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This figure shows five elements Brand Awareness, Perceived Quality, Proprietary Brand Assets, Brand Loyalty and Brand Associations arranged in a loop around a central element labelled Brand Equity name and symbol. The central element is linked to the surrounding elements by lines.

Starting with the top element and going in a clockwise direction, the following text is revealed.

Brand Awareness

Brand awareness relates to the level of consumer awareness regarding the existence of a particular brand. When consumers think about soft drinks which brands do they recall? Coca-Cola and Pepsi have strong brand awareness in this market.

Perceived quality

Quality level is an association that consumers attach to a brand. When the market perceives a brand as being high quality, organisations avoid competing on the basis of price and may adopt premium pricing strategies. For example, Rolls Royce is highly regarded for its quality and reliability.

Proprietary brand assets

Proprietary brand assets, which are normally legally protected, include patents, channel relationships and trademarks that are attached to the brand. In high technology products, brand innovation may lie in protecting product/technology patents and licensing. For example, there have been legal issues between Apple and Samsung regarding aspects related to their brands.

Apple contends Samsung’s Galaxi Tab 10.1 is too similar in terms of design to its iPad and Samsung considers Apple infringed its 3G patents. Both companies have made legal complaints in various countries including Australia, Germany and The Netherlands.

Proprietary assets also include aspects such as brand symbols (e.g. logo) and the brand name. PepsiCo, Inc. has clear guidelines for the use of trademarks, names, titles, logos, images, designs, copyrights and other proprietary materials. All these objects are copyrighted and can only be used for commercial purposes with the company’s agreement.

Brand loyalty

Brand loyalty refers to consumers who repeatedly buy the same brand. Having loyal customers enhances brand visibility and allows organisations to save resources in attracting new customers.

It further pressurises retailers to make these brands available to customers. For example, online retailer Amazon has a loyalty programme (Amazon Prime) offering benefits to customers who join as a way of building customer loyalty.

Brand associations

Marketers try to attach positive and strong associations to the brand such as lifestyle and personality. For example, the Ritz Hotel in London is associated with luxury and sophistication.

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Brand equity affects profitability (Stahl et al., 2012) and the organisation’s overall performance. For example, when consumers associate quality with a specific brand, they are more likely to purchase it.

In addition, by encouraging brand loyalty, organisations are able to charge premium prices and, ultimately, such brands have higher financial values and impact on overall performance.

 3.6 Brand equity