brands have exhibited is a lack of appreciation of the corporate asset that the
branding elements lead to, especially brand equity.
Several luxury brands have the notion that brand equity and brand value
come into play when a company needs to be valued for a merger, an acquisi-
tion or financial reporting. This is, however, only a surface-level approach to
brand equity. Brand equity is a profound concept that should be sustained and
grown in order to result in increased value for luxury brands. It is something
that involves relentless long-term management and if left static, often takes a
downward slope. Attaining a high level of brand equity requires nurturing all
the previously discussed brand elements. In other words, what consumers see,
hear, feel and know about a brand that results in their overall experience with
the brand, over time should be sustained. Since these elements reside in the
mind of consumers, the brand equity sustainability takes place through the
enhancement of the brand associations in the consumers’ minds.
In the luxury fashion sector, brand-equity measurement is done on two levels,
depending on the corporate ownership structure of the brand. For luxury brands
that are under the ownership of a conglomerate, their equity affects that of the
individual brand and the equity of the holding company. For example, Louis
Vuitton has a high brand equity but is owned by LVMH, a group with a portfo-
lio of more than 50 brands, including Fendi, Emilio Pucci, and Thomas Pink.
The high equity of Louis Vuitton is, however, transferred to the holding
company, LVMH, since all the earnings of Vuitton are reflected on the balance
sheet of LVMH. Each of the other brands owned by LVMH also has distinctive
personalities, associations and positioning and therefore different levels of brand
equity, which they contribute to LVMH. Although the brands are individual
luxury brands and are independent of one another, they are ultimately linked
because collectively, their equity affects the value of LVMH, its status as a
corporate brand and its worth on the stock market, since it is a publicly traded
company. The direct implication is that the higher the brand equity, the more
intangible assets the company will acquire and the higher its stock market value.
However, the challenge for conglomerates like LVMH is that each of the brands
in its portfolio needs to be meticulously nurtured to ensure continuous growth.
The second approach to brand-equity measurement for a luxury brand is
the simpler single-brand approach. This is where a particular brand is moni-
tored and developed to generate a high value for its owner. It often occurs
among brands that are privately owned such as Chanel, Hermès and Armani.
Table 5.2 shows the ownership portfolios of four of the largest luxury
goods conglomerates.
An understanding of the brand equity measurement indicators is essential
in assessing the financial value of brands, which we shall discuss in the
following section. These indicators include image attributes, level of aware-
ness and familiarity, loyalty, satisfaction and recommendation, among others.
These are factors that measure consumer’s perceptions of brands and how
they influence brand choices and buying behaviour.122
luxury fashion branding