Brand Management (MKT624) VU
Lesson 40
BRAND DYNAMICS
Introduction
With the understanding of measures on the first two dimensions, that is, differentiation and
relevance, this lecture continues with the discussion on measures of variants of the remaining
two dimensions, esteem and knowledge1.
On the dimension of esteem
Customer loyalty: This shows how consistent customers are in buying your brand, how long
they have been buying and how long they may buy? This measure should tell you the number
of customers that you would have lost had you not had the branding strategies. This also tells
you that the customers who did not leave your brand are loyal customers.
You ask your customers what other brands they considered before finally deciding to stick to
your brand. You can find out the competitive brands that entered your customers’ decision-set.
The next question should clarify why they stuck to your brand after considering competition
and then discarding it.
You will get yet another testimony to your product’s quality and branding strategies.
Price premium/Financial brand value: This shows you why your customers are willing to pay
you a premium over your competitors or a price that offers you good, attractive margin. This
also is an important measure in determining the right price premium for your brand.
You compare the price of your brand with your immediate competition and determine to what
extent you can further go up in price, thus following the market-based pricing mechanism.
The measure gives you insights into
•Going for the right premium
•Adjusting your pricing upwards, even if you do not charge a premium, to ensure you
have the right margins.
•Cutting your costs wherever you can to improve your margins
Lifetime value of a customer: It lets you have your loyal customer’s lifetime worth in terms of
your brand’s purchasing.
On the dimension of knowledge
Positioning understanding: This measure tells you to what extent customers understand the
way you have positioned your brand. Any gaps between your message and understanding of the
target market will raise questions for correction.
A similarity of message and reception of it by the market is a testimony to the right positioning
and, hence, leveraging of the brand.
It is one of the most important measures for the simple reason that differentiation and
segmentation come to life if a position is rightly occupied in the minds of your consumers. To
what extent customers understand your positioning and own it tells you the level of success that
you have achieved from your branding effort.
If you positioned your brand from the taste and quality platform, then it has to be perceived so
in the market.
Conversely, if it is perceived more as a price-friendly brand, then the perception needs to be
changed. This perception may hinder your efforts to go for a price increase; for customers may
take it for granted that your price will never be out of their perception range. That will be a big
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