CHAPTER:2

CUSTOMER-BASED
EQUITY AND BRAND
POSITIONING

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Customer-Based Brand Equity

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Defining Customer Based Brand
Equity (CBBE)
 Approaches brand equity from the perspective of
the consumer
 Stresses that the power of a brand lies in what
resides in the minds and hearts of customers
 Differential effect that brand knowledge has on
consumer response to the marketing of that brand

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Defining Customer Based Brand
Equity (CBBE)
• Positive customer-based • Negative customer-based
brand equity - When brand equity - When
consumers react more consumers react less
favorably to a product and favorably to marketing
the way it is marketed when activity for the brand
the brand is identified than compared with an unnamed
when it is not. or fictitiously named version
of the product.

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Defining Customer Based Brand
Equity (CBBE)
The three key ingredients of CBBE:
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
2.5
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Figure 2.1- Marketing Advantages of
Strong Brands

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Brand Equity as a Bridge

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Brand as a reflection of the past
• Marketers should consider the money spent in brand
building as an “ investment”.
• On the basis of the past experience, what consumers

saw, heard, learned, felt, and experienced about the

brand should be analyzed.
• The quality of the investment in brand building is

the most critical factor, not the quantity.

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Brand as a direction to the future
• Brand knowledge that marketers create over time,
which allows them to determine appropriate and
inappropriate future directions for the brand.
• Brand equity offers focus and guidance, provides a

means to interpret past marketing performance and

design future marketing programs.

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To Sum up ...
 Consumers perception of the brand plays a key role
in determining the worth of the brand
 Brand equity offers guidance to interpret past
marketing performance and design future
marketing programs
 Other factors that influence brand success and
equity are:
 Employees, suppliers, and channel members
 Media and government

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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.
 Marketers need an insightful way to represent how
brand knowledge exists in consumer memory
 Brand knowledge has two components: brand
awareness and brand image.

2.11
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Brand Knowledge
 Key to create brand equity
 Creates the differential effect that drives brand equity

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Associative Network Memory Model

 Views memory as a network of nodes and

connecting links
 Nodes - Represent stored information or concepts
 Links - Represent the strength of association between
the nodes
 Brand associations are informational nodes linked
to the brand node in memory

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Figure2.2 - Possible Apple Computer
Associations

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Sources of Brand Equity

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 Sources of Brand Equity
 Brand awareness
 Brand recognition
 Brand recall
 Brand image
Strong, favorable, and unique brand associations
Examples include:
Luxurious Car = success, wealth, only the best
5 Star Hotel = Paradise fit for kings and queens
Sportswear = strong athletic body, no pain no gain, enhance
your moves
Djuice = A young aspiration generation
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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

2.17
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Brand Image

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To Sum up...
 To create brand equity, marketers should:
 Create favorable consumer response i.e. brand
awareness
 Create positive brand image though brand associations
that are strong, favorable, and unique

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Identifying and Establishing Brand
Positioning

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Basic Concepts
 Brand positioning
 Act of designing the company’s offer and image so
that it occupies a distinct and valued place in the target
customers’ minds
 Finding the proper “location” in the minds of
consumers or market segment
 Allows consumers to think about a product or service
in the “right” perspective

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Target Market
 Market segmentation: Divides the market into
distinct groups of homogeneous consumers who
have similar needs and consumer behavior
 Involves identifying segmentation bases and criteria
 Criteria
 Identifiability
 Size
 Accessibility
 Responsiveness

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Figure 2.3 - Consumer Segmentation
Bases

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Figure 2.4 - Business-to-Business
Segmentation Bases

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Figure 2.5 - Hypothetical Examples
of Funnel Stages and Transitions

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Nature of Competition
Competitive analysis
•Considers resources, capabilities and likely

intentions of other firms.

•Allows marketers to choose markets where

consumers can be profitably served.

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Nature of Competition
Indirect competition
• Even if a brand does not face direct
competition in its product category, and thus
does not share performance related attributes
with other brands, it can still share more
abstract associations and face indirect
competition in a more broadly defined product
category.

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Nature of Competition
Multiple frames of reference
• Result of broader category competition or the
intended future growth of a brand.

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Points of Parity and Points of
Difference
 Points-of-difference associations
 Points-of-parity associations
 Points-of-parity versus points-of-difference

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Points- of-parity associations
• Attributes shared with other brands.
• Three types of associations are:

• Category points- of-parity: Necessary conditions for

brand choice.
• Competitive points-of-parity: Associations designed
to negate competitors’ points-of-difference.
• Correlational points-of-parity: Potential negative
associations that arise from the existence of other,
more positive associations for the brand.

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Points-of-parity versus points-of-
difference
• Unless certain points-of-parity can be achieved to
overcome potential weaknesses, points-of-difference
may not even matter.
• There is a “zone” or “range of tolerance or

acceptance” with points-of-parity.

• Points-of-parity are easier to achieve than points-of-

differences.

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To Sum up…
 To appropriately position a brand, marketers
should:
 Identify their target customers
 Analyze the type of competition they might face in the
identified market base
 Identify product features and associations that are
different or similar to their competitors

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Positioning Guidelines

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Defining and communicating the
competitive frame of reference
• Communicating category benefits - Marketers use
product benefits to announce category membership.
• Exemplars - Well-known, noteworthy brands in a

category can also be used as exemplars to specify a

brand’s category membership.
• Product descriptor - The product descriptor that

follows the brand name is often a very compact

means of conveying category origin.

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Choosing points- of-difference
• Desirability criteria
• Deliverability criteria

• Feasibility
• Communicability

• Differentiating criteria

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Establishing points-of-parity and
points-of-difference
• Separate the attributes
• Leverage equity of another entity

• Redefine the relationship

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Straddle positions
• Type of positioning where a company is able to
straddle two frames of reference with one set of points-
of-difference and points-of-parity.
• The points-of-difference in one category become

points-of-parity in the other and vice-versa for points-

of-parity.
• Disadvantage - If the points-of-parity and points-of-

difference with respect to both categories are not

credible, consumers may not view the brand as a
legitimate player in either category.

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Updating positions overtime
• Laddering
• Once the target market attains a basic understanding of
how the brand relates to alternatives in the same
category, it may be necessary to deepen the meanings
associated with the brand positioning.
• Failure to move up the ladder may reduce the strategic
alternatives available to a brand.

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Updating positions overtime
• Reacting
• When a competitor challenges an existing POD or
attempts to overcome a POP, there are essentially three
main options for the target brand:
• Do nothing.
• Go on the defensive.
• Go on the offensive.

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To Sum up ...
 Brand positioning describes how a brand can
effectively compete against a specified set of
competitors
 A good product positioning should:
 Have a “foot in the present” and a “foot in the future”
 Identify all relevant points-of-parity
 Reflect a consumer point of view in terms of the
benefits that consumers derive
 Contain points-of-difference and points-of-parity that
appeal both to the “head” and the “heart”
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Brand Mantra

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Brand mantra
• Short, three-to five-word phrase that captures the
irrefutable essence or spirit of the brand positioning.
• Provides guidance about:

• What products to introduce under the brand.

• What ad campaigns to run.

• Where and how the brand should be sold.

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Designing a brand mantra
• A good brand mantra should provide:
• Brand functions: Nature of the product or service or
the type of experiences or benefits the brand provides.
• Descriptive modifier: Combined with brand
functions, helps delineate the brand boundaries.
• Emotional modifier: Determines how a brand
provides benefits and in what ways.

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Implementing brand mantra
• Should be developed at the same time as the brand
positioning.
• Requires more internal examination and involves

input from a wider range of company employees.

• Based on core brand associations, a brainstorming

session can attempt to identify PODs, POPs, and

different brand mantra candidates.

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To Sum up...
 A good brand mantra should:
 Communicate the category of the business to set the
brand boundaries and clarify what is unique about the
brand
 Be simple, crisp, and vivid
 Stake out ground that is personally meaningful and
relevant to as many employees as possible

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