distinctive qualities of a brand that result in the continuous demand and
commitment to the brand. It is a set of attributes, elements and liabilities
linked to a brand that add to or subtract from the value placed on the brand
by consumers or companies. Brand equity is a means to an end, the end being
the creation of brand value. It is what gives consumers a reason to prefer
certain brands and their products to the alternatives offered by other brands of
which they are aware. Brand Equity refers to the inherent worth that is
attached to a well-recognized brand through the consumer’s perception of the
brand’s superiority. This is the significant difference between brand equity
and brand loyalty.
Brand equity is therefore the accountability and justification given for the
existence and preference for a brand and is measured through the value
placed on the brand. This value is expressed in two forms, which are directly
related. The first form is based on the total positive or negative associations
that consumers hold regarding a brand. If these associations are favourable, it
leads to high consumer-based brand equity while low consumer-based brand
equity is a result of negative brand associations.
The second form is approached from the point of view of the company. It
is when the total sum of the consumer-based brand equity is translated into an
intangible asset represented on a company’s balance sheet. This is then called
the corporate-based brand equity or what is commonly known in corporate
circles as the brand value. It forms a part of a company’s corporate assets and
is often shown as the incremental cash flows that accrue to a company due to
its investments in its brand. It is the sum of all the power that a brand has and
exhibits. However, brand equity and brand value are different in the sense that
brand equity is measured from the consumer viewpoint while brand value is
financial-based.
Consumers are crucial to the development of brand equity in the same
manner as they are to the other elements of branding. The power of a brand
lies within the experiences that consumers have had with the brand and their
attachment to the brand. This influences the consumer perception of the brand,
made up of the feelings, thoughts, images, opinions, beliefs, emotions and
associations. The implication is that brands generate positive consumer-based
brand equity when they’re favourably viewed by consumers and vice versa.
As previously mentioned, luxury brands utilize the branding concept as
their core competence and major corporate strategy tool. This means that
without branding, luxury brands would not be as appealing and might not
exist. However, the question of brand equity is something that remains vague
and often unanswered within the offices of several luxury brands. There are
several reasons for this. The first reason is that in luxury fashion management
circles the concept of brand equity is not completely understood and applied.
Luxury brands place much emphasis on creating high brand awareness and
the appropriate brand image with the objective of attaining a high level of
brand loyalty and subsequently a steady income stream. What several luxury
chapter 5 121the art of creating and managing luxury fashion brands