The main goal of strategic branding or strategic brand management for companies is to create and increase brand equity - a set of consumer perceptions, associations, and behaviors towards a product that provides competitive advantages, ensures demand, and guarantees significantly higher profits than non-branded products.

First of all, to understand the importance of the concept of brand equity, let us define the competitive advantages it offers:

  • Increased price-cost margin compared to competitors,
  • Reduced vulnerability to marketing activities of competition,
  • Reduced vulnerability to reputational crises,
  • Stable demand even when prices are increased,
  • Significant increase in demand when prices are decreased,
  • More favorable cooperation terms with dealers and partners,
  • Increased effectiveness of marketing campaigns,
  • Possibility of licensing and franchising,
  • Consumers as brand ambassadors.

Indeed, considering these advantages, every company dreams of achieving the maximum possible brand equity and obtaining the maximum profit from its product. To achieve this, it is necessary to understand what brand equity is, how it is formed, what structure it has, and what stages of creating and increasing brand equity must be passed to achieve the necessary result.

Therefore, in essence, brand equity is a set of consumers' perceptions of the product, that is, what exists in the consumers' minds. A company may have a great product with innovative and useful functionality, but if the consumers have no knowledge of it, success is not guaranteed. The perception of the product and its acceptance by the consumers is formed in the process of gradually acquiring knowledge about the product from various sources.

Then, marketers are faced with the task of understanding how consumers acquire and assimilate knowledge, for which the concept of brand equity uses particular elements of the associative network memory model, according to which memory consists of a certain number of interconnected memory cells. Each cell stores certain verbal, visual, or contextual information. Activation of one cell leads to the activation of the entire chain of cells, as a result of which a person recalls certain information in connection with another.

Consumer knowledge of the brand is structurally composed of two elements:

1) Brand awareness
is the ability of consumers to recognize the visual elements of the brand or the product itself when they see it (brand recognition), and the ability of consumers to recall the brand in certain situations of need, purchase, or consumption (brand recall). In the case of brand recognition, associative chains such as "Logo/slogan/melody -> Brand name -> Product category -> Need - .........." are activated in consumers' minds. In the case of brand recall, associative chains such as "Need/situation -> Possible categories of products -> Possible brand options -> Most relevant brand - ........." are activated.

2) Brand image is the set of associations in the memory that shapes his or her attitude toward the brand, in a positive or negative way, as a result of the gradual acquirement of information about the brand from all possible sources, such as personal experience, opinion leaders, recommendations of friends, media, advertising, and other marketing activities. In the case of image associations, it is better to use the concept of a set rather than a chain, as it is usually difficult to establish a logical progressive connection between them. For example, "Brand A: industry leader, innovative, reliable, environment friendly, stylish, comfortable, but the owner is too impulsive, prone to conflicts in the social media, increasingly makes questionable management decisions." Image associations are divided into three categories:

  • Points of parity are positive associations that are typical for most brands within a category and are considered by the majority of consumers as necessary attributes of the product,
  • Points of differentiation are positive associations that are unique to a particular product and are considered an advantage over competing brands from the perspective of most consumers or certain target audiences,
  • Points of negativity are associations that hinder the purchase of a brand or reduce the loyalty of certain target audiences.

Thus, knowledge about a brand consists of two extremely important elements - awareness and image. It is important to understand that companies' marketing mixes are constantly focused on both. Increasing awareness can be considered a somewhat quantitative indicator of the success of brand promotion, as the task for marketing is to increase coverage - more potential consumers should recognize the brand by its visual and other elements, more life situations should evoke the recall of the brand by consumers themselves. On the other hand, improving image associations can be considered a qualitative indicator of success - the task of marketing is to create in consumers strong and persistent points of parity and differentiation, as well as reduce the influence of negative associations.


Having defined the essence and structure of brand equity, let us consider the process of forming equity from the standpoint of strategic brand management and marketing. The formation of brand equity can be divided into 4 stages, but it should be understood that in practice the boundaries between stages are rather blurred, the process is constantly being adjusted, adjustments are made to the actions of competitors, changes in target audiences, and the development of markets in general. For truly successful brands there is no final point in this process.

Consequently, the stages of creating a brand equity consist of:

1) Brand identity development. In the first stage, all verbal and visual elements are created for further positioning, namely logo, slogan, brand book, values, mission, history, and brand DNA. Marketers implement marketing programs to link brand elements with the necessary product category, that is, to create an initial association between the brand, the product category, and the consumer's need. Marketing activities gradually intensify to continuously increase consumer awareness of the brand by creating the maximum number of associations between the brand and situations of consumption and use of the product. As a result of the first stage, consumers should know about the existence of the brand, recognize its elements, and recall it in different situations. However, consumers still do not have a complete picture or formed opinion regarding the brand attributes and advantages.

2) Brand meaning development. At this stage, the task of the marketing mix is to create points of parity and points of differentiation. That is, it is necessary to create such associations that would eliminate the advantages of competitors and outline their unique advantages. It is essential to understand that advantages can be based on both the physical properties of the product (functionality) and rely on consumers' emotional needs (imagery). Successful companies always combine functional and emotional aspects of the product, trying to create a holistic perception of the brand by consumers by creating relevant associations. As a result of the second stage, the marketing team has developed and implemented marketing programs aimed at creating a certain set of consumer associations. However, as practice shows, it is quite challenging to achieve the goal and develop strong, positive, and unique associations from the first launch of marketing activities in a short period of time. In fact, at this stage the consumers receive a large amount of information for a brand meaning, but do not yet form an opinion or perception of the brand.

3) Brand perception development. The third stage involves evaluating the success of the previous two stages and adjusting the obtained results. In practice, marketers are interested in two aspects - what opinion consumers have formed regarding the functional properties of the brand (judgements), and what impressions the brand creates in terms of emotions (feelings). As for consumers' opinions about the functionality of the brand, marketers are interested in four parameters that characterize whether the current marketing mix has been able to convey information to the target audience: the overall quality of the brand, trust in the brand, being in the purchase consideration set, and advantages over competition. Regarding consumers' emotions, six emotional states that brands can evoke are generally evaluated: a calming effect, mood improvement, excitement, safety, social approval, and selfrespect. In practice, implementing the third stage involves conducting quantitative marketing research to measure the degree of penetration of necessary opinions and impressions in the target audience. After obtaining the results, marketing activities are adjusted to strengthen those opinions and impressions that have not reached the required level.

4) Brand relationships development. The final stage of creating brand equity is transforming consumers with a positive perception of the brand into those who demonstrate active and intense loyalty and are active brand supporters. The simplest form of brand loyalty is the frequency of repeat purchases, but marketers aim for more than that. Much more valuable is transforming consumers into ambassadors and advocates of the brand, creating psychological loyalty, high interest in news and events related to the brand, shared interests, and so on. The marketing mix includes creating the necessary communities and events where consumer loyalty is constantly sustained and motivated.

To sum up, we have determined that the brand equity is the perception and understanding of the brand by consumers, which gradually forms as they acquire knowledge about the product. Knowledge about the brand is structurally composed of brand awareness and image. Based on this, for successful brand equity development, strategic brand management proposes a gradual four-stage formula for building the marketing mix, from creating consumer awareness of the brand and initial brand positioning to transforming consumers into brand ambassadors and advocates with active and intense loyalty.

Achieving the commercial objectives of a company through effective marketing requires a deep understanding of the market situation, consumer needs, the ability to analyze and explore alternatives, and a creative approach to problem-solving. Our company has extensive experience in defining optimal marketing strategies for our clients' businesses, creating a strong brand and market positioning, as well as developing a marketing mix and implementing the chosen strategy. You can familiarize yourself with the services and solutions our company offers on the "Services" and "Solutions" pages, respectively.
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