Under which of the following conditions, a brand is said to have a negative brand equity ?
Consumers react less favorably to the brand than to an unbranded version
When consumers react less favourably to the branded product than to the identical unbranded one — option 2.
The definition being tested. Customer-based brand equity, as defined by Kevin Lane Keller, is the differential effect that knowledge of a brand has on a consumer’s response to its marketing. The comparison is always against the same product sold without the name :
| Response to the branded version, compared with the unbranded | Brand equity |
|---|---|
| More favourable | Positive — the name adds value; the firm can charge more, spend less on promotion, and extend into new categories |
| The same | Zero — the name adds nothing |
| Less favourable | Negative — the name actively subtracts value; buyers would prefer the product with no name at all |
Why the other options are not it.
| Option | What it actually describes |
|---|---|
| 1. Consumers unaware of the brand | No brand awareness, and therefore zero equity — not negative. Awareness is the precondition of equity, and its absence leaves the brand neutral, not harmful |
| 3. Unable to differentiate itself | A weak positioning, which limits equity but does not make it negative |
| 4. Financial value falls below market price | A statement about brand valuation — a different, accounting-based conception of brand equity, and in any case not what negative equity means |
How a brand comes to have negative equity. Through a safety scandal or product failure; sustained poor quality or service; association with unethical conduct; or a badly judged brand extension that damages the parent. The consequence is severe: the firm is paying to maintain a name that is costing it sales, and the usual responses are rebranding, a change of name after acquisition, or retiring the brand altogether.
Keller’s two sources of brand equity are worth remembering alongside this: brand awareness — recognition and recall — and brand image, the strength, favourability and uniqueness of the associations held in memory.
Hence, the answer is that consumers react less favorably to the brand than to an unbranded version.
Similar Questions
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A. Adjustability
B. Awareness
C. Accessibility
D. Affordability
E. Acceptability
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A. National Brands
B. Generic Brands
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Choose the correct answer from the options given below:
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Statement (II) : Esteem measures perceptions of quality and loyalty or how well the brand is regarded and respected.
Code :
Important Questions from Marketing mix
Which of the following statements represents marketing ?
- Which one is not a part of Marketing Mix ?
- Give the correct sequence for Marketing strategy.
(i) Promotion
(ii) Packing
(iii) Analysing
(iv) Developing
(v) Distribution
(vi) Pricing
Code : - Match the pricing strategies in List - I with their appropriate explanation in List - II :
List - I List - II (a) Bundle pricing (i) Price for any product is deliberately fixed lower than the prices of competitors (b) Parity pricing (ii) Prices fixed for similar products and services are the same as competitor’s prices (c) Penetration pricing (iii) Price fixation is allowed at levels higher than competitors (d) Premium pricing (iv) Involves being the leader in fixing prices by benchmarking them (v) Set of products and services are clubbed together and charged at lower than the sum of individual elements in the mix The step after 'concept testing' in the new product development process is:
