Brand Equity – Financial-Based vs. Customer-Based
The documents of requirement will be uploaded.
Aim:
The aim of this assessment task is to develop your critical thinking skills and to use these to
expand your learning of an important topic in contemporary marketing. You are required to write a critical essay on a set topic provided, demonstrating an informed view and persuasive discussion of branding theory.
Topic:
The topic for discussion this semester is brand equity. Specifically, students will respond to the question:
Is financial based brand equity or customer based brand equity more important to ongoing firm success? Why
Your essay is expected to:
- provide an overview of brand equity and its importance
- examine the strategic importance/limitations of the FBBE and CBBE approaches
- identify and justify your position on which approach to brand equity is more important to ongoing firm success, with an explanation as to why.
All discussions will be informed by evidence drawn from branding theory. This should be from quality scholarly sources, as discussed in our course library guide. There is no set number of references required, rather we will be looking for expert and highly accurate discussion of the theory and consideration of a wide range of quality sources, as well as convincing and persuasive communication of the topic.
To provide learners with a structured approach to this task, a template is provided. You do not need to add a cover sheet. Additional subheadings may be added. All students should consult the marking criteria to see how this will be assessed. The essay should follow the template provided and be a maximum of 2,000 words, excluding reference list (everything else including tables, figures, heading, captions, etc are included in the word count). There are no appendices for this task, so all content must fit into the word limit.
APA 6th or 7th Referencing is required (use the Library style guide).
Stylistic Flair:
The nature of the task is informed, formal business writing. However, to begin your essay, you might like to use a…
- Quote:
Choose a quote to include at the start of the essay to entice the reader. Be brief and selective – all quotes counts toward your word count. It could be a quote from a business leader, a marketing academic, a piece of information from a textbook, journal article, or some other source that you have read, that introduces your essay. Reference it.
- Rhetorical Question:
Ask the reader a rhetorical question. A rhetorical question is a question that the reader obviously doesn’t need to answer directly to you, but is designed to get them thinking…
- Anecdote:
Write a real-world anecdote to start the essay and get your reader thinking. It could be based on your personal experience with a brand, either as a customer or through your work experience. Remember, brands are everywhere. Even if you do not have a formal job, you are studying at UQ – that is a brand!
- Scenario:
Write a brief scenario, or pose an example of where either Position A or Position B of the essay is relevant.
- Statistic:
Include a statistic, to reinforce or contradict a point (contradicting a point that your essay seems to make, can be interesting – if you resolve it, or explain conditions where it is relevant.
Don’t do all of these things – usually, choosing one works best
What is a Critical Essay?
Critical, in the context of a critical essay, does not necessarily mean being negative.
It can be both positive and negative, positive only, negative only, and somewhere in between, or relatively neutral.
All discussions should be informed by theory, not personal opinion. This means:
- Provide a thesis statement at the start of your essay in the introduction paragraph. Your thesis statement is your argument.
- Because this essay question poses two alternatives, you could think of your essay argument a bit like a written debate that is informed by evidence and justified with explanation and references.
- Your argument is your informed position in response to the essay question. There are a number of directions your argument could take, here are a few ideas:
Crafting a Thesis Statement:
Writing an essay is not like writing a mystery novel. Write a thesis statement to introduce your essay and claim your position in response to the essay question. You will need to provide definitions of the terms in the essay question (with references, in the introduction) to let the reader know your position. These definitions can follow the thesis statement. A single sentence or two will suffice for the length of the thesis statement. These are usually the first one or two sentences of your introduction.
- Position A is chosen because…
- Position B is chosen because …
- Neither position A or B are chosen because….
- Both position A or B are chosen because…
- Position A and/or Position B only apply in certain brand conditions…[explain]
- Position A and/or Position B
Then include definitions of key terms from the essay question.
- In this essay, brand equity is defined as xxx (reference/s) and financial based equity is xxx (reference/s). Firm success is defined as xxx and to be considered as ongoing success, this essay argues it requires [insert characteristics for ongoing success].
Why do we need references?
Use references in the body of your essay to justify the points you make. Justifying the points you make means including both your explanation and a reference to back it up, usually using the word ‘because’. The words ‘since’, ‘hence’, ‘due to’ are also good choices to vary the wording. Giving credit to ideas that are not your own (with references) is crucial in all areas of life – not just university assignments. In academia (which is the research and studying at UQ that you are part of) not doing so is plagiarism[1].
References are also important to:
- Provide a reference list at the end of the essay under a heading called References
- Only include references in the reference list that you refer to in the body of the essay
- Provide a balanced discussion to demonstrate that you have considered both positions
- Increase credibility of your argument by referring to a range of references
How do I use references well?
Don’t be tempted to ‘write’ without having read research. Don’t sprinkle a few references through the essay after you have written it – this is not good practice. You will need to edit your writing multiple times, which could include selecting more references for your writing and removing others that don’t fit your writing as your essay evolves.
Your readers will see through references that are forced into the essay just because it is a ‘good reference that is well-cited’.
How you use the reference matters. Typically, you might write a justification with a reference like this:
- A is argued because [insert reason/s xxx] (Insert reference)
Or, you could paraphrase a reference as something you agree or disagree with
- Consistent with (insert reference you agree with), Position A is argued because [insert reason/s xxx]
- In contrast to some commentary/research on this [insert topic], Position A is taken in this essay because [insert reason/s xxx].
To show that you have done some analysis of the references you have read, you might group references that have similar aspects with other references, so you can refer to a few different references in the one set of brackets.
This technique could be used effectively where authors of different sources are saying the same thing, and based on your reading, seem to agree with each other, or where some author/s or reference/s do agree, but others have some aspects that they don’t seem to agree upon.
- Essay A argues that Position A is most relevant because [insert reason/s xxx] (insert reference to source A, source B and source C)
Or, maybe the literature is undecided, some authors think one thing, some authors think another. Why is that? Explain what you have found to the reader.
- Although some evidence suggests that Position A is preferred (insert references for contrasting position), the position adopted in this essay aligns with Position B, because [insert reason/s xxxx]
This is not the only way to write your paragraphs. These are just some ideas to get started.
Body:
The body of your essay will consist of several paragraphs that explain your argument/Thesis statement. This means:
- Use a paragraph structure to unpack each element of the argument from the introduction of your essay. Provide examples, references, quotes to justify your argument, in each paragraph. This is what makes your essay an informed, balanced argument, and not an opinion piece.
- If useful, use sub-headings within the body of your essay. You don’t have to.
- Don’t include a heading for the body of the essay called ‘body’. Better to leave it blank without a heading for this. The paragraphs in between the first paragraph (introduction) and last paragraph (conclusion) will be assumed by the reader to be the body.
- All good paragraphs have a structure. A good structure is usually in three parts, with a beginning, middle and end.
- A beginning (this is the topic sentence, or what the paragraph is about – unpacking one aspect of your argument in response to the essay question),
- A middle (explanation of the topic sentence with references and justification) and
- An end (summary of what the paragraph was about with a linking sentence to the next paragraph)
Conclusion
A conclusion summarises the position of your essay. It reminds the reader of the thesis statement provided in the introduction, and in doing so, connects your writing as a whole.
No new information should be included in the conclusion.
Generally, references don’t have to be included in the conclusion, unless you are referring to a point that is not your own, an idea or statistic or piece of information, or name of a theory, or other information that would require a reference.
If you included a stylistic writing device at the start of the essay, you could connect back to this for the reader – perhaps answering the question if you posed one or asking another question to leave the reader thinking (but not wondering what your essay is about – they should definitely know what your position is!
Brand Equity – Financial-Based vs. Customer-Based
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Brand Equity – Financial-Based vs. Customer-Based
Introduction
Today, brands like Huawei offer more functionality in a smartphone than Apple iPhone. However, iPhone is three times more in price than Huawei and other leading brands in the consumer electronics industry. What makes customers pay more to the iPhone for limited functionalities than Huawei, Oppo, and other smartphone brands? The answer is brand equity, which allows brands to expand the perceived value of a product or service while increasing the profit margins (Wahyudi & Parahiyanti, 2021). This paper aims to examine the strategic concept of brand equity. The paper will also examine the difference between financial-based brand equity (FBBE) and customer-based brand equity (CBBE) through critical examination, strategic importance, and implications. Arguably, brand equity is necessary for progressive brands to secure competitive positioning in consumer marketplaces while operating in a global business environment. In my personal opinion, CBBE is more important for companies than FBBE. CBBE creates vibes and aura in brand personality to create FBBE subsequently in the brand equity lifecycle.
Brand Equity – Overview
Brand equity refers to the value premium that a company generates during the commercial selling of a product or service. Companies create brand equity by differentiating with quality, memory, and recognition. Companies create brand equity in the modern epoch to spread brand awareness, increase perceived value, and earn customer brand loyalty, particularly during saturations. Brand equity undergoes a systematic process creation to generate premium value for companies (Zia et al., 2021). First, brands would spread awareness for a product or service. In most instances, customers prefer purchasing products or services from trusted brands. Trust is built through continuous awareness, promotional tactics, and word of mouth (WOM) created by a brand throughout an operational period (Zia et al., 2021). Brand awareness is a primary mediating component for companies to create brand equity.
Perceived value is the second most valuable component for companies while creating brand equity. According to Ganassali and Matysiewicz (2020), companies would embed status, luxury, and personalization to increase the perceived value of a product or service. Companies position a product or service distinctively to attract customers and trigger an impulsive need during the purchase decision process. In some scenarios, companies would engage customers through emotional advertisements, connecting with the heritage and brand values to strengthen product positioning and perceived value (Ganassali & Matysiewicz, 2020). Hence, perceived value strengthens brand equity by strengthening brand awareness of a product or service.
Lastly, companies use brand awareness and perceived value to create brand loyalty among the target markets. Customers would make specific purchases from a particular brand based on trusted relationships and knowledge created by companies in the initial phases (Polat & Cetinsoz, 2021). The purchase decision would remain repetitive, and customers would resist making brand switches regardless of the propositions competitors would make in the marketplace. The continuous reflection of brand loyalty indicates that companies create substantial brand equity for a product or service (Polat & Cetinsoz, 2021). Brand equity combines awareness, perceived value, and loyalty, allowing companies to earn premium value and higher market returns in a fiscal period. Companies must maintain strategic interconnection between the three mediating components to sustain brand equity in the long run.
Financial-Based Brand Equity (FBBE)
FBBE is a brand’s monetary value that anticipates the current market position and prospects for upcoming fiscal periods. FBBE represents the quantitative value of a brand, calculated from different aspects. According to Huang and Liu (2021), market share is the primary component to measure the FBBE for a company since products have different market segments, including customers and competitors with different preferences and propositions. Brands with higher FBBE would lead the marketplace with the most market share within a fiscal period. The market share represents the frequency of inventory turnover, revenue scalability, and premium returns a company earns while operating in a specific market segment (Huang & Liu, 2021). Market share is the first primary metric to determine FBBE for a company in real-time calculation.
On the contrary, Tasci (2020) argued that FBBE is the ultimate destination for brands operating in a marketplace. A brand would spend resources, monetary and non-monetary, to spread awareness, strengthen perceived value, and earn loyalty to increase market returns through sales. Tasci (2020) indicated that brands would introduce product or service categorization to segregate customer needs and preferences. In this context, FBBE is calculated by collecting the market returns generated by each category within a fiscal period. FBBE would appear high once the products or services perform effectively in the Boston Matrix grids, regardless of the macro environment influencers (Tasci, 2020). Product categorization indicates that brands have the notable financial strength to scale operations in the marketplace through strategic decisions.
Lastly, FBBE generates goodwill for the brand name in the prospects of upcoming fiscal periods. Brands like Amazon and Coca-Cola (Coke) have substantial goodwill, an intangible asset. Goodwill is based on the overall brand value and market capitalization calculated for a company in a fiscal period (Huang & Liu, 2021). The brands would receive significant value for the brand name and value during disposition. FBBE through goodwill is quantitative security for brands. During expansions, brands earn debt financing, and equity financing options earn on their goodwill (Huang & Liu, 2021). Components like goodwill, market share, and product categorizations represent FBBE for a brand.
According to Das (2020), the strategic limitation of FBBE is the longitudinal engagement of companies to reach success. Companies require continuous investments and commitment to building FBBE, which do not guarantee anticipated value in the long run. However, companies sacrifice other prospects while building FBBE, which is dependent on CBBE activities. Hence, the long-term value of continuous capital injection could disturb the cash flows of businesses while gaining a competitive advantage in the marketplace.
Customer-Based Brand Equity (CBBE)
Professor Kevin Lane Keller proposed a pyramid model in the late 90s for understanding and measuring CBBE. According to Keller’s model, CBBE is a qualitative process to build brand equity in a marketplace. Companies would move upwards on the pyramid for creating the CBBE of...