Chasing brand value: Fully leveraging brand equity to maximise brand value
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RANDLE D. RAGGIO is Assistant Professor of Marketing in the E.J. Ourso College of Business at Louisiana State University, where he teaches the capstone marketing strategy course for senior-level marketing majors. He has taught courses at the undergraduate and MBA levels, as well as executive education. His research is focused on branding, brand equity and strategic issues in B2B services markets. Prior to entering academia, he was the marketing director for Kidpower, the toy company that marketed products such as the Funnoodle.
ROBERT P. LEONE is the J.Vaughn and Evelyne H. Wilson Chair and Professor of Marketing in the Neely School of Business at Texas Christian University. Professor Leone has published extensively in top marketing journals and is frequently quoted in publications such as Business Week and The Wall Street Journal. He has served on the editorial boards of Journal of Marketing, Marketing Science, and Journal of Advertising. His teaching interests lie in the areas of brand management, marketing management, and strategy and marketing research. He is a three-time recipient of the James L. Ginter MBA Marketing Elective Teaching Award at Ohio State University (most recently in 2006). Among other honours, he has also won the Fisher College Graduate Teaching Award twice.
Keywords
Abstract
brand value; valuation; brand equity; metrics; brand management
Both researchers and practitioners seek to understand how to leverage brand equity to create value. Adopting ‘the theoretical separation of brand equity and brand value’ framework originally proposed in the Journal of Brand Management by Raggio and Leone, this conceptual paper looks more closely at the brand value construct and the implications of the proposed theoretical separation. The authors argue that firms are continually attempting to ‘chase’ the appropriable value of their brands—defined as the theoretical maximum value that a brand could achieve if all brand equity were fully leveraged. Implications for developing measures of brand value are discussed.
Journal of Brand Management (2009) 16, 248–263. doi:10.1057/palgrave.bm.2550142; published online 1 February 2008 ‘Brand equity is often equated with brand valuation but that is like confusing your house (asset) with its financial worth (price).’1
INTRODUCTION
Randle D. Raggio E. J. Ourso College of Business, Louisiana State University, 3122 C Patrick F. Taylor Hall Baton Rouge, LA 70803, USA Tel: + 1 225 578 2434 Fax: +1 225 578 8616 E-mail: [email protected]
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The purpose of this conceptual paper is to investigate the implications of ‘the theoretical separation of brand equity and brand value’ proposed by Raggio and Leone,2 on the brand value construct. The framework can be used to understand past managerial decisions related to brands and their value, and to analyse future valuation scenarios. The framework also will help managers and researchers understand the
drivers of brand value as they attempt to evaluate current valuation methodologies and to develop new ones. Finally, it will relat
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