Theoretical Framework Of SME

This chapter presents theories within the field of brand equity, brand identity, challenges and opportunities of the approach how an SME should implement branding strategy. This chapter is structured as a conductor; it wills details border theories in the beginning to give an understanding of branding. The decision will then narrow down to theories that lighting the challenges of branding in an SME.
2.1 Choice of Theory
The theoretical framework begins by discussing about three major elements to generate brand equity: brand awareness, association and loyalty. These concepts are providing a general understanding of branding. Based on this general insight about branding the theoretical framework continues by describing brand identity and how

Another point of view is the theory by Gad (2000) that will discuss about the importance of brand identity and brand code when willing to project the brand from different dimensions to the company’s customers and consumers. Challenges with building a brand will be highlighted to be able to avoid common pitfalls when developing the model. Since the study focuses on investigating aspects that are important for a SME when branding, the first part of the thesis will detail some existing theories on how to deal with branding in a SME. This is done to obtain a comprehension, from the current recommended literature, how an SME can benefits from branding and to be able to create an adapted model.
2.2 Brand Equity
Keller (2002) argues that, from the company’s point of view, branding is the ability creates the differences and equipping products with the power of brand equity. Farquhar (1989) explains brand equity as the added value to the firm, the trade, or the consumer with which a given brand gives a product. Aaker (1991) mention that there are liabilities and assets linked to the brand and that these brand assets can provide value to both the company and customers in form of brand equity. He describes that there are different goals to archive as:
• Helps the customers interpret process and store large amounts of information

It is important to investigate how this should be used by brand managers to create brand equity. Customer loyalty is what brings most value to the brand equity (Aaker, 1996). The base of brand loyalty is by having an effective brand associations and high brand awareness. Loyalty leads to create re-buys or recommendation of the brand and therefore brand managers have to consider as an important goal. The impact of “values of brand loyalty” and how these can be achieved will be explained in the next