TOP 10 GLOBAL BRANDS, VALUATED BY INTERBRAND
# Rank 2003/2004
Brand 2004
Brand value $ Millions
2003 Brand Value
$ Millions
Percent Change
1 Coca Cola 67,394 70,453 -4%
2 Microsoft 61,372 65,174 -6%
3 IBM 53,791 51,767 4%
4 GE 44,111 42,340 4%
5 Intel 33,499 31,112 8%
6 Disney 27,113 28,036 -3%
7 McDonald’s 25,001 24,699 1%
8 Nokia 24,041 29,440 -18%
9 Toyota 22,673 20,784 9%
10 Marlboro 22,128 22,183 0%
Source: Business Week, August 9-16 2004
APPENDIX G: PRODUCT-BRAND MATRIX
Brands
A
B
M
1 2 N..............................Products
Source: Keller, 2004
xxi
APPENDIX H: EXAMPLE BRAND HIERARCHY COLGATE
Source: Aaker, 2000
Colgate
Colgate Colgate Colgate Dental Floss
Colgate Mouth Rinse
Colgate Fluoride Tablets
Toothpaste Toothbrush
Plus Precision Classic Youth Color
Diamond ‘The Wild Ones’
APPENDIX I: HOUSE OF BRANDS VS. BRANDED HOUSE
‘House of Brands’ ‘Branded House
Architecture Architecture Architecture Architecture Product Brand Endorsing Brand Umbrella Brand Source Brand
Autonomous
Source: Kapferer, 2004
Brands: no link Product Names: Graphic Link
Branded Products: Value Link
Autonomous Brands: weak link
xxii
APPENDIX J: ADVANTAGES AND DISADVANTAGES OF BRAND ARCHITECTURE STRATEGIES
Brand Architecture Strategy
Advantages Disadvantages
Product Brand Strategy • Serve the same market with multiple brands, greater consolidated market share • different names helps customers to better perceive the difference between various brands • product brands allows firms to take risks in new markets , without damaging other brands, company name • shelf space accorded by retailer to a company depends on number of strong brands • drawbacks from product brands are economic
• Increased launch cost. Each product launch is a new brand launch • Return on investment on a product brand can be difficult when the market is saturated • The product brands often don’t benefit from the positive spillover effect created by other products under the same name
Line Brand Strategy • Reinforces the selling power of the brand and creates a stronger brand image • Facilitate distribution for each line extension • It reduces launch cost
• A line has limits, so only include product innovations closely related to the existing one • Inclusion of powerful innovation could slow its development
Range Brand Strategy • Avoids random spread of external communications by focusing on single brand name thereby creating brand capital which can be shared by other products • Development of a unique brand concept • Easy distribution of new products that are consistent with its mission and fall within the same category • Low launch cost
• Problem of brand opacity as the brand expands
Umbrella Strategy • Capitalization on a single brand name because of brand awareness readily available after first product • Economies of scale (eg lower marketing, advertising cost) • Useful when reintroduce a old product (revitalization) • Core brand is nurtured by association with
• The Core of the brand is always stronger than its extensions so don’t overstretch the brand by adding too many different product categories • Negative spill over of one product can affect the other product within the umbrella brand range • Freedom allowed by the
xxiii
products with which it was not previously associated
umbrella strategy sometimes leads to patchwork of the brand. Different divisions responsible for communicating the same brand can lead to too much variation in positioning
Source Brand Strategy • Ability to provide a two-tiered sense of difference and depth. Parent brand offers its significance and identity, modified and enriched by the daughter brand in order to attract specific market segments
• Limit of the source brand lie in its necessity to respect the core, the spirit and identity of the brand. Boundaries in case of brand extensions and product communication.
Endorsing Strategy • Greater freedom of movement than the source brand. Each product name evokes a powerful image and has a power of recall for the consumer • Least expensive way of giving substance to a company name and allowing it to achieve minimal brand status
Source: Kapferer, 2004
xxiv
APPENDIX K: RESEARCH QUESTIONNAIRE
RESEARCH QUESTIONNAIRE
BRAND EQUITY IN SURINAMESE MANUFACTURING COMPANIES Date : Interviewer : Company : Respondent : Job title : Brief description of the company Established in (date): Products on market (top 5): # Product type
Brief description of the business environment: Mission and vision:
xxv
QUESTIONS
1. What is a brand in your perspective? 2. How do you perceive the role (s) of your brand? List 3 in order of importance:
o o o
3. a) Give an overview of your brand portfolio
No. Brand Name Brand age
Target group, market (Local)
Target group, market (export)
b) Briefly describe the positioning of your main brand
xxvi
c) Do you know what your target group expects from the brand? Describe one expectation.
d) Has any research been done to find out what these expectations are?
o Yes o No
4. a) Do you have a long-term (3-5 years) brand plan in place?
o Yes o No (go to Q.4c) b) If yes, what is (are) the long term objective (s) of your brand (s)? List 3 objectives:
o o o
c) If no, how would you define the long term objective (s) of your brand? List 3 objectives:
o o
o
5. a) How does the brand name add value to the mission or vision of the company? (E.g. corporate image)
b) How does the brand add value to a competitive advantage?
xxvii
6. a) Is the brand name supported by an approved quality system? o Yes o No (go to Q.7)
b) If yes, which one?
7. a) What is (are) the most strategic brand(s) in your brand portfolio?
b) Why do you consider it a strategic brand?
8. a) Do you consider your brand (s) a strong brand (s)? o Yes o No (go to Q.9)
b) If yes, why? (Give 2 characteristics)
9. Which of the following would describe how your brand portfolio is managed:
o Responsibility assigned to brand manager, marketing manager o Long term (3-5 year) brand plan, strategy (or incorporated in
marketing plan) o Regular brand audits (review of market segments, brand portfolio,
profitability of the brand) o Brand valuation o Other actions, specify:
o 10. Give a brief overview of the history of one of your main brands
o The choice of the brand name (what does it reflect: a product
characteristic, family name, other)
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o First launch of the brand ( describe the main strategies, actions)
o Which marketing and/or brand strategies were consistently
implemented or what actions were taken to build and elevate the brand? List 3.
o With Suriname joining Caricom in 1996, were there any significant
changes in your brand strategy to be more competitive in this new environment? List 2 major changes:
o What are the key characteristics of your brand-building policies and
strategies over time? List 2. 11. a) Is your brand legally protected?
o Yes o No (go to Q.12)
b) If yes, how?
12. What does brand equity mean to you?
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13. According to Aaker Customer-based brand equity consists of the following assets: o Brand awareness o Brand loyalty o Perceived quality o Brand associations
a) Have you ever measured the levels of these brand equity elements? o Yes o No (go to Q.13c)
b) If yes, how did you measure them? c) In your opinion, give an estimate of the different levels of brand equity elements in the Surinamese market (or companies target group) for your brand
Brand Equity Elements
High/Medium/Low Measure in %
Brand Awareness Brand Loyalty Perceived Quality Brand Associations Not Applicable
Note: high 70% – 100%, medium 40% – 69%, low 0% – 39% 14. a) Are the intangible assets (such as goodwill) capitalized in your balance
sheet? o Yes o No (go to Q.15a)
b) If yes, is there a distinction made between the brand as an intangible asset and other intangible assets in the balance sheet? o Yes o No
15. a) Do you valuate your brand periodically?
o Yes o No b) If yes, which approach do you take to measure the value of your brand?
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If no, which approach would you use?
Method Valuation by historical cost Valuation by replacement cost Valuation by market price Valuation by future earnings (DCF) Valuation by Royalties No measure
c) Explain why you do or why you would choose this method?
16. If not valuated, assume your company would use the market price or future earning stream approach to measure the financial equity of the brand. What would be the value range of your major brand based on these methods? If valuated, just state the value range:
Brand value range in US$ Brand $ 0 - $ 1,000,000 $ 1,000,000 - $ 5,000,000 $ 5,000,000 - $ 10,000,000 $ 10,000,000 - $ 25,000,000 > $ 25,0000,000 Cannot estimate/ Don’t know
17. What is the total value of your company? Give an estimate if you do not know the exact value :
Market Capitalization in US$ $ 0 - $ 10,000,000 $ 10,000,000 - $ 25,000,000 $ 25,000,000 - $ 50,000,000 $ 50,000,000 - $ 100,000,000 > $ 100,0000,000 Cannot Estimate/Don’t know
18. Define the brand value as a percentage of the market capitalization
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19. Why do you think it is necessary to valuate the brand? State 2 purposes for
brand valuation:
20. a) What are the current brand strategies, in terms of brand architecture?
Product – market roles, strategy Brand Product brand strategy
Line brand strategy
Range brand strategy
Umbrella brand strategy
Source brand strategy
Endorsing brand strategy
Mixed approach (define which one)
Don’t know
b) Did you intentionally choose this strategy?
o Yes o No
c) According to you, what are the benefits of this strategy? List 3 benefits. 21. a) What are the current marketing and brand strategies you use or used by
your company to build the brand and brand equity? Describe briefly how they are implemented on each level. o Advertising
o Promotions and sales promotions
o Sponsorship
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o Loyalty programs
o www./
o Innovation, Brand extensions
o Others, specify: o o o
b) Do you measure and/or evaluate the impact of these promotions, programs and strategies? o Yes o No (Go to Q.22) c) How do you measure or evaluate this impact? 22. Are there any future plans or intentions to enhance brand equity? Please
describe.
Thank you, for your cooperation
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Glossary of Terms Brand portfolio: the brand portfolio includes all the brands and sub brands attached to the product-market offerings including the co-brands with other firms Product brand: brand name assigned to one product or one product line Sub-brand: brand connected to a master (parent, umbrella or range) brand that augment or modify the associations of the master brand Strategic brand: a brand that represents a meaningful future level of sales and profits. It may be currently a dominant brand that is projected to maintain or grow its position or a small brand that is projected to become a major one Brand positioning: emphasizing the distinctive characteristics that make it different from its competitors and appealing to the public (ask these questions when positioning a brand: a brand for what, a brand for whom, a brand for when, a brand against whom?) Brand equity: the brand assets or liabilities linked to a brands’ name or symbol that add or subtract from the value provided by a product or service. Brand equity consist of:
• Consumer-based brand equity: brand equity assets that adds or subtracts value for customers
• Financial brand equity: as part of its role in adding value for the customer, brand equity has the potential to add value to the firm by generating marginal cash flows.
Brand awareness: the ability of a potential buyer to recognize or recall that a brand is a member of a certain product category Brand loyalty: a measure of the attachment that a customer has to a brand. Results in re-purchase of the brand, product Perceived Quality: a customer’s perception of the overall quality or superiority of a product or service with respect to its intended purpose, relative to alternatives Brand association: anything ‘linked’ in memory to a brand e.g. McDonald and Ronald Mc Donald Intangible assets: company assets which are not tangible such as goodwill, patents, brand name, customer relations etc. Brand valuation: financial valuation of the brand. Determining the ‘fair value’ of the brand according to international accepted accounting standards
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Valuation methods • Valuation by historical cost: the brand is an asset whose value comes from
investments over a period of time. This approach suggest adding together all the cost associated with a particular period: development cost, marketing cost, advertising and communication cost, etc. This method isolate the direct costs associated with the brand and attributes to it the indirect cost such as sales force and general expenses
• Valuation by replacement cost: Main question in this approach is how much would the brand cost to recreate it? By taking all its characteristics into account (awareness, percentage of trial purchases and repurchases, absolute and relative market share, distribution network, image, leadership, quality of legal disposition and presence in how many countries), how much would we have spend, and over what period, in order to create an equivalent brand
• Valuation by market price: value the brand by comparing with similar brands on the market
• Valuation by future earnings (Discounted cash flow method): valuation of the brand based on expected returns, profits of brand ownership
Market capitalization: Market value of the company Brand architecture: is an organizing structure of the brand portfolio that specifies the brand roles and relationship among brands and different product-market brand contexts Product brand strategy: involves the assignment of a particular name to one and only one product (or product line) as well as one exclusive positioning Line brand strategy: the line responds to the concern of offering one coherent response under a single name by proposing many complementary products Range brand strategy: range brands bestow a single brand name and promote through a single promise a range of products belonging to the same area of competence. Umbrella brand strategy: the same brand supports several products in different markets. Each of them has its own advertising and develops its own communications. Yet, each product is called by its own generic name (e.g. Cannon cameras, Cannon fax machines, Cannon printers) Source brand strategy: this strategy is identical to the umbrella brand except for one key point – the product has its own brand name. They are no longer called by one generic name but each has an own name. This is a two-tier brand structure known as double-branding e.g. Christian Dior (source) and ‘I love Dior’ (own brand) Endorsing brand strategy: the endorser brand gives its approval to a wide diversity of products grouped under product brands, line brands and range brands. E.g. Johnson is a guarantor of their high quality and security
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APPENDIX L: FREQUENCY TABLES RESEARCH QUESTIONNAIRE
Table 1: Q1 - A brand is? Description FrequencyA name of a product 2 name, symbol, icon of a product (group) that differentiates from its competitors
2
name, symbol, icon, visual image that provides value, image and promises to customers and consumers
2
Table 2: Q2 - Role of a brand (in order of importance) Description FrequencyIncome Generator 1 Identification 2 Brand meets customer needs (product + personality)
1
Provides Quality to customers & consumers
1
Missing Value 1 Other roles determined: source of pride, increases recognition and awareness, associates with the company, create trust (risk reducer), ensure repeat sales and sustainable growth, and provides sustainability, continuity, and distinction from the competitor
Table 3: Q3c - Consumer expectations: Description FrequencyGood Quality 1 Good Price-Quality Combination 3 Emotional value 2 Unique, Distinguished taste 2
Table 4: Q3d - Measure consumer expectations: Description Frequency Yes 5 No 1 Comment: most companies measure the expectations and are aware which needs the brand have to fulfil in order to be considered eligible among other brands Table 5: Q4a - Do you have a brand plan Description Frequency Yes 4 No 2
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Table 6: Q4b - Brand objectives, only no. 1 Description FrequencyRemain relevant for the target group (current & new generations)
1
Growth: in sales volume and brand image, increase Market share
2
Market leadership 1 Profit generation 1 Increase brand preference 1 Other objectives: increase brand awareness, build and establish the brand (in export markets), enhance company image, strengthen the brand through brand extensions, line extensions Table 7: Q5a - Added value brand to mission and vision Description FrequencyDesired association with the company (company image)
1
Contributes to profitability, growth and continuity
2
Gives strategic direction 1 Market Leadership 1 Symbol of Quality, brand image complements corporate image, brand loyalty
1
Table 8: Q5b - Added value brand to competitive advantage Description Frequency Strong established brand, brand heritage (gives strong position towards, consumers, customers, other partners)
2
Price- Quality combination, better perceived value
1
Symbol of National Pride, Real Surinamese, exotic
2
Good (positive) Brand image, association 1 Table 9: Q6a - Brand supported by Quality System Description Frequency Yes; 5 No 1 Table 10: Q6b - Which Quality System Description Frequency ISO 9001-2000 3 HACCP 2 TCCQS 1 None 1
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Table 11: Q7a - Strategic brands in product portfolio Description Frequency Yes 6 No 0 Table 12: Q7b - Why consider a strategic brand Description Frequency Contributes substantial to sales 1 Most important asset to generate future revenues
1
Long term goals 1 Strong roots, image and values 1 Market leader 2 Note: also because of its growth potential brands are considered strategic brands. Table 13: Q8a - Is your brand a strong brand? Description Frequency Yes 6 No 0 Table 14: Q8b - Why is it a strong brand? Description Frequency High brand awareness 1 Large market share despite competition of international strong brands
2
High brand recognition 2 Missing value 1 Others: positive brand associations, market leadership, growth potential, unique, high brand preference
Table 15: Q9 - Management of brand portfolio Description Frequency By marketing, brand manager 3 Long term brand plan, short term(1 year) brand plan
4
Brand audit 3 Brand valuation 0 Brand evaluation (management discussions) 1 Table 16: Q10a - Choice of brand name (Brand creation) Description Frequency Public Draw 3 Family name 2 Name of Place 1
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Table 17: Q10b - Strategies @ Brand launch 1. International competition 2. Promotions: In-store, consumer 3. Advertising 4. Intensive Channel distribution 5. House to House campaign 6. Incentive (dealers, sales force) Table 18: Q10c - Consistency of brand strategies over time (No. 1 answers): Description Frequency Quality of the product 1 In-store promotions 1 Consistent media & sponsorships 1 Consumer sampling 1 Product differentiation 1 Don’t know 1 Others: communication of brand core value, personal selling, product innovation Table 19: Q10d - Change in brand strategy because of change in comp. environment Description Frequency Restore quality level 1 Renew the look, according to standards, brand revitalization
2
Product development and Brand extensions 1 No changes at first 2 Other steps: Cost Reduction and modernize the plant Table 20: Q10e - Characteristics of brand building policies (no. 1 answers) Description Frequency Investment in the brand in good and bad times 1 Focus on distinctive (exotic) core values (real Surinamese product, brand) and communicate them
2
Consistency in communication, advertising and promotion
1
Leverage on a international brand to build the local brand
1
Emphasis on quality 1 Other relevant characteristics: Effective distribution, measure brand performance, product differentiation Table 21: Q11a - Legal Brand protection Description Frequency Yes 6 No 0
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Table 22: Q11b - Protected by Description Frequency Local Trademark Registration 1 Trademark Registration in country of export, destination
0
Registration locally and in country of export 5 No registration 0 Table 23: Q12 - What is Brand Equity? Description Frequency New Concept, Don’t Know 1 Value of the brand 5 Note: Most companies know that brand equity has to do with value of the brand. Table 24: Q13a - Have you ever measured consumer-based B.E. elements? Description Frequency Yes 4 No 2 Table 25: Q13b - How did you measure? Description Frequency By Sales 3 By Research 2 No Measure 1 Table 26: Q13c - Status Consumer-based B.E. elements? Brand awareness Description Frequency High 3 Medium 2 Low 1 Table 27: Q13c- Status Customer-based B.E. elements? Brand Loyalty Description Frequency High 4 Medium 1 Low 1 Table 28: Q13c- Status Customer-based B.E. elements? Perceived Quality Description Frequency High 5 Medium 1 Low 0
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Table 29: Q13c – Status Customer-based B.E. elements? Brand Associations Description Frequency High 3 Medium 1 Low 1 Missing value 1 Table 30: Q13c - Range percentage per Customer-based B.E element? Brand Awareness % RANGE # 0 – 39 % 0 40 – 69 % 0 70 – 100% 6
Table 31: Q13c - Range percentage per Customer-based B.E element? Brand Loyalty % RANGE # 0 – 39 % 1 40 – 69 % 1 70 – 100% 4 Table 32: Q13c - Range percentage per Customer-based B.E element? Perceived Quality % RANGE # 0 – 39 % 0 40 – 69 % 1 70 – 100% 5 Table 33: Q14a - Intangible asset valuated on balance sheet Description FrequencyYes 0 No 6 Table 34: Q14b - Is brand valuated on balance sheet Description Frequency Yes 0 No 6 Table 35: Q15a - Periodic brand valuation? Description Frequency Yes 1 No 5
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Table 36: Q15b - If brand is valuated, what Brand valuation method is used? Description Frequency Historical Cost 0 Replacement Cost 1 Market Price 3 DCF 4 Royalties 0 No Measure 0 Note: 3 companies choose a mixed approach i.e. the DCF and market price method Table 37: Q15c - Why choose for this method? Description Frequency Reflects potential, future earnings of the brand (based on current investment)
3
Comparison with competition 1 Financial quantifiable and easily calculated 1 Missing value 1 Comment: according to one company brand equity is an interesting concept, but of little value in daily practice Table 38: Q18 - Brand Value as % of Market Capitalization (main brand) % Range Frequency 60-70% 2 40% 3 Don’t know 1 Table 39: Q19 - Purpose of Brand Valuation Description Frequency In case of merging and acquisition 1 strategic decision making to invest in the brand 2 brand is valuable asset, part of market capitalization
2
Not necessary but interesting concept because limited value in daily practice
1
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Table 40: Q20a - Brand Architecture Strategies Description Frequency Product Brand 2 Line Brand 3 Range Brand 1 Umbrella Brand 2 Source Brand 0 Endorsing Brand 2 Note table Q20a.: in general, more sophisticated, two-tier brand architecture strategies are not used. Even though mentioned by two companies, in researcher’s perspective the endorsing brand strategy is not really prominent and not promoted. Table 41: Q20b - Intentionally choose for brand architecture strategy Description Frequency Yes 4 No 3 Note: one company indicated that in the first years brand architecture strategies were not chosen with future brand equity perspective. In a later stadium brands were chosen with better perspective since there was already knowledge of brand awareness. Table 42: Q20c - Benefits of Strategy Description Frequency Leveraging on existing brand equity (own brand and brand equity of international brand)
2
Reduction of marketing cost 1 High level of brand awareness and brand recognition
2
Stands alone in specific market, less risk to damage to other brands (product brand)
1
Table 43: Q21b - Do you measure the impact of strategies? Description Frequency Yes 6 No 0 Table 44: Q21c - How do you measure impact of the strategies? Description Frequency By Sales 2 By Research 0 Management report 1 Sales & Research 2 Management report & Research 1
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Table 45: Q21a - Current Marketing and Brand strategies: 1. Advertising 2. Promotions 3. Promotions 4. Sponsorships 5. Loyalty Programs 6. Brand extension Table 46: Q22 - Future brand building plans, strategies: 1. Brand extensions 2. Innovation 3. New markets 4. Promotions 5. Loyalty schemes 6. Continue to invest in the brand
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