CUSTOMER-BASED BRAND EQUITY

Customer-Based Brand Equity

The CBBE is formally defined as the differential effect that brand knowledge has on
consumer response to the marketing of that brand.
A brand has positive customer-based brand equity when consumers react more favorably to
a product and the way it is marketed when the brand is identified than when it is not (such as
unnamed).
There are three key ingredients to this definition:

Differential
response

effect:

Differences

in

consumer

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

Quarter of a million people went to the 100 year anniversary meet in Milwaukie.

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Harley Davidson is more than a motorcycle, its an experience, and attitude, a lifestyle, and a
vehicle to express who one is.

Marketing advantages of strong brands

Improved perceptions of product performance.
Greater loyalty.
Less vulnerability to competitive marketing actions.
Less vulnerability to marketing crises.
Larger margins.
More inelastic consumer response to price increases.
More elastic consumer response to price decreases.
Greater trade cooperation and support.
Increased marketing communication effectiveness.
Possible licensing opportunities.
Additional brand extension opportunities.

BRAND EQUITY AS A BRIDGE

Reflection of past investments in the marketing of a brand

The quality of the investment in brand building is the most critical factor, not necessarily
the quantity of investment, beyond some minimal threshold amount.

Direction for future marketing actions or program

Consumers will decide, based on their brand beliefs, attitudes and so on, where they think
the brand should go and grant permission (or not) to any marketing action or program.

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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.

Brand knowledge has two components:

1. Brand Awareness: It is related to the strength of the brand node or trace in memory, as
reflected by consumers ability to identify the brand under different conditions.
2. Brand Image: Perceptions about a brand as reflected by the brand associations held in
consumer memory is called brand image.
Sources of Brand Equity

Customer based brand equity occurs when the consumer:

1. Has a high level of awareness and familiarity with the brand

2. Holds some strong favourable, and unique brand associations in memory
Brand Awareness
a) Brand recognition: It relates to consumers ability to confirm prior exposure to the
brand when given the brand as a cue.
b) Brand recall: It relates to consumers ability to retrieve the brand from memory when
given the product category, the needs fulfilled by the category, or a purchase or
usage situation as a cue. e.g.: Kelloggs Corn Flakes.
Brand Awareness Advantages

Learning advantages

Consideration advantages

Register the brand in the minds of consumers

Likelihood that the brand will be a member of the consideration set

Choice advantages
-Affect choices among brands in the consideration set.
Reduces cognitive load

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1. Learning advantages: The first way that brand awareness affects consumer decision
making is by influencing the formation and strength of the brand associations that make up
the brand image.
2. Consideration advantages: Raising brand awareness increases the likelihood that the
brand will be a member of the consideration set, the handful of brands that receive serious
consideration for purchase.
3. Choice advantages: Brand awareness can affect choices among brands in the
consideration set, even if there are essentially no other associations to those brands.

Establishing Brand Awareness

Anything that causes consumers to experience a brand name, symbol, logo, character,
packaging or slogan can potentially increase familiarity and awareness of that brand
element. Example- Intel.

Increasing the familiarity of the brand through repeated exposure (for brand
recognition)

Forging/creating strong associations with the appropriate product category or other

relevant purchase or consumption cues (for brand recall)

Benefits of High Brand Awareness

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Creating Brand Awareness

Marketers can develop top-of-mind brand awareness by:

1) Having memorable names, e.g. Home Depot
2) Locations
e.g. Starbucks
(large number of stores, less advertising, customers walks and drives by the stores to
and from the work)
3) Symbols
Symbols involve visual images that typically are more easily recalled than words or
phrases and thus are useful for brand awareness.
e.g. The image of Colonel Sanders of KFC.
The Golden Arches of McDonalds.
4) Sponsorships of well-publicized events can provide considerable exposure to a retailers
name and increase awareness.
e.g. Macys Thanksgiving parade in New York city has become a holiday tradition.

Creating Brand Associations

Brand associations are anything that linked to or connected with the brand name in a
consumers memory.
Some of the common associations the marketers/retailers develop with their brand names
are1) Merchandise category

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e.g. Office Depot would like to have consumers associate its name with office
supplies.
2) Price/quality
e.g. Neiman Marcus, want to be high prices and unique, high fashion merchandise
Wal-Mart, want to be associations with offering low prices and good value.
3) Specific attribute or benefit
e.g. 7-Eleven for convenience
4) Lifestyle or activity
e.g. Electronic boutique is associated with home use of computer game software.

Brand Image
A positive brand image is created by marketing programs that link strong, favorable and
unique associations to the brand in the memory. Example: The Body Shop.
Assume forever, so get it right.

Strength of brand associations

Two factors facilitating the strength of association to any piece of information are the
personal relevance of the information and the consistency with which this information is
presented over time.
Brand attributes: These are those descriptive features that characterize a product or
service.
Brand benefits: These are the personal value and meaning that consumers attach to the
product or service attributes.

Favorability of brand associations

Favorable brand associations are those associations that are desirable to consumers and
are successfully delivered by the product and conveyed by the supporting marketing
program for the brand. Example: such that the brand is seen as highly convenient, effective
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efficient, colorful and so on.

Desirability depends on three factors:
1. How relevant
2. How distinctive
3. How believable
Need to be favorable, strong, and unique
Some product associations are shared in a category
Deliverability also depends on three factors:
1. The actual or potential ability of the product to perform
2. The current or future prospects of communicating that performance
3. The sustainability of the actual and communicated performance over time
Uniqueness of brand associations:
In many categories, non-product-related attributes, such as user type or usage situation,
may more easily create unique associations. Example: Marlboro cigarettes, Virginia Slims
brand.

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
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)

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1. Brand Salience:
Brand salience relates to aspects of the awareness of the brand,
example: How often and easily the brand is evoked under various situations or
circumstances.
Breadth and depth of awareness:
The depth of brand awareness concerns

Ease of recognition and recall

Strength and clarity of category membership

The breadth of brand awareness concerns

Purchase consideration

Consumption consideration

Product category structure:

In consumers minds, a product hierarchy often exists, with
product class information at the highest level,
product category information at the second highest level,
product type information at the next level, and
brand information at the lowest level.
Example: beverages.

Strategic Implications:
In many cases it is not only the depth of awareness that matters but also the breadth of
awareness.
It is important that the brand not only be top-of-mind and have sufficient mind share, but
it must also do so at the right times and places.
Example: H & R Block- year round financial service provider
Campbells Soup -never underestimate the power of soup

2. Brand performance:
It relates to the ways in which the product or service attempts to meet customers more
functional needs.
There are five important types of attributes and benefits that often underlie brand
performance, as follows:

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2.1) Primary ingredients and supplementary features.

2.2) Product reliability, durability and serviceability.
2.3) Service effectiveness, efficiency and empathy.
2.4) Style and design.
2.5) Price.
Some attributes are essential ingredients necessary for a product to work, whereas other
attributes are supplementary features that allow for customization and more versatile,
personalized usage. These types of attributes vary by product or service category:
Few ingredients or features:
Many essential ingredients but few features:
Numerous ingredients and features:

e.g. Bread
e.g. Toaster oven
e.g. Portable tape player

Reliability refers to the consistency of performance over time and from purchase to
purchase.
Durability refers to the expected economic life of the product.
Serviceability refers to the ease of servicing the product if it needs repair.
Service effectiveness refers to how completely the brand satisfies customers service
requirements.
Service efficiency refers to the manner by which these services are delivered in terms of
speed, responsiveness and so forth.
Service empathy refers to the extent to which service providers are seen as trusting, caring
and having the customers interests in mind.

3. Brand imagery:
Many kinds of intangibles can be linked to a brand, but four categories can be highlighted:
3.1) User profiles.
3.2) Purchase and usage situations.
3.3) Personality and values.
3.4) History, heritage and experiences.

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4. Brand judgments:
Brand judgments focus on customers personal opinions and evaluations with regard to
the brand. In terms of creating a strong brand, four types of summary brand judgments are
particularly important:
4.1) Brand quality:
Brand attitudes are defined in terms of consumers overall evaluations of a brand.
Value and Satisfaction
4.2) Brand credibility:
Brand credibility refers to the extent to which the brand as a whole is seen as credible in
terms of three dimensions:
a) Competent, innovative and a market leader (brand expertise)
b) Dependable and keeping customer interests in mind (brand trustworthiness)
c) Fun, interesting and worth spending time with (brand likeability)
4.3) Brand consideration:
Brand consideration depends in large part on the extent to which strong and favorable brand
associations can be created as part of the brand image. Relevance
4.4) Brand superiority:
Superiority relates to the extent to which customers view the brand as unique as and better
than other brands. Differentiation

5. Brand feelings:
Brand feelings are customers emotional responses and reactions with respect to the brand.
The following are six important types of brand-building feelings:
5.1) Warmth: Sentimental, warmhearted, affectionate.

5.2) Fun: Amused, lighthearted, joyous, playful, and cheerful.

5.3) Excitement: Sense of elation, of being alive.

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5.4) Security: Safety, comfort, self-assurance.

5.5) Social approval: Reactions of others, look favorably on their

appearance, behavior.
5.6) Self-respect: Pride, accomplishment or fulfillment.

6. Brand Resonance
-the depth of psychological bonds
6.1 Behavioral Loyalty
Repeat Purchase,
A loyal General Motor Customer can be worth of $276000 over life time
6.2 Attitudinal Attachment
Mere satisfaction is not enough, Xerox, should be on long run, research may not shows
the real one
6.3 Sense of community
Harley Davidson, Harley Owners Group, free one year membership, Magazine Hog tales
6.4 Active engagement
Brand related chat room, visit webpage, customer invest time, energy, money

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Brand Building Implications

1) Customers own brands:
To recognize the power of the brand and its ultimate value to the firm resides with
customers.
2) Dont take shortcuts with brands:
The amount of time it takes to create sufficient awareness and understanding so that firmly
held and felt beliefs and attitudes about the brand are formed that can serve as the
foundation for brand equity.
3) Brands should have a duality:
Strong brands blend product, performance and imagery to create a rich, varied but
complementary set of consumer responses to the brand.
Head and the heart
4) Brands should have richness:
Brands should not necessarily be expected to score highly on all the various dimensions and
categories making up each core brand value.
5) Brand resonance provides important focus:
Brand resonance is the pinnacle of the CBBE model and provides important focus and
priority for decision making regarding marketing. May not go in all dimensions.

Note: For details please see text & reference books.

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