CUSTOMER-BASED BRAND EQUITY

2.1
 Customer-Based Brand Equity

 “The differential effect that brand knowledge

has on consumer response to the marketing of
that brand.”

Keller, 1993

2.2
 A brand has positive CBBE when the
customers react more favorably to the product
and the way it is marketed when the brand is
identified than when it is not and vice versa.

2.3
 Power of a brand lies with what customers
have learned, felt, heard and seen about the
brand as a result of their experiences over
time.
 Power of a brand lies in what resides in the
minds of the customers.

2.4
 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

2.5
 Marketing advantages of strong
brands
 Improved perception of product performance
 Greater Loyalty
 Less vulnerability to competitive actions
 Less vulnerability to marketing crises
 Larger margins
 Less price sensitivity
 Greater trade co-operation and support
 Increased marketing communication effectiveness
 Possible licensing opportunities
 Additional brand extension possibilities

2.6
 Beer Tasting Experiment
 Larry Percy
 When consumers report different opinions about
branded and unbranded versions of identical
products, it must be the case that brand knowledge,
has somehow changed their product perceptions.
 Experiments have concluded that consumers’
perceptions of product performance are dependent on
their impressions of the brand that goes along with it.

2.7
 Brand Equity as a “Bridge”
 Brands as a Reflection of past investments in
the marketing of a brand
 Investments for creating the right knowledge
structures
 Direction for future marketing actions or
programs

2.8
 Making a Brand Strong:
Brand Knowledge
 Brand knowledge is the key to creating brand
equity. It creates the differential effect which
drives brand equity.
 Brand knowledge has two components: brand
awareness and brand image.

2.9
 Sources of Brand Equity
 Brand awareness-Ability to identify the brand
under different conditions. It is a necessary, but
not sufficient step in building brand equity.
 Brand recognition
 Brand recall

 Brand image=Consumers’ perceptions + brand

associations
 Strong, favorable, and unique brand associations

2.10
 Possible Apple Computer
Associations
 User friendly
 Educational
 Fun
 Desktop Publishing
 Friendly
 Ipod
 Graphics
 Creative
 Cool
 Logo
 Innovative

2.11
Possible Mc. Donald’s Associations

2.12
Possible Coca Cola Associations

2.13
Possible Volvo Associations

2.14
Possible Mercedes Benz Associations

2.15
 Sources of Brand Equity
 CBBE=Brand Knowledge
=Awareness +Image
=Familiarity + Brand Associations
(Strong, positive,
unique)
In Low involvement decisions…….
In High involvement decisions…….

2.16
 Brand Awareness
 Recognition is the consumers’ ability to
confirm prior exposure to the brand when
given the brand as a cue.
 Recall is the ability to retrieve a brand from
memory when given the product category, the
needs fulfilled by the category, or purchase or
usage situation as a cue.
 WHAT IS IMPORTANT AT POP and
OTHERWISE??????

2.17
 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

2.18
 Establishing Brand Awareness
 Increasing the familiarity of the brand through repeated
exposure (for brand recognition), more brand elements should
be reinforced.
 Forging strong associations with the appropriate product
category or other relevant purchase or consumption cues (for
brand recall).
 Crux-We can create brand awareness by increasing familiarity
of the brand through repeated exposure (for brand recognition)
and forging strong associations with the product category or
other relevant purchase or consumption cues (for brand recall).

2.19
Creating a Positive Brand Image
 Means linking the strong, favorable and
unique associations to the brand in memory
 Associations need to be favorable, strong, and
unique
 Marketers should recognize the influence of these
other sources of information by both managing
them as well as possible and by adequately
accounting for them in designing communication
strategies.

2.20
 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

2.21
Four Questions Customers ask of Brands

1. Who are you? (brand identity)

2. What are you? (brand meaning)
3. What about you? What do I think or feel
about you? (brand responses)
4. What about you and me? What kind of
association and how much of a connection
would I like to have with you? (brand
relationships)

2.22
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?
2.23
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, DURABILITY SITUATIONS
& SERVICEABILITY PERSONALITY &
SERVICE EFFECTIVENESS, VALUES
EFFICIENCY & EMPATHY HISTORY, HERITAGE
STYLE AND DESIGN & EXPERIENCES
PRICE

CATEGORY IDENTIFICATION
NEEDS SATISFIED
 Salience
 Means achieving right identity
 Measures brand awareness

 Dimensions

Category Identification
Needs satisfied

2.25
 Performance Dimensions
 Primary characteristics and supplementary
features
 Product reliability, durability, and serviceability
 Service effectiveness, efficiency, and empathy
 Style and design
 Price

2.26
 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 ruggedness
 History, heritage, and experiences
 Nostalgia
 Memories
2.27
 Judgment Dimensions (Rational
Responses to performance and
imagery)
 Brand quality  Brand consideration
 Value  Relevance
 Satisfaction
 Brand credibility
 Brand superiority
 Expertise (Competent,
 Differentiation
Innovative, Market Leader)
 Trustworthiness (dependable,
keeping customers interests in
mind)
 Likeability (fun, interesting,
worth spending time with)

2.28
 Feelings Dimensions (Emotional
Responses to performance and
imagery)
 Warmth-sentimental, warmhearted, affectionate

 Fun-amused, joyous, cheerful, playful

 Excitement-energizes, cool, elation
 Security-safety, comfort, self-assurance
 Social Approval-status, ego, esteem
 Self-respect-confidence, pride, accomplishment

2.29
 Resonance Dimensions
 Behavioral loyalty
 Frequency and amount of repeat purchases
 Lifetime value of behaviorally loyal customers is enormous
 Behavioral loyalty is not a necessary but not sufficient
 Attitudinal attachment
 Love brand (favorite possessions; “a little pleasure”)
 Proud of brand
 Strong personal attachment
 Satisfaction is not enough-marketing programs and services needed
 Sense of community (Brand Community) is a social phenomenon
 Kinship and
 Affiliation with other people associated with the brands
 Active engagement
 Seek information
 Join club
 Visit website, chat rooms
 Brand Evangelists and Brand Ambassadors
2.30
 Brand Community
 a specialized, non-geographically bound
community, based on a structured set of social
relations among admirers of a brand.”

2.31
 These brand communities exhibit three
traditional markers of community:
 shared consciousness
 rituals and traditions
 and a sense of moral responsibility

2.32
 Shared consciousness happens when “members feel an
important connection to the brand, but more importantly, they
feel a stronger connection to one another
 Rituals and traditions center on shared consumption
experiences with the brand
 Moral responsibility means a sense of duty to the community
as a whole, and to individual members of the community.”
This includes recruiting new people into the community
(assuming they fit the established norms for the community,
addressed later in this article) as well as helping other
members who may be having problems

2.33
 Brand Evangelists
 Brand evangelists are people who are so
excited about your product or company that
they go out on their own and convince
friends to buy your services too. They're a
great boon to your marketing and public
relations, but brand evangelists can be hard
to find and recruit.

2.34
 How to create Evangelists
 Treat your customers with care to help establish a good relationship
with them. Everyone who buys something from your store has the
potential to be an evangelist, but you need to need to ensure that
they have good experiences with your company so that they will
return for future purchases.

 Tailor your products so that they can become a part of a customer's

lifestyle. You want your products to be adaptable to a variety of
situations but also retain a personal touch. For example, you could
offer the same product in several color choices and designs or offer
to personalize them with engravings or special fittings.

 Offer special deals to your return customers to help fortify your

relationships with them. Create special products that are only
available to people who have been your patrons for a long time.

2.35
 Involve your customers in the business to give a voice to the evangelists.
For example, recruit people to make their own advertisements for your
product and host the best ones on your website. You can also solicit
photos from customers that show them using your products.
 Strike a deal with bloggers to reward them for redirecting traffic to your
website. Keep the benefits small and limited, like a one-time gift
certificate for 1,000 unique IP addresses redirected to your sales page.
Also consider starting a referral program to reward evangelists for
bringing you more business.
 Use brand evangelist feedback to improve your products. Recruit even
more loyal customers by stating which features you created as a result of
user suggestions.
 Monitor blogs and message boards where your products are frequently
discussed. While you may not have the time to respond to every post,
occasionally posting on these sites can make customers feel like your
company really cares about them and appreciates their business.

2.36
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 Equity
2

2
P-1

J-1
P-1

J-1
P-2

J-2
11

11
P-

J-
3

3
P-

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

R-2
R-1
R-1
P-

J-
P-

J-
9
9

11
5
5
P-8

J-8
P-6

J-6

R-
P-7

J-7

3
R-
Resonance
R-10
R-4

0.17 0.66
I-12

R-
I-1

F-1
F-1

R-
I-2

F-2

5
1

R-8
11

R-6
I-1

R-7
F-
I- 3

3
F-
0.58
0.24
Imagery
I-10

I- 4 F-1
Feelings F-4
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.

2.39
 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.

2.40
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.

2.41
Customer Relationship Management
(CRM)
 Uses a company’s data systems and
applications to track consumer activity and
manage customer interactions with the
company

2.42
 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 retainability of your customer
 Consider writing separate marketing plans—or even building two
marketing organizations—for acquisition and retention efforts

2.43
 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

2.44
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.

2.45