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How Nike Is Building Brand Equity

  • Date Submitted: 02/24/2014 05:50 AM
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How NIKE is building Brand Equity
  1. Brand Equity: introduction
Brand equity is defined as “the differential effect of brand knowledge on customer response.” Three elements of this definition need to be emphasized. The most critical element is differential effect or “differentiation.” Without this, a brand is not different from the next one, and therefore, can never seek a premium. In some instances, differentiation is easy to create (e.g., automobiles, breakfast cereal, etc.), whereas in other instances this can be much more challenging (e.g., gasoline, bottled water). Regardless, however, it is equally important to strive for differentiation. The next element is brand knowledge. Your customers should know about the differentiation. They should be aware of it, and should appreciate that the differentiation is meaningful for them. The last key element of this definition is customer response. Customers should respond favorably to this differentiation. This response should (hopefully) be reflected in their desire to demonstrate some loyalty towards the product, and in their willingness to pay a premium for their preference. These definitions underlie the model we present.
  2. Managing brand equity
The model shown in Figure below depicts the elements that we believe all high-performing brands have in common but this model cannot be said as a comprehensive model of brand equity, but rather to highlight its essential elements. As this shows, brand equity rests on a solid foundation of brand vision and brand identity. Given a strong foundation, brand knowledge can be built. Important dimensions of brand knowledge include brand awareness and brand image. Finally, brand equity results in superior performance; that is, the ability to earn long-term economic profits. Two key indicators of a brand’s ability to earn economic profits over the long run are brand loyalty and the ability to command a price premium (i.e., a price-cost differential above “normal”).

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