Although brand management had been on the American business scene for decades, the specific topic of brand equity did not become popular until the volatile 1980s, when once proud brands such as Sears, IBM, and Cadillac began to lose ground to lower-priced generic competition. Market shares dropped as a serious nationwide recession further aggravated corporate profits. This historic economic downturn inspired a rash of company consolidations and “downsizing” actions. Prudent cost cutting is indeed one way to shore up sagging profit margins, but as Sears’ CEO, Arthur Martinez, warned at the time, “You can’t shrink your way to greatness.” Brand building is essential for growth.

During many leveraged buyout negotiations, corporate executives and Wall Street investors had to come to terms with the portfolio value of brand names. The recognition of brands as valuable intangible assets fostered an increased interest in brand equity as a topic for private and scholarly research.

The initial success of less expensive generic brands during the 1980s implied that consumers were failing to acknowledge the supposed added value of a “name brand” commodity and were influenced more by factors such as pricing and shopping convenience. This added value that immunizes a brand from such competitive incursions is often referred to as its equity. Businesses coping with “mature” product categories that exhibit little or no growth are particularly interested in brand equity. In such cases, competitive pressures are intense as sales gains (share increases) are derived from competitors rather than new category users. Under these zero-sum circumstances, as the number of competitors increase, the battle for market share becomes more acute.

In a single phrase, brand equity is a good thing because successful consumer brands tend to remain successful. This momentum in market performance is revealed in a brand’s stability and predictability over time. It is easy to identify many retail brands with amazing “staying power” that have been market leaders in their respective product categories for decades: Kodak, Goodyear, Nabisco, Gillette, and, of course, Coke. Similarly, not only do popular television programs draw bigger audience shares, but these shares are fairly consistent over time. Abrupt changes in market rank occur more often among weaker challengers than with the established market leader. And if a leading brand does experience a drop in performance, it is usually a gradual deterioration over many months or years.

Weaker brands are more volatile and take brand managers on unwelcome roller coaster rides. For the television industry, this is a familiar phenomenon during the critical fall premiere weeks when audiences sample and abandon new shows on a nightly basis. On the other hand, strong returning programs, such as Law and Order, appear often to “ride out the storm” with minimal fluctuations in ratings. This is a bonus to strong brand equity; weaker programs don’t enjoy the “sample-proof” performance. After a few weeks, the unsubstantiated hype takes its toll, with only a tiny handful of new programs being declared “breakthrough hits.”

A second advantage of strong brand equity is that it can be used to support brand extensions. The added value of a brand name can be assigned to a new product line, giving the product a marketing boost in consumer acceptance. A successful media brand can buttress the promotion of another program or network. The names MSNBC, 60 Minutes II, and ESPN 2 were not created by accident. Each capitalized on the reputation of an established consumer brand. Probably the most dramatic brand extensions for broadcasters in recent years involve the creation of internet portals, specialized Web sites, and digital multicasting projects.

Third, consumer brands with high equity are more cost-effective to promote. Struggling brands need proportionately more promotion than do successful brands to attract and hold customers. Furthermore, research has found that advertising messages for highly successful brands tend to be more believable than are similar messages emanating from new or struggling brands. This phenomenon goes back to our earlier discussions of brand familiarity and attitude persistence, in which consumers remain stubborn in their beliefs regardless of the quality of arguments presented by competing brands. The bottom line is that to achieve the same branding goals, brand challengers must invest more time, money, and effort work in marketing mix activities than do brand leaders.

Television marketing professionals can experience the same financial fruits of strong brand equity, particularly when initiating advertising campaigns. Holding the promotional high ground with a successful program is far easier than fighting the uphill battle of changing people’s established attitudes and viewing habits.

Finally, strong brand equity is a good thing because of “the rule of double jeopardy” found in most retail consumer goods and television programs. For decades, researchers have confirmed that the most popular brands (largest market shares) also cultivate the most loyal customers. The double jeopardy rule influences smaller brands in that not only do they have fewer customers but these customers tend not to be as loyal in terms of repeat purchases. Even in this era of niche marketing, the notion of a “small but loyal” customer base (or audience base) is extremely rare in the real world.

Researchers have found that this loyalty advantage is a trait found not in the heavy users of a product category but in the light users—consumers who purchase a product occasionally. Heavy users of a product tend to “shop around,” looking for variety and new experiences. Light users, on the contrary, tend to remain faithful to one brand, and that one brand is usually the market leader. Over the course of several weeks or months, the cumulative effect of these “soft core” buyers begins to show in market shares.

From a television branding perspective, bigger is also better. Studies indicate that the most popular programs also have proportionately more loyal audiences than do less popular shows. In addition, this loyalty is more common among infrequent users of a media product. For example, people who watch local news only once or twice a week tend to watch the same newscast, and that newscast usually is the market leader.

Of course, being on top doesn’t guarantee long-term brand survival. One can find dozens of case histories in which established market leaders have fallen out of grace. Brand equity can be a perishable commodity when ignored or abused. For over 30 years, the number one luxury car in America was the Packard.