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Effective Executive Magazine:
Brands and Competitive Advantage : Leveraging on Brand Value
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Most marketing scholars agree that brands are crucial elements in the process of building and sustaining competitive advantage. However, most scholars focus on the brand as something that can be leveraged during this process. Hence, we focus mostly on brands as assets that are already built and which we can draw on when trying to outperform competitors; consequently, we rarely focus on the fact that it takes decades to build brands that can be leveraged at a later point in time. Drawing on the notions of competitive advantage and brand equity, this article focuses on the missing link between these two concepts, i.e., the concept of hard work and consistent decision-making to build strong brands and the decision to leverage on brand value that can dilute its value almost instantly.

According to Barwise (1993), the concept of brand equity came to life around 20 years ago when American advertising agencies started using the notion of equity to describe the long-term franchise of brands as well as the financial value of such franchises. Hence, the notion of brand equity relates to two distinctive, although interrelated, ideas. First, it relates to brands as financial assets and second, it relates to the antecedents of such assets in the form of customer franchise that has been built over time. In a financial context, the term brand equity thus refers to the security that arises from the difference between assets and liabilities and hence refers to the brand value that has been built after correction for the efforts it has taken to build the brand. In the same vein, antecedents of brand equity are actions that the company has taken in order to build the brand as well as the customer thrust, liking and loyalty which are built when customers have had experiences with the brand in the past. Hence, the concept of brand equity is quite simply employed to describe the notion that brands have value beyond the value they "lend" from the products, upon which they supervene. As such, the brand is a "container" in which effects of positive actions on behalf of the company accumulate over time. Hence, the building of a strong brand enables the company to accumulate value over time and across various products, the life cycles of which are, mostly, much shorter than the life cycle of the brand (which may, if managed properly, be infinitive). As a result, at the core of branding and brand management lies the ability to build strong brands, i.e., the "filling of the value container".

 
 
 

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