New Product Development Created Equity

¶ … New Product Development created equity for the Yahoo brand

Brand equity at Yahoo!

Yahoo! is nowadays one of the leading companies in the field of online entertainment and communications. This position has not however always been the same for Yahoo!. The company was launched in the 1990s decade as a small startup agency, surrounded by the giants of the Silicone Valley. Still, Yahoo! was not intimidated and managed to gradually create a strong brand and a powerful brand equity.

The concept of brand equity is generally difficult to decide and the specialized literature has yet to reach a common terminology to describe it. In most instances however, it is understood as the benefits a product attains by having a brand attached. Specifically, brand equity represents the "additional value of the product (which derives from the brand), or an additional change (premium price) for that a consumer is willing to pay for an identical product, if this product is also provided with a brand. The more higher the loyalty results from the marketing mix methods, the higher is the value of the brand" (Tonnis, 2007).

Brand equity is the result of the interaction of numerous factors that strengthen the organizational position and enhance the brand. The diagrams below present two standpoints on the generators of brand equity, including elements such as awareness of the brand, the perceived quality of the products / services attached to the brand or the loyalty of the consumers towards the respective brand.

Sources: Nworah and Q. And A Consulting

In the case of Yahoo!, their brand equity was created through a multitude of elements, one of the more important of them having been the development of new items. The company initially launched itself as a search engine -- among the first search engines on the World Wide Web -- and it attracted hundreds of thousands of surfers within the first year of operations. As Yahoo! became the default search engine on the Netscape website, the company brand further strengthened. Brand equity was as such created through popularity and increased access to a wider market share.

As the company grew larger and larger, it also became more popular within the virtual environment and within the business community. In other words, Yahoo! came to be recognized as a portal to new business opportunities. Economic agents as such commenced to advertise their products and services on the Yahoo! platform and the "biggest dot-com advertisers [would] pay premium prices for ads on Yahoo!" (case). This situation further increased the company's brand equity.

The company however further diversified its services and launched itself within the field of electronic commerce. It introduced the Yahoo! branded visa card; created an online shopping mall and it created technological support for merchants to sell their products in the Yahoo! mall. Additional products included the "Yahoo! Clubs, and online immunity, the Yahoo! Calendar, an online calendar, and Yahoo! Small Business, with Internet and services aimed at small business proprietors" (case).

All in all, Yahoo!'s strategy of new product development has allowed them to expand their penetration of the market. The product development efforts have raised emotions in users; were developed using aesthetics principles and core technology and they had an important impact on the users and the community. This increased popularity and market presence, combined with the quality of the new products and services, have attracted the attention of both customers as well as investors, to further consolidate and strengthen the Yahoo! brand equity.

Brand equity is becoming a necessity within the modern day business climate, when economic agents compete not only for market shares, but also for the best employees, the best technologies or the best resources. In this setting, brand equity provides competitive advantages and points of differences and is essential.

The creation of brand equity varies across industries, across economic agents and it depends on various elements. In other words, there are no secret recipes to creating brand equity, but Yahoo! has to devise its own strategies based on its own specifics. Some of the features which can impact the brand equity strategy would include the size of the company and its resource availability, the marketing expertise it possesses, the features of the market it addresses or the nature of the items it sells.

In terms of the items commercialized, it could be argued that brand equity is created differently at the level of services and products. For products for instance, more emphasis would be placed on the technical functionalities of the items. In the case of services however, the functionality traits are more difficult to define and the emphasis of brand equity would be placed on emotions. Then, since services are immaterial, they are less trusted by the prospective customers. This means that brand equity in services is more focused on creating trust in the vendor, whereas in the case of products, it would be more focused on product promotions.

The construction of brand equity by Yahoo! is a highly challenging endeavor and the complexity is often due to the intangible nature of the services, which makes it more difficult for the audiences to envision them (the services), trust them and demand them. In this setting then, several Best Practice recommendations can be formulated to help the company create brand equity. Two examples in this sense are revealed below:

Emphasis should be placed on promoting the service in a clear manner so that the audiences can envision it. Yahoo! should focus on the features of the service, on how it can be used and what specific customer needs it can satisfy. At this level, it is also recommended for the strategy to relate to the emotional dimension of the service, referring specifically to the feelings which would be created if the individual were to purchase / use the services of Yahoo!.