A brand is an important asset for business organizations. Theoretically, a brand is defined as a name, logo or symbol used to identify a product and also to differentiate the product with competitors. To win a business competition, business organizations need to have brand equity. To date, advertising is the common way used to build brand equity. While advertising has been recognized as an effective tool to build brand equity, it spends lot of resources. Therefore there is a need to find an alternative strategy.
This article aims to discuss about how cause related marketing might be used by business organizations to build brand equity. Ronald McDonald House of Charities, would be used in this article to illustrate how cause related marketing works. This article is expected to contribute in providing an insight about alternative strategy in building brand equity.
Historically, Ronald McDonald House'Charities (RMHC) was created by McDonald at 1974 to provide a better life for children around the'world. This organization is a form of corporate societal marketing. Hoeffler and Keller defined corporate societal marketing as a marketing 'initiatives' having at least an objective relates to social welfare where the resources coming from the firm or its partner. Several programs were conducted as a part of RMHC such as such as Ronald'McDonald House, Ronald McDonald Care Mobile, Ronald McDonald Family Rooms and'Ronald McDonald Scholarship. To date, it has'a network around 174 local charities service serving in 32 countries'around the world.
As a societal marketing program, RMHC contributes to McDonald's brand equity through six steps. They are building brand awareness, enhancing'brand image, establishing brand credibility, evoking brand feelings, creating a'sense of brand community and eliciting brand engagement. The following section would discuss these six ways in detail.
Keller explains that brand'awareness is an ability of customers to recognize and recall the brand. Customer'corporate societal marketing is a way which can be chosen by organizations to'improve brand recognition. In the case of McDonald, RMHC makes customers easier to recognize the McDonald's brand because they always'use McDonald's elements in all of their activities. Therefore, customer will be'familiar with the McDonald because they often see the brand elements of'McDonald through Ronald McDonald House of Charities.
Generally, brand'awareness is an important element in building brand equity. However, it is not enough. Hoeffler and Keller claim that consumers'will consider the image of the brand before buying. By using Ronald McDonald House of Charities,'McDonald can build positive image in the society. As a social organization,'Ronald McDonald House of Charities makes customers feel that McDonald as the'owner of Ronald McDonald House of Charities is generous and doing good things. In'other words, McDonald has a responsibility to the society.
Establishing brand credibility is an essential element in building brand equity. Kevin'Keller contends that credibility is about whether the company or organization'behind the brand is seen by consumers as good at what they do. As a non-profit'organization, RMHC will create brand credibility'for McDonald since a non-profit organization will be perceived unbiased by'consumers as well as highly credible source. As a'result, by using social corporate responsibility program like Ronald McDonald'House of Charities, McDonald can build high credibility.
Fourth, business organization should have a strong brand feeling in'order to build brand equity because it will affect consumer behaviour. Scholars claim that only positive response of the customers would affect'consumer behaviour. By involving in the social activity such as'RMHC, people would feel to have a social approval'and a 'self respect' from the society. Social approval and self respect is very important for customers'since it will make they feel proud when use the brand.
Creating'a sense of brand community is the further step in building brand equity. Muniz and O'guinn declare that'community is a specialized non-geographically bound community, based on a'structure set of social relationship among users of a brand. In the context of McDonald, RMHC would serve a rallying point for the customers to'share their experience about that brand. Customers can interact with'other customers or employees through many ways. They might have a gathering at RMHC events or by using internet at www.rmhc.com. By'having a brand community, McDonald can always maintain the loyalty of customers'in the way to build brand equity.
The last step is eliciting brand commitment. Referring to Brand Equity Pyramid, brand commitment takes place at the top of pyramid. Scholars claim that by participating in a cause-related activity as a part of corporate societal'marketing activities, a business organization would obtain brand loyalty. Hence, to enhance their relationship with its customers, RMHC is a good strategy for McDonald.
Apart its effect on marketing and brand equity, there are some other reasons might be the reasons for McDonald to conduct RMHC. This article would also try to analyze these reasons. Generally, at least there are two possible aspects considered by McDonald in building RMHC. They are to enhance corporate reputation and increasing financial performance.
Theoretically, a business organization needs to have high corporate'reputation. Scholars claim that by having a high corporate reputation, business organization will'survive in running the business. Scholars such as Fombrun and Schwaiger mention that reputation'can be defined as overall judgment of an organization by its stakeholders, which'is expressed by customers, investors and employees. In increasing corporate reputation, cause related marketing is viewed as an alternative strategy. Corporate brands personifying'social responsibility would increase the reputation of a business organization. Therefore, Ronald McDonald'House of Charities as a form of societal marketing program can be expected by'McDonald to increase its reputation.
Financial performance could be other factor which is'considered by business organization when they use corporate societal'marketing. Financial performance is'important for business organizations since it has a strong relation with'capital market. Some finance experts state that there is a connection between'social responsibility policies and the position of business organizations in'capital market. In addition, scholars such as Dowell, Hart and Yeung claimed that there is a positive correlation between the stock of market value'of the company to the cost of its tangible assets and the performance of'environmental.
Based on the research of McGuire, Sundgreen and Schneeweis, companies having low social responsibility will have low'Return on Assets (ROA) and stock market return. Furthermore, as a business organization which'has sold its shares at capital market, McDonald needs to have a strong position'on there because by having a strong position at capital market, there is many'investors would be attracted to invest on McDonald. For that reason, by using'Ronald McDonald House of Charities, McDonald does not only build brand equity'but also strengthen the financial performance and having good position on the'capital market.
Finally, it can be concluded that corporate societal marketing as a part of cause related marketing is an alternative strategy to build brand equity building. Six steps conducted by this strategy in building brand equity. They are building brand awareness, enhancing'brand image, establishing brand credibility, evoking brand feelings, creating a'sense of brand community and eliciting brand engagement. Corporate societal marketing is considered more cost-efficient than advertising since it might satisfy several objectives including community and society as well as it would prevent organizations from negative publicity. Apart its role in building brand equity, cause related marketing is also important in enhancing reputation and financial performance.
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