Building and Managing Brand Equity
In his 1989 paper, Managing Brand Equity, Peter H. Farquhar outlined the following three stages that are required in order to build a strong brand:
1. Introduction - introduce a quality product with the strategy of using the brand as a platform from which to launch future products. A positive evaluation by the consumer is important.
2. Elaboration - make the brand easy to remember and develop repeat usage.
There should be accessible brand attitude, that is, the consumer should easily remember his or her positive evaluation of the brand.
3. Fortification - the brand should carry a consistent image over time to reinforce its place in the consumer's mind and develop a special relationship with the consumer.
Brand extensions can further fortify the brand, but only with related products having a perceived fit in the mind of the consumer.
Building brand equity requires a significant effort, and some companies use alternative means of achieving the benefits of a strong brand.
For example, brand equity can be borrowed by extending the brand name to a line of products in the same product category or even to other categories.
In some cases, especially when there is a perceptual connection between the products, such extensions are successful. In other cases, the extensions are unsuccessful and can dilute the original brand equity.
Brand equity also can be "bought" by licensing the use of a strong brand for a new product.
As in line extensions by the same company, the success of brand licensing is not guaranteed and must be analyzed carefully for appropriateness.