Brands and Brand Management

Customer Based Brand Equity

Dr Uma P Jaidev,
VIT Business School, VIT
Vellore 2.1
Brand

A brand is a product, but adds other dimensions that

differentiate it in some way from other products
designed to satisfy the same need.
Brand Differences

• Rational and tangible

• Emotional, intangible and symbolic
• Valuable intangible assets that need to be managed
carefully
Strategic Brand Management

1. Identifying and developing brand positioning

2. Designing and implementing brand marketing
programs
3. Measuring and interpreting brand performance
4. Growing and sustaining brand equity
IHCL – Subsidiary of Tata Group

Taj: 47 Luxury hotels. Its portfolio consists of luxury hotels,

resorts, jungle safaris and palaces

Vivanta: Upscale hotels with 25 hotels in 20 locations.

Ginger: Midscale hotels with 45 hotels in 32 locations.

SeleQtions: Brand that includes heritage properties

Gateway: Midscale hotels

 Customer-Based Brand Equity

“The differential effect that brand knowledge has

on consumer response to the marketing of that
brand.”

Keller, 1993

2.9
 Customer-Based Brand Equity
 Differential effect
 Differences in consumer response
 Brand knowledge
 A result of consumers’ knowledge about the brand
 Consumer response to marketing
 Choice of a brand
 Recall of copy points from an ad
 Response to a sales promotion
 Evaluations of a proposed brand extension

2.10
 Brand Equity as a
“Bridge”
 Reflection of past investments in the marketing of
a brand
 Direction for future marketing actions or
programs

2.11
 Making a Brand Strong:
Brand Knowledge
 Brand knowledge is the key to creating
brand equity.
 Brand knowledge consists of a brand node in
memory with a variety of associations linked to
it.
 Brand knowledge has two components: brand
awareness and brand image.

2.12
 Sources of Brand Equity
 Brand awareness
 Brand recognition
 Brand recall

 Brand image
 Strong, favorable, and unique brand associations

2.13
 Brand Awareness Advantages
 Learning advantages
 Register the brand in the minds of consumers
 Consideration advantages
 Likelihood that the brand will be a member of the
consideration set
 Choice advantages
 Affect choices among brands in the consideration
set

2.14
 Establishing Brand Awareness
 Increasing the familiarity of the brand through
repeated exposure (for brand recognition)
 forging strong associations with the appropriate
product category or other relevant purchase or
consumption cues (for brand recall)

2.15
 The Four Steps of Brand Building
1. Ensure identification of the brand with customers and
an association of the brand in customers’ minds
2. Establish the totality of brand meaning in the minds of
consumers
3. Elicit the proper customer responses to the brand
identification and brand meaning
4. Convert brand response to create an intense, active
loyalty relationship between customers and the brand

2.16
Customer-Based Brand Equity Pyramid

4. RELATIONSHIPS
RESONANCE = What about you and
me?

3. RESPONSE =
JUDGMENTS FEELINGS
What about you?

2. MEANING =
PERFORMANCE IMAGERY What are you?

1. IDENTITY =
SALIENCE
Who are you?
2 12
.
Sub-Dimensions of CBBE Pyramid

LOYALTY
ATTACHMENT
COMMUNITY
ENGAGEMENT

WARMTH
QUALITY FUN
CREDIBILITY EXCITEMENT
CONSIDERATION SECURITY
SUPERIORITY SOCIAL APPROVAL
SELF-RESPECT

PRIMARY CHARACTERISTICS & USER PROFILES

SECONDARY FEATURES PURCHASE & USAGE
PRODUCT RELIABILITY, SITUATIONS
DURABILITY & SERVICEABILITY PERSONALITY &
SERVICE EFFECTIVENESS, VALUES
EFFICIENCY & EMPATHY HISTORY, HERITAGE
STYLE AND DESIGN & EXPERIENCES
PRICE

CATEGORY IDENTIFICATION
NEEDS SATISFIED
 Salience Dimensions
 Depth of brand awareness
 Ease of recognition and recall
 Strength and clarity of category membership

 Breadth of brand awareness

 Purchase
consideration
 Consumption consideration

2.20
 Depth and Breadth Importance
 The product category hierarchy shows us not
only the depth of awareness matters but also the
breadth.
 The brand must not only be top-of-mind and have
sufficient “mind share,” but it must also do so
at the right times and places.

2.21
 Product Category Structure
 To fully understand brand recall, we need to
appreciate product category structure, or how
product categories are organized in memory.

2.22
 Performance Dimensions
 Primary characteristics and supplementary features
 Product reliability, durability, and serviceability
 Service effectiveness, efficiency, and empathy
 Style and design
 Price

2.23
 Imagery Dimensions
 User profiles
 Demographic and psychographic characteristics
 Actual or aspirational
 Group perceptions—popularity

 Purchase and usage situations

 Type of channel, specific stores, ease of purchase
 Time (day, week, month, year, etc.), location, and context of usage

 Personality and values

 Sincerity, excitement, competence, sophistication, and roughness
 History, heritage, and experiences
 Nostalgia
 Memories
2.24
 Judgment Dimensions
 Brand quality  Brand consideration
 Value  Relevance
 Satisfactio

n
Brand credibility
 Brand
 Expertise superiority
 Trustworthines  Differentiation
 s Likeability

2.25
 Feelings Dimensions
 Warmth

 Fun

 Excitement

 Security

 Social Approval
 Self-respect

2.26
 Resonance Dimensions
 Behavioral loyalty
 Frequency and amount of repeat purchases
 Attitudinal attachment
 Love brand (favorite possessions; “a little
pleasure”)
 Proud of brand
 Sense of community
 Kinship
 Affiliation

 Active engagement
 Seek information
 Join club
 Visit website, chat rooms

2.27
Customer-Based Brand Equity Model

Consumer- INTENSE, ACTIVE

LOYALTY
Brand
Resonance

RATIONAL &
Consumer Consumer EMOTIONAL
Judgments Feelings REACTIONS

POINTS-OF-
PARITY &
Brand Brand POINTS-OF-
Performance Imagery DIFFERENCE

DEEP, BROAD
Brand Salience BRAND
AWARENESS
 Application:
Identify the Key Drivers of Brand
2

Equity

J-12
P-1

J-1
P- 1

P-2

J- 2
11

11
P-

J-
3

3
P-

J-
Performance Judgment
P-10
J-4
0.65
P-4 J-1
0
0.49

R-1

R-2
P-

J-

R -1
P-

J-
9
9

11
5

J- 8
P-8

J -6
P-6

R-
P-7

J-7

3
R-
Resonance
R-10
R-4

0.17 0.66

R-
I-12

I-1

F-1

R-
F- 1

9
I-2

F- 2

5
R-8
1

R-6
11
I-1

R-7
F-
I-3

3
F-
0.58
0.24
Imagery Feelings
I-10
F-4
I-4 F-1
0
I-9

F-
I-5

F-
9

5
I- 8

F- 8
I-6

F-6
I-7

F-7
 Brand Building Implications
 Customers own brands.
 Don’t take shortcuts with brands.

 Brands should have a duality.

 Brands should have richness.

 Brand resonance provides important focus.

2.30
 Creating Customer Value
 Customer-brand relationships are the
foundation of brand resonance and building a
strong brand.
 The customer-based brand equity model
certainly puts that notion front and center.

2.31
Is a company consumer-centric?
1. Is the company looking for ways to take care of
you?
2. Does the company know its customers well
enough to differentiate between them?
3. Is someone accountable for customers?
4. Is the company managed for shareholder
value?
5. Is the company testing new customer offers and
learning from the results?
Sources: Larry Selden and Geoffrey Colvin, 2004.
2.32
Customer Relationship Management
(CRM)
 Uses a company’s data systems and applications
to track consumer activity and manage
customer interactions with the company

2.33
 Customer Equity
 Blattberg and Deighton (1996) offer eight guidelines as a means
of maximizing customer equity:

 Invest in highest-value customers first

 Transform product management into customer management
 Consider how add-on sales and cross-selling can increase customer equity
 Look for ways to reduce acquisition costs
 Track customer equity gains and losses against marketing programs
 Relate branding to customer equity
 Monitor the intrinsic retain ability of your customer
 Consider writing separate marketing plans—or even building two
marketing organizations—for acquisition and retention efforts

2.34
 Customer Equity
 The sum of lifetime values of all customers
 Customer lifetime value (CLV) is affected by
revenue and by the cost of customer acquisition,
retention, and cross-selling
 Consists of three components:
 Value equity
 Brand equity
 Relationship equity

Rust, Zeithamal & Lemon,

2004
2.35
 Relationship of Customer Equity to
Brand Equity
 Customers drive the success of brands but
brands are the necessary touchpoint that firms
have to connect with their customers.
 Customer-based brand equity maintains that
brands create value by eliciting differential
customer response to marketing activities.
 The higher price premiums and increased levels
of loyalty engendered by brands generate
incremental cash flows.

2.36