Edited by Bernd H. Schmitt and David L. Rogers
Tom Meyvis and Ravi Dhar It is by now widely accepted by managers and academics alike that brand names can be highly valuable assets. Just how valuable is demonstrated by Ford’s willingness to pay over $1.4 billion to purchase Jaguar’s intangible assets. Aside from being deﬁned in such ﬁnancial terms, brand equity can also be examined from a consumer perspective, as the eﬀect of brand knowledge on consumers’ response to a marketing action by that brand (Keller, 1993). For instance, although Toyota Corolla and GM’s Prizm are based on identical platforms and sold at almost identical prices, Toyota Corolla was in substantially higher demand, resulting in an annual revenue premium of close to $500 million (Srinivasan, 2006). Companies do not just value brand names because they can produce more favorable consumer reactions to their existing products and marketing strategies, but also because they have the potential to add value to new products and novel marketing actions. However, there may be limits to customers’ willingness to accept a familiar brand name in new roles and situations. Consider for example how consumers would react to an announcement that the Altria group (marketers of Marlboro cigarettes) plans to leverage its insights into people’s health and open Marlboro-branded research and treatment centers that specialize in lung cancer. Alternatively, consider the decision of a major technology company to market its existing products to line-of-business executives rather than to IT managers, based on research ﬁndings that choices about technology products are increasingly being made...
You are not authenticated to view the full text of this chapter or article.