Page 235 - Design for Six Sigma for Service (Six SIGMA Operational Methods)

204 Chapter Eight

(Keller 1993). The first reason was an accounting one, and it was to better
estimate the value of brands more precisely for the balance sheet especially
in cases of mergers, acquisitions, and divestitures. The second reason was a
strategy-based motivation to improve marketing productivity (Keller 1993).

Brand equity provides a mechanism for capturing the marketing effects
uniquely attributable to the brand (Keller 1993). Aaker’s brand equity model
(Aaker 1991, p. 269) is one of the best-known models of brand equity. It is
a tool for understanding the linkage between the brand and the value it
provides the firm and its customers beyond what is inherent in the functional
attributes of the products and services. The brand equity model defines five
dimensions of value that the brand provides the firm: brand loyalty, name
awareness, perceived quality, brand associations, and other proprietary
brand assets (Fig. 8.6). Each of these dimensions is important in influencing
customers’ purchasing decisions, and thus, is a contributor toward the
viability of the enterprise. The strategic role of each of these brand equity
dimensions will be described in more detail.

Brand Loyalty
In a competitive environment the ability of a company to retain its existing
customers is of key importance. Brand loyalty is a key factor influencing the
repeat-buying behavior of customers (Keller 1993), and it reduces vulner-
ability to competitive actions in the marketplace. Secondly, it reduces the
cost of doing business for a company because it is more expensive for a
business to try to acquire new customers than to retain existing ones,
especially when the existing ones are satisfied with the brand (Aaker 1991).
Thirdly, brand loyalty can be powerful leverage for negotiating more
favorable terms in the distribution channels (Aaker 1991).

Name Awareness
Brand-name awareness relates to the likelihood that a brand name will come
to mind and the ease with which it does so. Brand-name awareness consists
of two dimensions: brand recall and brand recognition. Brand recognition
reflects a familiarity gained from past experience with the brand (Aaker
1996). Studies have shown that people often buy a brand because they are
familiar with it (Aaker 1991). Brand recall refers to how strongly the brand
comes to mind when the consumer thinks about that product category or the
needs fulfilled by that product category (Keller 1993). Brand-name
awareness plays an important role in consumer decision making because it
allows the brand to be included in the consideration set, which is a pre-
requisite for its eventual choice.