Comments

I disagree with the professor! Looking at how Walmart has grown over the years, one can safely say, getting more & more people to shop at its stores itself indicates its brand equity.

Posted by Jana at March 14, 2005 11:50 PM

Steve, your professor friend's sense of a premium is too narrow if he only sees product price. The impact on product price is less important than the impact on stock price.

If Wal-mart's brand equity exists, then it's here more than there.

Posted by Jason Kerr at March 15, 2005 12:01 AM

This comment is professorially incorrect. That is, it is both wrong and arrogant. Saying that the largest company in the history of the universe has not built brand equity because it got that way on the basis of low pricing is a narrow definition, indeed.

The brand equity = the low pricing strategy, no?

What about Dell? No brand equity there either?

Posted by Tom Guarriello at March 15, 2005 12:14 AM

Brand equity measured solely in terms of the ability to command a price premium is nonsensical. I’m hoping he was being provocative - if not, you should post the name of the business school so that we can steer clear....

One could argue that the brand equity that WalMart has established is reflected in its ability to attract so many loyal customers, day-in and day-out, without any price premium. At a more important level it has established the brand as an attractor and a trigger in an otherwise crowded market. WalMart shoppers shop there for price - but there are plenty of places to do that. It’s the entire brand experience that pulls them back.

Lets apply the logic elsewhere. Southwest doesn’t have any brand equity because it’s cheap... Or, Mercedes doesn’t have any brand equity because it costs too much... Gimmeee a break!

Brand equity is about something much bigger. Eisner said it well in relation to Disney... "We all know that the Disney brand is our most valuable asset. It is the sum total of our seventy-five years in business, of our reputation, of everything that we stand for."

Posted by andy at March 15, 2005 1:04 AM

I think Andy is on a good roll. And it reminds me of a saying of a mentor, "You can either be in the volume business, or the margin business."

I'll finish his thought...but you need to choose one. Shouldn't your brand reflect your business model? Southwest doesn't tout leather seats, it touts price. Walmart doesn't claim fine china, it claims the lowest prices on china.

Steve, your professor friend has fallen prey to that which most agencies fall prey, that to be a brand you have to be sexy, and with sex appeal comes desire, and with desire comes the willingness to pay more. Of course, working on "volume" brands isn't much fun unless you have stock options.

I think Southwest was a great example. Are there others? Dell?

And while I write this, I find arguments for your friend. Does Target charge more for a lightbulb? I don't frankly care, so long as I'm in a Target and not in a hellish Walmart.

I remember a recent fishing trip with a bunch of old farts who were discussing who had the lowest prices. They had compared prices on aspirin and metamucil and other things I don't buy. And it was a consensus, Walmart was far cheaper.

If a brand is a promise, Walmart delivers consistently. And your friend is off the mark.

Posted by Paul Davidson at March 15, 2005 2:03 AM

Andy's right. Brand equity isn't something that allows a company to price things at a premium, but that allows a company to have recognition beyond the individual products or services that it offers. Think of strong brands; Coke might not taste that great, but it's a billion dollar brand. Nike isn't the best sports shoe out there, but that little swoosh is one of the most valuable logos on the market. Why? Because their very brand identity allows them to move product, to sell services, to succeed as businesses.

To say that brand equity = the ability to price products at a premium misses the point. Then again, it's interesting that Wal-Mart's brand is focused on distribution, not packaging: you can't really go into the store and buy a "Wal-Mart brand" shirt, fishing pole or bicycle, can you?

Compare that to the Apple Store, where they also have brand equity, yet their prices might not actually be higher than competitive chains (e.g. iPod sales). It's the overall shopping experience, the sense that it's "the overall package", not just the individual items therein...

Posted by Dave Taylor at March 15, 2005 2:33 AM

I've got a dictionary definition of equity as, "The residual value of a business or property beyond any mortgage thereon and liability therein." I think Wal-Mart, or Asda as they are here in the UK, have brand equity that attracts people to their stores, satisfies their need for value and thus allows the business to flourish. Paul's mentor had it right (volume or margin) and Wal-Mart are proving that relentlessly - day in, day out.

Posted by Mark JF at March 15, 2005 3:55 AM

No disrespect, but this is a typical academic conclusion derived from an untested theory, not from research or experience.

WalMart's brand equity is based on selection and low price.

Posted by Ed Brenegar at March 15, 2005 4:46 AM

I agree that those that can do - those THAT CAN'T TEACH [like the professor making $70k or so]. Academics seem to lack reasoning ABILITY and get excited about ideas only - rather than their productive applications.

Posted by John at March 15, 2005 6:54 AM

Good academics propose theses, ideas, and sometimes just plain crackpot theories in the interest of generating discussion among "students" in order to get them to find the answers for themselves. It seems to me that this professor did an excellent job of provoking thought and discourse. I give him an A.

Posted by Mike at March 15, 2005 8:21 AM

To Mike's point, the professor's point did get us talking!

I like to focus on how strong brand impressions encourage customer action: That action could be to pay more, but it could also be to try a product, use a product more, re-purchase a product, refer it to friends, buy more products from the same company, etc. Strong brand impressions encourage customer action that improves the business results of the branded product.

Posted by Steve Yastrow at March 15, 2005 9:06 AM

That´s a great idea, Steve. To look at the actions a Brand impression fosters in the customers. A good tool to manage your Brand in different ways.

Posted by felix gerena at March 15, 2005 9:47 AM

Brand Equity = Price Premium. Sorry. That's a resounding No. Either you have Price Premium and Less Customers. Or Low / Medium price and More customers. In any case, you gotta be making the money.
Brand Equity is about recognition, relating to it, loving it, being loyal to it... a whole bunch of other things.

Posted by Rose at March 15, 2005 9:54 AM

Its a good question. I think that Walmart has no brand equity. Lets say their product Prices Raise ?? Will the same consumer still go to Walmart ?? The CustomerBase is driven to Walmart for one reason only- Price !! IMHO The professor is right.

Steve, "So, can you have brand equity with no price premium?" No, Brand Equity and Price are linked into each other. e.g thats like NIKE, Addidis shoes or the M.Benz, Porsche cars

In short, "loyalty revenue growth" can only be sustained by having a "Loyal customerBase" , this goes hand in glove with Price Premiums. Business gorge the consumerdex, to such a degree that the value added proportions of their products are elastic enough to sustain the loyalty factor. 'Buy once from us and you will always buy from us'- concept. Off course, this can only be sustained by excellent products .Apple iPod is a good example.

Posted by /pd at March 15, 2005 10:05 AM

Got us talking indeed! Here are three more thoughts on the topic:

1) If we can't agree on what the "it" is, we don't have much hope of figuring out whether Wal-Mart has it. And whether it matters.

Brand Equity is a nebulous term whose definition is not widely agreed upon. A quick search in google yielded dozens of definitions. To the marketing prof's defense, almost all of them included some variation of the pricing power concept. Pretty much all of the things mentioned in this discussion have some value in assessing the strength of a brand, but I think we'd have a hard time incorporating them all into a single measure. Perhaps there are several related concepts under discussion here: collectively we seem to have no doubt that Wal-Mart is powerful, but that doesn't mean that the source of the power is something called brand equity.

2) Brand Equity is at best a mixed metaphor, and at worst complete nonsense.

Applying financial language to a concept as fluid as brand is difficult, but if we do, this is what we get. Equity = Assets less Liabilities. As in the Disney quote posted by Andy, the brand itself is most like an asset. It's fair to say that the asset will depreciate over time if it's not maintained. The costs of maintaining it can be plugged in as your liabilities, pick something else if you like. The difference is your equity. And it's all complete nonsense: you can't isolate the costs required to sustain your brand from the costs required to train your employees, clean your windows or research new products. These are all be part and parcel of your brand, but would require stretching the metaphor and fudging things all for the sake of developing a meaningless measurement.

3) Some measurements do nothing to help us achieve our goals.

As long as we're borrowing financial language, think about it this way: being able to calculate EBITDA doesn't mean that you know anything about how to create value. Instead of focusing on a measure of the result, we should be focusing on measures of the activities that lead to valuable brands. What gets measured gets done - if we're teaching and measuring the right things, our staff will do the right things and the rest will take care of itself.

.

Posted by Ken King | King Marketing at March 15, 2005 10:13 AM

Maybe we're looking at a good old-fashioned accounting concept of goodwill and re-titling it brand equity? I don't agree that brand equity = a price premium but I think it ought to go further than just recognition - it needs to translate into profits. What about brands that inspire all sorts of loyalty but aren't profitable? They die, despite the "brand equity", or maybe that's brand negative equity?

Posted by Mark JF at March 15, 2005 10:21 AM

Ok I am going to stick my neck out here! If walmart suddenly stopped being the cheapest show in town would people still shop there?

If not then Walmart is only successful by being cheap - what then is the brand equity?

Posted by PaulH at March 15, 2005 10:29 AM

Ok - another thought here:

Isn't a price premium based purely on brand equity morally wrong?

If I am paying more for something - what do I actually get in return?

I can see the point of premium "brands" if the product quality or service etc is measurably better. I can also see the benefit of brands like Rolex if there is a certain prestige (that is tangible - sort of!)

But ultimately isn't charging more for a mere name a flawed concept and morally wrong?

I suspect it is also unsustainable as well. As more and more companies take on "Brand" as a strategy doesn't that dilute the whole thing? i.e. it stops being a competitive advantage. It's like product quality. Great quality has now become a default entry level criteria not an advantage.

In 5-10 years time when Chinese brands are as strong as Western what are Western companies going to do then?

Doesn't brand become a commodity?

What is the next big business ideas in the post brand world?

I think we should be thinking about this now!

Posted by PaulH at March 15, 2005 10:43 AM

There are different areas of the brain for cognitive [point of view] and emotional [empathetic]decision making, different neuropathways. There are contextualized interpretations of emotional contracts and financial obligations. Who are you asking the definition of brand equity of, the consumer or the financial analyst; the relationship manager of the hedge fund operator? Technically any "brand" is expected to drive a premium price, so the professor isn't wrong in his declaration. Here is the real question...what's wrong with the definition of brand? Maybe that is what he was trying to say?

Posted by Wendy at March 15, 2005 10:46 AM

I would say WalMart has a strong brand equity and can get a premium for it despite being a low price vendor.

Remember the DuPount equation which relates ROI to the product of margin and turnover. WalMart does not get the premium on margin but certainly gets a premium through sales, repeat sales, and additional sales (items that a trip to the store was not immediately intended but we bought anyway).

Whether it's a premium price (higher margin) or a higher share of the wallet (which would increase turnover rate if managed properly), the resulting premium is the same. WalMart clearly has substantial brand equity and is obtaining a premium for it, just not through the traditional margin or price.

Posted by Jim Wesnor at March 15, 2005 11:35 AM

As an ex-b-school prof (I quit, in part, because of too many encounters with that prof's particular brand of shallow BS)... I'd like to try to redeem the three letters I spent so many years working to get...

My guess is that he was a Marketing Prof. Marketing Profs, in my experience, don't get this fundamental:

PRICE is set by the MARKET (rather... you make better business decisions by ASSUMING price is set by the market). MANAGERS can control the QUALITY they deliver (quality in the biggest sense of the term) and the COST at which they deliver that quality. BUT... what matters to the owners of the business is only MARGIN... You can get a higher margin by increasing quality and/or decreasing cost. The best-run businesses are always operating at the lowest cost point for the quality they deliver.

It is really quite simple folks... Wal-Mart, therefore, DOES have a price-premium IF they are more profitable than their competition. If they were less profitable, or equally profitable, they would have no brand equity (because price, set by the market, would only be enough to cover costs, including opportunity costs).

Big finish: Believe it or not, Wal-Mart shoppers are paying a premium based on Wal-Mart's actual costs. Wal-Mart shoppers, once they drink the kool-aid, are (I'm guessing) much less likely to compare prices/shop elsewhere. Mission accomplished.

Posted by Terry Rock at March 15, 2005 12:11 PM

Well, I'm no professor, ahem! But it sure seems like Wal-Mart has brand equity. Their reputation as the low-price provider allows them to have narrow aisles, sell inferior produce/meat, leave pallets of product right in the consumers' way, practically ignore the customer, and understaff the cash registers while customers wait in lengthy lines. All of these cutbacks allow them to increase their margins on low price products that they negotiated at insanely low prices from the manufacturers because they have what??? Brand equity.

Why do consumers put up with this? Because Wal-mart has the best prices (we assume to some degree), and we can get almost anything within their four walls. That's their brand and it allows them to command not a higher price, but minimal service to reduce overhead. That's equity. Equity gives you breathing room, whether to jab the customer on price or jab them on service. I feel sorry for the consumer sometimes.

Posted by Dustin at March 15, 2005 12:16 PM

Terry, looks like you beat me to the draw. Dammit.

Posted by Dustin at March 15, 2005 12:19 PM

This is certainly a great debate about what brand equity is or is not, but one question to ask yourself is - "brand equity for whom?" I'm going to guess that the vast majority of visitors to the Tom Peters site are not Wal-Mart loyalists (admittedly I'm not), so trying to put the argument in financial or "premium" terms makes sense.

I would argue, however, that Wal-Mart has tremendous brand equity with its target market. If you've ever lived in rural America where Wal-Mart is the only game in town, the people there are as loyal as they come. These are not premium price shoppers and in most cases don't really care that the majority of what they are buying is made by the lowest bidder in China, India or Malaysia. Wal-Mart provided these consumers with something they never had before – choice. For that they are grateful.

In many of these towns you also find that the premium priced shops are doing as well if not better than they did before Wal-Mart arrived. The people who shop in a lot of these stores fall into two categories: The people who would never shop in Wal-Mart and Wal-Mart shoppers who have come to town to shop there and to get something for a special occasion. In this case many of the premium shop owners, who were originally opposed to Wal-Mart entering the market are now reluctant fans since they still have their core customer base, plus all of the new ones that the discounter brought into town.

So, does Wal-Mart have brand equity? I would argue that it has both a tremendous amount and none; it all depends on your point of view. Personally, if Wal-Mart went away tomorrow I wouldn't feel worse for the loss, but my parents who live in a small rural town would miss it dearly. In this case, equity is a matter of perspective.

Posted by Andrew Hayden at March 15, 2005 12:20 PM

I forgot to mention that I LOVE Wal-Mart.

In a smallish town (8,000) near Calgary (1 million), Wal-Mart entered to great trepidation. Guess what? Wal-Mart took all the low-margin business and allowed the remaining retailers to focus on high-margin stuff. The small guys are THRIVING because they don't have to worry at all about attracting "value shoppers." They focus on customer experience, customized solutions, hard-to-get stuff. They now have laser-sharp focus because Wal-Mart cleared out the customers that were probably LOSING THEM MONEY!!

I love that. It is an outcome of competition. I love buying commodities at Wal-Mart. It allows me to spend more on other things.

One more thing... Wal-Mart doesn't get low costs because of brand equity... that's just good old fashioned vertical power. I tell my students: "you know you have the power in the relationship when your supplier reps leave meetings crying."

Posted by Terry Rock at March 15, 2005 2:05 PM

Terry,

As I re-read my post earlier (how's that for narcissism) I realized I had misspoken. Wal-Mart's buying power probably isn't brand equity. You are correct.

I also probably broke Steve's rule of separating my answer on brand equity from any rants. I am no fan of Wal-Mart. My wife shops there, but knows that I'll drive the opposite direction (to Target) in order to avoid the horrid experiences that recur at "Wally World." Also, we used to have a family business ran by my grandparents that went under, in part because of Wal-Mart entering the market (or actually expanding their presence). We couldn't compete on price and in our small town price was king.

So, take my opinion with a grain of salt.

Posted by Dustin at March 15, 2005 2:29 PM

Tom,

You are right. Your "brand" has equity if anybody else wants some of it...

Q

Posted by Q at March 15, 2005 4:10 PM

Tom,

You are right. Your "brand" has equity if anybody else wants some of it...

Q

Posted by Q at March 15, 2005 4:11 PM

Great discussion ... here's where I still come out: Great brands drive customer action. Paying a premium price is only one of many possible customer actions. To Terry's point, in all cases a strong brand should encourage customer actions that drive business results. (If you have a copy, see chapter 5 of my book, Brand Harmony.)

Posted by Steve Yastrow at March 15, 2005 11:01 PM

Hi Steve. I just went back to your book and had a thought. What if... we said, the platform of a brand is what a company says it is not what what consumer thinks it is and the words and actions of a company match its harmony? In the face of WorldCom and Enron don't you think we should be redefining brand and harmony? It just seems so incongruent to me. It's part of what I call Identity Marketing. To me that is brand equity.

Posted by Wendy at March 16, 2005 8:05 AM

The comment by Terry Rock annoys me greatly. If this person actually has students and is actually teaching them this idea that the customer-supplier relationship is all about "power," then we will have yet another crop of new-hires to re-educate in the realities of modern business. It isn't about who has the power. That way lies bankruptcy for ALL. Geez, read a book or two if you call yourself a teacher. You start making your suppliers "cry" and they'll quickly tell you to take your business elsewhere. Study the Big Three auto companies and their purchasing department philosophies to see how this really doesn't work at all.
As for Wal-Mart--I have had only positive experiences at my local store. Clean store, helpful staff, convenient hours, good selection. Sometimes the aisles are too narrow, true. There is, I believe, and old sales saying that "if the price is low enough you can throw the product on the floor and people will still flock to your store." Maybe that's true.

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Posted by Mike at March 16, 2005 8:50 AM

Fabulous comments. I have a bias, not really a strong point of view. I come pretty close to endorsing the "price premium" side of the argument. I am in fact a Wal*Mart fan, but I am genetically fearful of attempting Eternal Greatness based on a low-cost position. Compaq ruled the PC roost ... until Dell came along. 100 years ago Macy's ruled the low-price roost until Sears came along. And so on. (Meanwhile, P&G and J&J, to name two, just keep rollin' despite a hiccup from time to time.) I--Tom, personally--sleep easier knowing that my future depends on continuing to add value, rather than having to perpetually defend low cost goods & infrastructure. Yes, I can imagine Wal*Mart being eclipsed some day in the not so distant future.

Posted by tom peters at March 16, 2005 11:44 AM

Brand equity is smoke and mirrors financial mumbo jumbo. How can you place value on what a brand will mean to customers at some time in the future? The future is disorder. Leave it to the bean counters.

TP writes that he sleeps easier knowing that his "future depends on continuing to add value." That's the essence of a brand! Adding value to the customer's experience with the brand over time so that they’ll pay a premium for it (as compared to competitive brands), continuously repurchase it, or go out of their way to purchase it. TP didn't write: "I sleep easier knowing that I'll continue to get $30k a speech." It may sound paradoxical, but my guess is that TP’s strategic angst is also his sense of comfort.

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All of which simply means that a brand's "equity" is really a bet on its ability to adapt and innovate for customers. Will Wal-Mart be able to keep up? Will they be able to bring their knowledge and scale to other "commodity" products and services? They're presently modeling Wal-Mart gas stations. Would you frequent THAT brand if they could cut your fuel price in half? Or would you buy the "premium" brand? The one with the magic additive Platformate (which, by the way, was named by some guy working on Platform Number 8)? ;)

Posted by Tom Asacker at March 16, 2005 12:24 PM

Tom I am struggling here. How is you continously adding value (and long may it continue!) protecting you in the future - apart from being smarter and faster than the next guy?

I go back to my question higher up (Which I have posted several times over the years and no one answers! you'll scared or am I talking gibberish?) but I will keep trying:

I am challenging all you business thinkers out there WHAT IS THE NEXT BIG THING POST BRAND???

When everyone has the same brand equity what will differentiate? Note this isn't an attack on brand equity or the ideas (We really need to do those things and fast) here it's just a recognition of the natural state of the business world. So when Chinese companies start coming at us with brand setups that are every bit as powerful what are you going to do?

Posted by PaulH at March 16, 2005 1:22 PM

Paul, why does there have to be a formalistic "post brand" (forget Kevin Roberts' "Lovemarks" for a moment)? Brand is a lovely shorthand for the Client's "IWANNACOMEBACKBECAUSEITRUST'EM." Right?

I (Tom) am a "Steve Jobs Guy." I want to ... PLAY. Screw around. Do the "women's thing" for a couple of years. The "BlogThing." Keep playing, stretching, twitting, foolin' around with people's minds. By "being my cantankerous self" I'm also trying to be original & different & provocative (& "worth" my outrageous speaking fees). Michael Lewis got it spot on with the title of his next to last book: "The Next Big Thing." That's what "the hunt" for Value Added is all about. It's pretty primitive; it doesn't need management-speak to confirm it. And if you get a hit (homer = iPod), then you get to keep playin' a while longer.

That's all I ask: GIVE ME ONE MORE AT BAT!!!

Posted by tom peters at March 16, 2005 2:34 PM

One more at bat. Amen to that!

Posted by Tom Asacker at March 16, 2005 3:02 PM

Thanks, Tom. I value your comments!

Posted by tom peters at March 16, 2005 3:16 PM

Just have to poke back at a comment aimed at my comment earlier... I don't actually teach that buyer/supplier relationships are all about power... but you certainly can't ignore it! I know people trying to sell to Wal-Mart and Safeway, and they have stories about how demanding these firms can be. If you're trying to sell to them and you don't have what it takes, my guess is you're gonna be mighty disappointed leaving that meeting (you might even cry!).

Here's another go at the brand equity discussion, and I think it is related to some of the good/bad feelings people have about Wal-Mart. Wal-Mart uses its market power to force suppliers to lower costs (they also help the suppliers become more efficient in the process). Wal-Mart has no competitor that can match their cost structure while providing the same variety. Therefore, what looks like "brand equity" is just a plain old lack of competition... no one is putting up enough of a fight to get Wal-Mart to lower their prices (and hence their margin).

But... I don't think that's all of it. They've built their brand equity to the point that "low price, wide selection" = Wal-Mart. There is no consumer search going on... Wal-Mart is now shorthand for something. This is an asset that they've used to expand into groceries, etc. Sounds like "equity" to me...

Posted by Terry Rock at March 16, 2005 4:05 PM

Whew. Heated.

I probably won't do anything to change that but here's my two Gs (I definitely don't compete on price):

I'm with the prof on this one. True value is ultimately love, and while it may work in the short term to be cheap, available and fast (note hooker analogy), these attributes do nothing over the long term to foster mature, profitable relationships. Nor do they attract others interested in mature, mutually profitable relationships. It attracts the 80%, where 20% of the profits come from. Spread that wide enough and you'll make lots of money, but in my opinion, it's impossible to sustain. Like a forest fire. Seems much easier to go after the 20% that gets you 80%.

As long as people are poor enough (which is changing), think they are poor enough (which is changing), or think they are starving (ditto), they'll go anywhere and do anything. But once they get a taste of something decent, or claw themselves into stability, they'll never go back. Forget what it must be like to work there (or supply them). Forget what kind of mass-produced break-down crap they sell. Remember, we create how we live by what we believe. If we believe in the rat race (and act on those beliefs), then it's a rat race. If we believe it's all love, then it is. Wal*Mart has done some wonderful things, and brought a lot fo goods to a lot of people (and woke up a lot of sleepy small-town merchants). I firmly believe that whoever wants to do something the most should get to do it. Wal*Mart wanted to sell 2 gallon jars of pickles like no one ever before. More power to 'em. Turns out there were an awful lot of people starving for pickles. But as this site knows well, the future is upmarket, creative, responsible and feel--less goods with more value added--because people are learning and growing. What do they possibly have to offer that? They're dinosaurs.

The bottom line, in my opinion: not a single person is there for the brand. So where's the equity? They could change names tomorrow and they'd have the exact same clientele. That would be like saying spam had brand equity because it makes money. Too many people have been thinking about value only in terms of money so long, they've forgotten what it is they really want. Money is of very limited use without the ability to feel it--love.

If I may--more about culture, $$, love, sex, and business over at www.ebencarlson.com. Thanks for the opportunity to discuss. Much love.

Eben

Posted by Eben Carlson at March 16, 2005 4:07 PM

Brand Equity is still ultimately a financial concept rather than a marketing concept. If Wal-Mart's brand gives it a tacit profitability that translates to higher stock price than the sum of the market value of its assets, then there's some brand equity in there.

Want to test it? Ask this question? Could Wal-Mart license its name? I'm not saying this would be a good business model, but I think there would be buyers.

Posted by Jason Kerr at March 16, 2005 4:26 PM

Oh Yeah...all that crap about "What if Wal-Mart stopped selling low?" is BULL!

That would be like saying, "Yeah, but if Apple stopped being so damned user friendly it's customers would just take a hike."

Of course the brand disappears when you rip out the primary value proposition!!! Hello!?

Posted by Jason Kerr at March 16, 2005 4:30 PM

If branding a phenomena of convergence between what the company has as value proposistion and the perception in the mind of the potential buyer, then YES Wal-mart has brand equity, because the buyers who visit Wal-mart "experiences " integirty of what Wal-mart projects itself and what it actually offers in its stores. And I wonder beyond four repeated visits if anyone is comparing how much he/she is paying for a pound of cilatro or lettuce, if a pair of jeans seemed cheaper.

Posted by Sandy at March 16, 2005 5:21 PM

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If we are saying that brand equity is simply primary value prop (a companies business model) with a jazzy name attached....

Surely there is more to it than that? especially as Walmart isn't really that jazzy a name....

Posted by PaulH at March 16, 2005 5:38 PM

I like Jason's question "Could Wal-Mart license its name?" It seems that if you look at companies that have licensed their names (Harley Davidson, Eddie Bauer and LL Bean [both to vehicles I think]) they are great examples of whatever brand equity is.

Posted by Preston at March 16, 2005 5:53 PM

Paul,

Who we?

I didn't say that a brand IS the primary value prop. But I do think that the organization's identity is so fundamentally tied to that proposition--or it should be--that suddenly dropping it would likely disintegrate the brand. (P->Q ≠ Q->P.)

And yes it is more than that. Brand equity is not the value prop, is not the brand. Brand equity is a real (as in financially demostrable) and factor of the value of the company that can be expressed in dollars but cannot be touched with the hands. As far as itemizing that intangible asset column--well....

Also, I think a jazzy name only fits a jazzy company. (In Wal-Mart, country > jazz).

Posted by Jason Kerr at March 16, 2005 6:31 PM

Does Wal*Mart have brand equity? Yes.

Is it the standard for terrible service? Yes.

There is no way it could/should be considered a "great" company and have horrible customer service and treat its employees almost as bad. Its a bad deal, from the highest levels to the local level. Bad management = bad company.

Wal*Mart will topple on its own arrogance.

Posted by Earl at March 16, 2005 9:43 PM

My strong belief is that branding happens one customer at a time. If an individual customer has a compelling personal brand impression of a product/company/service, she will be more likely to act in a way that helps that product's performance.

(Paraphrasing earlier comments) Her actions may be to pay more, but they may also be to buy more, or to rave to friends, or maybe just to use the product more. Paying a price premium is only one of many possible customer actions that can be encouraged by a strong brand imrpession.

Brand equity is built one customer at a time. Think of it as the sum total of "motivation to act" that all customers of a product have, the cumulative effect of all of their individual brand imnpressions.

In Wal-Mart's case, there is one helluva cumulative "motivation to act." According to a Foote Cone & Belding study when Wal-Mart invaded Oklahoma City a couple of years ago, 76% of adults had visited a Wal-Mart Supercenter there in the last 4 weeks, with an average of 3.4 visits per person in that time period. (And that didn't even count visits to Sam's Clubs, Wal-Mart Discount Stores or Wal-Mart Neighborhood Markets in the same geographic area.)

Hey ... something is compelling people to act in that way. It's their brand impressions of Wal-Mart.

Posted by Steve Yastrow at March 17, 2005 1:21 AM

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Steve... I agree, and what I'm about to write is a no brainer... but... brand equity only really matters if it impacts profitability...

I write that because way too many times I've seen shallow analysis (from the likes of the person who caused you to start this thread) that treats "brand" as if it somehow unrelated from providing a return to shareholders... like it is an end in itself unrelated to the entire operation, a "thing" that needs nurturing in a different way than creating an excellent organization from top to bottom. I haven't read your book, but perhaps that's what "harmony" means??

Posted by Terry Rock at March 17, 2005 1:52 AM

To Terry's last point - yes, brand equity only matters if it impacts profitability. And my contention is that, for most businesses, the most powerful force that unleashes the "latent profit" that resides in the business is customer action. When customers do things, results are impacted, for better or worse.

If all of the experiences the customer has with the product and the company behind it blend to tell a compelling, powerful, differentiating story, the customer perceives a strong brand harmony is more likely to act in a way that impacts results.

There is a direct connection from the entire set of experiences the customer has with the product/service to business results. What's in between? The customer's brand impression.

Posted by Steve Yastrow at March 17, 2005 2:59 AM

I love the last 2 comments (anything that sets me off chewing over a topic is WOW in my book).

There is an irony here in Terry's comments. It is usually too much focus on providing return to sharholders that stops most large COs pulling the whole org together.

Sometimes I think the vision of the brand (maybe not the implementation) does have to stand for something more than the financial success.

As an employee do I care about shareholders - err no (sorry)

Do I care about the financial success of the company - err no (apart from a stability aspect)

As an employee do I want to do extraordinary things with and extraordinary company - Yep, sign me up

The brand competition is not about winning customers it's about winning the best employees. viagra professional

Posted by PaulH at March 17, 2005 4:38 AM

Do you want to get your consumer addicted to your product? Can you get your consumer's emphathetic brain ignited to your brand or is it really their cognitive brain you have fasinated? Would you prefer to teach them to how to be strong on their own through via the use of your product... and then have them loyal to you?

If you saw a beautiful, rich, sexy women, and you married her, does that then make you a handsome, rich desirable man? No, but if you are already a strong, sensual, desirable man who knows his identity you will attract the woman of your dreams.

If we are really about the consumer, be about the consumer. Give them back their time. Give them knowledge. Give them their feelings, to themselves not to the product. ...Obviously build in strategies and tactics to support the flow of loyalty.

Posted by Wendy at March 17, 2005 9:48 AM

I agree with PaulH. Sometimes there is too much emphasis on immediate ROI. "Immediate" being the key word. In this show-me-the-money-NOW world of shareholders and powerholders, there is more and more pressure being put on immediate returns. What ever happened to long-term strategy?

As scapegoat CEOs (and deserved CEOs) are fired left and right and their tenures become shorter and shorter, why would they care if their company is around in 10, 20, 50 years? We're more about built to profit, than built to last. That being said, is brand equity just another shortsighted focus on temporal earnings?

Posted by Dustin at March 17, 2005 11:49 AM

I think there's a crucial element to the Wal-mart brand that no one's mentioned yet: convenience.

It goes beyone simple "selection." Someone mentioned the 80/20 rule. I'm not a Wal-mart fan, but they make shopping increadibly convenient--the 20% of my time that allows me to get 80% of what I need.

Cheap is a great attractor. But I could easily pay a premium to aviod condoning what I considerable underhanded principles, selling one category at a loss to drive competitors out of business, then raising prices once you control that market.

But, as busy as life has become, I'll be damned if I don't go to wal-mart just to avoid having to trek all over town to the grocery store, department store, hardware store and half-a-dozen other places.

They could even raise their prices and I'd probably still go if it will save me five trips to other stores. And, based on the definitions above, that qualifies as brand equity, right?

Posted by Danny at March 17, 2005 1:00 PM

The Wal-Mart brand is indeed everyday low prices, but it transends "price." It's fundamentally about trust. We trust Wal-Mart prices because we've come to understand how they make money. It's transparent to us. That's why other discount retailers with this same level of brand trust - like a Costco - are now introducing luxury items to their offering. They've gained our trust. We now believe we can find true value in their selection and pricing of luxury items as well. It's the Toyota way. Start with low priced, basic products, gain our trust (in Toyota's case it was via quality), then move upmarket with luxury products (e.g. Lexus). Watch out high priced commodity items (e.g. diamond rings)!

Posted by Tom Asacker at March 17, 2005 2:01 PM

My wife spends a few hundred a month at Walmart. Here's what she said about Walmart. It is the 1st store she goes to when looking for something to buy. The top reasons why she buys: Price and they have everything. To me that's Brand Equity. Brand is in the eyes of the beholder and not the academic.

Posted by Chris Herbert at March 25, 2005 2:25 PM

Wal*Marts prices are amazingly low at times with adequate quality. $5 phones and clock radios and $25 ski winter coat/pants - amazing.

Posted by John at March 28, 2005 10:49 AM