Brand equity can be defined as the added value awarded on products and services. It may be reflected in the way consumers think, feel, and act with respect to the brand, as well as in the prices, market share, and profitability the brand commands (Kotler & Keller, 2009). Additionally, Brand equity is an intangible asset built up by a company overtime by building awareness, having a well-known name or a clear identity, consistent communications, marketing to the consumer, acting socially responsible, and spending on advertising and promoting the brand.
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Procter & Gamble (P&G) has been known to be one of the most skillful marketers of consumer packaged goods and also the company holds one of the most powerful groups of trusted brands. Developing brand equity is vital as it allows companies to more effectively engage with their customer base in such a way that drives brand loyalty, allowing the business to grow further. P&G energies brand loyalty due to its numerous capabilities and philosophies.
Some of the capabilities are huge market research and intelligence gathering, active product innovation, brand management system and also quality strategy in which the company designs and improve products of high quality in ways that matter to consumers. Therefore, developing brand equity is important because the products associated with the brand command a premium price in the market and is perceived to be higher quality when compared to the similar generic unbranded products.
Brand equity also offers competitive advantages by reducing the marketing costs to companies that enjoy high “Brand Equity” such as P&G as a result of high brand awareness and loyalty and thus enhances their earnings. 2. What are the key factors when considering a brand strategy? A branding strategy categorizes which brand elements a company chooses to apply across the various products it sells (Kotler & Keller, 2009). Firstly, market size can be considered as a factor when considering a brand strategy.
When the market size for the product is large or small, the company can choose to use product branding strategy or existing brand respectively. Another factor
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can be innovativeness and technology; entirely new product category or a major technology breakthrough presents special problems in branding. The company has to make sure that the success of the product brings recognition to the company. P&G is an active product innovator, devotes about $2 billion every year to R&D and part of its innovation process is to develop brands that offer new consumer benefits. Competitive situations could be another factor.
When the competition is fierce, there is a huge need to highly differentiate the product offering. This requires communicating specific consumer benefit and the brand’s personality dimensions. Furthermore, marketing costs is another factor to consider. P&G’s purpose for internationalizing the brands is economies of scale and scope. What is successful in one country is simply brought to another. Each single brand does not necessarily exist in all markets. For instance, the cost advantage with P&G’s type of branding strategy, which is product branding, is as mentioned previously economies of scale and scope.See More on Brand